When evaluating a new compensation system,you notice that the compensation cost ratio increased,while total compensation or average earnings remained static.What is a likely explanation?
A) All employees have received some kind of raise.
B) Total costs and/or revenues have decreased.
C) Benefits have been removed from total compensation.
D) There is an error in the data; this situation is not possible.

Question

Quizplus · Accepted Answer

When the compensation cost ratio increases while total compensation or average earnings remain static, it likely means that total costs and/or revenues have decreased. This ratio reflects the proportion of costs or revenues dedicated to compensation, so a rise in the ratio without an increase in compensation suggests a reduction in the overall financial base (costs or revenues) against which the ratio is calculated.

When Evaluating a New Compensation System,you Notice That the Compensation