SPHR Questions Bank

To build a sustainable staffing plan, HR must start by identifying existing skills and capabilities. A skills inventory is a comprehensive internal scan that identifies gaps, strengths, and development needs, enabling the organization to prepare for growth, succession, and future workforce demands.

Extract from HRCI-aligned HR knowledge (Talent Planning and Acquisition domain):

SPHR-level HR strategy includes “conducting internal talent assessments to anticipate future organizational needs.” Developing an employee skills inventory is the first step in strategic workforce planning, forming the basis for recruitment, development, and succession actions.

Retention efforts yield the highest ROI when aimed at high performers, especially those in critical roles or possessing hard-to-replace skills. Broad retention efforts can dilute impact and cost efficiency.

Extract from HRCI-aligned HR knowledge (Employee Relations and Engagement):

SPHR’s strategic retention model highlights “targeted retention of high-potential and high-performing talent as essential to long-term success.” This includes tailored development and reward strategies for key contributors.

When developing a compensation strategy, the first and most critical decision HR must make is whether the organization intends to lead, lag, or match the labor market (B). This decision establishes the overall compensation philosophy, which then guides all downstream design choices, including pay structures, incentives, and adjustment mechanisms.

At the SPHR level, compensation strategy must align with organizational strategy, financial capacity, talent availability, and competitive positioning. Market positioning answers a fundamental strategic question: How does the organization intend to compete for talent? Leading the market may support aggressive growth or scarce-skill acquisition but requires higher labor costs. Lagging the market may be appropriate for cost-control strategies but increases retention risk. Matching the market balances competitiveness and cost stability.

Options such as cost-of-living increases (A), pay-for-performance practices (C), and competency-based pay (D) are design mechanisms, not starting points. These decisions should only be made after the market position is clearly defined. For example, pay-for-performance may be implemented within any market position, but its structure and funding depend on whether the organization leads, matches, or lags the market.

SPHR exam content emphasizes that HR leaders must take a systems-level view of total rewards. Without a clear market posture, compensation programs risk inconsistency, inequity, and misalignment with business goals. Establishing market position first ensures that compensation decisions are intentional, defensible, and sustainable.

References :

HRCI SPHR Exam Content Outline — Functional Area: Total Rewards (compensation philosophy; market positioning; pay strategy alignment).

HRCI SPHR Study Guide — Foundational decisions in compensation strategy development.

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The most critical factors affecting an organization’s ability to compete are the bargaining power of buyers and suppliers (C) and the threat level of substitute products and new market entrants (E). These elements are core components of competitive forces analysis, commonly associated with strategic frameworks used at the SPHR level.

The bargaining power of buyers and suppliers directly influences pricing flexibility, profit margins, and supply chain stability. When buyers have strong bargaining power, they can demand lower prices or higher quality. When suppliers dominate, costs increase and operational flexibility decreases—both directly affecting competitiveness.

The threat of substitute products and new entrants shapes market dynamics by increasing competition, driving innovation pressure, and limiting long-term pricing power. Organizations in markets with low barriers to entry or many substitutes must continuously adapt to remain competitive.

Automation (A) and total quality management proficiency (D) are internal capabilities that support competitiveness but do not define the competitive environment itself. Marketing media cost (B) is a tactical expense rather than a strategic competitive force.

SPHR exam content emphasizes that HR leaders must understand external competitive forces to align workforce strategy, capability development, and organizational design with business realities.

References :

HRCI SPHR Exam Content Outline — Functional Area: Leadership and Strategy (competitive analysis; external environment).

HRCI SPHR Study Guide — Competitive forces and strategic positioning.

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