Global Compensation Practices Flashcards
7 cards from real CCP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Global Compensation Practices flashcards as text
Which international pay delivery issue arises when an expatriate's salary is split between home and host currency accounts?
Answer: Split payroll currency risk
Split payroll exposes both the employer and employee to currency exchange fluctuations between the two accounts.
The Organization for Economic Cooperation and Development (OECD) transfer pricing guidelines are relevant to global compensation because they govern:
Answer: Arm's-length pricing for intercompany charges including management fees
OECD guidelines require that intercompany transactions, including charges for seconded employees, reflect what unrelated parties would negotiate.
A company operating in a country with mandatory 13th-month pay must account for this when comparing total compensation costs. The 13th-month payment is best classified as:
Answer: A legally mandated additional salary payment
In many countries (e.g., Philippines, Brazil), the 13th-month payment is a statutory requirement, not discretionary.
When conducting a global job evaluation to establish international pay grades, which factor requires the MOST localization?
Answer: Market pay data for benchmark jobs
Market pay data must be sourced locally because compensation levels vary dramatically by country even for identical roles.
In countries with high inflation, compensation practitioners typically use which mechanism to protect real wages?
Answer: Inflation-indexed wage adjustment clauses
Inflation-linked clauses automatically adjust wages in line with official price indices, protecting employees' purchasing power.
Which global pay equity concept requires that employees performing substantially equal work in the same establishment receive equal pay regardless of gender?
Answer: Equal pay for equal work principle
The equal pay for equal work principle, codified in laws like the U.S. Equal Pay Act, prohibits wage differentials based on sex for substantially similar jobs.
A multinational firm uses a 'local-plus' approach for regional assignees. Compared to a full expatriate package, local-plus typically:
Answer: Offers host-country base pay with limited add-ons like housing and schooling
Local-plus pays host-market salary but adds selected allowances (housing, education) that bridge the gap without the full cost of a traditional expatriate package.