The Definitive

Guide to

PASS THE HRCI EXAMS

1Kathy Nguyen

TA B L E O F C O N T E N T S

Chapter 1: Introduction p.4

Chapter 2: Human Resources Strategic Management p.12

Chapter 3: Workforce Planning and Employment p.36

Chapter 4: Compensation and Benefits p.54

Chapter 5: Employee & Labor Relations p.78

Chapter 6: Human Resource Development p.100

Chapter 7: Risk Management p.114

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Chapter Two

Human Resources

Strategic

Management

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Strategic Management

Strategic management included:

Elements of strategic management for HR Professionals

General business environment

Business strategy: strategic planning process and HR management

Change management, technology impacts, risk management, the importance of HR interactions with other functional areas and in the community

Overview about organizations:

External business environment: HR professional must understand how the external forces affect other organization as well as their effects on HR process

Technology development

Industry changes

Economic environment

Labor pool

Legal and regulatory activities

Internal Business Operations: HR must understand how organization functions

Different types of organizations include:

Sole proprietorships: single (sole) person is the final authority for all decisions in the business

Partnerships: two or more people share final authority and jointly liable for the actions of the business – They’re liable for their partner’s action.

General partnership: owners share responsibility for managing the business

Limited liability partnership (LLP): owners are investors but less involve in daily operational activities – For example: medical clinics, accounting practices, law firms, and other business services

Joint venture: form to manage a specific project and/or within a limited time frame

Corporation: including 4 characteristics – (1) liability limited to assets of the company –(2) the life of corporation can extend beyond the life of its original founder – (3) central management structure – (4) transfer ownership by selling stocks

Limited liability corporation (LLC): it’s a cross between general partnership and corporation, provides liability protection of a corporation with fewer operating restrictions, ands need to have only 2 of 4 characteristics of a corporation.

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Organization Functions

Production and operations: create of products or services including these activities:

Capacity: materials, labor, equipment

Production layout: assembly line, model plan or protocol – how product or service can be produced

Scheduling: to meet customer’s demands

Inventory management: balance needs and inventory – Just-in-time inventory management

Sales and marketing: create a demand for company’s product and move them from the company to customer (4 Ps model)

Product

Price

Placement or distribution

Promotion

Research and development: design new product, offer and test them to make sure they do what they’re designed to do

Finance and Accounting: all activities related to moving money into and out of an organization.

Finance obtains credit to meet organization’s need and grant credit to customer, invest and manage cash for max return on investment, establish relationship with banking, provide analysis for future financial needs

Accounting records financial transaction, cost accounting (all costs related to the product); need to be complied with FASB and SEC; GAAP; IASB

Information Technology (IT): all activities related to computer and information technology. This department provides technical support for the organization.

Human Resources:

Engage the workforce, identify the best fit, concentrate on individual employee strengths, clearly established desired results; look for talent as well as KSAs (Knowledge, Skills, Abilities)

Three themes to increase employees’ engagement: leadership; professional development; employee recognition

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Organization Life Cycles:

• Start-up phase: A start-up company requires the best people. Therefore, company highly focuses on hiring new talent.

• Growth phase: Company prefers to hire more new employees. As it requires a growing structure, company focuses on building its infra-structure.

• Maturity phase: Company does not need to hire the most experienced candidates because it’s easier to provide training than the start-up phase.

• Decline phase: This phase involves budget cut, sales declines, profit loss, and mass layoffs.

Strategy: defines organization’s goals and methods to be used to achieve those goals –This process is called strategic planning and management.

Strategic planning: Nowadays human resource professional role has been shifted from heavily administrative focus to design and implement HR policy to support strategic business goals.

• Strategy: uses the strength of the business in the market place

• Goal: describes the direction the business’s direction

• Objectives: are practical steps to achieve the business goals

• Long range plans: 3-5 years

• Midrange plans: 1-3 years

• Short range plans: 6-12 months

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Steps of a strategic planning process:

• Preplan: includes who will be invited to participate and what stages in theprocess, time frame to complete, tools to be used

• Environmental scanning: is a framework to collect info, and to create a successfulplan for future growth. It is used to review general business environment, industrypractices and developments, technology advances, economic environment,changes in the labor forces population, legal and regulatory environment

• Strategy formulation: vision statement, mission statement, core competencies,corporation’s values statement – SMART model (specific, measurable, action-oriented, realistic, time based) will be used in this stage.

• Strategy Implementation: develop tactical goals, action plans, budget

• Evaluation: review the entire strategic process, evaluate results, and identifyshortcomings for future strategic planning process.

Human Capital Management Plan includes

• Statement of strategic direction

• Desired results or goals

• Objectives

• Action plans

• Communication plan

• Measurement

Human capital projecting is a budgetary activity in which HR department measures thevalue of HR resources.

Strategic Management Methods:

• Organizing: centralized organization (concentrate at higher level of org) vs.decentralized organization (decision making is delegated to lower levels) ; linefunctions (operations and sales); staff functions (human resources); span ofcontrol (number of employees under one manager) – There are 5 basic oforganizational structures: functional, product based, geographical, divisional,matrix

• Controlling: ensured planning process is implemented – For ex: Total qualitymanagement, Six Sigma, management by objectives.

Strategic relationships:

• Internal relationships: labor management relationships are at the core of HRresponsibilities

• External relationships: recruiting agencies, benefit brokers, others with expertisein areas of importance to the organization, ensures the availability of neededservices when they’re required.

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• Corporate responsibility: is a business behavior that is focused on building external strategic relationship – linking external environment to the internal environment

• Porter’s 5 forces: Political; legal; economic; social; technology; competition

• Sustainability: in resources such as labor, finances, long-term health of corporation, green initiatives etc.

• HR roles include corporation values; code of conduct; company culture; employee relations; ethics; stakeholder commitment; corporation governance; offshoring; worker rights; social responsibility; data security; philanthropy; community relations; corporation values

• Change management: Structural changes including

• Reengineering: eliminate unnecessary processes with the goals of increasing customer’s satisfaction and efficiency

• Corp restructuring: reduce and/or eliminate individual units to reduce redundancy

• Workforce expansion: increase the numbers of employees to fulfil new business strategy

• Workforce reduction: such as downsizing, rightsizing

• Mergers: A merger is the joining together of two separate companies or organizations so that they become one.

• Acquisition: If a company or business person makes an acquisition, they buy another company or part of a company.

• The types of info to be collected as part of the due diligent process during the change management:

1. Documents: names of employees, locations, offer letters, contracts, I9, benefit plans

2. Compensation: hourly wage rates, salary schedules; number of employees in each positions

3. Policy and procedures: policy manual, employee handbook, management handbook

4. Legal compliance: COBRA notices and participants; active FMLA leaves, WARN compliance, OSHA compliance

5. Labor relations: CBA (Collective bargaining agreement); ongoing negotiation; union activity; grievance history and outstanding grievances

6. Legal exposure: sexual harassment claims; termination disputes; violations of federal or state laws; worker compensation’s claims

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Enterprise Risk Management: a practice of forecasting possible risks to the

organization and taking steps to mitigate their impact on the organization, identify

risk by conducting HR audits, review the current process and implement appropriate

adjustments.

• Insurance policies: liability insurance to protect or reduce potential loss from

employment related claims – Employment practices liability insurance (EPLI)

• Employee handbooks: protecting employer from potential risks of sexual

harassments; reasonable accommodation; wage, hours; leave etc.

• Litigation statistics: Identify current trends based on statistics; Unemployment

rate by geographic locations; Safety standards; Updates of labor law

HUMAN RESOURCE TECHNOLOGY (HRIS): serves 2 purposes (1) repository of info;

(2) effective decision making

• HRIS systems: reports for EEOC or OFCCP; applicant tracking system (ATS –

usually used for recruiting); Hiring Management Systems (carry employer brand

throughout the process – provide templates for recruiters); Learning

Management System (LMS – streamlines administrative task of training

program)

• Selecting an HRIS system: conduct a need analysis and identify the info/type of

reports/integrating functions/ security level/ HR access

• Implementation: Once completed the selection process, the system is needed to

be tested in a smaller scale. Once successful, the implementation can start

within the whole company.

• Employee Self Services (ESS): allow employees access their own info through

automated system. It reduces HR admin tasks, frees HR to concentrate on other

important tasks and projects.

Two types of researches:

• Primary research: researchers perform the research

• Secondary research: based on info collected or reported by others

Scientific method (used for primary research):

Identify a problem

Create a hypothesis

Decide how to test the data

Collect data to verify the hypothesis

Draw conclusion/analyze the data

Data collection:

Personal records: analyzing trends

Observations: create and test hypothesis

Interviews: get direct info about the problem

Focus groups: need willingness to be opened up

Questionnaires: gather info from large group but limited in the types of data can be collected

Analysis tools: 2 types – quantitative and qualitative

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METRICS AND MEASUREMENT:

• Business Impact Measures: demonstrate how a particular HR program or

activity adds value to the bottom line

• ROI: dividing the benefits realized as a result of a program by the total direct

and indirect cost

• Cost/benefit analysis (CBA): compare all costs to the benefits – used to

evaluate the cost effectiveness for alternatives solutions. CBA includes soft cost –

ROI generally includes only hard cost

• Tactical Accountability: measures info to evaluate effectiveness of HR

programs. For ex: job satisfaction; organization’s commitment and involvement;

cost per hire; turnover and retention; absenteeism and sick leave use; grievance

rates; termination as a percentage of total employees

• Building a business case: evaluate the possible consequences of taking (or

not taking) a particular action. For example: implementing an HR program

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Change Management

• CHANGE MANAGEMENT: HR needs to be flexible for changes such as restructuring, mergers or acquisition; right-sizing; workforce expansion in order to adjust to new way of operations

• JOB ANALYSIS AND JOB DESCRIPTION: the foundation of all happens within the employment relationship, used for multiple purposes: hiring based on knowledge-skills-abilities (KSAs); performance management; appropriate level of pay; guideline for reasonable accommodation

• Job Analysis: understood in the context of accomplishing org’s goals and objectives. Process:

Interview the incumbent if available

Interview the supervisor and coworkers

Complete a structured or open-ended questionnaire

Complete a task inventory

Observe incumbents and make notes

Utilize work logs kept by incumbents

• Job description: written document about the job – Focus on the job, not the person performing it.

Identifying info: title, department, sup’s title, exempt status, salary range, date created

Supervisory responsibilities: If applicable

Position summary

Essential functions: comply with ADA (American Disability Act); description of level of complex and frequency of tasks

Nonessential functions: ADA purpose – could be move to another position

Equipment operated

Job specification: Education/licenses/skills/ experience

Physical requirements

Mental requirements

Work environment

Approvals

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