Compensation professionals in XYZ Company use regression analysis to determine the pay rates of its marketing professionals.There are 4 different marketing job titles in XYZ Company.Compensation professionals use job evaluation points assigned to each marketing job title and a salary survey data.In other words,they regress job evaluation points on the salary data.What does it mean when the R² value of this regression turns out to be 0.85?
A)All of the variation in market pay can be explained by the company's job structure.
B)None of the variation in market pay can be explained by the company's job structure.
C)A large amount of the variation in market pay can be explained by company's job structure.
D)A small amount of the variation in market pay can be explained by company's job structure

Question

Quizplus · Accepted Answer

An R² value of 0.85 suggests that a large amount (85%) of the variation in market pay can be explained by the company's job structure. This indicates that the job evaluation points assigned to each marketing job title are highly correlated with the salary survey data, and can be used to predict pay rates for these positions with a high degree of accuracy.

Compensation Professionals in XYZ Company Use Regression Analysis to Determine