A Guide to the Human Resource Body of Knowledge (HRBoK) PDF

WEBFFIRS 04/03/2017 18:59:21 Page i A GUIDE TO THE HUMAN RESOURCE BODY OF KNOWLEDGETM (HRBoK TM ) WEBFFIRS 04/03/2017 18:59:21 Page ii WEBFFIRS 04/03/2017 18:59:21 Page iii A GUIDE TO THE HUMAN RESOURCE TM OF BODY KNOWLEDGE (HRBoK TM ) SANDRA M. REED, SPHR WEBFFIRS 04/03/2017 18:59:21 Page iv Cover design: Wiley Cover image:  naqiewei/Getty Images Copyright  2017 by Human Resources Certiﬁcation Institute, Inc. All rights reserved. Published by John Wiley & Sons, Inc., Hoboken, New Jersey. Published simultaneously in Canada. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, 222 Rosewood Drive, Danvers, MA 01923, (978) 750-8400, fax (978) 646-8600, or on the web at www.copyright. com. Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, (201) 748-6011, fax (201) 748-6008, or online at www.wiley.com/ go/permissions. Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and speciﬁcally disclaim any implied warranties of merchantability or ﬁtness for a particular purpose. No warranty may be created or extended by sales representatives or written sales materials. The advice and strategies contained herein may not be suitable for your situation. You should consult with a professional where appropriate. Neither the publisher nor the author shall be liable for damages arising herefrom. For general information about our other products and services, please contact our Customer Care Department within the United States at (800) 762-2974, outside the United States at (317) 572-3993 or fax (317) 572-4002. Wiley publishes in a variety of print and electronic formats and by print-on-demand. Some material included with standard print versions of this book may not be included in e-books or in print-on-demand. If this book refers to media such as a CD or DVD that is not included in the version you purchased, you may download this material at http://booksupport.wiley.com. For more information about Wiley products, visit www.wiley.com. Library of Congress Cataloging-in-Publication Data Names: Reed, Sandra M., author. Title: A guide to the human resource body of knowledge / Sandra Reed. Description: Hoboken, New Jersey : John Wiley & Sons, Inc., | Includes bibliographical references. | Identiﬁers: LCCN 2017007870 (print) | LCCN 2017013310 (ebook) | ISBN 9781119374893 (pdf) | ISBN 9781119374916 (ePub) | ISBN 9781119374886 (cloth) | ISBN 9781119374930 (oBook) Subjects: LCSH: Personnel management. Classiﬁcation: LCC HF5549 (ebook) | LCC HF5549.R447 2017 (print) | DDC 658.3–dc23 LC record available at https://lccn.loc.gov/2017007870 Printed in the United States of America 10 9 8 7 6 5 4 3 2 1 WEBFFIRS 04/03/2017 18:59:21 Page v As always, I must dedicate this work to C3, who continue to be the inspiration for every single decision I make. To Christopher, thank you for believing in me and celebrating the big moments in my life, even when I stubbornly cling to my wallﬂower status. To my Rowdy friends, thank you for force-feeding me balance (and alternative housing in rainstorms) when I need it the most. Each of you has given me a particular type of love, support, and encouragement, allowing me to live a life of passion. My wish for each of you is an abundance of the same. WEBFFIRS 04/03/2017 18:59:21 Page vi WEBFTOC 04/03/2017 16:20:14 Page vii Contents Acknowledgments xi Acknowledgments from the First Edition xiii About the Author xv Foreword HR Rising to the Opportunity Dave Ulrich xvii HR Career Mosaic HR Certiﬁcation and Competencies Conclusion Notes xviii xix xxiii xxiii Chapter 1 The Human Resource Body of Knowledge: HRBoKTM The Building Blocks The HR Profession The Age of Organizational Behavior Structuring Human Resource Departments The Development of HR Competencies HRBoK TM Notes Chapter 2 Business Management and Strategy Introduction General Business Principles HR as a Strategic Partner Organizational Development (OD) The Role of HR Suggested Study or Organizational Audit Activities References vii 1 1 4 10 11 17 31 32 33 33 35 51 80 98 106 106 WEBFTOC 04/03/2017 viii 16:20:14 Page viii Contents Chapter 3 Workforce Planning and Employment Introduction Workforce Planning: A Cascading Strategy Recruiting: Characteristics of People The Separation Process Metrics Succession Planning Global Workforce Planning Suggested Study or Organizational Audit Activities Notes References 109 111 111 124 156 157 160 161 169 170 170 Chapter 4 Human Resource Development Introduction Employee Training Theories of Motivation Instructional Design Talent Management Employee Development Metrics Suggested Study or Organizational Audit Activities Case Study—Measuring Return on Investment in HR: A Global Initiative for HR Strategy, by Jack Phillips and Patti Phillips References 171 174 175 184 191 204 216 229 234 Compensation and Beneﬁts Case Study—Organizational Justice: The Case for Organizational Justice, by Katrina P. Merlini Introduction Strategic Compensation Designing Pay Systems Employee Beneﬁt Programs Compensation and Beneﬁts Outsourcing Expatriate Compensation Executive Compensation Metrics Suggested Study or Organizational Audit Activities 245 245 250 251 260 269 275 275 279 285 285 Employee and Labor Relations Introduction Managing the Employee-Employer Relationship Employee Communication and Feedback 287 288 289 296 Chapter 5 Chapter 6 235 243 WEBFTOC 04/03/2017 16:20:14 Page ix Contents Chapter 7 ix Discipline and Terminations Managing the Union Relationship Suggested Study or Organizational Audit Activities Note 300 306 317 317 Risk Management Introduction A Focus on Compliance Risk Assessments Injury and Illness Prevention Programs Return to Work Programs A Focus on Prevention Employee Communication and Safety Training Risk Management Techniques Metrics Suggested Study or Organizational Audit Activities 319 321 322 323 331 335 336 347 347 348 348 Appendix A Alphabetical Listing of Legal Issues Afﬁrmative Action Plans (AAPs) Age Discrimination in Employment Act of 1967 (ADEA) Americans with Disabilities Act of 1990 (ADA) Australian Federal Privacy Act of 1988 Civil Rights Act of 1964 (Title VII) Common Law Doctrines Copyright Act of 1976 Davis-Bacon Act of 1931 Drug-Free Workplace Act of 1988 EEO Survey Employee Retirement Income Security Act of 1974 (ERISA) Executive Orders Fair Credit Reporting Act of 1970 (FCRA) Fair Labor Standards Act of 1938 (FLSA) Family and Medical Leave Act of 1993 (FMLA) Foreign Corrupt Practices Act of 1977 Genetic Information Nondiscrimination Act of 2008 (GINA) Glass Ceiling Act of 1991 Illegal Immigration Reform and Immigrant Responsibility Act of 1996 (IIRIRA) Immigration Reform and Control Act of 1986 (IRCA) International Labour Organization (ILO) International Trade Organizations Mine Safety and Health Act of 1977 (MSHA) 351 351 357 359 361 361 365 369 370 370 371 374 381 382 383 395 408 409 410 411 411 414 415 416 WEBFTOC 04/03/2017 16:20:14 Page x x Contents Occupational Safety and Health Act of 1970 (OSHA) Organisation for Economic Co-operation and Development (OECD): Guidelines for Multinational Enterprises (MNEs) Patient Protection and Affordable Care Act of 2010 (PPACA, ACA, Obamacare) Pension Protection Act of 2006 (PPA) Privacy Act of 1974 Privacy Shield and Safe Harbor Frameworks Rehabilitation Act of 1973, Sections 501, 503, and 505 Sarbanes-Oxley Act of 2002 (SOX) Service Contract Act of 1965 (SCA) Sexual Harassment Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA) United Kingdom Bribery Act of 2010 United States Patent Act of 1790 Wage Garnishment Law, Federal Walsh-Healey Public Contracts Act of 1936 Worker Adjustment Retraining and Notiﬁcation Act of 1988 (WARN) Workers’ Compensation Quick Reference Guide: Agencies, Court Cases, Terms, and Laws; General Record-Keeping Guidelines 417 430 431 432 432 433 434 434 435 435 439 442 442 443 443 444 445 446 Appendix B Four Steps to Domestic Certiﬁcation 457 Appendix C Four Steps to Global Certiﬁcation 461 Appendix D Some Questions You May Have About Form I-9 465 Appendix E Sample Afﬁrmative Action Plan 477 Appendix F OSHA Form 300 515 Appendix G HRCI’s Ethical Standards Professional Responsibility Professional Development Ethical Leadership Fairness and Justice Conﬂicts of Interest Use of Information 529 529 530 530 530 531 531 Appendix H Glossary of Terms 533 Index 573 WEBFACK 04/03/2017 18:49:5 Page xi Acknowledgments The industry of human resources (HR) has many voices, several of which are repre sented in this work. The construction and deconstruction of the ideas contained here are intended to be a reﬂection of the work of passionate and dedicated HR practitioners around the globe. While sure to inspire conversation and debate, the primary purpose of this volume is to serve those practitioners—guiding new careers, providing insights on the application of HR principles, accompanying the preparation efforts of certiﬁca tion seekers, and offering perspectives on the past, present, and future of our ﬁeld. Critical to these aims are the subject matter experts who juggled tight dead lines, travel commitments, teaching and work schedules, the holidays, sickness, and my incessant e-mails and questions in review of the content for accuracy and clarity. While any errors to the content are certainly my own, I offer my sincere thanks to the following reviewers for their thoughtful guidance and expertise: Pantelis Markou, PhD Vice President of Human Resources, Adjunct Professor of Business Psychology Mikimoto America Co. Ltd. Cameron Evans, JD President Evans Law Group, PC Dr. Rita Fields, SHRM-SCP Associate Professor of Management, Madonna University Workforce Strategist, Copper Phoenix Consulting, LLC Karla J. Kretzschmer, SPHR Owner Karla K Enterprises, LLC Joan E. Moore, JD, SPHR President The Arbor Consulting Group, Inc. Roger Herod, SPHR Global Mobility Consultant Tracy Jimenez, JD Consultant The Arbor Consulting Group, Inc. Lee S. Webster, SPHR, GPHR Director, Employee Relations University of Texas Medical Branch at Galveston xi WEBFACK 04/03/2017 xii 18:49:5 Page xii Acknowledgments I often joke about geeking out over those who have had a signiﬁcant impact on my career or helped shape my thinking. In this way, having Dave Ulrich write the Foreword to this book was a career highlight. My ﬁrst read of his book The HR Value Proposition many years ago helped root within me the goal of educating HR professionals on how to be the most valuable players within any organization. My abundant thanks for his patience and ﬂexibility with the schedule, and generosity in sharing his profound insights with us in this text. Additionally, many thanks to Andy Fleming of Way to Grow, Inc. for a delightful conversation where he shared with me his thoughts regarding twenty-ﬁrst-century employee development. His work is well worth a deep dive beyond the scope of this publication. The professionalism and thoroughness of the case study provided by Jack and Patti Phillips from the ROI Institute is an excellent example of why their group has set the standard for measuring business outcomes. Katrina P. Merlini’s phenomenal case study on the important concept of organizational justice is also well worth the time it takes to digest, and I am indebted to her for her professional courtesy and contribution to my lifelong learning objectives in the area of industrial-organizational (I-O) psychology. Navigating the ins and outs of the publishing process would have been impossible without the direction, guidance, and project management skills of Jeanenne Ray at John Wiley & Sons. I always picture her in my mind at her desk pressing buttons, ﬂipping toggles, and pulling levers, working her magic to keep our project on track. Additionally, the optimism and hard work of Chris Webb were instrumental in getting this manuscript from concept to launch—many thanks to Jeanenne, Chris, and their team at Wiley. Finally, I must acknowledge the dedication of the leaders at the HR Certiﬁcation Institute®. Their vision for our industry is unﬂinchingly represented by the precision and excellence of their core staff; their commitment to the principles of the profession of HR is a testament to why HRCI® has and will continue to lead the certiﬁcation efforts of HR practitioners across the world. It was a pleasure working with Amy Dufrane, CEO, Kerry Morgan, Rebecca Hastings, Inga Fong, and the many others I came into contact with through the course of this manuscript development. Thank you for the opportunity to serve the HR community through this work. WEBFACK01 04/03/2017 18:51:43 Page xiii Acknowledgments from the First Edition The process of building out the Human Resource Body of KnowledgeTM (HRBoKTM) is evolutionary, requiring the time and attention of many practitioners. I would be remiss if I failed to acknowledge the professionalism and expertise of those that worked on the inaugural edition of this guide. HR Certiﬁcation Institute® (HRCI®) recognizes and thanks the many individuals who assisted with the creation of the ﬁrst edition of the HRBoK Guide. The following individuals comprised the HRBoK Working Group: Chair: John D. Varlaro, PhD, MBA, SPHR, GPHR Vice Chair: Linda J. Haft, MS HRM, SPHR, CCP Subgroup Leaders: Business Management and Strategy: Javiel Lopez, SPHR, MS Workforce Planning and Employment: Human Resource Development: Lynda D. Glover, MA, SPHR Compensation and Beneﬁts: Alisa Guralnick, SPHR Employee and Labor Relations: Karla M. Knowlton, MAOM, PHR, GPHR Risk Management: Nancy L. Hill-Davis, MHSA, MJ, SPHR, CHHR Lori L. Rolek, SPHR Working Group Members: Amy Gulati, GPHR, SPHR, PHRca, CPDM Armando A. Villasana, MBA, PHR Diana Kroushl, SPHR Doris M. Sims, SPHR Gary W. Sexton, SPHR, CLRS Kathusca Johnson, PHR xiii WEBFACK01 04/03/2017 xiv 18:51:43 Page xiv Acknowledgments from the First Edition Lee S. Webster, JD, MBA, SPHR, GPHR Lin Little, SPHR Lori S. Goldsmith, SPHR, GPHR Pantelis Markou, PhD Q VanBenschoten, MBA, SPHR, CFE Rafael M. Uzeda de Oliveira, CHRL, PHR, GPHR Roland C. Howell, SPHR, GPHR Ron Drafta, CIH, CSP, SPHR Sharon L. Beaudry, JD, SPHR Shiva Dubey, MBA, CCP, GRP, PHR Stephen I. Otterstrom, SPHR Sue S. Stalcup, SPHR, LPC-MHSP Victoria Clavijo, SPHR Project Consultant Team: PSI Services Rory E. McCorkle, PhD, MBA, SPHR, CAE, NPDP Beth Kalinowski, MBA, SPHR Siddiq Kassam, MS Alexandra Kassidis Melissa McElroy HRCI HRBoK Team: Amy Dufrane, EdD, SPHR, CAE, CEO Linda K. Anguish, SPHR, GPHR Rebecca R. Hastings, SPHR, PHRca Inga Y. Fong, SPHR, GPHR Naomi M. Cossack, SPHR, PHRca WEBFABOUT 04/03/2017 18:46:39 Page xv About the Author Sandra M. Reed, SPHR, is a leading expert in the certiﬁcation of human resource professionals, and has had 20 years of practical HR experience. She is the author of the fourth edition of the PHR/SPHR: Professional in Human Resources Certiﬁcation Study Guide and PHR/SPHR Exam For Dummies. Sandra is a sought-after, engaging facilitator of human resource and management principles, with a strong focus on strategic business management and employee development. She is currently the owner of epocHResources, a management and consulting group based in California. She holds a bachelor of arts in applied psychology with an emphasis on industrial-organizational (I-O) psychology from Florida Tech University and an adult vocational teaching credential from California State University, San Bernardino. She has been SPHR certiﬁed since 2007. xv WEBFABOUT 04/03/2017 18:46:39 Page xvi WEBFINTRO 04/03/2017 16:24:28 Page 17 Foreword HR Rising to the Opportunity Dave Ulrich Rensis Likert Professor of Business at the University of Michigan and Partner, the RBL Group The professionals who commit to helping organizations and people succeed through human resource (HR) practices have impact because they recognize and respond to the unprecedented opportunities available in today’s business world. This exceptional volume holds the Human Resource Body of Knowledge (HRBoKTM), offering both conceptual frameworks and practical tools to enable HR professionals. Let me set the context for the opportunities implicit in this work with three simple tenets. First, it is a great time to be in HR. HR is not about HR, but about helping organizations and individuals in organizations be more successful. Organizational success includes investor conﬁdence (evidenced by market value), customer com mitment (evidenced by customer share), and community reputation (evidenced in social responsibility). Individual success includes measures of productivity (evi denced by output/input indicators), as well as personal well-being (evidenced by sentiment indicators). Four forces make HR more central to organization and individual success: the context of business: social, technological, economic, political, environmental, and demographic changes (STEPED); the increased pace of change: volatility, uncer tainty, complexity, ambiguity (VUCA); the demise of employee well-being (individ uation, isolation, indifference, intensity); and the requirement to be outside-in (attend to customers, investors, and communities). Collectively, these four forces shift HR to center stage of organizational and individual success. Competitors can access and match ﬁnancial resources, strategic insights, and technological xvii WEBFINTRO 04/03/2017 16:24:28 xviii Page 18 Foreword: HR Rising to the Opportunity platforms. HR issues around talent, leadership, and capability become differentiators that are more difﬁcult to copy, but critical to success. Because HR is not about HR, HR analytics are less about an HR scorecard, and more about how HR practices and HR professionals impact business results. For example, increasingly HR insights are less about innovations on how to hire, train, or pay people, and more about how the hiring, training, or compensation choices impact and deliver value to stakeholders outside (e.g., customers, investors) and inside (employees) the organization. These business-based analytics provide lead ers with information to make more informed choices about HR practices, and HR professional standards become clearer. It is a great time to be in HR because HR matters more than ever in the value creation process. Second, we know what it takes to be successful. As the HR profession evolves, it becomes more evident how to be a successful HR professional, both in terms of managing a career and in terms of developing competencies that matter. HR Career Mosaic When diagnosing choices that make up an HR career, there has been an evolution from a career stages (stage 1, 2, 3) logic to a career mosaic based on two questions: 1. Where do you work? There are four choices where HR professionals can work (generalist, specialist, geography commitment, or outside HR). 2. What level or type of work do you do? There are three levels, each with increasing scope for HR work (individual contributor, manager, or leader). These two questions shape an HR mosaic so that HR professionals may create a personal career path that works for them (see Figure F.1). Within this mosaic, HR professionals may embark on a number of career paths as evidenced in the options in Figure F.1. Three examples of HR career paths are: Functional specialist (1, 2, 3, 4) These HR professionals take increasingly senior jobs within a functional expertise (e.g., compensation, training, organization devel opment, labor relations). With each career move (1, 2, 3, 4), they expand their scope within their chosen functional expertise. Specialist to generalist (A, B, C, D, E) These HR professionals move from specialist to generalist world and back again (with a stint in geography). As they move back and forth, they gain awareness of the types of HR work. Broad-based experience (a, b, c, d, e) These HR professionals have careers that offer broad exposure and experience, including work outside the HR function (e.g., WEBFINTRO 04/03/2017 16:24:28 Page 19 Foreword: HR Rising to the Opportunity xix Figure F.1 HR Career Mosaic in operations, marketing, or consulting). They are likely to be seen as business experts who happen to work in HR. Obviously, within this mosaic a host of other career paths exist. The HR career mosaic reﬂects choices HR professionals make about how to manage their careers. HR Certiﬁcation and Competencies HR certiﬁcation ensures that HR professionals know the body of knowledge (theory and research) that underlies HR. Certiﬁcation validates base knowledge and ensures that HR professionals are legitimate. This volume offers exceptional insights into the certiﬁcation requirements in six areas of HR functional expertise: 1. 2. 3. 4. 5. 6. Business management and strategy Workforce planning and employment Human resource development Compensation and beneﬁts Employee and labor relations Risk management Becoming certiﬁed in these areas enables HR professionals to deliver insights that will have impact. In addition, HR professionals need to be competent. There are an increasing number of HR competency models created by HR associations and by organizations WEBFINTRO 04/03/2017 xx 16:24:29 Page 20 Foreword: HR Rising to the Opportunity working to upgrade their HR professionals. Having researched and published on HR competencies for 30 years (primarily with Professor Wayne Brockbank from the University of Michigan, but also with many exceptional colleagues), we have identiﬁed four principles of deﬁning the right HR competencies.1 1. HR competence deﬁnition is not the goal; deﬁning HR competencies that create positive outcomes is the goal. Most competency models ask the question “What are the competencies of HR professionals?” This is the wrong question. The question should be: “What are the competencies of HR professionals that have greatest impact on business performance?” We have shown that different HR competencies have differential impact on three outcomes: personal effective ness of the HR professional, impact on key stakeholders, and business results. HR is not about HR, and HR competencies are not about the competencies, but about how they deliver key outcomes. 2. HR competencies are determined less by self-report and more by how those competencies are perceived by others. HR competencies should be assessed not only by the HR professional but by those who observe the HR professional. People generally judge themselves by their intent; others judge them by their behavior, so it is important to evaluate both intent and behavior. 3. Global HR competencies exist, but they also may vary by geography, industry, size of organization, level in the organization, role in the organization, gender, time in role, and so forth. We empirically show that 50 to 60 percent of HR competences are essential to all circumstances, and then 40 to 50 percent vary by setting. 4. Key HR competencies change over time. Having done seven rounds of major studies over 30 years with a total of more than 100,000 respondents, we can say with some certainty that every four to ﬁve years, 30 to 40 percent of HR competencies evolve. For example, in recent rounds of our research, we have seen a rise in the importance of HR technology and HR analytics. In our most recent research, we identiﬁed nine competencies for being an effective HR professional, as shown in Figure F.2.2 Table F.1 summarizes the key questions and our ﬁndings from this recent research. In brief, we know what it takes to be successful in HR. Regardless of career path, HR professionals require a combination of certiﬁcation and competence. Certiﬁca tion gives one a license to act; competence ensures the right actions. Third, HR professionals can rise to their opportunities. Through hundreds of HR interventions, we have learned how to be a better HR professional and how to build better HR professionals. In both cases, there are four steps to upgrading HR professionals. First, create a theory or standard of what it means to be effective. The six domains of certiﬁcation in this volume and the example of HR competencies cited earlier suggest a standard of what it means to be or build effective HR. The “be, know, and do” of these expectations may become a standard for effective HR. WEBFINTRO 04/03/2017 16:24:29 Page 21 Foreword: HR Rising to the Opportunity xxi Figure F.2 2016 HR Competency Model—Round 7 Second, assess HR professionals against the standards and behaviors. Some of this assessment may come from personal proﬁling, and some may come from 360-degree assessments. These assessments highlight strengths that can be built on and weaknesses that can be overcome. People are more likely to change when they have clarity about what to improve. Third, improve HR professionals through a host of development experiences. We have organized these development experiences into three categories. First, work experiences come when HR professionals take on new and demanding assignments, work on special projects, and/or receive coaching. Most learning comes from personal experience with trial and error. Second, training and devel opment experiences come from learning in more structured education settings. Training is more effective when it emphasizes learning solutions, adapts to different learning styles, is focused on speciﬁc business challenges and personal behaviors, and is measured by accountable impact. Third, people learn from life experience. Some of life experience can be structured, such as using corporate philanthropy as a leadership development opportunity (e.g., IBM service corps offers aspiring leaders a way to learn by participating in IBM’s community service). But many life expe riences create incredible forums for learning, such as raising children, participating in community organizations, traveling to new countries, reading and exploring new WEBFINTRO 04/03/2017 xxii 16:24:31 Page 22 Foreword: HR Rising to the Opportunity Table F.1 Key Questions and Overall Findings from HR Competency Research Key Question Overall Finding 1. What are the competencies of HR professionals, and how do they differ by individual and organizational context? 2. What competencies do HR professionals require to be personally effective (i.e., to be invited “to the table”)? 3. When engaged “at the table” (in business discussions) and HR professionals represent themselves, what competencies are required to add value to key stakeholders? 4. When engaged “at the table” (in business discussions) and HR professionals represent the HR department’s practices and policies, what competencies are required to add value to key stakeholders? 5. What competences do HR professionals require to drive business results? 6. What is the relative importance of the competencies of HR professionals versus the activities of the HR department in driving business results? Nine overall competency domains Three core drivers; three strategic ena blers; three foundational enablers Be a credible activist who builds relationships of trust and takes advocacy positions. If inside (employee, line), be a credible activist. If outside (customer, investor), be a stra tegic positioner. For the most part, the competencies of individual HR professionals that have an impact on stakeholder outcomes are the same as the collective competencies of HR professionals, with a few exceptions (culture, change, and analytics) where the collective competencies have business impact. Navigate paradox (manage tension and divergent-convergent cycle), followed by strategic positioner and technology and media integrator. Recognize the importance of the HR department (about four times the impact of the individual on business results). Build capabilities (information/external sensing, speed, culture, collaboration, efﬁciency, customer responsiveness). ideas, representing one’s organization to public audiences, and simply being an active observer of one’s world. Each HR professional should have an individual development program that lays out a road map to becoming a better HR professional. Each HR department should be investing in HR professional development either through HR career manage ment (see previous discussion), through HR academies for HR professionals, or through other HR development opportunities. Fourth, evaluate HR improvement. Wanting to change indicates a desire, but without measures to track change, desires often languish. To rise to their opportu nities, HR professionals should track not only their personal improvements, but the WEBFINTRO 04/03/2017 16:24:31 Page 23 Foreword: HR Rising to the Opportunity xxiii impact of these improvements on desired outcomes. Personal change can be monitored through sequential 360-degree assessments that track how others perceive change. Organization change can be tracked through the impact of HR on desired outcomes. For example, we have created the leadership capital index that offers investors a way to measure how HR impacts investor value. These four steps essentially propose HR for HR. Often HR encourages leaders and others to deﬁne, assess, improve, and evaluate in order to grow. When HR professionals apply the same logic to themselves, they can make real progress. Conclusion What is the hope for the ideas in this book? To help HR practitioners, academics, and thought leaders deliver more value from a shared set of best practices and benchmarks. Whether you are a student of HR, an international HR professional, a seasoned practitioner, or a professional inﬂuencer, it is indeed a great time to be in HR. We know what it takes to be successful, and because of this, HR professionals can be valued business partners by rising to the opportunities. Notes 1. Dave Ulrich, Wayne Brockbank, Mike Ulrich, and Dave Kryscynski, “Toward a Synthesis of HR Competency Models: The Common HR ‘Food Groups’ or Domains,” People and Strategy 4 (Fall 2015): 56–65. 2. Dave Ulrich, David Kryscynski, Mike Ulrich, and Wayne Brockbank, Victory through Organization: Why the War for Talent Is Failing Your Organization and What You Can Do about It (New York: McGraw-Hill, 2017). WEBC01 04/02/2017 4:18:5 Page 1 A Guide to The Human Resource Body of KnowledgeTM (HRBoKTM), First Edition. Sandra M. Reed.  2017 by Human Resources Certiﬁcation Institute, Inc. Published 2017 by John Wiley & Sons, Inc. 1 The Human Resource Body of Knowledge HRBoK TM The way organizations of today utilize the human resource (HR) department tells the story of HR. Some companies continue to view HR as personnel departments and compliance ofﬁcers, managing the transactions of payroll, processing new hire paperwork, and terminating nonperformers. The second type of company uses human resources to its strategic advantage. Organizations of the second type recognize and support the valued contributions of a high-functioning HR depart ment, delivering outcomes through people management, group management, and ultimately the management and understanding of the organization as a whole (see Figure 1.1). The Building Blocks The inconsistencies in the ways companies use their HR competencies mirror nearly perfectly the evolution of the profession. As the business landscape has changed, the HR industry has changed as well, and some businesses and industries have been better at keeping the two aligned than others. The early twentieth century was characterized by enormous growth in industri alization and the country’s labor pool. Large factories in the northern states expanded beyond textiles and into the middle states, creating a boom of work and many lifetime jobs. This industrialization required more workers, and the European immigrant population from countries such as Italy and Hungary grew as a result. Railroads expanded, decreasing the cost of transportation. Workers 1 WEBC01 04/02/2017 2 4:18:5 Page 2 A Guide to the Human Resource Body of KnowledgeTM Figure 1.1 Human Resource Management continued to organize for better working conditions. Human resources had a new job, and it was the industrial relations manager—relations with labor unions and interactions between humans and processes, and between humans and machines. Industrial Relations The relationship between an employer and its employees The relationship between the management of an industrial enterprise and its employees, as guided by speciﬁc laws and regulations Automating manufacturing processes fostered the development of mass pro duction, bringing a whole new perspective to the workplace. For the ﬁrst time, U.S. businesses had to think about managing full-scale operations and the people it took to perform them. How should large companies be structured? How should the work be organized? How should people be managed? Personnel became a staff unit, an independent department whose job was to advise all line management functions. WEBC01 04/02/2017 4:18:6 Page 3 The Human Resource Body of Knowledge 3 It wasn’t just businesses that were seeking answers. The government took a keen interest in the way these taxpaying giants were behaving, and began inﬂuencing how businesses would be run through laws. HR added new responsibili ties to its job description: policy maker and compliance ofﬁcer. Staff Units People who support line management Work groups that support the major business of an organization with activities such as accounting, customer service, maintenance, and personnel Line Management People who create revenue for organizations Work groups that conduct the major business of an organization, such as manufacturing or sales Compliance Obedience, conforming Following established laws, guidelines, or rules As companies evolved and thought leaders of the day discovered that busi nesses could signiﬁcantly inﬂuence individual employee behavior to achieve strategic goals, the transactional nature of HR work was not enough. Everything was in motion, with a mix of moving targets made up of the competitive and the resource management needs of the business (ﬁnancial, physical, and knowledge). HR began to address the interpersonal skills of the workforce, applying principles of communication, leadership, and team-building skills. The human relations role of HR came to be. As the market deepened into international waters and competition increased, it became essential to employers that they ﬁnd, develop, and retain key talent, adding the development and management of a human capital strategy to HR’s increasingly important role. Human Capital Strategy Employment tactics, plan for managing employees Methods and tools for recruiting, managing, and keeping important employees WEBC01 04/02/2017 4 4:18:6 Page 4 A Guide to the Human Resource Body of Knowledge The academic and scientiﬁc communities were experiencing momentum similar to that of other industries. As technological and economic progress was made in the workplace, psychology and the social sciences were creating a bank of empirical evidence on how best to manage organizational, individual, and group performance through systematic interventions. This work formed the basis for industry best practices around organizational development. Enter HR as the behavioral scientist. Organizational Development Planned process to improve an organization Planned process that uses the principles of behavioral science to improve the way an organization functions Finally, the globalization of the workforce and business structures created a need for HR practices across geographic borders. Decreased trade barriers, the search for new markets, the rapid development of technology, and the rise of e-commerce platforms have all contributed to the internationalization of business. HR was tasked with international human resource management (IHRM) strategies— adapting home country practices to global conditions. It was and continues to be clear that the evolved HR role of industrial relations, compliance, human relations, strategy, organizational development, and IHRM has formed a powerful discipline from which organizations could push their competitive performance. The HR Profession In the late 1960s, a study by Cornell University found that a profession is deﬁned by ﬁve main characteristics.1 They were: 1. 2. 3. 4. 5. A profession must be full-time. A profession must have a national professional association. A profession must have a certiﬁcation program. A profession must have a code of ethics. Schools and curricula must be aimed speciﬁcally at teaching the basic ideas of the profession, and there must be a deﬁned common body of knowledge. Based on this, the American Society of Personnel Administration (ASPA) began to design a formal human resource profession, seeking to frame the context from which the practice would be performed. These activities included organizing the WEBC01 04/02/2017 4:18:6 Page 5 The Human Resource Body of Knowledge 5 existing academic principles into a formal program to teach human resources. It gave inﬂuence to the formal association of the ASPA, which morphed eventually into what is now the Society for Human Resource Management (SHRM). A code of ethics was adopted, serving to guide the highest standards of professional behav iors. In 1973, the ASPA Accreditation Institute (AAI) was formed to meet the professional certiﬁcation requirements. The ﬁrst certiﬁcation exams were given in 1976. The AAI as we know it today is called the Human Resource Certiﬁcation Institute® (HRCI® ). All of these efforts served to create the six domains of human resource management (HRM). The foundation of human resources is built upon the human resource body of knowledge—the HRBoKTM. HR Human Resources Function within an organization that focuses on implementing organizational strategy, as well as recruiting, managing performance, and providing direction for the people who work in the organization The Six Domains This book is organized according to the six domains of human resources that are rooted in HR’s origins, but have evolved to reﬂect current conditions. These domains are reviewed in more detail next. Business Management and Strategy The domain of business management and strategy (BMS) is the area where HR experts look at the organization as a whole while establishing goals and outcomes for its parts. It is the foundation for all other HR activities, providing macro-level direction through strategy development and operational direction through busi ness management. The goal of this domain is to develop and support the company’s mission, vision, and values. HR is expected to shape policies and HR programs around the company identity and employer brand while supporting the behaviors that achieve strategic goals and objectives. All of the aforementioned outcomes are served when HR professionals are adept at managing change on a local and global scale, and being accepted as organizational leaders (see Figure 1.2). WEBC01 04/02/2017 6 4:18:6 Page 6 A Guide to the Human Resource Body of Knowledge Figure 1.2 The Inﬂuence of Contemporary HR Workforce Planning and Employment If BMS is strategically focused, the domain of workforce planning and employment (WPE) is operationally focused. This is where HR practitioners are experts in recruitment, selection, and employee separation. These two practices are the bookends of the life cycle of the employee; the other domains address all areas in between (see Figure 1.3). Key to all the activities of HR in this domain is alignment: Aligning jobs to company goals and activities. Using the principles of job design, HR supports productivity outcomes through work ﬂow analysis. WEBC01 04/02/2017 4:18:7 Page 7 The Human Resource Body of Knowledge 7 Figure 1.3 The Employee Life Cycle Aligning jobs to people and people to organizations. This is known as ﬁt. HR uses both job and company data to predict the success of new hires and separate those with poor ﬁt. Aligning resources to strategy. By systematically reviewing company business plans and strategies, HR determines the human capital requirements to achieve business goals. This includes both stafﬁng up and downsizing. Human Resource Development In the domain of human resource development (HRD), HR supports organizational strategies through managing performance. It begins with conducting needs assess ments to identify gaps between current performance and the desired state. This is followed by building programs that address the gaps. These programs may be people oriented, such as performance management systems and leadership devel opment, or process oriented, such as through quality initiatives. Additionally, the management of individuals requires expertise in motivating adults to do the work, developing tools beyond the paycheck. Understanding how WEBC01 04/02/2017 8 4:18:8 Page 8 A Guide to the Human Resource Body of Knowledge employees learn and paying attention to what employees need form the basis for employee training and development activities. Compensation and Beneﬁts While compensation and beneﬁts (CAB) are not the sole motivating factors for workers, poor management of the programs results in highly dissatisﬁed workers. CAB programs are heavily inﬂuenced by the concepts of equity and loyalty: Perceptions of justice are very closely linked to CAB programs. Compensation and beneﬁts programs increase employee loyalty. Both of these concepts are linked with the psychological contract: the mutual expectation of an exchange of fair behaviors, implied and codiﬁed over time through experience. Employers expect employees to do their best work, remain loyal, and stay until work is completed. Employees expect fair pay, promotions, and job security. Psychological Contract Beliefs that inﬂuence the employee-employer relationship An unwritten agreement of the mutual beliefs, perceptions, and informal obligations between an employer and an employee, which inﬂuence how they interact The reception other HR programs receive in terms of employee engagement and responsiveness must pass ﬁrst through the psychological veil of CAB programs. Additionally, employers need their CAB programs to remain competitive while dealing with increasing labor and health care costs. Employers pay a cost above and beyond employee base wages, and this burden must be factored into the design of all CAB programs to deliver a return on investment (ROI) and retain the company’s value (see Figure 1.4). Employee and Labor Relations Key to understanding and practicing human resources is knowing that each domain is connected and dependent upon the functioning of each department. When one domain of HR is dysfunctional, performance in the other domains is, to varying WEBC01 04/02/2017 4:18:8 Page 9 The Human Resource Body of Knowledge 9 Figure 1.4 CAB Balancing Act degrees, impaired as well. Perhaps in no other area is this as true as in employee and labor relations (ELR). The management of the relationship between the employer and the employee forms the energy of the company culture, the pulse of employee performance. The artful practice of communication is the conduit through which information ﬂows, and determines both the speed of transfer and the obstacles encountered along the way. It is in this domain that discipline and terminations are processed and manage ment under the watchful eye of an employee union is done. Both of these conditions may be fraught with emotion and conﬂict, requiring the true advocacy role of human resources to be practiced, serving the needs of both the employer and the employee. Risk Management Risk management (RM) is the domain of HR that manages employee health, safety, and security, along with protecting the employer from loss and liability. Identifying personnel as human assets, while impersonal, does give clarity to the need for protection. HR is tasked with protecting all assets of the organization, from the human to the physical and, in the twenty-ﬁrst century, the information assets for all stakeholders. Employers have a duty of care regarding their workers, and an obligation to protect the company from risk. Both are underscored by compliance with safety, security, and governance laws. WEBC01 04/02/2017 4:18:8 10 Page 10 A Guide to the Human Resource Body of Knowledge Education and prevention are at the heart of all RM programs. When employees understand the hazards associated with their work and are taught how to protect themselves from said hazards, then injuries, accidents, and near misses decrease. When ﬁnancial and purchasing accountability processes are developed, controls are introduced to protect assets. HR helps the companies they serve conduct risk assessments, working with internal and external experts to identify threats and build behavioral and environ mental controls to reduce exposure. Response plans must be built and tested for if (when) the controls fail, and reﬁned as conditions change. Stakeholder An interest holder in an organization A person, group, or organization that has a direct or indirect interest in the organization (for example, owners, investors, employees, suppliers, unions, or the community) The Age of Organizational Behavior Gary Vaynerchuk tweeted2 that a company environment is about the people, not about whether there is a foosball table in the break room; this is a great example of the bridge between human relations and organizational behavior (OB). By deﬁni tion, OB is both theory based and practically applied, using analytical techniques of people, group, and organizational factors. Kinicki and Fugate in their phenomenal book Organizational Behavior 3 deﬁned OB’s focus as managing people within and between individual, group, and organizational levels. Human relations formed in response to evidence that organizational behavior inﬂuences individual behavior. How people are treated, and how they think (perceive) they are being treated makes a difference in how they perform. For this reason, companies began investing and experimenting with the human side of production as opposed to focusing only on outputs. The quality of leadership, the way communication ﬂowed, and the way coworkers interact formed best practices to engage and retain a talented workforce. Capital is an interesting word meaning “wealth in the form of assets” (www.businessdictionary.com). This deﬁnition and that of human capital are rooted in possibility: If a company has ﬁnancial assets, it can direct those resources to solve problems. Similarly, if a company has a wealth of knowledge workers, it can deploy them to solve problems, take advantage of opportunities, and, ultimately, success fully compete in its market. A current or future employee with the right knowledge, skills, and abilities represents a company’s ultimate ability to both sustain its WEBC01 04/02/2017 4:18:8 Page 11 The Human Resource Body of Knowledge 11 existence and thrive by taking advantage of opportunities and reducing threats through the power of its people. The individual talents of the employees inﬂuence the overall competencies of a group, collectively accumulating to drive organiza tional performance.4 In this way, organizational behavior and human relations must drive the management of the human resources of public, private, and nonproﬁt businesses. This translates into the design of HR programs, policies, and processes that inﬂuences not only the behaviors of the people, but the behavior of the organization as well. Structuring Human Resource Departments In every sense, all managers are HR managers. They are responsible for making hiring decisions, providing performance feedback, making recommendations for training and promotions, and taking corrective action when necessary. As a company grows, these responsibilities may get lost or diluted under the increased burden of operations. Additionally, asking managers to keep track of the labor compliance factors—which become increasingly onerous as employers add staff— is unrealistic and risky. As the company grows, so does the need for a structured human resource department. A quick Google search of the phrase “human resource job titles” resulted in these ﬁrst ﬁve: 1. 2. 3. 4. 5. Category Manager, HR Chief Happiness Ofﬁcer Chief Human Resources Ofﬁcer Chief People Ofﬁcer Client Facing Human Resources Specialist There is some speculation that “human resource” is out of date in a job title, failing to reﬂect the complex roles and responsibilities of this discipline. This is evidenced by the ﬁve job titles listed, but also by a growing trend by large companies such as UPS, Adobe, and Airbnb to include “employee experience” in the titles and job responsibilities of their HR talent. Regardless of what they are called, most companies staff their human resource departments based on the total number of employees. Typically, a company will hire someone to focus solely on human resource tasks when it reaches 80 employ ees. While the ﬁrst hire could be administrative, operational, or strategic, most midsize companies ﬁnd they need an operationally oriented hire to provide midlevel support. Priority tasks include managing payroll, recruitment, selection, and training. These roles are reviewed next. WEBC01 04/02/2017 12 4:18:8 Page 12 A Guide to the Human Resource Body of Knowledge Department of Labor, Bureau of Labor Statistics, RIASEC There are three resources in this section that are used to illustrate the talent structure of an HR department. They are: 1. U.S. Department of Labor (DOL) O∗NET. The DOL undertook a formal job analysis of nearly every job in the United States, collecting information from employers on job content, context, tasks, duties, responsibilities, work environ ment, and much more. This section calls upon the DOL’s ﬁndings to provide examples of how companies are utilizing their HR talent. 2. U.S. Bureau of Labor Statistics (BLS) Occupational Handbook Outlook. The BLS compiled and continues to provide regular updates to the outlook of jobs in the United States, including projected growth. 3. Holland’s RIASEC (realistic, investigative, artistic, social, enterprising, and con ventional) model of vocational choice. This model of personality demonstrates the interests of individuals who gravitate toward work in the HR ﬁeld. The DOL used the RIASEC to identify work interests. Holland believed six personality factors inﬂuence career choice. They are: 1. Realistic (doers) Realistic occupations frequently involve work activities that include practical, hands-on problems and solutions. They often deal with plants, animals, and real-world materials like wood, tools, and machinery. Many of the occupations require working outside, and do not involve a lot of paperwork or working closely with others. 2. Investigative (thinkers) Investigative occupations frequently involve working with ideas, and require an extensive amount of thinking. These occupations can involve searching for facts and ﬁguring out problems mentally. 3. Artistic (creators) Artistic occupations frequently involve working with forms, designs, and patterns. They often require self-expression, and the work can be done without following a clear set of rules. 4. Social (helpers) Social occupations frequently involve working with, com municating with, and teaching people. These occupations often involve helping or providing services to others. 5. Enterprising (persuasive) Enterprising occupations frequently involve starting up and carrying out projects. These occupations can involve leading people and making many decisions. Sometimes they require risk taking and often deal with business. 6. Conventional (organizers) Conventional occupations frequently involve following set procedures and routines. These occupations can include working with data and details more than with ideas. Usually there is a clear line of authority to follow. WEBC01 04/02/2017 4:18:8 Page 13 The Human Resource Body of Knowledge 13 Table 1.1 The RIASEC Model and Those Who Choose HR Doers: Thinkers: Creators: Helpers: Persuaders: Organizers: Realistic Investigative Artistic Social Enterprising Conventional Human resource manager Human resource specialist Training and development manager Compensation, beneﬁts, and job analysis specialists Payroll and timekeeping clerks X X X X X X X X X X X X X Source: U.S. Department of Labor, O∗NET. The RIASEC model and corresponding theory of vocational choice, when applied to the sample HR jobs listed in Table 1.1, reveal a trend in the types of folks attracted to the work of HR. This data should be used by organizers of a human resource department to ensure they get the right blend of talent into the depart ment, and consider any service gaps based on the current personality mix of the department and needs of the company. Human Resource Manager: Enterprising, Social, Conventional Characterized by the RIASEC as “persuasive helpers who like to organize,” human resource managers plan, direct, and coordinate the administrative functions of an organization. They oversee the recruiting, interviewing, and hiring of new staff; consult with top executives on strategic planning; and serve as a link between an organization’s management and its employees. Work Styles 1. Integrity Job requires being honest and ethical. 2. Stress tolerance Job requires accepting criticism and dealing calmly and effectively with high-stress situations. WEBC01 04/02/2017 4:18:8 14 Page 14 A Guide to the Human Resource Body of Knowledge 3. Leadership Job requires a willingness to lead, take charge, and offer opinions and direction. 4. Dependability Job requires being reliable, responsible, and dependable, and fulﬁlling obligations. 5. Initiative Job requires a willingness to take on responsibilities and challenges. Job Outlook Employment of human resource managers is projected to grow 9 percent from 2014 to 2024, faster than the average for all occupations. As new companies form and organizations expand their operations, they will need human resource managers to oversee and administer their programs, and to ensure ﬁrms adhere to changing and complex employment laws. Strong competition can be expected for most positions. Human Resource Specialist: Enterprising, Conventional, Social Human resource specialists recruit, screen, interview, and place workers. They often handle other types of human resource work, such as those related to employee relations, compensation and beneﬁts, and training. Tasks Human resource specialists perform tasks such as: Prepare or maintain employment records related to events, such as hiring, termination, leaves, transfers or promotions, using human resources manage ment system software. Interpret and explain human resources policies, procedures, laws, standards, or regulations. Hire employees and process hiring-related paperwork. Inform job applicants of details such as duties and responsibilities, compensa tion, beneﬁts, schedules, working conditions, or promotion opportunities. Address employee relations issues, such as harassment allegations, work com plaints, or other employee concerns. Job Outlook Employment of human resource specialists is projected to grow 5 percent from 2014 to 2024, about as fast as the average for all occupations. Human resource WEBC01 04/02/2017 4:18:8 Page 15 The Human Resource Body of Knowledge 15 specialists will be needed to handle increasingly complex employment laws and health care coverage options. Most growth is projected to be in the employment services industry. Compensation, Beneﬁts, and Job Analysis Specialists: Conventional, Enterprising Compensation, beneﬁts, and job analysis specialists conduct an organization’s compensation and beneﬁts programs. They also evaluate position descriptions to determine details such as a person’s classiﬁcation and salary. Work Styles 1. Integrity Job requires being honest and ethical. 2. Analytical thinking Job requires analyzing information and using logic to address work-related issues and problems. 3. Attention to detail Job requires being careful about detail and thorough in completing work tasks. 4. Dependability Job requires being reliable, responsible, and dependable, and fulﬁlling obligations. 5. Adaptability/ﬂexibility Job requires being open to change (positive or negative) and to considerable variety in the workplace. Job Outlook Employment of compensation, beneﬁts, and job analysis specialists is projected to grow 4 percent from 2014 to 2024, more slowly than the average for all occupations. Outsourcing compensation and beneﬁts plans to consulting ﬁrms will limit employ ment growth in most industries. Job prospects should be best for those with previous human resources work experience. Training and Development Managers: Conventional, Enterprising, Social Training and development managers plan, direct, and coordinate programs to enhance the knowledge and skills of an organization’s employees. They also oversee a staff of training and development specialists. WEBC01 04/02/2017 4:18:8 16 Page 16 A Guide to the Human Resource Body of Knowledge Tasks Training and development managers perform tasks such as: Prepare training budget for department or organization. Evaluate instructor performance and the effectiveness of training programs, providing recommendations for improvement. Analyze training needs to develop new training programs or modify and improve existing programs. Conduct or arrange for ongoing technical training and personal development classes for staff members. Plan, develop, and provide training and staff development programs, using knowledge of the effectiveness of methods such as classroom training, demon strations, on-the-job training, meetings, conferences, and workshops. Job Outlook Employment of training and development managers is projected to grow 7 percent from 2014 to 2024, about as fast as the average for all occupations. Job prospects should be very good, particularly in industries with a lot of regulation, like ﬁnance and insurance. Payroll and Timekeeping Clerks: Conventional, Enterprising Payroll and timekeeping clerks compile and record employee time and payroll data. They may compute employees’ time worked, production, and commissions, and may compute and post wages and deductions, or prepare paychecks. Tasks Payroll and timekeeping clerks perform tasks such as: Process and issue employee paychecks and statements of earnings and deductions. Compute wages and deductions, and enter data into computers. Review time sheets, work charts, wage computation, and other information to detect and reconcile payroll discrepancies. Compile employee time, production, and payroll data from time sheets and other records. Process paperwork for new employees and enter employee information into the payroll system. WEBC01 04/02/2017 4:18:8 Page 17 The Human Resource Body of Knowledge 17 From HR to Employee Experience As alluded to in the Introduction, HR has a bit of an identity crisis, and it’s no wonder with the rapid growth and elevation of business needs of the past several decades. The fracturing of the industry through manufactured or generic job titles has not served HR’s overall credibility well. Companies that don’t know how to use HR will not use HR. They will rely instead on the status quo: performance management systems that nearly everybody agrees are unsatisfactory, hope as a workforce strategy, and boxing HR into compliance and transactional exchanges between people. Of course, not all companies do this; many are tapping into the strategic competencies of their HR leaders to drive the change from “HR” to “employee experience.” The point is that HR leaders take control and participate in the adaptations of the HR profession where appropriate, lending their voices and best practices to mold the discipline, and committing to their own professional development through the activities described in the next section. The Development of HR Competencies Competencies are deﬁned as the knowledge, skills, and abilities (KSAs) necessary to do a job well. Senior leaders must be able to develop strategy and lead change. Generalists must have a working grasp on labor law. All HR staff must understand the fundamental activities of an HR department. Competencies The abilities needed to do well in a speciﬁc job The skills, behaviors, and knowledge that are needed to succeed in a speciﬁc job Human Resource Manager While no two companies have HR management needs that are exactly alike, there are fundamentals to the KSAs and work activities of a functional human resource depart ment. The following uses information from the DOL to identify the required compe tencies of an HR manager that apply across industrial, geographic, and other divides. Knowledge Personnel and human resources Knowledge of principles and procedures for personnel recruitment, selection, training, compensation and beneﬁts, labor rela tions and negotiation, and personnel information systems. WEBC01 04/02/2017 18 4:18:8 Page 18 A Guide to the Human Resource Body of Knowledge Clerical Knowledge of administrative and clerical procedures and systems such as word processing, managing ﬁles and records, stenography and transcription, designing forms, and other ofﬁce procedures and terminology. Administration and management Knowledge of business and management prin ciples involved in strategic planning, resource allocation, human resources model ing, leadership technique, production methods, and coordination of people and resources. Customer and personal service Knowledge of principles and processes for providing customer and personal services. This includes customer needs assess ment, meeting quality standards for services, and evaluation of customer satisfaction. Skills Active listening Giving full attention to what other people are saying, taking time to understand the points being made, asking questions as appropriate, and not interrupting at inappropriate times. Speaking Talking to others to convey information effectively. Reading comprehension Understanding written sentences and paragraphs in work-related documents. Critical thinking Using logic and reasoning to identify the strengths and weak nesses of alternative solutions, conclusions, or approaches to problems. Abilities Oral comprehension The ability to listen to and understand information and ideas presented through spoken words and sentences. Oral expression The ability to communicate information and ideas in speaking so others will understand. Written comprehension The ability to read and understand information and ideas presented in writing. Work Activities Communicating with supervisors, peers, or subordinates Providing information to supervisors, coworkers, and subordinates by telephone, in written form, by e-mail, or in person. WEBC01 04/02/2017 4:18:8 Page 19 The Human Resource Body of Knowledge 19 Getting information Observing, receiving, and otherwise obtaining information from all relevant sources. Interacting with computers Using computers and computer systems (including hardware and software) to program, write software, set up functions, enter data, or process information. Stafﬁng organizational units Recruiting, interviewing, selecting, hiring, and pro moting employees in an organization. Consider the KSAs and work activities in the context of hiring for this role. What job related preemployment tests might you use to predict success on the job? What interview questions might you write to determine ﬁt? What instrument would you use to measure oral expression and written comprehension? As the title search results suggest, organizations are grappling with how to best utilize current and developing competencies of the HR industry. The purpose of the HRBoK is to provide the blueprint from which the business and HR leaders of today may build out their HR culture: the cultivation of living things. Adopting the HRBoK throughout organizations and academia ensures consistency in the profes sion, weaving integrated patterns of knowledge and practice to affect organiza tional performance. HR must be an adaptive, learning industry, one with a neverending capacity for professional development and growth while still performing from best practice benchmarks. Degrees Most colleges and universities have robust human resource management programs from which formal degrees are available. It is worth using curriculum as a ﬁlter through which to understand what the academic community believes to be important elements to the practice of HR. For example, human resource undergrads at DePaul University will be edu cated in areas such as training and career development, compensation and beneﬁts, and recruitment and selection. Other required courses include labor economics, leadership and global human resource management, and organiza tional development. As you can see by the core requirements, the curriculum invests heavily in the ability of human resources to be proﬁcient in the six domains of the HRBoK while incorporating global inﬂuences within and outside of the United States. This includes viewing the competitive marketplace through the lens of a global organi zation. When this concept is applied to HR, it reﬂects the need for human resource WEBC01 04/02/2017 20 4:18:8 Page 20 A Guide to the Human Resource Body of Knowledge professionals to develop competencies in management of one labor market and all its diverse components. Global Organization An organization that views the world as one market An organization that views the whole world as one market, and does not divide it into separate markets by country Other universities run HR certiﬁcate programs, which develop student proﬁ ciencies in human resource and leadership through classes, workshops, and onsite training. Continuing an HR education is a best practice that serves the student, the employer, and the employees who are dependent upon the HR practitioner to take their role seriously. See Figure 1.5 for a view of the cascading transmission of HR and business knowledge and competencies from the sciences to the workplace. Professional Certiﬁcation: Seven and Strong Achieving professional human resource certiﬁcation is a mark of excellence and commitment. Certiﬁcation programs are different from certiﬁcate programs such as the ones offered at many universities. Certiﬁcation programs: Require speciﬁc experience and education. Require recertiﬁcation, making sure your skills stay up to date. Allow you to put the letters after your name. The credentials demonstrate mastery over the three e’s: education, experience, and an exam covering a body of knowledge and practical competencies to designate a person as a dedicated, credible practitioner. When hiring in the human resource ﬁeld, any one of HRCI’s seven credentials serves as a reference of talent within the scope of the HR discipline. While you can’t teach talent, you can certainly inﬂuence the exponential effect that professional certiﬁcation will have on a career. Talent without direction literally has no place to go. Professional certiﬁcation is an integral piece in a career management system that can address many of the moving parts of knowledge and competency that will serve an individual’s desire for a career path paved with excellence, conﬁdence, job satisfaction, and pay increases. If we can’t create a logical, systematic career path for ourselves, how will HR be able to do it for employees? WEBC01 04/02/2017 4:18:8 Page 21 The Human Resource Body of Knowledge 21 Figure 1.5 Transmission of Knowledge to Competencies Certiﬁcation A procedure to grant an ofﬁcial designation Conﬁrmation of speciﬁc achievements or characteristics given by an authority, usually by issuing a certiﬁcate or diploma after a test (continued ) WEBC01 04/02/2017 4:18:9 22 Page 22 A Guide to the Human Resource Body of Knowledge (continued ) Mastery Ability, expertise Great ability and knowledge of some subject or activity Credentials Certiﬁed documents, diplomas Proof of a person’s earned authority, status, or rights, usually in writing (for example, a university diploma, a digital certiﬁcation badge, or other proof of passing a professional exam) Career Management Planning and controlling the professional development of an employee Preparing, implementing, and monitoring the career path of employees, with a focus on the goals and needs of the organization The Importance of Accreditation Accreditation through the National Commission for Certifying Agencies (NCCA) for professional or personnel certiﬁcation programs provides validation from an impartial third party that the program has met recognized national and international creden tialing industry standards for development, implementation, and maintenance of certiﬁcation programs. The NCCA describes accreditation as the number one reason to choose one professional certiﬁcation over another. It’s important to note that there are only a few accrediting bodies (such as NCCA and ANSI) that evaluate a whole certiﬁcation program; others validate only the exam instrument itself. HRCI certiﬁcations are also the only accredited HR certiﬁcation program in the market, and have been in place for over 40 years. —from HRCI.org; Used with permission by Human Resource Certiﬁcation Institute, Inc. The NCCA standards were developed to highlight the essential elements of a high-quality program, focusing on the processes and products of certiﬁcation organizations. In order to be applicable to all professions and industries, the WEBC01 04/02/2017 4:18:9 Page 23 The Human Resource Body of Knowledge 23 NCCA standards do not evaluate exam content. The NCCA determined that program content validity is demonstrated with a comprehensive job analysis con ducted and analyzed by experts, with data gathered from experts and practitioners. HRCI’s certiﬁcation exam items and exam forms are developed and peer reviewed by subject matter experts with diverse HR experience developed in numerous indus tries, company sizes and levels of expertise. Each exam is built based on an exam blueprint (Exam Content Outline) which is developed through a structured, researchbased practice analysis study. All exams are competency-based and all but the aPHR are practice-based and require demonstrated professional-level HR experience. —from HRCI.org; Used with permission by Human Resource Certiﬁcation Institute, Inc. The Exams Headquartered in the United States, HRCI has been credentialing human resource professionals for decades. As an independent nonproﬁt organization, the company follows an accredited practice to certify human resources professionals over seven exams. These exams deliver upon HRCI’s vision that “People and organizations perform better because of us.” The bank of seven certiﬁcation exams is reviewed next.5 aPHR The newest of HRCI’s seven professional-level exams, the aPHR exam is appropriate for an entry-level HR practitioner with a high school diploma or global equivalent. It is also an excellent choice for someone who has been in human resources, but does not meet the exempt level requirement to test for one of the other exams. The aPHR exam content is sorted into six functional areas: 1. 2. 3. 4. 5. 6. HR Operations Recruitment and Selection Compensation and Beneﬁts Human Resource Development and Retention Employee Relations Health, Safety, and Security The tasks that may be expected of an aPHR candidate are represented in Table 1.2. Hiring a successfully credentialed aPHR candidate means that employers may rely on the new hire to perform many of the administrative duties of HR, from coordinating orientation, on-boarding, and training to maintaining data for employee record keeping throughout all functions of HR. Operationally, aPHR WEBC01 04/02/2017 24 4:18:9 Page 24 A Guide to the Human Resource Body of Knowledge Table 1.2 Typical aPHR Tasks Administrative Operational Strategic Access, collect, and provide information and data to support HR-related decisions (for example, recruiting, employee relations, training, safety, budgeting, needs analysis, off-boarding, termination) Maintain employee data in human resource information system (HRIS) or system of record Maintain, ﬁle, and process HR forms (for example, notices, announcements, new hire forms, salary forms, performance, termination paperwork) Prepare HR-related documents (for example, reports, presentations, organizational charts) Post job listings (for example, company website, social media, job boards) Manage applicant databases (for example, enter data, access records, update records) Coordinate interview logistics Arrange for tests and assessments of applicants Coordinate the employment offer (for example, start date, salary, beneﬁts) Administer postoffer employment activities (for example, execute employment agreements, complete I-9/e-Verify process, coordinate relocation, immigration) Comply with all applicable laws Communicate the organization’s and regulations core values, Coordinate and communicate vision, mission, with external providers of HR culture, and services (for example, ethical behaviors recruiters, COBRA administrators, employee recognition services) Provide internal customer service by answering or referring HR-related questions from employees as the ﬁrst level of support Communicate information about HR policies and procedures Identify risk in the workplace Minimize risk by conducting audits (for example, I-9, workers’ compensation, employee records) Document and update essential job functions with the support of managers Screen applicants for managers to interview Answer questions from job applicants Interview job candidates Communicate compensation and beneﬁts programs and systems Coordinate activities to support employee beneﬁts programs (for example, wellness, retirement planning) Resolve routine employee compensation and beneﬁts issues WEBC01 04/02/2017 4:18:9 Page 25 The Human Resource Body of Knowledge Administrative Operational 25 Strategic Coordinate payroll-related Conduct orientation and oninformation (for example, boarding for new hires, new hires, adjustments, paid rehires, and transfers Conduct employee training time off, terminations) programs (for example, Process claims from employees safety regulations, (for example, workers’ emergency preparedness, compensation, short-term or presentation skills, time long-term disability beneﬁts) management skills) Coordinate training sessions Monitor completion of (for example, logistics, performance reviews and materials, tracking, development plans registration, evaluation) Coordinate the logistics for employee relations programs (for example, recognition, special events, diversity programs) Note: Used with permission by Human Resource Certiﬁcation Institute, Inc. candidates are well versed in processes that provide employee support by being knowledgeable about compensation and beneﬁts, policies, procedures, and essen tial job functions. The aPHR exam is 2 hours and 15 minutes in length, and comprises 100 multiple-choice questions and 25 pretest questions. Professional in Human Resources, California® (PHRca®) This is currently the only exam that is state speciﬁc, focusing on Compensation/ Wage and Hour, Employment and Employee Relations, Beneﬁts and Leaves of Absence, and Health, Safety, and Workers’ Compensation. To be eligible, indi viduals must have one of the following: At least one year of experience in a professional-level HR position + a master’s degree or higher, At least two years of experience in a professional-level HR position + a bachelor’s degree, or At least four years of experience in a professional-level HR position + a high school diploma. This exam has 100 scored and 25 pretest questions, and is administered over a 2-hour, 15-minute time frame. WEBC01 04/02/2017 26 4:18:9 Page 26 A Guide to the Human Resource Body of Knowledge Professional in Human Resources® (PHR®) and Senior Professional in Human Resources® (SPHR®) The PHR and the SPHR exams share core content. They are designed to measure a candidate’s knowledge and competencies in the six functional areas described in this book: 1. 2. 3. 4. 5. 6. Business Management and Strategy Workforce Planning and Employment Human Resource Development Compensation and Beneﬁts Employee and Labor Relations Risk Management The Professional in Human Resources exam supports HR professionals with generalist or operational titles. These professionals generally focus on the HR operation as opposed to the operation of the organization as a whole. The PHR is both knowledge and competency based, requiring successful candidates to have one of the following: At least one year of experience in a professional-level HR position + a master’s degree or higher, At least two years of experience in a professional-level HR position + a bachelor’s degree, or At least four years of experience in a professional-level HR position + a high school diploma. In addition to these PHR knowledge and competency requirements, a Senior Professional in Human Resources adds the dimension of executive-level strategic planning to his or her value set. An SPHR has a breadth and depth of knowledge in the functions of human resources and the functions of business. Eligible candidates will have one of the following: At least four years of experience in a professional-level HR position + a master’s degree or higher, At least ﬁve years of experience in a professional-level HR position + a bachelor’s degree, or At least seven years of experience in a professional-level HR position + a high school diploma. Both the PHR and SPHR exams are 3 hours long, and are 150 questions with 25 pretest questions in length. WEBC01 04/02/2017 4:18:10 Page 27 The Human Resource Body of Knowledge 27 Global Professional in Human Resources® (GPHR®) As much of this book’s content reﬂects, there is a growing need for aligned global professionals with cross-border human resource experience. Competent profes sionals are eligible to sit for the 3-hour GPHR exam, consisting of 140 + 25 pretest questions, if they have one of the following: At least two years of experience in a global professional-level HR position + a master’s degree or higher, At least three years of experience in a professional-level HR position (at least two in global HR) + a bachelor’s degree, or At least four years of experience in a professional-level HR position (at least two in global HR) + a high school diploma. Professional in Human Resources, International® (PHRi®) and Senior Professional in Human Resources, International® (SPHRi®) A recent addition to the bank of seven exams are the PHR and SPHR international. As their titles suggest, these exams are appropriate for HR leaders practicing in a country outside the United States. PHRi-eligible candidates have work experience in a single international setting using technical and operational principles, and are tested with 145 + 25 pretest questions in a 3-hour, 15-minute period. Certiﬁcate seekers are eligible if they have one of the following: At least one year of experience in a professional-level HR position + a master’s degree or global equivalent, At least two years of experience in a professional-level HR position + a bachelor’s degree or global equivalent, or At least four years of experience in a professional-level HR position + a high school diploma or global equivalent. SPHRi candidate careers have been more oriented toward senior-level HR competencies across multiple HR domains within a single international setting. To be eligible for the exam, SPHRi candidates must have one of the following: At least one year of experience in a professional-level HR position + a master’s degree or global equivalent, At least two years of experience in a professional-level HR position + a bachelor’s degree or global equivalent, or At least four years of experience in a professional-level HR position + a high school diploma or global equivalent. WEBC01 04/02/2017 28 4:18:10 Page 28 A Guide to the Human Resource Body of Knowledge The SPHRi exam is administered over 2 and a half hours, with 105 + 25 pretest multiple-choice questions. Cross-Border Country to country Taking place across the geographic boundaries of two or more countries (for example, cross-border trade) How the Exams Are Scored The Angoff method is a way to establish exam scoring standards. It is used by test developers to determine a passing score. Subject matter experts (SMEs) evaluate the content of each exam question and predict how many minimally qualiﬁed test takers would get the correct answer. An average of the judges’ scores is used to establish the cutoff for a passing grade. Each exam taker seeking to pass one of the seven exams will take a test that includes pretest questions. These are questions that are being evaluated for validity and level of difﬁculty before they are rotated into the scored bank of tests used to determine an individual score. In this way, the integrity of the process and the quality of the exam item are measured. All of HRCI’s exams are pass-or-fail based on a range of scores from 100 to 700. Successful candidates will achieve a minimum scaled score of 500. The raw score is the actual number of items answered correctly on the test. The scaled score represents the difﬁculty level of the random exam the test taker received, and is shown only to those who do not pass. It is recommended that you do not leave a question unanswered. Scoring is based on the number of correct answers, so leaving an item blank eliminates the possibility of that item counting in your scaled score. Angoff Method An exam scoring process A way to set the standard score for passing a test Scaled Score An adjusted score A conversion of a raw score to a common scale that can be used for comparison WEBC01 04/02/2017 4:18:10 Page 29 The Human Resource Body of Knowledge 29 How to Prepare for Exams The most important step toward a successful exam experience is to ensure you select the proper exam. The practice of human resources requires lifelong learning through a mix of professional development activities. Starting with the PHR before the SPHR, for example, gives you the opportunity to develop benchmark knowl edge and learn the operational job content of those you will eventually be managing. Measuring yourself against the content of the PHRi before the SPHRi ensures that you have a quality platform from which to base all other professional development activities. Certiﬁcation is a journey, not an event. Very few individuals sit for these exams with little or no preparation. The degree to which you prepare is based on your unique work experience and education and should include a mix of activities to ensure you are looking at the content from multiple perspectives. Consider Exam Content Weights The exam content outline for each of the exams shows the percentage of content for each functional area. This serves as a guide for test takers to know where to concentrate their study efforts. Practice Exams Certiﬁcation seekers must conduct their own type of gap analysis to identify where they are compared to where they want to be. HRCI offers practice exams for most of the test banks. The practice exam results show your individual score in each functional area, allowing you to concentrate your study effort in the area where it is most needed. Gap Analysis A technique used to compare the current state with the future desired state An analysis process that helps organizations or people compare their actual performance with their potential performance Study Groups versus Self-Study Methods There is no single way to study for these exams that is best. Knowing your individual learning style and personality will help you choose whether to go it alone or join a group to help prepare for your chosen exam. WEBC01 04/02/2017 30 4:18:10 Page 30 A Guide to the Human Resource Body of Knowledge Study groups have the advantage of learning from each other, holding one another accountable to stay on track. It is helpful to have others encourage you when you need it, and clarify content when necessary. Study groups can be selfformed, but many are led by experts who can guide you through exam content. Successful self-studiers are those who have a high degree of self-discipline and are committed to the process. Staying organized and on track and reaching out to alternative resources when content is new or complex characterize those for whom self-studying is best. Techniques for both groups should include reading content from exam prep resources, watching videos from credible sources, creating presentations focused on critical content, and always seeking to ﬁnd ways to relate exam content to the job. Both approaches should utilize an 8-, 12-, or 14-week study plan to work through the exam content outline. Learning Style The way a person learns The way people process new information and learn most effectively (for example, some people learn best visually, through lectures, or by reading. Others learn best by action or doing) The Importance of Recertiﬁcation Newly certiﬁed HR professionals need to recertify every three years. This is achieved by engaging in professional development activities designed to increase the depth of existing knowledge, or to learn something new related to the domains of HR. Successful exam takers may recertify credentials in one of two ways: retake the exam or earn credits. Many choose to earn the 60 recertiﬁcation credits over the three-year active window rather than sit for the rather difﬁcult exam again. Approved recertiﬁcation activities fall into any of the following categories: Continuing education Part of the HRCI code of ethics is that HR professionals commit to professional development. This is achieved through formal and continu ing education activities such as classes, workshops, seminars, and webinars. Instruction Teaching an HR class or a topic on which you’re an expert is another way to earn recertiﬁcation credits. Instruction can be paid or voluntary. On-the-job training (OJT) Training that occurs on the job is valuable, as these exams are experienced based. These types of credits need to be for tasks or responsibilities that are new to your role. WEBC01 04/02/2017 4:18:10 Page 31 The Human Resource Body of Knowledge 31 Research/publications With the abundance of online publishing, blogs, and e-newsletters, plenty of opportunities are out there for you to write on an HR topic that may be trending or of interest to other professionals. Leadership Leading teams or projects or groups through interventions is another way to log recertiﬁcation hours. Keeping track of any documentation that demon strates the nature of the leadership, the relation to exam content, and the amount of time spent is important for your recertiﬁcation application. Professional membership Log any professional memberships you have in local, industrial, national, or global associations for additional credits. While many pre-approved programs are available, you may submit work or educational activities for consideration with your recertiﬁcation activities. An easy way to track recertiﬁcation credits is to regularly log into your HRCI account, and submit credit activities as you achieve them. When the time comes to recertify, you simply review for accuracy and submit, rather than scroll back through e-mails and calendars for dates, locations, content, and credits. Once successfully certiﬁed, don’t forget to claim your digital badge! Proof of your certiﬁcation, this digital seal can be used on social media, e-mails, personal websites, and resumes. The badges securely link to HRCI to verify your active credential, protecting the integrity of the reference. HRBoKTM The practice of HR is inﬂuenced by academia, politics, the economy, technology, and globalization. It draws upon research from the disciplines of psychology, anthropol ogy, the social sciences, and business management. If that isn’t enough, HR pro fessionals must be intimate with the details and nuances of the industries in which they practice, such as ﬁnance, health care, manufacturing, and construction. HR profes sionals must be lifelong learners, as the practice of HR adapts as research emerges and business conditions change. Those who do not seek to advance their knowledge run the risk of becoming irrelevant in a very short period of time or of damaging their relationships with employers and employees through errors and omissions. The HRBoKTM is the helix of human resources, a learning DNA shaped by past practices and evolving needs. Organic in nature, it reﬂects the need for an organization’s human resources to serve in a consulting role more often than a policing role. It underscores the value of fostering a performance culture across all company departments through thoughtful, systematic programs with clear targets and regular measurements. The HRBoK positions practitioners to globally represent the discipline of HR with up-to-date and relevant best practices while functioning WEBC01 04/02/2017 32 4:18:10 Page 32 A Guide to the Human Resource Body of Knowledge Figure 1.6 Human Resource DNA under the highest professional standards in service to the stakeholders who are counting on them. In short, the HRBoK is the cornerstone for a community in practice (see Figure 1.6). Notes 1. HR Certiﬁcation Institute, “A Brief History.” Retrieved from https://www.hrci.org/ about-hrci/overview/history. 2. Gary Vaynerchuk, “Work Required,” September 14, 2016, Twitter.com/dailyvee. 3. A. Kinicki and M. Fugate, Organizational Behavior (New York: McGraw-Hill, 2011). 4. Ibid. 5. Exam eligibility and accreditation details found on pages 23–31 are used with per mission by Human Resource Certiﬁcation Institute, Inc. WEBC02 04/02/2017 4:22:37 Page 33 A Guide to The Human Resource Body of KnowledgeTM (HRBoKTM), First Edition. Sandra M. Reed.  2017 by Human Resources Certiﬁcation Institute, Inc. Published 2017 by John Wiley & Sons, Inc. 2 Business Management and Strategy Introduction Where do businesses come from? The fact is that there have been some forms of enterprise for thousands of years. From small businesses built upon individual skills and barter systems to import/export services for cross-country and across-oceans transport all the way through the formalized state-run corporations and academic institutions, the early businesses had the same fundamental needs as the companies of today: human capital strategies and competitive supply chain management (SCM). The functional HR practices in business management and strategy (BMS) embrace HR as a business partner. With a strong emphasis on managing the people and processes required to keep businesses up and running, a dedicated HR professional must be capable of: Applying general business principles Leading change efforts Acting as a strategic partner for all functions of HR Applying business strategies to operational activities Achieving international human resource management goals Integrating industry best practices and academic theories Orienting HR activities toward the bottom line The human resources (HR) function focuses on implementing business strate gies that combine the needs of the business with the needs of the people doing the work. This chapter serves as a resource for HR in an advisory role for all business 33 WEBC02 04/02/2017 4:22:37 34 Page 34 A Guide to the Human Resource Body of KnowledgeTM functions. HR professionals must be able to create relationships with HR partners, and develop and administer programs that operate from a set of blueprints designed by master builders—architects, experts, and skilled individuals—with the shared objective to do well, and competitively, the business of work. HR Human resources Function within an organization that focuses on implementing organizational strategy, as well as recruiting, managing performance, and providing direction for the people who work in the organization HR Partner An ally in providing HR services A manager or department that has a relationship with HR in order to provide services to the organization HR Business Partner Strategic role for human resources A role in which the human resources function works closely with an organization to develop strategies and achieve business results Dedicated HR Person committed to human resources in an organization A human resources position that works only on HR responsibilities within an organization Functional HR Dedicated tasks of the human resources position in an organization The human resources role within an organization that focuses on strategy, recruitment, management, and the direction of the people in the organization Human Capital Strategies Employment tactics plan for managing employees Methods and tools for recruiting, managing, and keeping important employees WEBC02 04/02/2017 4:22:37 Page 35 Business Management and Strategy 35 Supply Chain Management (SCM) The steps taken from initial planning through customer support Process of planning, implementing, and controlling operations, which begins with acquiring raw materials and continues to customer delivery and support General Business Principles HR professionals wear many hats and need to possess a variety of skills in order to serve business outcomes. Often acting as internal consultants, their continuing value to the organizations that employ them comes from understanding all aspects of the business, not just the practices of the HR department. Knowing company ﬁnancials, building programs to serve organizational goals, evaluating the efﬁcacy of strategies both before and after implementation, and helping companies prepare the workforce for future needs are all activities that contribute to HR professionals as trusted organizational leaders. Business Entities, Functions, and Structures The interrelatedness of all business functions is often demonstrated through the management of human resources. HR policies, procedures, and rules must be broad enough to apply to all employees yet speciﬁc enough to meet unique company and regulatory needs. Additionally, improving employee engagement and productivity and designing work that is free from safety hazards are other inﬂuences that HR helps to manage through organizational design decisions. This entails HR pros understanding the big picture environment of business entities, department functions, and organiza tional structures. These design features help dictate the plans, policies, programs, and procedures necessary to achieve HR outcomes linked to business strategy. Business Entities There are several different types of business structures that are deﬁned by the Internal Revenue Service (IRS): Sole proprietorship A business that is owned by a single person. Income is generally reported under personal income tax forms and includes liability for self-employment taxes. Partnerships A partnership exists when two or more individuals legally join together to form a business. Each person is actively involved in the business by WEBC02 04/02/2017 36 4:22:37 Page 36 A Guide to the Human Resource Body of Knowledge contributing money and labor, and both expect to share in the beneﬁts of proﬁtability and the risk of loss. In a partnership, the business entity does not pay income tax. Instead, gains or losses are “passed through” to each partner’s personal income tax returns. In this structure, partners are not considered employ ees, and self-employment taxes apply. Corporations A corporation is a business in which stock is sold to shareholders in order to fund operations. The proﬁts of the corporation are taxed to the corporation when earned, and then taxed again to the shareholders when distributed to them as earnings (called a double tax). Shareholders do not deduct corporate losses from their personal taxes. S corporations S corporations are entities that elect to pass proﬁts and losses, income, and deductions through to the shareholders. These are then reported on the shareholders’ personal income taxes as opposed to a corporate tax return. This allows S corporations to avoid the double tax described for regular (C) corporations. Limited liability companies (LLCs) An LLC is a state-by-state-granted business structure that is a hybrid of a corporation and a partnership, with most states allowing for a single member. If there are two or more partners, it may be classiﬁed as a partnership for tax ﬁling purposes. LLCs are not taxed as a corporation; proﬁts and losses are passed through to the members. Self-employment taxes generally apply. In addition to the IRS deﬁnitions, there are other ways a business can be organized, either initially or as part of an overall business strategy. They include: Franchising Franchising is a business structure in which a company sells licensing rights to another group or individual, allowing the franchisee to conduct for-proﬁt business under the franchisor’s brand and supply chain practices. Fast-food restau rant chains are a common example. Joint ventures (JVs) A joint venture (JV) is a type of time-based partnership between two businesses, often with shared goals or aligned to maximize resources. For example, in 2011 Microsoft joined with General Electric to form Caradigm, a company focused on streamlining health care analytics. Similarly, a strategic alliance may be formed by two or more companies to pursue similar objectives. Equity partnerships When an individual or group decides to invest funds for start ups, they may do so using an equity partnership structure. Simple Sugars, a skin care company, appeared on the television show Shark Tank, and agreed to a 33 percent equity partnership with Mark Cuban in exchange for a $100,000 investment in this turnkey operation. Investments may also be used to pay for up-front costs associ ated with getting a business off the ground. Subsidiaries A subsidiary is a company with 50 percent or more ownership interest by a parent company. Odwalla Inc. is a subsidiary of the Coca-Cola Company, two major beverage brands successfully leveraging market position. WEBC02 04/02/2017 4:22:37 Page 37 Business Management and Strategy 37 Foreign subsidiaries Similar to a subsidiary, a foreign subsidiary is 50 percent or more owned by a parent company headquartered in another country, such as Revlon Beauty Products of Spain, a foreign subsidiary of Revlon, Inc., head quartered in the United States. These may be formed using a foreign direct invest (FDI) strategy to obtain control. Greenﬁeld and brownﬁeld operatio

A Guide to the Human Resource Body of Knowledge (HRBoK) PDF

Document Details

Tags

Related

Summary

Full Transcript

Upgrade to continue