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Table of Contents

Title Page

Copyright

Publisher's Note

Dedication

Acknowledgments

About the Authors

About the Technical Editors

Introduction

About Human Resource Certification

Why Become Certified?

How This Book Is Organized

How to Use This Book and the Additional Study Tools

Assessment Test

Answers to Assessment Test

Chapter 1: Certifying Human Resource Professionals

The Human Resource Profession

Development of the Human Resource Body of Knowledge

The Test

Summary

Chapter 2: Core Knowledge Requirements for HR Professionals

Needs Assessment and Analysis

Third-Party Contract Management

Communication Skills and Strategies

Documentation Requirements

Adult Learning Processes and Learning Styles

Motivation Concepts

Leadership Concepts

Project Management Concepts

Diversity Concepts

Human Relations Concepts

HR Ethics and Professional Standards

Human Resource Technology

Qualitative and Quantitative Analysis

Change Management

Job Analysis and Description

Employee Records Management

Interrelationships Among HR Activities

Organizational Structures

Environmental Scanning Concepts

Employee Attitude Assessment

Basic Budgeting and Accounting

Risk Management

Summary

Exam Essentials

Review Questions

Chapter 3: Business Management and Strategy

Organizations

Strategy

Strategic Management

Legislative and Regulatory Processes

Corporate Governance

HR Metrics: Measuring Results

Global Considerations

Summary

Exam Essentials

Review Questions

Chapter 4: Workforce Planning and Employment

Federal Employment Legislation

Strategic Workforce Planning

Staffing Programs

Organization Exit/Off-Boarding Processes

Metrics: Measuring Results

Global Considerations

Summary

Exam Essentials

Review Questions

Chapter 5: Human Resource Development

Federal Employment Legislation

Organization Development

Talent Management

Performance-Management Programs

Performance Appraisal

Unique Employee Needs

Metrics: Measuring Results

Global Considerations

Summary

Exam Essentials

Review Questions

Chapter 6: Compensation and Benefits

Total Rewards Defined

Compensation

Benefits

Payroll

Communicating Compensation and Benefits Programs

Executive Compensation

Metrics: Measuring Results

Global Considerations

Summary

Exam Essentials

Review Questions

Chapter 7: Employee and Labor Relations

Federal Employment Legislation

Employee Relations

Dispute Resolution

Labor Relations

Union Organization

Union Avoidance Strategies

Metrics: Measuring Results

Global Considerations

Summary

Exam Essentials

Review Questions

Chapter 8: Risk Management

Risk Identification

Risk Assessment

Risk Management

Metrics: Measuring Results

Global Considerations

Summary

Exam Essentials

Review Questions

Appendix A: Answers to Review Questions

Chapter 2: Core Knowledge Requirements for HR Professionals

Chapter 3: Business Management and Strategy

Chapter 4: Workforce Planning and Employment

Chapter 5: Human Resource Development

Chapter 6: Compensation and Benefits

Chapter 7: Employee and Labor Relations

Chapter 8: Risk Management

Appendix B: Case Study: Where the Green Glass Grows

The Company

The Customer

Exercises

Answer Key and Additional Exercise

Appendix C: Federal Employment Legislation and Case Law

Legislation and Case Law Summary

Additional Cases

Appendix D: Resources

Business Management and Strategy

Workforce Planning and Employment

Human Resource Development

Compensation and Benefits

Employee and Labor Relations

Risk Management

Appendix E: About the Additional Study Tools

Additional Study Tools

System Requirements

Using the Study Tools

Troubleshooting

Index

About the Additional Study Tools

Exam Objectives Map

Wiley End User License Agreement

Title Page

Dear Reader,

Thank you for choosing PHR/SPHR: Professional in Human Resources Certification Study Guide, Fourth Edition. This book is part of a family of premium-quality Sybex books, all of which are written by outstanding authors who combine practical experience with a gift for teaching.

Sybex was founded in 1976. More than 30 years later, we're still committed to producing consistently exceptional books. With each of our titles, we're working hard to set a new standard for the industry. From the paper we print on, to the authors we work with, our goal is to bring you the best books available.

I hope you see all that refl ected in these pages. I'd be very interested to hear your comments and get your feedback on how we're doing. Feel free to let me know what you think about this or any other Sybex book by sending me an email at nedde@wiley.com. If you think you've found a technical error in this book, please visit http://sybex.custhelp.com. Customer feedback is critical to our efforts at Sybex.

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To my husband Chris, whose three little words never fail to inspire me: “Go for it.” To my children, Calvin and Clara, because the best part of me will eternally be each of you. I am filled with love and gratitude for having the three of you in my life.

Acknowledgments

Any acknowledgement in the updating of this book must begin by recognizing the professionalism and intellect of Anne Bogardus. Her thoroughness and attention to detail represented in the previous editions of this work made writing these updates an absolute career highlight.

To the editors Jeff Kellum, Kim Wimpsett, Pete Gaughan, Brenda Budke, Christine O'Connor and Tim Tate, thank you for your professionalism, encouragement, superior organizational skills and insightful additions to the expanded version of this work — it absolutely made for a better final product.

A book like this requires a great deal of time and thought, and nobody felt that more than my clients, co-workers, and support staff who watched me attempt to juggle it all. To TAGS, VWC, and my clients at SBDC, thank you for allowing me a peek into your business, for letting me rattle your cage with strategic “leaps,” for picking up the slack when I went underground, and for supporting my crazy schedule—I quite literally could not have done it without you.

Finally, to the students, a brief mention of my own testing experience: I remember sitting in my hotel room the night before my SPHR exam, trying to cram in a few more details, desperate to figure out what I didn't already know. It was around Christmas time, and my youngest child was just 2 years old. Feeling guilty for being away from my family and with my confidence at an all-time low, I wondered if I was really up for the challenge. Then, surrounded by my books and flashcards, I suddenly “got” it. The pieces starting fitting together, the processes had rationale, and the big picture came into clear focus. The next morning, I took a 4-hour exam in just 2 hours and passed it on the first go-round. My excitement about being a part of this project is a reflection of that one “a-ha” moment, representing for me when HR crosses over from just being a job to an intelligent, strategic career choice. My hope is that with each pass through this material, you will get closer to your own enlightened moment when suddenly, you just get it. Many thanks, and good luck in your career—this absolutely can happen for you!

About the Authors

Sandra M. Reed, SPHR, has more than 17 years of experience in human resources, the last ten of which have been spent in training and instruction. Prior to teaching, she spent much of her work career in the recruiting and risk-management functions of human resources, which evolved into a passion for training through on-boarding and OSHA compliance activities. She obtained her PHR and her SPHR designations through the Human Resource Certification Institute and received her teaching credential in adult vocational education from California State University, San Bernardino. As an independent contractor, she has conducted onsite training for California State University Stanislaus, University of the Pacific, the Small Business Development Center of Stanislaus County, and private employers throughout Northern California. She has authored learning modules and case studies for the Society for Human Resource Management, focusing on educating the emerging workforce and future human resource professionals. She currently is owner of Epoch Resources, a consulting firm located in the Central Valley of California that specializes in the unique HR needs of small businesses. Find her on the Web at http://epochresources.com.

Anne M. Bogardus, SPHR, began her human resources career in compensation at a public multinational corporation, Castle & Cooke, owner of the Dole food brand, and later at First Nationwide Bank. She also founded and was principal of S.T.A.R. HR in northern California, which specialized in building human resource functions that serve strategic business needs. Her practice included small to medium-sized businesses in a wide range of industries including biotechnology, mortgage lending, high technology, public relations, retail, nonprofit, and construction. Ms. Bogardus is also the author of an introductory book for non-HR business professionals, Human Resource Jumpstart, as well as the previous three editions of this book, all published by John Wiley & Sons, Inc.

About the Technical Editors

Brenda G. Budke is the executive director for Sierra HR Partners, Inc., an HR consulting and outsourcing service located in Fresno, California. She is a certified SPHR with over 20 years experience in the human resource field. Prior to joining Sierra HR Partners, Brenda served as the human resources manager for a national communications company, overseeing employment, employee relations, and training. She is founder and dean of a corporate university and has developed curriculum and presented performance-based training at all levels. Ms. Budke holds a Bachelor of Science degree in organizational behavior with a concentration in Human Resource Management from the University of San Francisco. She currently serves on the board of the Central California Employment Round Table (CCERT), working in conjunction with DFEH to prevent harassment and discrimination in the workplace; she is a member of the Society of Human Resource Management (SHRM) and past-president of the Human Resource Association of Central California (HRACC). Most recently she served as deputy director for the California State Council for SHRM.

Tamra Aguinaldo has a background in human resources and education and currently works as an HR consultant in Northern California. She has a Master of Arts degree in Education with an emphasis in Guidance Counseling. Prior to becoming a consultant, she was Director of Professional Development for the Northern California Human Resources Association in San Francisco.


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HR is a dynamic profession requiring practitioners to keep up-to-date with current trends and changes to employment law. The PHR/SPHR exams are updated annually to reflect these trends and changes. For information about updates between revisions of this study guide, log on to http://epochresources.com, and click PHR/SPHR Certification to view changes or ask questions about content.

Introduction

Congratulations on taking the first step toward achieving your Professional in Human Resources (PHR) or Senior Professional in Human Resources (SPHR) certification! The process you're embarking on is rewarding and challenging, and as more than 100,000 of your fellow human resource colleagues have already discovered, it's an excellent opportunity to explore areas of HR management with which you may not work every day. In the next few pages, you'll find some general information about HR certification, some suggestions for using this book, information about what to expect in the following chapters, and a discussion of the organizations involved in certification.

Before we begin, a word about what you should already know. This study guide was designed to serve as a refresher for experienced professionals who have practiced for several years or have been educated in human resources. We assume that those who are pursuing certification have the basic HR knowledge that comes not only from education in human resources but also, more importantly, from exempt-level experience. If your daily work is truly generalist in nature, you likely have touched on many of the topics I cover, but you may not have in-depth knowledge in all of them. Conversely, if you specialize in one or two areas of HR, you probably have extensive experience in those areas but may need to refresh your knowledge in other areas.

The goal of this study guide is to provide enough information about each of the functional areas of HR management to enable candidates in either situation to find what they need to prepare themselves for successfully completing the exam. More than 22,000 books related to human resources are listed on Amazon.com alone, and there is obviously no way we can cover all the aspects of HR in a single book. So, we've organized the information around the test specifications (test specs) established by the Human Resource Certification Institute (HRCI), the certifying body for our profession. We'll talk more about the test specs in Chapter 1, “Certifying Human Resource Professionals,” but for now, suffice it to say that the key to success on the exam is a thorough understanding of and ability to apply the test specs when answering questions on the exams.

About Human Resource Certification

What exactly is human resource certification? Briefly, let's just say that certification is a way of acknowledging individuals who have met the standard of competency established by HR practitioners as that which is necessary to be considered a fully competent HR professional. To understand whether this book is for you, you'll want to know why you should become certified and how the certification process works.

Who Certifies HR Professionals?

Three organizations are involved in the certification of HR professionals: the Human Resource Certification Institute (HRCI), the Society for Human Resource Management (SHRM), and the Professional Examination Service (PES).

The Human Resource Certification Institute

HRCI is the certifying body for the HR profession. It was formed by the American Society of Personnel Administrators (ASPA) in 1972, when it was known as the ASPA Accreditation Institute (AAI). In its early stages, HRCI was financially dependent on SHRM, but it's now financially independent. Both HRCI and SHRM have individual boards of directors that govern their operations. Although HRCI and SHRM have a long history of affiliation and mutual support, the certification process is a separate and distinct function of HRCI, and SHRM has no more control over or access to the certification process than does anyone else in the profession.


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You can find HRCI's organizational mission statement at www.hrci.org/Page.aspx?id=31&terms=mission.

The Society for Human Resource Management

SHRM is the largest organization of HR professionals in the world, representing more than 250,000 members worldwide, with more than 900 affiliated professional and student chapters. From its beginning in 1948 as the American Society for Personnel Administrators (ASPA), SHRM has been a leader in the endeavor to gain recognition for the HR profession. Today's certification program is a direct result of efforts by the first volunteer members of SHRM, who recognized the need for a defined body of knowledge and set about to develop it along with a certification process that evaluates the abilities of practitioners in the field.

Professional Examination Service

PES is a nonprofit organization that conducts license and credential examinations for a wide variety of professions, including psychology, pharmacy, real-estate appraisal, security management, as well as human resources. PES maintains the database of test items developed by HRCI and is responsible for ensuring that applicants for the PHR and SPHR exams meet the eligibility requirements, administering and scoring the tests, and notifying candidates of the results. PES conducts a practice analysis study to ensure the continued relevance of the credentialing process to current business practice.

We'll refer to these organizations frequently in Chapter 1 as we discuss the body of knowledge and the certification process.

Why Become Certified?

Over time, the certification offered by HRCI has become the industry standard for determining competence in the field of human resources. There are many reasons that individuals may decide to seek professional certification. Let's talk about just a few of them.

First, certification is an acknowledgement that you have met the standards of excellence determined by other HR professionals to be those that are necessary to be fully competent in the field. Because the standards are developed by working professionals, not just by those who teach and consult in the field, this credential demonstrates that you're a fully competent HR practitioner based on a standard set by your peers.

Second, certification is a way to increase your marketability. In difficult economic times, when there is tough competition for jobs, certification provides an edge that can be advantageous in your job search. With an abundance of job seekers for a limited number of jobs, whatever you can do to set yourself apart from the crowd can give you the edge when potential employers are making the final hiring decision.

Third, those who spend the time to advance their own knowledge and achieve certification have demonstrated their ability to continue learning and growing as times and business needs change. A person who is willing and able to set a significant goal and do what is necessary to achieve it demonstrates characteristics that are in great demand in business today: results orientation, technical competence, commitment, and excellence.

Finally, certification enhances your credibility with co-workers and customers by demonstrating to the people you encounter during your workday that you have proven competence in the field.

Whether your reason for seeking certification falls into one of these categories or you're motivated to do so for some other reason, it can be a great opportunity to validate how much you already know about the practice of human resources as a profession.

How to Become Certified

To become a certified HR professional, you must pass either the PHR or SPHR exam, both of which have been developed by HRCI in a comprehensive process described in Chapter 1.

HRCI uses a computer-based testing (CBT) process during two time periods each year: between the beginning of May and the end of June, and from mid-November through mid-January. One advantage of the CBT process is that exam candidates know before they leave the testing center whether they are certified.

Each exam, PHR and SPHR, consists of 225 questions. Of these questions, 200 are scored to determine whether you pass the exam. The additional 25 questions are being “pretested” in order to determine their reliability and validity for inclusion in future test cycles. You can find a detailed discussion of how the questions are developed and scored in the HR Certification Institute's 2012 Certification Policies and Procedures Handbook, which can be viewed and/or downloaded at the HRCI website (www.hrci.org), or you can request a hard copy from HRCI by calling (866) 898-4724. The handbook is an essential guide to all aspects of the exams and includes test dates, application deadlines, fee information, and answers to frequently asked questions about the certification process, as well as the full list of test specifications.

Chapter 1 explains in greater detail how much and what kinds of experience are required for each exam level and how the questions differ on each level.

How This Book Is Organized

We've talked a little about Chapter 1, which provides information about requirements for certification and the testing process. Chapter 1 also provides some suggestions on the best ways to study for the exam.

Chapter 2, “Core Knowledge Requirements for HR Professionals,” provides a brief discussion of knowledge with implications in multiple functional areas. Reading this chapter first gives exam candidates a base for understanding topics covered in subsequent chapters.

Chapters 3.1–8.1 get down to the specifics of each functional area and discuss the test specifications in detail. Each of these chapters consists of a list of objectives, an overview of the functional area, the federal employment laws applicable to that area, and a discussion of the test specs, including the appropriate court cases.

We have also provided five appendices to facilitate your study. Appendix A, “Answers to Review Questions,” provides all of the answers to the questions at the end of every chapter.

Appendix B, “Case Study,” gives you an opportunity to pull information from multiple functional areas to solve typical HR challenges in a fictitious company.

Appendix C, “Federal Employment Legislation and Case Law,” is a chronological listing of the federal legislation appearing throughout the book, as well as significant court decisions with implications for human resources. This appendix also includes additional court decisions that were not discussed in the chapters but have significance for HR practice and with which you should be familiar, so be sure to review them. They are included in a separate section of the appendix.

Appendix D, “Resources,” is just that: a list of additional sources of information about each of the functional areas of human resources.

Appendix E, “About the Additional Study Tools,” provides a listing of all the material you can find on the book's companion web site.

Finally, we've included some additional study tools including the Sybex test engine, electronic flashcards, and a PDF of a glossary of terms: an alphabetical listing of all the key terms throughout the book with their corresponding definitions.


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For up-to-the-minute updates please see www.epochresources.com; and for directions on where to get the study tools, visit www.sybex.com/go/phr4e.

The Elements of a Study Guide

You'll see many recurring elements as you read this study guide. Here's a description of some of those elements:

Assessment Test

At the end of this introduction is an assessment test that you can use to check your readiness for the exam. Take this test before you start reading the book; it will help you determine the areas on which you may need to brush up. The answers to the assessment test questions appear on a separate page after the last question of the test. Each answer includes an explanation and a note telling you the chapter in which the material appears.

Objective Map and Opening List of Objectives

On the inside front cover of this book is a detailed exam-objective map showing you where each of the exam objectives is covered in this book. In addition, each chapter opens with a list of exam objectives that are covered in that chapter. Use these to see exactly where each of the exam topics is covered.

Summary

The summary is a brief review of the chapter to sum up what was covered.

Exam Essentials

The “Exam Essentials” section at the end of each chapter highlights topics that could appear on one or both of the exams in some form. Although we obviously don't know exactly what will be included in a particular exam, these sections reinforce significant concepts that are key to understanding the functional area and the test specs HRCI has developed.

Chapter Review Questions

Each chapter includes 20 practice questions designed to measure your knowledge of key ideas discussed in the chapter. After you finish each chapter, answer the questions; if some of your answers are incorrect, it's an indication that you need to spend more time studying that topic. The answers to the practice questions can be found in Appendix A. The chapter-review questions are designed to help you measure how much information you retained from your reading and are different from the kinds of questions you'll see on the exam.


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The assessment test and chapter-review questions can also be taken via the Sybex test engine. The next section tells you where to get the additional study tools, including the test engine.

Additional Study Tools

We've included a number of additional study tools that can be found on the book's companion site at www.sybex.com/go/phr4e. All of the following gear should be loaded on your computer when you're studying for the test.

The Sybex Test Preparation Software

The test-preparation software helps prepare you to pass the PHR/SPHR exams. In this test engine, you'll find all the chapter-review and assessment questions from the book, plus two additional bonus practice exams that appear exclusively on the test engine: one specifically for PHR candidates and one for SPHR candidates. You can take the assessment test, test yourself by chapter, or take the bonus practice exams.


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Just as on the certification exams, the practice exam questions draw on your experience as an HR professional. Be on the lookout for questions based on your everyday activities in HR and not just on the material in the PHR/SPHR Study Guide.

Electronic Flashcards

Sybex's electronic flashcards include more than 200 PHR questions and more than 200 SPHR questions designed to challenge you further for the PHR and SPHR exams. Between the review questions, practice exams, and flashcards, you'll have a wide variety of materials to help you prepare!

Glossary of Terms in PDF

Sybex offers an exclusive glossary of terms in PDF format as part of the additional study tools. Now you can review key terms on your computer or e-reader if you travel and don't want to carry a book or if you just like to read from the computer screen.


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You can get the additional study tools by visiting www.sybex.com/go/phr4e. Here, you'll get instructions on how to download the files to your hard drive.

How to Use This Book and the Additional Study Tools

This book has a number of features designed to guide your study efforts for either the PHR or the SPHR certification exam. All of these features are intended to assist you in doing the most important thing you can do to pass the exam: understand and apply the test specs in answering questions. This book helps you do that by listing the current test specs at the beginning of each chapter and by ensuring that each of them is fully discussed in the chapter.

The practice questions at the end of each chapter and the practice exams included with the study tools (which can be found on the companion site at www.sybex.com/go/phr4e) are designed to assist you in testing your retention of the material you've read to make you aware of areas on which you should spend additional study time. We've provided web links and other resources to assist you in mastering areas where you may require additional study materials. Here are some suggestions for using this book and study tools:

Finally, find a study partner if possible. Studying for, and taking, the exam with someone else will make the process more enjoyable, and you'll have someone to help you understand topics that are difficult for you. You'll also be able to reinforce your own knowledge by helping your study partner in areas where they are weak.

Assessment Test