DSST Human Resource Management — MUST MEMORIZE SHEET
EXAM PREPARATION GUIDE · DEFINITIONS · LAWS · THEORIES · FORMULAS · EXAM TRAPS
The DSST Human Resource Management examination tests your understanding of how organizations recruit, select, train, compensate, evaluate, motivate, and retain employees.
My recommendation is to study this guide as a memorization document, not simply as a textbook summary. You should be able to recognize the theories, distinguish similar concepts, identify the applicable employment laws, and solve basic HR calculations.
I have organized it into eight sections:
Foundations of Human Resource Management
Strategic HRM and organizational theories
Job analysis, recruitment, and selection
Training, development, and performance appraisal
Compensation, benefits, and motivation
Employment laws and regulations
Essential HR formulas
Exam traps and final review questions
1. Foundations of Human Resource Management
1.1 What is HRM?
Human Resource Management (HRM) is the process of managing people to achieve organizational objectives.
Its principal functions are:
Function | Meaning |
|---|---|
Human resource planning | Forecasting future employee needs |
Job analysis | Identifying job duties and requirements |
Recruitment | Attracting candidates |
Selection | Choosing the best candidate |
Training | Improving current job performance |
Development | Preparing employees for future responsibilities |
Performance appraisal | Evaluating employee performance |
Compensation | Determining wages, salaries, and incentives |
Benefits | Providing non-wage rewards |
Employee relations | Managing workplace relationships |
Labor relations | Managing relationships with unions |
HR compliance | Ensuring compliance with employment laws |
Memorize this distinction:
Recruitment = attracting candidates.
Selection = choosing candidates.
Training = improving current skills.
Development = preparing for future responsibilities.
Performance appraisal = measuring performance.
Compensation = financial rewards.
Benefits = indirect compensation.
1.2 Strategic Human Resource Management
Strategic HRM means aligning human resource policies with the organization's long-term goals.
Example:
A company pursuing innovation needs employees with creativity, technical knowledge, and problem-solving abilities. Its HR department must recruit, train, and reward employees accordingly.
Three important concepts:
Vertical alignment: HR strategy supports business strategy.
Horizontal alignment: HR policies and practices support one another.
Human capital: Employees' knowledge, skills, abilities, and experience.
Competitive advantage through HRM: An organization can outperform competitors by developing a skilled, motivated, and difficult-to-replace workforce.
1.3 HR planning
Human resource planning involves determining:
How many employees are needed.
What skills are required.
When employees will be needed.
Whether the organization should hire, train, promote, or outsource.
Two important approaches:
Forecasting demand: Estimating how many employees the organization will need.
Forecasting supply: Estimating how many qualified employees will be available internally and externally.
A skills inventory identifies the qualifications and capabilities of existing employees.
Succession planning identifies and prepares employees to fill important positions in the future.
2. Strategic HRM and Organizational Theories
These theories are important because questions often describe a management situation and ask you to identify the corresponding theorist or concept.
2.1 Classical management theories
Frederick Winslow Taylor — Scientific Management
Focus: efficiency and productivity.
Scientific analysis of work methods.
Standardization of tasks.
Scientific employee selection and training.
Financial incentives for productivity.
MEMORIZE: Taylor = efficiency, scientific management, productivity.
Henri Fayol — Administrative Management
Focused on management principles and organizational administration.
Five traditional management functions:
Planning
Organizing
Commanding
Coordinating
Controlling
MEMORIZE: Fayol = administrative principles and management functions.
Max Weber — Bureaucratic Management
Formal hierarchy.
Written rules and procedures.
Division of labor.
Impersonal relationships.
Authority based on position and expertise.
MEMORIZE: Weber = bureaucracy, hierarchy, rules.
Elton Mayo — Human Relations Movement
Associated with the Hawthorne studies.
Social relationships influence productivity.
Employee attention and group dynamics matter.
Informal groups influence workplace behavior.
MEMORIZE: Mayo = Hawthorne studies, social factors, human relations.
2.2 Important organizational theories
Theory | Central idea |
|---|---|
Theory X | Employees generally dislike work and require close supervision |
Theory Y | Employees can be self-directed and accept responsibility |
Theory Z | Emphasizes trust, participation, long-term employment, and collective responsibility |
Systems theory | Organization is a system of interconnected parts |
Contingency theory | The best management approach depends on the situation |
Bureaucratic theory | Rules, hierarchy, and formal authority |
Scientific management | Efficiency through systematic work methods |
Douglas McGregor: Theory X and Theory Y.
William Ouchi: Theory Z.
Important trap: Theory Y does not mean employees never need supervision. It means management assumes employees can exercise responsibility and self-direction.
2.3 Organizational structures
Structure | Characteristics |
|---|---|
Functional | Employees grouped by specialization |
Divisional | Organized by product, region, or customer |
Matrix | Employees report to functional and project managers |
Flat | Few management layers |
Tall | Many management layers |
Team-based | Work organized around teams |
Matrix organization: A particularly important distinction. Employees may have two reporting relationships.
2.4 Organizational culture
Organizational culture refers to the shared values, beliefs, norms, and assumptions that influence employee behavior.
Three levels of culture, according to Edgar Schein:
Artifacts: Visible elements, such as dress codes, office layout, and rituals.
Espoused values: Officially stated values and principles.
Underlying assumptions: Deeply held, often unconscious beliefs.
3. Job Analysis, Recruitment, and Selection
3.1 Job analysis
Job analysis is the systematic process of collecting information about a job's duties, responsibilities, and required qualifications.
It produces two important documents:
Document | Definition |
|---|---|
Job description | Explains what the employee does |
Job specification | Explains what qualifications the employee needs |
Example:
Job description: Prepare financial reports, supervise accounting staff, and analyze budgets.
Job specification: Bachelor's degree, accounting knowledge, analytical skills, and relevant experience.
Remember: Description = duties. Specification = qualifications.
Other important terms:
Job design: Organizing tasks and responsibilities.
Job enlargement: Adding more tasks at the same responsibility level.
Job enrichment: Increasing responsibility, autonomy, and control.
Job rotation: Moving employees between different jobs.
Job simplification: Reducing a job to simpler, specialized tasks.
3.2 Recruitment
Recruitment is the process of attracting qualified candidates.
Internal recruitment:
Promotions.
Transfers.
Internal job postings.
Employee referrals from existing staff.
Advantages: Lower recruitment costs, employee motivation, knowledge of existing employees.
Disadvantages: Limited candidate pool, possible internal competition, fewer new ideas.
External recruitment:
Job advertisements.
Universities.
Employment agencies.
Professional associations.
Online recruitment platforms.
Advantages: New skills, fresh perspectives, larger candidate pool.
Disadvantages: Higher costs, longer adjustment period, greater uncertainty.
3.3 Selection
Selection is the process of choosing the most suitable candidate.
Common selection methods:
Method | Purpose |
|---|---|
Application form | Collect candidate information |
Structured interview | Ask candidates standardized questions |
Unstructured interview | Conduct a less standardized conversation |
Cognitive ability test | Assess reasoning and mental abilities |
Personality test | Assess personality characteristics |
Work sample test | Simulate actual job tasks |
Assessment center | Evaluate candidates through multiple exercises |
Reference check | Verify previous employment and performance |
Background check | Verify relevant background information |
Two essential concepts:
Reliability = consistency of a selection instrument.
Validity = whether the instrument measures what it is supposed to measure.
Example:
A test that gives similar results every time is reliable. But if it does not measure the skills required for the job, it may not be valid.
Exam trap: A test can be reliable without being valid. Validity generally requires adequate reliability.
3.4 Types of validity
Content validity: The test represents actual job tasks or knowledge.
Criterion-related validity: Test results correlate with job performance.
Construct validity: The test measures an underlying characteristic, such as leadership ability or intelligence.
3.5 Turnover and workforce reduction
Turnover: Employees leaving an organization.
Types:
Voluntary turnover: Employee chooses to leave.
Involuntary turnover: Employer terminates employment.
Functional turnover: Loss of poor-performing employees.
Dysfunctional turnover: Loss of valuable employees.
Other concepts:
Layoff: Employment termination generally associated with organizational or economic needs.
Downsizing: Reducing the size of the workforce.
Attrition: Workforce reduction through departures that are not replaced.
Retirement: Employee leaves the workforce after reaching retirement eligibility or choosing to retire.
Succession planning: Preparing employees to replace people in critical positions.
Important distinction: Attrition reduces the workforce without necessarily dismissing employees.
4. Training, Development, and Performance Appraisal
4.1 Training versus development
Training | Development |
|---|---|
Focuses on current job | Focuses on future responsibilities |
Shorter-term orientation | Longer-term orientation |
Specific skills | Broader capabilities |
Improves current performance | Prepares for advancement |
Examples:
Training: Teaching an employee how to use accounting software.
Development: Preparing an employee to become a finance manager.
4.2 Training methods
Method | Explanation |
|---|---|
On-the-job training | Learning while performing the job |
Job rotation | Learning through different assignments |
Apprenticeship | Structured combination of practical and classroom learning |
Internship | Temporary practical work experience |
Classroom training | Instructor-led learning |
E-learning | Online learning |
Simulation | Practicing in a realistic simulated environment |
Coaching | Individual guidance to improve performance |
Mentoring | Experienced employee guides a less experienced employee |
Remember: Coaching usually focuses on specific performance improvement; mentoring often involves broader career guidance.
4.3 ADDIE training model
ADDIE
Five stages of instructional design
A — Analysis
Identify training needs and performance gaps.
D — Design
Establish objectives and plan the program.
D — Development
Create training materials and activities.
I — Implementation
Deliver the training.
E — Evaluation
Measure whether the training worked.
4.4 Kirkpatrick's four levels of training evaluation
Another important model.
Level | What is evaluated? |
|---|---|
1. Reaction | Did participants like the training? |
2. Learning | Did they acquire knowledge or skills? |
3. Behavior | Did they apply learning at work? |
4. Results | Did the organization benefit? |
Memorize the sequence: Reaction → Learning → Behavior → Results.
Example:
A company provides leadership training.
Reaction: Employees liked the course.
Learning: They learned conflict-resolution techniques.
Behavior: They applied those techniques at work.
Results: Workplace conflicts decreased.
4.5 Performance appraisal
Performance appraisal is the systematic evaluation of an employee's work performance.
Its purposes include:
Identifying strengths and weaknesses.
Determining promotions.
Supporting compensation decisions.
Identifying training needs.
Improving productivity.
Providing feedback.
Important appraisal methods
Method | Explanation |
|---|---|
Graphic rating scale | Rates employees using predefined characteristics |
Ranking | Orders employees from best to worst |
Forced distribution | Assigns employees to predetermined performance categories |
Paired comparison | Compares each employee with every other employee |
Critical incident | Records particularly effective or ineffective behavior |
BARS | Uses behavioral examples to define performance ratings |
MBO | Evaluates employees based on agreed objectives |
360-degree feedback | Collects feedback from multiple sources |
BARS = Behaviorally Anchored Rating Scale.
Example: Instead of rating someone simply as an excellent communicator, BARS defines observable behaviors associated with different performance levels.
360-degree feedback
Feedback comes from several directions:
Supervisors.
Peers.
Subordinates.
Sometimes customers.
Self-evaluation.
Exam trap: Traditional performance appraisal is often supervisor-centered. 360-degree feedback uses multiple sources.
4.6 Common appraisal errors
These are particularly important.
Error | Definition |
|---|---|
Halo effect | One positive characteristic influences the entire evaluation |
Horn effect | One negative characteristic influences the entire evaluation |
Leniency | Rating everyone too highly |
Severity | Rating everyone too harshly |
Central tendency | Rating everyone near the middle |
Recency error | Overemphasizing recent performance |
Primacy error | Overemphasizing first impressions |
Contrast error | Comparing employees with one another rather than standards |
Similar-to-me bias | Favoring employees who resemble the evaluator |
Memorize these three especially:
Halo = one good trait affects everything.
Recency = recent events receive too much weight.
Central tendency = everyone gets an average rating.
4.7 Management by Objectives (MBO)
Associated with Peter Drucker.
MBO involves:
Establishing organizational objectives.
Establishing individual objectives.
Agreeing on measurable performance targets.
Monitoring progress.
Evaluating results.
Example:
An employee agrees to reduce processing errors by 10% within six months.
MEMORIZE: Drucker = Management by Objectives.
5. Compensation, Benefits, and Motivation
5.1 Compensation
Compensation is the total financial and nonfinancial reward employees receive in exchange for their work.
Direct compensation
Hourly wages.
Salaries.
Bonuses.
Commissions.
Profit-sharing.
Stock options.
Indirect compensation
Health insurance.
Retirement plans.
Paid vacations.
Sick leave.
Life insurance.
Disability insurance.
Total rewards = Compensation + Benefits + Nonfinancial rewards.
Nonfinancial rewards include recognition, career opportunities, autonomy, and work-life balance.
5.2 Types of pay systems
System | Definition |
|---|---|
Hourly pay | Payment based on hours worked |
Salary | Fixed regular compensation |
Piece-rate | Payment based on units produced |
Commission | Payment based on sales |
Bonus | Additional payment for achieving targets |
Merit pay | Salary increase based on individual performance |
Profit-sharing | Employees receive a share of company profits |
Gainsharing | Employees share financial gains from improved productivity |
Stock options | Opportunity to purchase company shares under specified terms |
Important distinction:
Profit-sharing = company profits.
Gainsharing = productivity or cost improvements.
5.3 Job evaluation
Job evaluation determines the relative value of jobs within an organization to establish an equitable compensation structure.
Four methods:
Ranking method: Rank jobs from highest to lowest value.
Classification method: Place jobs into predefined grades.
Point-factor method: Assign points to compensable factors.
Factor comparison method: Compare jobs using selected compensable factors.
Point-factor method: Particularly important.
Typical compensable factors:
Skill.
Effort.
Responsibility.
Working conditions.
Hay job evaluation method
The Hay Plan is a job evaluation system that assesses jobs using three principal factors:
Know-how.
Problem-solving.
Accountability.
Exam trap: The Hay Plan is a job evaluation method, not a performance appraisal or incentive plan.
5.4 Internal and external equity
Internal equity: Fairness of pay among jobs within the same organization.
External equity: Competitiveness of pay compared with other organizations.
Individual equity: Fairness of pay among employees doing comparable work, considering relevant differences.
5.5 Motivation theories
These theories are extremely important for HR examinations.
Abraham Maslow — Hierarchy of Needs
Five levels, from bottom to top:
Physiological: Food, water, basic necessities.
Safety: Security, stability, protection.
Social: Friendship and belonging.
Esteem: Recognition, respect, achievement.
Self-actualization: Reaching one's potential.
MEMORIZE: Maslow = five levels of human needs.
Frederick Herzberg — Two-Factor Theory
Two groups:
Hygiene factors: Salary, job security, working conditions, company policies, supervision.
Motivators: Achievement, recognition, responsibility, advancement, personal growth.
Crucial distinction: Hygiene factors prevent dissatisfaction; motivators create satisfaction.
Victor Vroom — Expectancy Theory
Employees are motivated when they believe:
Effort leads to performance.
Performance leads to rewards.
Rewards are valuable.
Formula:
Expectancy: Can I perform if I try?
Instrumentality: Will performance produce a reward?
Valence: Do I value that reward?
J. Stacy Adams — Equity Theory
Employees compare their inputs and outcomes with those of other people.
Inputs: Effort, experience, education, time.
Outcomes: Salary, recognition, promotion, benefits.
Perceived unfairness can reduce motivation.
B. F. Skinner — Reinforcement Theory
Behavior is influenced by its consequences.
Positive reinforcement: Add a desirable consequence to encourage behavior.
Negative reinforcement: Remove an unpleasant condition to encourage behavior.
Punishment: Apply an unfavorable consequence to reduce behavior.
Extinction: Stop reinforcing a behavior so it decreases.
Exam trap: Negative reinforcement is NOT punishment.
David McClelland — Acquired Needs Theory
Three learned needs:
Achievement: Desire to accomplish challenging goals.
Affiliation: Desire for friendly relationships.
Power: Desire to influence others.
5.6 Leadership theories
Theory | Main idea |
|---|---|
Trait theory | Leaders possess certain characteristics |
Behavioral theory | Leadership depends on observable behaviors |
Situational leadership | Leadership style changes according to employee readiness |
Contingency theory | Effectiveness depends on the situation |
Transformational leadership | Inspires change through vision and motivation |
Transactional leadership | Uses rewards and corrective action |
Servant leadership | Prioritizes the needs and development of followers |
Transformational vs. transactional:
Transformational = inspires and changes.
Transactional = rewards and performance agreements.
5.7 Employee benefits
Mandatory benefits
Important federally required programs include:
Social Security.
Medicare.
Unemployment insurance.
Workers' compensation (through state systems).
Certain unpaid family and medical leave rights under FMLA for eligible employees.
Voluntary benefits
Employer-sponsored health insurance.
Dental insurance.
Vision insurance.
Life insurance.
Retirement savings plans.
Paid vacation.
Flexible spending arrangements.
Note: Whether a benefit is legally required can depend on employer size, employee eligibility, and state law.
6. Employment Laws and Regulations
This is one of the most important sections. The examination may describe a workplace situation and ask which law applies.
6.1 Equal Employment Opportunity (EEO)
Equal Employment Opportunity means employees and applicants must receive fair treatment without unlawful discrimination.
The most important federal employment laws
Law | Year | What it protects |
|---|---|---|
Equal Pay Act (EPA) | 1963 | Equal pay for substantially equal work, regardless of sex |
Civil Rights Act, Title VII | 1964 | Prohibits discrimination based on race, color, religion, sex, and national origin |
Age Discrimination in Employment Act (ADEA) | 1967 | Protects individuals aged 40 and older |
Rehabilitation Act | 1973 | Disability protections, particularly in federal programs and contractors |
Pregnancy Discrimination Act | 1978 | Protects against discrimination because of pregnancy, childbirth, and related conditions |
Americans with Disabilities Act (ADA) | 1990 | Protects qualified individuals with disabilities |
Civil Rights Act | 1991 | Strengthened remedies and protections against employment discrimination |
Genetic Information Nondiscrimination Act (GINA) | 2008 | Restricts employment discrimination based on genetic information |
Title VII — Civil Rights Act of 1964
MEMORIZE: Five protected categories:
Race.
Color.
Religion.
Sex.
National origin.
It applies generally to employers with 15 or more employees.
It established the Equal Employment Opportunity Commission (EEOC).
EEOC: Enforces federal laws prohibiting employment discrimination.
ADEA — Age Discrimination in Employment Act
Protects individuals aged 40 and older.
Generally applies to employers with 20 or more employees.
Prohibits discrimination because of age in covered employment situations.
Exam trap: The ADEA protects workers aged 40+, not only older workers nearing retirement.
ADA — Americans with Disabilities Act
Protects qualified individuals with disabilities against employment discrimination.
Important concepts:
Qualified individual: Person who can perform essential job functions, with or without reasonable accommodation.
Reasonable accommodation: Appropriate workplace adjustment that enables an individual with a disability to perform the job, unless it creates undue hardship.
Essential functions: Fundamental duties of a job.
Undue hardship: Significant difficulty or expense, evaluated under applicable legal standards.
Examples of reasonable accommodations:
Modified work schedules.
Accessible workplace facilities.
Appropriate equipment.
Adjustments to the way certain tasks are performed.
MEMORIZE: ADA = disability discrimination and reasonable accommodation.
Equal Pay Act of 1963
Requires equal pay for men and women performing substantially equal work in the same establishment, considering skill, effort, responsibility, and similar working conditions.
Permissible pay differences may be based on:
Seniority system.
Merit system.
System measuring earnings by quantity or quality of production.
Another factor other than sex.
Exam trap: Equal Pay Act does not require identical salaries for every employee. It addresses unequal compensation based on sex for substantially equal work.
Pregnancy Discrimination Act
Pregnancy-related discrimination is prohibited under Title VII as amended.
Employers must treat pregnancy-related conditions consistently with other similar employment situations.
The Pregnant Workers Fairness Act (2023) separately requires reasonable accommodations for known limitations related to pregnancy, childbirth, and related medical conditions, subject to statutory exceptions.
6.2 Compensation and benefits legislation
Fair Labor Standards Act (FLSA) — 1938
One of the most important employment laws.
It establishes federal standards concerning:
Minimum wage.
Overtime pay.
Child labor.
Recordkeeping.
Important rules:
Federal minimum wage: $7.25 per hour, although state and local rates may be higher.
Overtime: Generally 1.5 times the regular rate after 40 hours in a workweek for covered, nonexempt employees.
Child labor: Restricts the employment of minors.
Exempt vs. nonexempt employees
Exempt | Nonexempt |
|---|---|
May be exempt from federal overtime requirements | Generally entitled to overtime |
Must satisfy applicable exemption tests | Covered by overtime requirements |
Salary alone does not establish exemption | May be paid hourly or salary |
Important: An employee does not become exempt merely because the employer pays a salary. Duties and applicable compensation tests matter.
Family and Medical Leave Act (FMLA) — 1993
Provides eligible employees with up to:
12 weeks
of unpaid, job-protected leave during a 12-month period for qualifying reasons.
Common qualifying reasons include:
Birth of a child.
Adoption or foster placement.
Caring for a spouse, child, or parent with a serious health condition.
The employee's own serious health condition.
Certain military-family circumstances.
Generally, an eligible employee must:
Have worked for the employer for at least 12 months.
Have at least 1,250 hours of service during the preceding 12 months.
Work at a location where the employer has at least 50 employees within 75 miles.
MEMORIZE: FMLA = 12 weeks, unpaid, job-protected leave.
ERISA — Employee Retirement Income Security Act (1974)
Regulates many private-sector employee benefit plans.
It establishes standards concerning:
Reporting and disclosure.
Fiduciary responsibilities.
Vesting.
Funding of certain pension plans.
Employee rights under covered benefit plans.
Important distinction: ERISA generally does not require employers to offer pension or health plans. It regulates many plans when offered.
COBRA — Consolidated Omnibus Budget Reconciliation Act (1985)
Allows eligible individuals to continue group health coverage temporarily after certain qualifying events.
Examples:
Job loss.
Reduction in working hours.
Certain family status changes.
The former employee or beneficiary generally pays the premium, including an administrative charge where permitted.
MEMORIZE: COBRA = temporary continuation of health insurance.
Social Security Act
Provides the foundation for:
Retirement benefits.
Disability benefits.
Survivors' benefits.
Medicare-related provisions.
Employers and employees contribute through payroll taxes.
Workers' Compensation
State-administered systems generally provide benefits to employees who suffer work-related injuries or illnesses.
Benefits may include:
Medical expenses.
Partial wage replacement.
Disability benefits.
Rehabilitation.
Exam trap: Workers' compensation is generally a no-fault system. Employees ordinarily do not need to prove employer negligence to qualify for benefits.
6.3 Workplace safety and employee rights
OSHA — Occupational Safety and Health Act (1970)
The Occupational Safety and Health Administration enforces workplace safety standards.
Employer responsibilities include:
Providing a workplace free from recognized serious hazards.
Following applicable safety standards.
Providing required training.
Maintaining required records.
Reporting certain serious workplace incidents.
Employee rights include:
Receiving information about workplace hazards.
Accessing relevant safety records.
Requesting OSHA inspections.
Raising safety concerns without unlawful retaliation.
MEMORIZE: OSHA = workplace safety and health.
WARN Act — Worker Adjustment and Retraining Notification Act (1988)
Requires covered employers to provide advance notice, generally 60 calendar days, before certain plant closings and mass layoffs.
The federal law generally covers employers with 100 or more employees, subject to statutory counting rules and exceptions.
Typical thresholds:
Plant closing: Employment loss for 50 or more employees at a single site during a 30-day period.
Mass layoff: Employment loss for 500 or more employees, or 50–499 employees when they constitute at least 33% of the workforce at a single site.
MEMORIZE: WARN = advance notice of certain large layoffs and plant closings.
6.4 Other important employment laws
Law | Main purpose |
|---|---|
USERRA (1994) | Protects employment and reemployment rights of military service members |
GINA (2008) | Protects against genetic-information discrimination |
Lilly Ledbetter Fair Pay Act (2009) | Clarifies the timing of discriminatory compensation claims |
Pregnant Workers Fairness Act (2023) | Requires reasonable accommodations for covered pregnancy-related limitations |
Family and Medical Leave Act (1993) | Job-protected unpaid leave for eligible employees |
6.5 Memorize these laws together
The HR law memory table
If the question mentions... | Think... |
|---|---|
Race, religion, sex, national origin | Title VII |
Age 40 or older | ADEA |
Disability accommodation | ADA |
Equal pay for equal work | EPA |
Overtime and minimum wage | FLSA |
12 weeks of qualifying unpaid leave | FMLA |
Retirement plan administration | ERISA |
Continued health insurance | COBRA |
Workplace hazards | OSHA |
Mass layoffs and plant closings | WARN |
Military service | USERRA |
Genetic information | GINA |
Pregnancy accommodations | PWFA |
7. Labor Relations, Unions, and Collective Bargaining
7.1 Labor unions
A labor union is an organization representing employees in negotiations with employers concerning wages, working conditions, and other employment matters.
Its principal objectives include:
Better wages.
Improved benefits.
Job security.
Safer working conditions.
Fair treatment.
7.2 Collective bargaining
Collective bargaining is the negotiation process between an employer and a union representing employees.
Typical subjects include:
Wages.
Hours.
Benefits.
Working conditions.
Grievance procedures.
The result is often a collective bargaining agreement (CBA).
7.3 Important labor legislation
National Labor Relations Act (NLRA) — 1935
Also called the Wagner Act.
It established important employee rights concerning union organization and collective bargaining in covered private-sector employment.
It protects employees' rights to:
Organize unions.
Join unions.
Engage in collective bargaining.
Participate in protected concerted activities.
Refrain from such activities, subject to applicable legal rules.
It established the National Labor Relations Board (NLRB).
MEMORIZE: NLRA = Wagner Act = employee organizing and collective bargaining rights.
Taft-Hartley Act — 1947
Also called the Labor Management Relations Act.
It amended the NLRA.
It:
Restricted certain union practices.
Defined unfair labor practices by unions.
Allowed states to enact right-to-work laws under Section 14(b).
Established additional restrictions on labor-management conduct.
Distinction:
Wagner Act = strengthened labor organizing rights.
Taft-Hartley = imposed restrictions on certain union activities and amended labor law.
Landrum-Griffin Act — 1959
Also called the Labor-Management Reporting and Disclosure Act.
Its purpose was to regulate internal union affairs and protect union members' rights.
It established requirements concerning:
Union financial reporting.
Democratic union elections.
Member rights.
Union governance.
Civil Service Reform Act — 1978
Reorganized federal civil service management and established the framework for the Federal Labor Relations Authority (FLRA).
It is important in the context of federal employee labor relations.
7.4 Important labor relations terms
Term | Definition |
|---|---|
Union certification | Formal recognition of a union as employee representative |
Collective bargaining agreement | Contract between employer and union |
Grievance | Formal complaint concerning workplace rights or contract interpretation |
Arbitration | Neutral third party makes a decision |
Mediation | Neutral third party helps parties reach agreement |
Conciliation | Assistance to improve negotiations and resolve disputes |
Strike | Employees collectively stop working |
Lockout | Employer prevents employees from working during a labor dispute |
Picketing | Demonstration outside a workplace |
Closed shop | Requires union membership before hiring; generally prohibited under federal law, subject to historical and statutory exceptions |
Union shop | Requires joining a union after hiring in arrangements where permitted |
Right-to-work | State law restricting agreements requiring union membership or financial support as a condition of employment |
Very important distinction:
Mediation = mediator helps parties reach an agreement.
Arbitration = arbitrator decides the dispute.
Collective bargaining = parties negotiate the agreement.
7.5 Unfair labor practices
Examples include:
Employer interference with protected employee organizing activities.
Employer discrimination against employees for protected union activity.
Union coercion of employees exercising their rights.
Certain prohibited union or employer bargaining practices.
The NLRB administers the NLRA and investigates covered unfair labor practice charges.
8. HR Formulas, Current Issues, and Final Exam Traps
8.1 Essential HR formulas
These formulas are worth memorizing. The exam may give you numbers and ask you to calculate an HR indicator.
1. Employee turnover rate
Example:
Employees who left = 12.
Average workforce = 120.
2. Absenteeism rate
A common measure:
Example: 50 absence-days out of 2,000 available workdays.
Answer = 2.5%.
3. Cost per hire
Example: $12,000 recruitment expenses and 6 hires.
Answer = $2,000 per hire.
4. Selection ratio
Example: 10 hires from 200 applicants.
Answer = 0.05, or 5%.
5. Yield ratio
Measures the percentage of candidates progressing successfully through a recruitment stage.
6. Training ROI
Example:
Training benefits = $30,000.
Training costs = $10,000.
7. Compensation range spread
Example: Minimum salary $40,000 and maximum $50,000.
Answer = 25%.
8. Compa-ratio
Example: Salary = $48,000; midpoint = $50,000.
Answer = 96%.
Interpretation: The employee earns 96% of the salary range midpoint.
8.2 Current HR issues and trends
The DSST content outline also includes contemporary developments.
Human Resource Information Systems (HRIS)
HRIS refers to technology used to collect, store, manage, and analyze employee information.
Examples:
Payroll.
Benefits administration.
Recruitment.
Performance evaluations.
Employee records.
Workforce analytics.
Workforce diversity and inclusion
Diversity: Differences among employees.
Equity: Fair access to opportunities and resources.
Inclusion: Creating an environment where employees can participate and contribute.
Global HRM
Managing employees across national borders.
Important challenges:
Cultural differences.
International labor laws.
Expatriate management.
Compensation across countries.
International recruitment.
Language barriers.
Expatriate: An employee assigned to work in a country other than their home country.
Repatriation: Returning an expatriate employee to their home country after an international assignment.
Changing work arrangements
Term | Meaning |
|---|---|
Telecommuting | Working remotely using technology |
Flextime | Flexible starting and ending hours |
Compressed workweek | Full working hours completed in fewer days |
Job sharing | Two employees share one position |
Part-time work | Fewer hours than a full-time schedule |
Contingent workforce | Temporary, contract, or other nontraditional workers |
Gig economy | Short-term, project-based, or task-based work |
Ethical HR management
Important principles:
Confidentiality.
Fairness.
Transparency.
Accountability.
Avoiding conflicts of interest.
Protecting employee information.
Consistent application of workplace policies.
8.3 The 25 most important exam traps
These distinctions are particularly useful for multiple-choice questions.
No. | Concept | Correct distinction |
|---|---|---|
1 | Recruitment vs. selection | Attract vs. choose |
2 | Job description vs. specification | Duties vs. qualifications |
3 | Training vs. development | Current job vs. future career |
4 | Reliability vs. validity | Consistency vs. accuracy of measurement |
5 | Job enlargement vs. enrichment | More tasks vs. more responsibility |
6 | Job rotation vs. job enrichment | Different jobs vs. greater job autonomy |
7 | Halo effect vs. recency error | One positive trait vs. recent events |
8 | Central tendency vs. leniency | Middle ratings vs. overly high ratings |
9 | Mediation vs. arbitration | Facilitates agreement vs. decides dispute |
10 | NLRA vs. Taft-Hartley | Union rights vs. restrictions and amendments |
11 | OSHA vs. workers' compensation | Safety standards vs. injury benefits |
12 | FLSA vs. FMLA | Wages/overtime vs. qualifying unpaid leave |
13 | ERISA vs. COBRA | Benefit-plan regulation vs. health coverage continuation |
14 | ADA vs. ADEA | Disability vs. age |
15 | Title VII vs. Equal Pay Act | Protected categories vs. sex-based pay discrimination |
16 | Profit-sharing vs. gainsharing | Profits vs. productivity gains |
17 | Positive reinforcement vs. punishment | Encourages vs. discourages behavior |
18 | Negative reinforcement vs. punishment | Removes an unpleasant condition vs. applies an unfavorable consequence |
19 | Transformational vs. transactional | Inspires change vs. exchanges rewards for performance |
20 | Internal vs. external recruitment | Existing employees vs. outside candidates |
21 | Internal vs. external equity | Fairness within vs. outside the organization |
22 | MBO vs. 360-degree feedback | Objectives vs. multiple feedback sources |
23 | Profit vs. compensation | Organizational earnings vs. employee rewards |
24 | Attrition vs. layoffs | Natural departures without replacement vs. workforce reduction through termination |
25 | Expectancy vs. instrumentality | Effort-to-performance vs. performance-to-reward |
8.4 The essential theorists: final memorization table
Theorist | Theory or contribution | Keyword |
|---|---|---|
Frederick Taylor | Scientific management | Efficiency |
Henri Fayol | Administrative management | Management functions |
Max Weber | Bureaucratic theory | Rules and hierarchy |
Elton Mayo | Human relations | Hawthorne studies |
Douglas McGregor | Theory X and Theory Y | Employee assumptions |
William Ouchi | Theory Z | Trust and participation |
Abraham Maslow | Hierarchy of needs | Five needs |
Frederick Herzberg | Two-factor theory | Hygiene and motivators |
Victor Vroom | Expectancy theory | Effort and rewards |
J. Stacy Adams | Equity theory | Fairness |
B. F. Skinner | Reinforcement theory | Consequences |
David McClelland | Acquired needs | Achievement, affiliation, power |
Peter Drucker | Management by Objectives | Measurable goals |
Edgar Schein | Organizational culture | Three levels |
Robert House | Path-goal theory | Leader facilitates goals |
9. Final 30-question DSST-style practice examination
The following are original practice questions, not actual DSST examination questions. They are designed to test the definitions, distinctions, and applications covered in this guide.
Practice examination
Question 1. Which management theorist is most closely associated with scientific management?
Question 2. A job description primarily identifies:
Question 3. Which law prohibits employment discrimination based on race, color, religion, sex, and national origin?
Question 4. The ADEA generally protects employees who are:
Question 5. Which law establishes federal overtime and minimum-wage standards?
Question 6. An employee needs a reasonable workplace accommodation because of a disability. Which law is most relevant?
Question 7. Which law generally provides eligible employees up to 12 weeks of unpaid, job-protected leave?
Question 8. Which law regulates many private-sector employee benefit plans?
Question 9. Which law allows eligible individuals to continue group health coverage after certain qualifying events?
Question 10. Which agency administers federal workplace safety standards?
Question 11. A test consistently produces similar results but does not measure the required job skills. It is:
Question 12. The process of attracting qualified applicants is called:
Question 13. Which selection method uses standardized questions for all candidates?
Question 14. An employee receives a high overall evaluation because of one particularly positive characteristic. This is:
Question 15. Which appraisal method collects feedback from supervisors, peers, and subordinates?
Question 16. In the ADDIE model, what comes immediately after Design?
Question 17. Which training evaluation level measures whether employees apply what they learned at work?
Question 18. Which theory distinguishes hygiene factors from motivators?
Question 19. An employee believes that greater effort will lead to better performance and rewards. Which theory applies?
Question 20. An employee compares salary and effort with those of colleagues. Which theory explains this?
Question 21. Which is an example of negative reinforcement?
Question 22. Which method evaluates jobs using skill, effort, responsibility, and working conditions?
Question 23. The Hay Plan is primarily a:
Question 24. Which compensation system rewards employees based on company profits?
Question 25. Which law established the National Labor Relations Board framework and protects covered private-sector organizing rights?
Question 26. The Taft-Hartley Act is associated with:
Question 27. A neutral third party who makes a decision in a labor dispute is an:
Question 28. An employer has 12 employees who leave during a year and an average workforce of 120. What is the turnover rate?
Question 29. A company spends $15,000 recruiting five employees. What is the cost per hire?
Question 30. Which law requires advance notice for certain large plant closings and mass layoffs?
Answer all 30 questions to unlock your score and explanations.
10. My final study priorities
Based on the published DSST subject outline, I would allocate your preparation as follows:
Subject | Suggested priority |
|---|---|
Employment laws | Very high |
Compensation and benefits | Very high |
Safety and health | Very high |
Staffing and selection | Very high |
Performance appraisal | Very high |
Labor relations | High |
Motivation theories | High |
Training and development | High |
HR planning | High |
Current HR trends | Medium |
The American Council on Education's examination description confirms the major subject areas, including planning, staffing, training, appraisal, compensation, safety, employment law, and labor relations.
A suggested seven-day memorization schedule
Day | What to study |
|---|---|
1 | HR foundations, Taylor, Fayol, Mayo, Weber, McGregor |
2 | Recruitment, job analysis, selection, reliability and validity |
3 | Training, ADDIE, Kirkpatrick, performance appraisal |
4 | Compensation, benefits, Maslow, Herzberg, Vroom, Adams |
5 | Employment laws: Title VII, ADA, ADEA, FLSA, FMLA, ERISA |
6 | OSHA, COBRA, WARN, unions, NLRA, Taft-Hartley |
7 | Formulas, exam traps, and the 30-question mock examination |
The 15 things I would memorize cold before test day
Taylor = Scientific Management.
Fayol = Administrative Management.
Mayo = Hawthorne Studies.
McGregor = Theory X and Theory Y.
Maslow = Hierarchy of Needs.
Herzberg = Two-Factor Theory.
Vroom = Expectancy Theory.
Adams = Equity Theory.
Skinner = Reinforcement Theory.
Drucker = Management by Objectives.
Title VII = Five protected categories.
ADA = Disability protection.
ADEA = Age 40+.
FLSA = Minimum wage and overtime.
FMLA = Up to 12 weeks of qualifying unpaid, job-protected leave.
My advice: Give particular attention to employment law, compensation, safety, and performance appraisal. Do not spend all your preparation time memorizing definitions: DSST questions can present practical situations and ask you to identify the correct HR principle.
Free official preparation resource
The official DSST website provides examination fact sheets and preparation information:
Good luck with your examination!
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