Are you thinking about taking the HRM DSST test? Wondering what you need to know about the course? Here is a quick guide to help you with your prep.
If you’ve studied HR or general management before then this guide will act as a quick summary of all the topics you need to revise for the test. However, even if this is your first time studying management, then this easy-to-understand guide will still give you a comprehensive idea of what you need to prepare.
The exam itself is divided into ten parts. We’ve covered all of the topics for you here, and at the end of the guide we’ve put together a sample test for you so you can practice your skills – remember, however, that the sample questions only cover the course in summary.
Human Resource Management (HRM) in the simplest of terms is the management of human resources in an organization. HRM has evolved immensely since the industrial revolution and has been growing and changing at a rapid pace ever since. Unlike in the past, HRM has now become an entirely separate department of its own, and it plays a vital role in the successful functioning of an organization.
An HR manager has a vital position in an organization with responsibilities that include creating and implement policies and making sure every employee is aware and follows set rules and regulations.
HR functions: The list of HR functions is very long, but some of the most critical roles that the HRM department plays include:
• Job analysis and job designing
• Compensations and rewards
With Human Resource planning, organizations identify its HR requirements. In other words, HR planning is like a connection between human resource management and the strategic plan of the organization as a whole. It is a process that outlines ways to maximize employee output while keeping them satisfied and happy with the organization, and making sure there is never a shortage or surplus of the workforce. The HR department interacts with other departments of the organization to devise strategies that will help in achieving organizational goals and objectives. Strategic HRM helps to make other departments stronger and effective, and that is why it is considered an essential and integral part of the organization in the modern era.
Another essential function of HR management is Diversity and Inclusion. Diversity here is further divided into two categories:
• Visible diversity traits: e.g., race, gender, age, etc.
• Invisible diversity traits: e.g., religion, sexual orientation, socio-economic status, etc.
The HR department has to create an organizational environment where everyone is treated respectfully, fairly, and with equal access to opportunities.
Organizations have to pay equal importance to the concept of inclusion and not just diversity. An organization may be diverse, but if an environment of acceptance of each other’s differences is absent, this type of diversity could be catastrophic.
Job Analysis and Job Design: Job Analysis and Job Design are the primary and most important roles of the HR department. Through job analysis, HR managers determine the duties and requirements of a job, and through job design, they determine how these duties are to be performed most productively. Job design then helps the administration in other areas such as job rotation, job enlargement, etc.
Hiring/Recruitment is the traditional role of HR managers. Hiring is a long, tiresome, and expensive process. The first step of recruitment is job analysis through which HR managers, with input from other relevant departments, outline job requirements. They then collect a pool of candidates and choose the best out of them through various tests and interviews.
Promotions and Transfers: According to Pigours and Myers, “Promotion is the advancement of an employee to a better job – better in terms of greater responsibility, more prestige or status, greater skill, and especially an increased rate of pay or salary.”
Transfers, on the other hand, are a lateral shift from one position to another without any change in status or duties. The change of location of a job is also called a transfer.
Companies may lay off employees for a variety of reasons including acquisitions, a lack of funds, etc.
Training and Development is a critical function of HR management. It ensures that employees are made aware of, taught and, if applicable, put into practice recent developments and trends in their respective fields to help them maximize the quality and quantity of their output for the company.
Onboarding is somewhat like an orientation, but not just an orientation. It is a process by which new employees are informed about the environment, culture, policies, and regulations of the organization.
In the modern era of high competition, the role of HR has also increased. It is no longer just about hiring, promoting, and providing benefits. HR departments also help employees in career planning and training workers via rigorous learning programs.
HR managers have to manage employee performance and have to conduct appraisals as well. These appraisals are then used as the basis for promotions, training and development opportunities, compensation reviews, feedback and grievances, and more. Numerous techniques are available for conducting performance appraisals, including the following:
• Assessment Centre Method
• Behaviorally Anchored Rating Scale
• Essay Evaluations
• Human Asset Accounting Method
• Management by Objective
Challenges that managers may face during the appraisal processes include:
• Appraiser inexperience
• Employee resistance
• Appraiser bias
• Appraisals that are not linked to rewards
• Appraisals that are not focused on development
Compensations are all of the rewards earned by employees in return for their services and labor. They include direct financial compensation such as salaries, indirect financial compensations such as retirement funds, and non-financial compensations such as development opportunities and career development.
Compensation sometimes is used by organizations as a tool for:
• Recruiting and retaining employees
• Increasing productivity
• Reducing turnover and increasing employee loyalty
Employee benefits are non-cash compensations offered to employees. These benefits are either mandatory by law or voluntary, i.e., the employees get to choose the benefit plan according to their situation.
Workplace safety, security, and health are not just industry buzzwords anymore. Companies nowadays strive to provide the best of everything to their employees to gain employee loyalty which results in high retention, low turnover, higher productivity levels, and ensures that company goals and objectives are achieved, making it a win-win situation for employees and the company alike. In some places, companies are required by law to provide various safety features or equipment to their employees, and in case of workplace accidents or illness, companies may be liable for compensation to their employees.
Labor or Employment Law acts as an arbitrator between workers, employers, unions, and the government. These laws are set to resolve conflicts between different parties peacefully.
Equal employment opportunity laws such as the Civil Rights Act Title VII, ADA, or ADEA require employers to provide equal opportunities to all their employees, and they are prohibited from discriminating on the basis of race, age, color, ethnicity, or gender, etc.
Compensation and benefits-related laws such as ERISA, FMLA, or FLSA require employers to pay at least minimum wages (in an amount fixed and adjusted annually by the government) as well as benefits such as insurance to employees.
Health, safety and employee rights laws such as OSHA or WARN require employers to make workplaces safe and secure and free of dangerous hazards.
Labor Relations is the function that HR plays in training and guiding employees about employment laws, legal issues, and work-related contracts.
Labor Laws such as NLRA, the Taft-Hartley Act, or the Civil Service Reform Act cover the rights and responsibilities of unionized employees. Unions exist to represent the labor force, and labor laws prohibit employers from treating unionized employees any differently from non-unionized employees.
Unions exist to help in bringing up and solving employee-related problems. Conflict resolution has become somewhat easier with unions since employee representatives are better positioned to present their demands to and negotiate with employers. Through collective bargaining, unionized employees now have higher salaries and benefits.
Unionized versus non-unionized work settings: In a non-unionized setting, the employer makes all the decision while employees have little or no say in the decision-making process. In a unionized setting, however, the union represents the employees, and they have a say in work contracts, and the union makes sure the contracts are carried out.
Human resource information systems or human resource management systems (HRMS), in simple terms, is a blend of human resources and information technology using software. HRMS allows HR managers to carry out most of their activities electronically.
The Global HR Environment: With the world becoming a global village, the HR functions of companies have become increasingly internationalized over the past few decades. Competition between products and services has increased, employees are more diverse and more likely to work off-location, and such work setups present new varieties of employee issues to HR managers. New practices and policies are being studied and introduced to workplaces across the globe to manage issues related to the globalization of human resources.
Corporate Social Responsibility and Sustainability: CSR has to do with the steps that a corporation takes to assess and take responsibility for the effect that the company has on the environment and society. Sustainability is when a company is aware of its responsibilities to stakeholders and is not only concerned with its own profits and financial gains.
Correct Answer: a compressed workweek
Explanation: Employees can choose their own schedule through a compressed workweek schedule. For example, an employee can work for 10 hours a day and take three days off in a week, or they can complete their required hours in fewer days and take other days off.
Correct Answer: A lockout
Explanation: During a conflict between labor/employees and employers, if the employer shuts down the workplace and labor is not allowed to work, this is called a lockout. This is done to pressurize employees to agree with the terms set by the employers. When several employers take a lockout action together, this is known as a joint lockout or shutout.
Correct Answer: A third-country national
Explanation: When a company opens a branch in another country (known as the host country) it has three staffing s:; • It can hire from the home country (home-country national strategy; the employees are called expatriates); • It can hire from the host country (host-country national strategy); • It can hire a third country national (third-country national strategy); such employees are called third country nationals
Correct Answer: Civil Rights Act Title VII, ADA, ADEA
Explanation: The Americans with Disabilities Act (ADA) and the Age Discrimination in Employment Act are the laws that prohibit companies from discriminating on the basis of disabilities or age, while Civil Rights Act Title VII prohibits organizations from discriminating on the basis of race, color, ethnicity, sex, language, etc.
Correct Answer: Evidence-based HRM
Explanation: In evidence-based HRM, human resource managers critically use evidence, facts, and research to make important decisions that matter to the organization and its employees.
Correct Answer: Job description
Explanation: A document that describes the duties and responsibilities of a job is called a job description. Job descriptions also define whom employees have to report to, and it specifies the skills and education required for the position. The salary range of the position is also outlined in the job description.
Correct Answer: Merit pay
Explanation: Merit pay (pay-for-performance) is a raise in salary based on set criteria. If an employee can meet set goals as described in specific criteria, then he or she is given merit pay. Usually, a meeting between the employee and employer is held to review performance before giving out merit pay.
Correct Answer: Neglect
Explanation: A dissatisfied employee may leave an organization, or they may choose to stay loyal and actively voice their problems and constructively work toward improvement with the employer. However, neglect is when an employee neither leaves the job nor works to help the organization and instead chooses to ignore their problems, leaving grievances and issues to smolder and worsen over time.
Correct Answer: Reengineering
Explanation: Business Process Reengineering (BPR) is the analysis and re-designing of business processes and job workflows in an organization. Through re-engineering, new patterns are determined to get work done more efficiently and effectively.
Correct Answer: Staff manager
Explanation: Line hierarchies exist in revenue-generating departments such as manufacturing and sales. Staff hierarchies exist in departments that consume revenues; their central role is to support revenue-generating departments by things such as making policies and taking internal organizational decisions etc., leaving C – Staff managers – as the role that assists HR managers.
Textbooks are great as far as they go, but I’d generally recommend you opt for this exam guide instead. It tends to cut through the confusion and help you accelerate your learning process.
Ok, so the DSST website isn’t the most inviting, but it will give you the best approximation of the real exam experience. Also, the official practice test is quite affordable (currently just $5 per practice exam).
Another website with a very dated design, but as ancient as it looks, this is actually an incredibly valuable resource. Basically, you get a massive set of flashcards that you can use to study human resources management and to really solidify that knowledge so you’re ready for the exam.