CCP Quantitative Principles in Compensation Management

  1. Name five key questions to ask regarding variables of interest
    • 1. What is it?
    • 2. What is the level of measurement?
    • 3. Data = population or sample?
    • 4. Should it be grouped?
    • 5. Any other variables available?
  2. Name the four levels of measurement
    • 1. Nominal
    • 2. Ordinal
    • 3. Interval 
    • 4. Ratio
  3. Define nominal measurement
    Measurements used to identify or categorize (e.g. SSN, EEID, M/F, etc.)
  4. Define ordinal measurement
    Measurements used to put data in order (e.g. rankings, Gold/Silver/Bronze, performance ratings)
  5. Define interval measurement
    Measurements used to show value where zero value is arbitrary (e.g. temperature)
  6. Define ratio measurement
    Measurements used to show value where zero value has meaning (e.g. salary, employee count, turnover, etc.)
  7. Why do compensation professionals collect and use data?
    To improve chances of making sound decisions
  8. A true, absolute zero exists for which level of measurement?
  9. Salary is an example of which level of measurement?
  10. In order to satisfy ordinal level data requirements, what must you be able to do?
    Be able to meaningfully arrange the data in rank order
  11. Rating employee performance on a five-point scale ranging from "5" (outstanding) to "1" (unsatisfactory) is most likely an example of which level of measurement?
  12. How do you calculate compa-ratio?
    Salary divided by Midpoint
  13. How do you calculate market index?
    Salary divided by Market Rate
  14. How do you calculate range penetration?
    • Pay - Minimum of Grade
    • -------------------------
    • Maximum of Grade - Minimum of Grade
  15. How do you calculate range spread?
    • Max of Range - Min of Range
    • -----------------------
    • Min of Range
  16. You spent 30% of your budget on merit increases three years ago, 35% two years ago, and 40% last year. When was the most money spent on merit increases?
    You don't know the budget, therefore the answer can't be calculated.
  17. What is the individual compa-ratio for an employee whose salary is 25k, with the midpoint at 30k?
  18. If you earn 50k, and your co-worker earns 60k, what percent more is he worth compared to you?
    He is 20% more of a man than you will ever be.
  19. Midpoint = 72k
    Range Spread = 50%

    Tell me min & max
    • 57,600 - 86,400
    • hint:
    • Midpoint / [1+(Range Spread/2)] = Min.
    • Min. + (Range Spread * Min.) = Max.
  20. Provide the compound interest formula in terms of future and present values
    Future Value = Present Value * (1 + Interest%) ^ N
  21. What does the rule of 72 indicate?
    You can calculate years to double by taking 72 / Growth rate. This will give you a rough estimate
  22. What is an annuity?
    Regular payments made over a period of time
  23. Define annuity
    Investment that pays on a scheduled basis over a fixed amount of time.
  24. Define population
    All the data in a dataset
  25. Define sample
    A portion of the total data in a dataset
  26. Name the steps for histogramming
    • 1.) Organize the data
    • 2.) Group the data
    • 3.) Determine intervals
    • 4.) Graph them
  27. This answer is stupid:
    "What is interpolation?"
    An exact value representing a remainder
  28. What is the "range" of a dataset?
    Maximum - Minimum
  29. What is the "interquartile range?"
    75th percentile - 25th percentile
Card Set
CCP Quantitative Principles in Compensation Management
CCP Quantitative Principles in Compensation Management