1. What is the primary objective of a total rewards strategy? A) To minimize labor costs B) To attract, motivate, and retain employees C) To standardize employee benefits D) To comply with legal standards Answer: B) To attract, motivate, and retain employees Rationale: A total rewards strategy is designed to offer a package that will make the company attractive to potential employees, keep them motivated to perform well, and retain them over the long term. 2. Which of the following best describes 'pay-for-performance'? A) Salary is based on the cost of living adjustments. B) Compensation is related to the results or outputs of employee performance. C) Pay is determined by seniority and longevity with the company. D) Benefits are distributed equally among all employees. Answer: B) Compensation is related to the results or outputs of employee performance. Rationale: Pay-for-performance aligns compensation with the level of performance or achievement of specific targets, incentivizing employees to perform better. 3. What is a benefit of offering employees a flexible benefits plan? A) Reduces administrative costs for the employer. B) Ensures all employees have the same benefits. C) Allows employees to tailor benefits to their individual needs. D) Simplifies the benefits selection process. Answer: C) Allows employees to tailor benefits to their individual needs. Rationale: Flexible benefits plans provide employees with options to choose from a range of benefits that best suit their personal circumstances, increasing employee satisfaction and retention. 4. In the context of compensation, what does 'internal equity' refer to? A) The fairness of pay compared to competitors. B) The fairness of pay within the organization. C) The balance between salary and benefits. D) The distribution of stock options.