What You Should Know About Businesses for the PHR/SPHR Exams
For purposes of the PHR/SPHR exams, knowing information related to the operational functions of business is important. These functions include a general understanding of finance, accounting, production, sales and marketing, customer service, purchasing, and information technology (IT).
Finance and accounting
Some people commonly misperceive accounting and finance as one and the same. Unfortunate for the amount of studying that you have to do, that’s simply not true. The finance function of business management deals with elements, such as making data-driven decisions using financial information. It may also include establishing banking relationships to meet both current and future needs. The accounting function is more operational in nature, dealing primarily with accounts receivable and accounts payable. HR supports the accounting function through the development of key metrics, including budgets to execute workforce planning or human capital management plans.
Look for keywords and variations to the terms strategic and operational. Strategy is a fundamental component to the SPHR core knowledge requirements, whereas the term operational often refers to the PHR exam. For example, the finance elements are important to building and evaluating the strategic plan, so you may anticipate questions related to this business function on the SPHR exam. The accounting function, however, is more operational, often describing tasks that are critical to day-to-day operations, an essential concept to the PHR body of knowledge.
Although studying all of these concepts is important, identifying these key terms will help direct your attention to foundational material for your particular exam.
Production deals with producing the widgets from which a company generates revenue. It can be either products or services. Production is often considered the most important function of business because it remains firmly rooted at the heart of the company’s core competency.
Because production (or services) is often a core competency, both the PHR and SPHR exams require working knowledge of how HR can support productivity and the ancillary needs, such as quality, performance management, employee relations, and risk management.
Sales and marketing
Similar to finance and accounting, sales and marketing are separate yet related business functions. Marketing deals with issues, such as determining what products or services to introduce to the market, branding the products and the company, and providing the collateral necessary to get the message into the marketplace. In turn, the sales department is responsible to sell the items that production is producing and marketing is offering. Symbiotic, as it were — it’s all related.
Sales and marketing are conduits to profit. Therefore, on both exams, expect to see questions related to the recruiting and selection of qualified professionals, commission-based pay structures, plus ongoing performance management of the behavior of these employees to positively impact growth.
Customer service serves multiple roles within an organization, but viewing it is easiest from the perspective of pre- and post-sale. Customers may have many questions before making a decision to buy, ranging from product details to purchase policies or warranties. After a sale, a customer may have issue with damaged product or the need to return. For this reason, HR best supports the customer service department through the hiring of talent, training on the skills necessary to problem solve, and being able to answer questions successfully regarding the products and services. The areas of HR support are topics that you can expect to see on both of the exams.
Purchasing is tied closely to the inventory management system that is in place within the organization. It’s primarily a support function of production, solving issues related to incoming raw materials and the ancillary components necessary to build a product or operate a business. The PHR exam more than likely asks questions related to operational issues about conducting inventory or hiring purchasing agents. On the SPHR exam, prepare for questions related to higher level strategy of the interrelatedness of purchasing technology and its impact on other corporate systems, and know how to respond to the threat of supplier availability in the marketplace.
Information technology (IT)
The impact of technology in the workplace is far reaching. In human resources, the use of Human Resource Information Systems (HRIS) helps to tie together the various elements present in the life cycle of the employee, as shown.
An HRIS system serves as a resume database for recruiting, a compliance repository for training materials, and documentation of compensation and benefits as the employee matures within the company.
IT is also important in that it’s the frontline of defense in the protection of customer and employee information.
Finally, IT provides the infrastructure necessary for the execution of most business operations.
On both exams, prepare for content related to confidentiality issues and the electronic storage of records. It’s also likely that you will be asked questions related to workforce planning, because technology can replace part of the existing workforce due to streamlined processes, or questions about the need to staff a new department with technical, noncore skillsets of talent.