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HRM & Industrial Relations study materials
HRM & Industrial Relations study resources

HRM & Industrial Relations practice questions

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Question 1Strategic Human Resource Management

Which term describes the process of aligning an organization's human resource practices with its long-term goals and direction?

  1. Strategic human resource management Correct answer.
  2. Grievance arbitration
  3. Transactional recruitment
  4. Operational payroll administration

Explanation

Strategic human resource management links people practices such as staffing, development, and reward to the long-term objectives of the organization. It is distinguished from day-to-day administrative tasks by its forward-looking, integrated orientation.

Question 2Strategic Human Resource Management

In the resource-based view, which characteristic makes a firm's human capital a source of sustained competitive advantage?

  1. It is easily imitated by rivals
  2. It is purchased on the open market
  3. It is valuable, rare, and difficult to imitate Correct answer.
  4. It depreciates quickly

Explanation

The resource-based view holds that resources generate sustained advantage when they are valuable, rare, hard to imitate, and not readily substitutable. Skilled, committed employees embedded in firm-specific routines fit these criteria better than generic inputs.

Question 3Strategic Human Resource Management

A firm wants HR practices to reinforce one another so that selection, training, and pay all push employees toward the same behaviors. Which concept does this describe?

  1. Job enlargement
  2. Horizontal fit Correct answer.
  3. Span of control
  4. Vertical fit

Explanation

Horizontal fit refers to internal consistency among the various HR practices within the function. Vertical fit, by contrast, concerns alignment between HR practices and the broader business strategy.

Question 4Strategic Human Resource Management

A low-cost airline emphasizes efficiency, standardized service, and tight cost control. Which HR strategy is most consistent with this positioning?

  1. Extensive employee autonomy in service design
  2. Efficiency-focused staffing with narrow job descriptions Correct answer.
  3. Long-term internal development of broad generalists
  4. Heavy investment in idiosyncratic innovation skills

Explanation

A cost-leadership strategy rewards predictability and efficiency, so narrow, clearly specified jobs and efficient staffing fit well. Broad autonomy and heavy investment in unique skills support differentiation strategies instead.

Question 5Strategic Human Resource Management

Which model explains employee performance as a function of ability, motivation, and opportunity to perform?

  1. The Boston Consulting Group matrix
  2. Maslow's hierarchy of needs
  3. The AMO model Correct answer.
  4. The five forces framework

Explanation

The AMO model holds that performance depends on employees having the ability, the motivation, and the opportunity to contribute. HR practices are then grouped by whether they build skills, shape incentives, or create supportive work conditions.

Question 6Strategic Human Resource Management

An HR director argues that the HR function should hold a seat in strategy formulation rather than only implement decisions made elsewhere. Which perspective does this reflect?

  1. The personnel-management perspective
  2. The scientific-management perspective
  3. The human-relations perspective
  4. The strategic-partner perspective Correct answer.

Explanation

The strategic-partner perspective positions HR as a co-author of strategy, contributing insight about human capital to major decisions. The older personnel perspective treated HR as a largely reactive administrative support function.

Question 7Strategic Human Resource Management

A software company competes by rapid innovation and needs employees who adapt quickly to new problems. Which human capital attribute is most valuable to this firm?

  1. Generic skills that are easily hired
  2. Narrowly defined repetitive task skills
  3. Firm-specific skills tied to legacy systems
  4. Highly adaptable, broadly skilled employees Correct answer.

Explanation

Innovation-based strategies depend on employees who can learn continuously and apply broad skills to novel problems. Narrow or legacy-specific skills become obsolete when technology and customer needs shift quickly.

Question 8Strategic Human Resource Management

What does vertical fit mean in strategic human resource management?

  1. Alignment between HR practices and the organization's business strategy Correct answer.
  2. Consistency among HR practices such as pay and training
  3. Matching job grades across departments
  4. Equalizing pay across hierarchical levels

Explanation

Vertical fit describes the alignment of HR policies and practices with the competitive strategy and external environment of the firm. It is the counterpart to horizontal fit, which concerns consistency among HR practices themselves.

Question 9Strategic Human Resource Management

A retail chain with high employee turnover decides to invest in extensive long-term development of all frontline staff. Why might this decision be strategically questionable?

  1. Employees may leave before the firm recovers its investment Correct answer.
  2. Skills training has no effect on service quality
  3. Training always reduces employee motivation
  4. Development increases the firm's wage bill only

Explanation

When turnover is high, the firm may not retain employees long enough to recoup substantial development costs. A strategic approach weighs the expected return on training against the likelihood of retention.

Question 10Strategic Human Resource Management

Which of the following best describes a differentiation strategy in the context of HRM?

  1. Reducing the number of product variants
  2. Standardizing all customer interactions
  3. Offering unique products or services that customers value Correct answer.
  4. Competing on the lowest possible price

Explanation

A differentiation strategy seeks competitive advantage by offering something customers perceive as unique and worth a premium. This typically calls for employee creativity, responsiveness, and higher-skill work designs.

Question 11Strategic Human Resource Management

A firm's HR department uses workforce analytics to forecast the skills it will need in three years and plans recruiting accordingly. Which strategic HR activity does this illustrate?

  1. Job evaluation
  2. Collective bargaining
  3. Human resource planning Correct answer.
  4. Discipline management

Explanation

Human resource planning forecasts future demand for and supply of skills so the organization can close anticipated gaps. It links staffing decisions to the strategic direction of the firm over time.

Question 12Strategic Human Resource Management

According to the universalistic perspective on HRM, what is claimed about certain HR practices?

  1. They must be customized to each individual employee
  2. They improve performance regardless of the firm's strategy Correct answer.
  3. They work only in unionized workplaces
  4. They are effective only for large firms

Explanation

The universalistic perspective, often called best practice, argues that a set of HR practices yields superior performance across contexts. The contingency perspective instead holds that effectiveness depends on fit with strategy and environment.

Question 13Strategic Human Resource Management

The contingency perspective in SHRM would predict which outcome?

  1. Identical HR bundles perform equally well in every industry
  2. Only compensation affects firm performance
  3. The value of an HR practice depends on the firm's strategy and environment Correct answer.
  4. HR practices have no measurable effect on performance

Explanation

Contingency theory holds that the performance impact of HR practices is conditional on fit with contextual factors such as strategy, technology, and market conditions. There is no single bundle that is optimal everywhere.

Question 14Strategic Human Resource Management

Which concept refers to the collective skills, knowledge, and abilities of an organization's workforce that can be deployed to create economic value?

  1. Physical capital
  2. Structural capital
  3. Social capital
  4. Human capital Correct answer.

Explanation

Human capital denotes the knowledge, skills, and experience embodied in employees that can be applied to productive purposes. Social capital instead refers to value embedded in relationships and networks.

Question 15Strategic Human Resource Management

A firm pursuing an innovation strategy is deciding how to design jobs. Which design is most consistent with that strategy?

  1. Broadly defined jobs with discretion to solve problems Correct answer.
  2. Rigid hourly monitoring of every task
  3. Highly repetitive assembly tasks
  4. Tightly scripted tasks with minimal discretion

Explanation

Innovation requires employees to experiment, adapt, and solve novel problems, which calls for broad job definitions and discretion. Tight scripting and close monitoring suppress the experimentation innovation depends on.

Question 16Strategic Human Resource Management

What is the primary purpose of a balanced scorecard when applied to human resources?

  1. To set legal minimum wages
  2. To translate HR strategy into measurable indicators across several perspectives Correct answer.
  3. To replace financial reporting entirely
  4. To rank employees for dismissal

Explanation

The balanced scorecard translates strategy into measures spanning financial, customer, internal process, and learning perspectives. Applied to HR, it links people practices to outcomes that matter strategically rather than relying on a single financial metric.

Question 17Strategic Human Resource Management

A firm measures revenue per employee and the proportion of key roles filled internally. What are these examples of?

  1. HR outcome metrics Correct answer.
  2. Collective agreements
  3. Job evaluation points
  4. Grievance procedures

Explanation

These indicators quantify the results of HR activity and connect people management to organizational performance. Metrics such as revenue per employee and internal fill rates help leaders judge whether HR strategy is delivering.

Question 18Strategic Human Resource Management

Which statement best captures the concept of a psychological contract in strategic HRM?

  1. A legally binding employment contract signed at hire
  2. A government regulation on workplace safety
  3. A union agreement covering wages and hours
  4. The unwritten expectations between employee and employer about mutual obligations Correct answer.

Explanation

The psychological contract refers to implicit, unwritten beliefs about what each party owes the other, such as loyalty in exchange for security. Breach of these expectations can damage trust and retention even when no formal contract is violated.

Question 19Strategic Human Resource Management

A firm known for lifetime employment and internal promotion suddenly hires senior managers externally. What strategic risk does this create?

  1. It eliminates the need for succession planning
  2. It strengthens the existing psychological contract
  3. It guarantees lower labor costs
  4. It may breach implicit promises of career progression Correct answer.

Explanation

When employees have been led to expect internal advancement, external senior hiring can be perceived as breaking an implicit promise. That perceived breach can reduce commitment, trust, and retention among existing staff.

Question 20Strategic Human Resource Management

Which term describes a set of distinct but interconnected HR practices that together produce superior performance?

  1. A grievance procedure
  2. A job specification
  3. An HR bundle Correct answer.
  4. A wage curve

Explanation

An HR bundle is a configuration of complementary practices, such as selective hiring combined with training and performance pay. The logic is that practices reinforce one another and produce effects greater than any single practice alone.

Question 21Strategic Human Resource Management

A manufacturing firm's strategy shifts from mass production to customized, high-quality output. What HR change is most consistent with this shift?

  1. Shifting toward teamwork, training, and quality-focused incentives Correct answer.
  2. Narrowing jobs and increasing close supervision
  3. Cutting all training to reduce costs
  4. Replacing variable pay with strict hourly monitoring

Explanation

Customized, high-quality production depends on employee involvement, problem-solving skills, and incentives aligned with quality. Teamwork, training, and quality-linked rewards support that strategic shift better than tighter control.

Question 22Strategic Human Resource Management

What distinguishes strategic HRM from traditional personnel management?

  1. It applies only to small firms
  2. It integrates HR with long-term organizational goals and treats people as a source of advantage Correct answer.
  3. It focuses exclusively on payroll processing
  4. It avoids any involvement in business planning

Explanation

Strategic HRM treats human resources as a lever for competitive advantage and integrates people decisions with long-term organizational direction. Traditional personnel management was more administrative, reactive, and detached from strategy.

Question 23Strategic Human Resource Management

A firm uses a differentiation strategy but pays below-market wages and offers little training. What is the most likely strategic consequence?

  1. It will eliminate the need for performance management
  2. It will strengthen its ability to attract highly skilled staff
  3. It will automatically reduce turnover
  4. It will struggle to attract and retain the talent its strategy requires Correct answer.

Explanation

Differentiation depends on skilled, motivated employees, so below-market pay and minimal training create a mismatch with the strategy. This misalignment tends to raise recruitment difficulty and turnover among the very talent the strategy needs.

Question 24Strategic Human Resource Management

Which of the following is an example of an internal fit problem?

  1. A competitor raises its wages
  2. The labor market tightens for engineers
  3. The firm's strategy shifts because of new regulation
  4. The firm's teamwork policy is undermined by individual piece-rate pay Correct answer.

Explanation

Internal, or horizontal, fit concerns consistency among HR practices, so rewarding individual output while requiring teamwork creates a contradiction. The other options describe external pressures rather than inconsistency within the HR system.

Question 25Strategic Human Resource Management

What role does succession planning play in strategic HRM?

  1. It replaces the need for any external recruitment
  2. It ensures critical roles can be filled from within over time Correct answer.
  3. It guarantees that no employee will ever leave
  4. It sets the legal minimum for severance pay

Explanation

Succession planning develops a pipeline of capable people for key positions so that leadership transitions do not disrupt strategy execution. It is a forward-looking activity that connects development and career planning to organizational continuity.

Question 26Strategic Human Resource Management

In strategic human resource management, what does horizontal fit refer to?

  1. The alignment of HR practices with the organization's competitive strategy
  2. The internal consistency and alignment among an organization's individual HR practices Correct answer.
  3. The alignment of HR goals with national labor legislation
  4. The consistency between an organization's HR planning and its financial budgeting

Explanation

Horizontal fit concerns how well the separate HR practices, such as staffing, training, appraisal, and rewards, reinforce one another rather than pull in different directions. When these practices are mutually consistent, they send coherent signals to employees and are more likely to produce the intended behaviors.

Question 27Strategic Human Resource Management

A firm adopts a cost-leadership strategy built on efficiency and scale. Which reward design is most consistent with this strategy?

  1. Rewards emphasizing broad stock options for all employees
  2. Rewards emphasizing individual creativity and experimentation
  3. Rewards linked to productivity and cost-control targets Correct answer.
  4. Rewards tied to long-term innovation milestones and tolerance for failure

Explanation

A cost-leadership strategy rewards efficiency, high output, and cost discipline, so incentive systems should tie pay to measurable productivity and cost outcomes. This directs employee effort toward the behaviors the strategy depends on, illustrating vertical fit between rewards and strategy.

Question 28Strategic Human Resource Management

Which theoretical perspective explains that HR practices affect firm performance mainly through employees' collective human capital and motivation, often summarized by the ability-motivation-opportunity model?

  1. The behavioral perspective
  2. The resource-based view of the firm
  3. The AMO framework Correct answer.
  4. Institutional theory

Explanation

The AMO framework holds that performance depends on enhancing employee ability, motivation, and opportunity to contribute, and that HR practices should target all three. It is a widely used lens for explaining how bundles of HR practices translate into outcomes.

Question 29Strategic Human Resource Management

A professional services firm wants to sustain a competitive advantage from its people. According to the resource-based view, which characteristic of its human capital is most important for this advantage to be sustained?

  1. The human capital is inexpensive relative to industry benchmarks
  2. The human capital is standardized so it can be deployed in any role
  3. The human capital is valuable, rare, and difficult to imitate or substitute Correct answer.
  4. The human capital is easy to imitate because competitors can hire from the same labor market

Explanation

The resource-based view holds that a resource supports sustained advantage when it is valuable, rare, hard to imitate, and hard to substitute. Human capital embedded in firm-specific routines and relationships meets these conditions better than easily copied skills.

Question 30Strategic Human Resource Management

An organization claims to pursue a differentiation strategy based on superior customer service, but its appraisal system rates employees solely on volume of transactions handled. Which strategic HRM problem does this illustrate?

  1. A problem of external labor-market competitiveness
  2. A lack of vertical fit between appraisal and the customer-service strategy Correct answer.
  3. An appropriate alignment of appraisal with a cost-leadership strategy
  4. A lack of horizontal fit between appraisal and the intended strategic behaviors

Explanation

Vertical fit means HR practices reinforce the chosen competitive strategy. Appraising only transaction volume rewards speed and cost efficiency, which contradicts a customer-service differentiation strategy, so the appraisal is misaligned with strategy.

Question 31Workforce Planning and Talent Acquisition

Which document translates an organisation's overall strategy into the specific number and type of people needed over the planning horizon?

  1. The induction checklist
  2. The workforce plan Correct answer.
  3. The grievance procedure
  4. The salary survey

Explanation

Workforce planning converts strategic objectives into quantified staffing requirements, specifying how many people with which skills are needed and when. The other documents serve unrelated administrative or reward purposes and do not project staffing demand.

Question 32Workforce Planning and Talent Acquisition

A retailer expects sales volume to rise next year and therefore needs more store staff. This demand is best described as:

  1. Structural demand
  2. Frictional demand
  3. Derived demand Correct answer.
  4. Cyclical demand

Explanation

Demand for labour is derived from demand for the goods or services the labour produces, so higher sales expectations translate into higher staffing needs. The other labels describe types of unemployment or labour-market conditions rather than the source of demand.

Question 33Workforce Planning and Talent Acquisition

Which recruitment source is generally associated with lower cost per hire and higher retention in the first year?

  1. Newspaper advertising
  2. Campus milkround
  3. Executive search agency
  4. Internal promotion Correct answer.

Explanation

Internal moves are typically cheaper because no agency or advertising fee is incurred, and retention tends to be higher since the person already understands the culture. External channels add sourcing costs and carry greater uncertainty about fit.

Question 34Workforce Planning and Talent Acquisition

What is the main purpose of a realistic job preview during selection?

  1. To verify the candidate's identity documents
  2. To negotiate the starting salary
  3. To test technical skills under timed conditions
  4. To give candidates a balanced picture of the role so expectations are calibrated Correct answer.

Explanation

A realistic job preview presents both attractive and unattractive aspects of the role, which helps candidates self-select and reduces early voluntary turnover. It is not an ability test, a pay discussion, or an identity check.

Question 35Workforce Planning and Talent Acquisition

Which metric expresses the average number of days taken to fill a vacancy from the point it is approved?

  1. Selection ratio
  2. Time to hire Correct answer.
  3. Yield ratio
  4. Absence rate

Explanation

Time to hire measures elapsed days between vacancy approval or posting and acceptance by the chosen candidate. Yield and selection ratios measure funnel conversion, while absence rate concerns attendance.

Question 36Workforce Planning and Talent Acquisition

In succession planning, a 'ready now' candidate is one who:

  1. Has declined a promotion
  2. Has just joined the graduate scheme
  3. Could step into the target role immediately Correct answer.
  4. Needs five or more years of development

Explanation

Succession plans usually classify candidates by readiness, and 'ready now' means the individual could take the role without further substantial development. Longer-horizon candidates are labelled ready in one to three years or longer.

Question 37Workforce Planning and Talent Acquisition

Which of the following is a quantitative demand-forecasting technique in workforce planning?

  1. Nominal group technique
  2. Delphi technique
  3. Scenario brainstorming
  4. Work-study based ratio analysis Correct answer.

Explanation

Ratio and work-study approaches use measurable relationships, such as staff per unit of output, to calculate future headcount numerically. Delphi, nominal group and brainstorming methods rely on expert judgement and are qualitative.

Question 38Workforce Planning and Talent Acquisition

A firm has 200 employees and expects to lose 30 over the year. What is the annual labour turnover rate?

  1. 20 per cent
  2. 6.7 per cent
  3. 15 per cent Correct answer.
  4. 30 per cent

Explanation

Turnover is leavers divided by average headcount, so 30 divided by 200 equals 0.15, or 15 per cent. The other figures result from dividing the wrong quantities or misplacing the decimal.

Question 39Workforce Planning and Talent Acquisition

A call centre forecasts a need for 1,200 agent-hours per week. Each agent works 30 productive hours per week. How many agents are required?

  1. 36
  2. 40 Correct answer.
  3. 48
  4. 30

Explanation

Dividing required hours by productive hours per agent gives 1,200 divided by 30, which equals 40 agents. Using total paid hours rather than productive hours would understate the requirement.

Question 40Workforce Planning and Talent Acquisition

A warehouse plans to automate part of its picking operation next year. Which workforce planning response is most appropriate?

  1. Recruit additional pickers on permanent contracts
  2. Extend the probation period for current pickers
  3. Freeze all recruitment without any analysis
  4. Forecast reduced demand for pickers and plan redeployment or reskilling Correct answer.

Explanation

Automation reduces the labour required for the automated tasks, so the plan should anticipate lower demand and manage the surplus through redeployment or reskilling. Recruiting more pickers or freezing recruitment without analysis ignores the forecast change.

Question 41Workforce Planning and Talent Acquisition

Which selection method generally has the highest predictive validity for job performance across many occupations?

  1. Unstructured interview
  2. References
  3. Graphology
  4. Structured employment interview Correct answer.

Explanation

Meta-analytic evidence places structured interviews among the most predictive selection methods because questions and scoring are standardised. Unstructured interviews, handwriting analysis and references show much weaker validity.

Question 42Workforce Planning and Talent Acquisition

A selection panel uses the same scoring rubric and the same questions for every candidate. This primarily improves:

  1. The salary benchmark
  2. Reliability of the selection decision Correct answer.
  3. The employer brand
  4. The time to hire

Explanation

Standardising questions and scoring reduces random variation between assessors, which raises the consistency, or reliability, of judgements. It does not directly affect branding, speed of hiring or pay benchmarking.

Question 43Workforce Planning and Talent Acquisition

What does a selection ratio of 0.05 indicate?

  1. Five per cent of offers are declined
  2. Five per cent of hires leave within a year
  3. Each vacancy attracts five applicants
  4. Five per cent of applicants are hired Correct answer.

Explanation

The selection ratio is the number of hires divided by the number of applicants, so 0.05 means one hire for every twenty applicants. It signals a highly selective process, not turnover or offer acceptance.

Question 44Workforce Planning and Talent Acquisition

Which action best supports employer branding during recruitment?

  1. Delaying all candidate communication until an offer is ready
  2. Presenting consistent, accurate messages about culture across all candidate touchpoints Correct answer.
  3. Promising benefits that are not actually offered
  4. Using identical adverts for every role regardless of content

Explanation

A credible employer brand depends on consistent and honest messaging so that candidate expectations match the employment experience. Inflated promises, generic adverts and silence damage trust and increase offer decline or early exit.

Question 45Workforce Planning and Talent Acquisition

A job analysis produces a list of tasks, duties and responsibilities. This output is best described as a:

  1. Person specification
  2. Job description Correct answer.
  3. Workforce plan
  4. Competency framework

Explanation

A job description records the tasks, duties and responsibilities of a role, whereas the person specification states the human attributes needed to perform it. Competency frameworks and workforce plans serve different purposes.

Question 46Workforce Planning and Talent Acquisition

Which approach to reducing a forecast labour surplus is usually the most humane and preserves morale?

  1. Closing the site without notice
  2. Immediate compulsory redundancies
  3. Natural attrition with a recruitment freeze Correct answer.
  4. Cutting all training budgets

Explanation

Managing a surplus through natural attrition and a hiring freeze avoids forced job losses and signals that the employer values its people. Compulsory redundancy, sudden closure and training cuts damage trust and capability.

Question 47Workforce Planning and Talent Acquisition

A firm has 80 applicants, 20 are interviewed and 4 are hired. What is the yield ratio from interview to hire?

  1. 0.25
  2. 0.05
  3. 0.50
  4. 0.20 Correct answer.

Explanation

The interview-to-hire yield is hires divided by interviewees, so 4 divided by 20 equals 0.20. Dividing by applicants instead gives the overall selection ratio of 0.05.

Question 48Workforce Planning and Talent Acquisition

Which factor most directly increases the supply of labour available to an occupation?

  1. A decline in training places
  2. An increase in required entry qualifications
  3. A fall in the retirement age
  4. A rise in the wage rate relative to comparable jobs Correct answer.

Explanation

Higher relative pay makes the occupation more attractive, drawing entrants from other fields and raising labour supply. Raising entry barriers or cutting training places restricts supply, and a lower retirement age reduces it.

Question 49Workforce Planning and Talent Acquisition

Which internal recruitment advantage is most often cited as reducing the risk of poor person-organisation fit?

  1. Internal moves require no induction
  2. Internal candidates always accept lower pay
  3. The candidate's performance and behaviour are already known Correct answer.
  4. Internal candidates need no reference checks

Explanation

Internal candidates have a track record that can be observed directly, reducing uncertainty about performance and cultural fit. Pay, induction and referencing still apply to internal moves.

Question 50Workforce Planning and Talent Acquisition

An organisation uses a nine-box grid plotting performance against potential. What is its main workforce planning use?

  1. Recording statutory training completion
  2. Scheduling shift rotas
  3. Calculating the annual pay award budget
  4. Identifying talent pools for development and succession Correct answer.

Explanation

The nine-box grid cross-classifies employees by current performance and future potential, which helps target development and build succession pipelines. It is a talent review tool rather than a pay, rostering or compliance record.