Free Certified Executive Compensation Professional Exam CECP Exam Practice Test

What statement is most accurate regarding compensation communications with employees at varying levels?

• They tend to be fairly consistent because the elements of pay may differ, but the concerns are universal.
  
• They generally require a greater degree of detail for lower level employees who have less of an understanding of pay plan design.
  
• They usually require more detail for senior employees regarding plan details and performance and the needs from one employee group to another can vary greatly.
  
• They should be kept to a minimum for employees at all levels to maximize efficiency and efforts can be focused only on those who have questions.
  

The ''Value Store'' retail company offers its customers low prices and ease of purchase by minimizing waste and striving for high efficiency. What strategy is the ''Value Store'' using?

• Operational excellence
  
• Product/service leadership
  
• Customer intimacy
  
• Brand loyalty
  

To ensure appropriate funding levels, the compensation professional must generally do which of the following?

• Possess a high level of education and competency in accounting principles
  
• Determine which programs are crucial to the enterprise and which programs are expendable
  
• Partner with multiple departments and external consultants and vendors
  
• Demonstrate broad understanding of principles of financial management and business expertise
  

What is the term for the skills, technologies, applications and practices of continuous iterative exploration and investigation of past business performance used to gain insight and drive business planning?

• Business forecasting
  
• Business analytics
  
• Predictive modeling
  
• Statistical analysis
  

What type of pay increase is given when an organization finds that its compensation program is behind competitive market rates?

• General
  
• Cost of living
  
• Automatic
  
• Merit
  

What most accurately describes a reason why organizations use financial reports?

• To differentiate company financial data from industry competitors to prevent loss of proprietary information
  
• To provide subjective information to key constituents that reflects the company's performance in the most favorable manner depending on stakeholder priorities
  
• To create a historical record of financial performance and identify trends that may justify changes in strategy
  
• To promote consistency of communication regarding company performance and value
  

Gross margin is which of the following, as percent of revenue?

• Revenue minus cost of goods sold
  
• Expenses plus taxes and depreciation
  
• Gross profit minus expenses
  
• Cost of goods sold
  

What statement is most accurate regarding communication of compensation information?

• Compensation professionals should anticipate the level of the audience and tailor messages to their needs.
  
• Compensation terms and practices are unclear to most individuals who do not work in this area and communication should be tailored to the least informed member of the target audience.
  
• The ready availability of information online has made it unnecessary for compensation professionals to tailor messages since individuals can research terms and concepts after the fact if they don't understand a communication.
  
• Compensation terms are well-known and easily understood by most stakeholders.
  

What is the most likely explanation for why compensation and rewards require a strong grasp of business executive for compensation professionals?

• Because the internal and external environments are constantly changing
  
• Because the best interests of the organization take priority, which can lead to difficult decisions and implementation issues
  
• Because they are emotional issues and stakeholders have many vested interests
  
• Because strong business executive is required for all compensation decisions
  

What is a primary objective of profit-sharing and performance-sharing variable pay plans?

• To achieve organizational cost savings through base pay reductions
  
• To increase employee identification with the organization's success
  
• To defer compensation expenses to future reporting periods
  
• To reward individual employees for some significant contribution