SHRM PRACTICE PAPER 2026 COMPLETE
QUESTIONS AND SOLUTIONS GRADED A+
● What is an accurate characterization of the correct role for HR in
managing organizational risk? Answer: The best role for HR is one that
is proactive, not reactive, and that considers risk from an integrated
enterprise perspective. The definition of risk appetite and risk tolerance
is best made by senior management, however.
● What leadership theory is characterized by the belief that managers
must use different leadership styles depending on the circumstances?
Answer: The situational leadership theory states that different leadership
styles should be used based on the situation in which managers find
themselves. The trait theory states that leaders possess different traits
than average people do. According to the behavioral theory, how a
person behaves determines leadership effectiveness. The motivational
theory looks at the factors causing job satisfaction and dissatisfaction.
● The HR director and the management team of a small resort hotel are
developing a strategy to remain union-free. A union's representatives are
talking with the employees. What action should management take?
Answer: Be honest with the employees. Being dishonest will play into
the union's potential future organizing campaign.
● What is the typical relationship of the strategic planning process to the
environmental scan? Answer: An organization typically conducts a
,SWOT analysis as part of its strategic planning process. In order to
accurately assess the company's threats and opportunities, the company
must have an understanding of factors outside of the organization. The
environmental scan focuses on external factors, and, when done in
conjunction with strategic planning, provides additional information
upon which the company can base its decisions.
● What critical effect have technological forces had on today's corporate
social responsibility (CSR) practices? Answer: Data mining and
analytics capabilities have made CSR factors more readily measurable
and their impacts more demonstrable and understandable. That, in turn,
has increased accountability, helped shape regulatory requirements, and,
where measurable performance results are positive, given organizations
a powerful strategic tool.
● How can HR best assist in creating an ethical organization? Answer:
To create an ethical organization, leaders and managers need to know
how to recognize ethical dilemmas and how to deal with them. Leaders
need to know what the organization values and what its expectations are
for its leaders and employees.
● An organization has been forced to hire new employees at higher pay
rates than usual due to a tight labor supply. Employees who have been
with the organization one to three years are earning the same or only
slightly more than the new hires they have to train. What is the
organization experiencing? Answer: Pay compression, or salary
compression, occurs when there is only a small difference in pay
between employees, regardless of their experience, skills, or seniority.
, Pay differentials may be narrowed over time in an organizational
hierarchy.
● What is the best vehicle for communicating a strong organizational
commitment to ethical standards? Answer: Modeling of ethical behavior
indicates management and supervisory support every day in a variety of
scenarios. Statements in handbooks are passive learning and are hard to
transfer to real workplace situations. Annual training without frequent
reinforcement is not very effective. Individual coaching is good, but it is
reactive, occurring after the event. Modeling can help prevent unethical
behavior.
● What is the effect of the principle of employment-at-will on employers
in countries that recognize this employment right? Answer: When the
principle of employment-at-will applies, primarily in the U.S., both the
employee and the employer are free to terminate the relationship with no
consequences, assuming that no other contracts or agreements have been
made and the termination was legal (in other words, not a case of
wrongful discharge). However, although not legally required in that
situation, employers may provide some sort of compensation for
terminated employees.
● New leadership is in place at a large retailer. All departments are
undergoing detailed reviews of their support of organizational strategy
and effectiveness. The benefits department has just completed its review,
and leadership believes benefit offerings are not reflective of the
organization's total rewards philosophy. A gap analysis yields
overlapping benefits. What action should be taken to remedy the
QUESTIONS AND SOLUTIONS GRADED A+
● What is an accurate characterization of the correct role for HR in
managing organizational risk? Answer: The best role for HR is one that
is proactive, not reactive, and that considers risk from an integrated
enterprise perspective. The definition of risk appetite and risk tolerance
is best made by senior management, however.
● What leadership theory is characterized by the belief that managers
must use different leadership styles depending on the circumstances?
Answer: The situational leadership theory states that different leadership
styles should be used based on the situation in which managers find
themselves. The trait theory states that leaders possess different traits
than average people do. According to the behavioral theory, how a
person behaves determines leadership effectiveness. The motivational
theory looks at the factors causing job satisfaction and dissatisfaction.
● The HR director and the management team of a small resort hotel are
developing a strategy to remain union-free. A union's representatives are
talking with the employees. What action should management take?
Answer: Be honest with the employees. Being dishonest will play into
the union's potential future organizing campaign.
● What is the typical relationship of the strategic planning process to the
environmental scan? Answer: An organization typically conducts a
,SWOT analysis as part of its strategic planning process. In order to
accurately assess the company's threats and opportunities, the company
must have an understanding of factors outside of the organization. The
environmental scan focuses on external factors, and, when done in
conjunction with strategic planning, provides additional information
upon which the company can base its decisions.
● What critical effect have technological forces had on today's corporate
social responsibility (CSR) practices? Answer: Data mining and
analytics capabilities have made CSR factors more readily measurable
and their impacts more demonstrable and understandable. That, in turn,
has increased accountability, helped shape regulatory requirements, and,
where measurable performance results are positive, given organizations
a powerful strategic tool.
● How can HR best assist in creating an ethical organization? Answer:
To create an ethical organization, leaders and managers need to know
how to recognize ethical dilemmas and how to deal with them. Leaders
need to know what the organization values and what its expectations are
for its leaders and employees.
● An organization has been forced to hire new employees at higher pay
rates than usual due to a tight labor supply. Employees who have been
with the organization one to three years are earning the same or only
slightly more than the new hires they have to train. What is the
organization experiencing? Answer: Pay compression, or salary
compression, occurs when there is only a small difference in pay
between employees, regardless of their experience, skills, or seniority.
, Pay differentials may be narrowed over time in an organizational
hierarchy.
● What is the best vehicle for communicating a strong organizational
commitment to ethical standards? Answer: Modeling of ethical behavior
indicates management and supervisory support every day in a variety of
scenarios. Statements in handbooks are passive learning and are hard to
transfer to real workplace situations. Annual training without frequent
reinforcement is not very effective. Individual coaching is good, but it is
reactive, occurring after the event. Modeling can help prevent unethical
behavior.
● What is the effect of the principle of employment-at-will on employers
in countries that recognize this employment right? Answer: When the
principle of employment-at-will applies, primarily in the U.S., both the
employee and the employer are free to terminate the relationship with no
consequences, assuming that no other contracts or agreements have been
made and the termination was legal (in other words, not a case of
wrongful discharge). However, although not legally required in that
situation, employers may provide some sort of compensation for
terminated employees.
● New leadership is in place at a large retailer. All departments are
undergoing detailed reviews of their support of organizational strategy
and effectiveness. The benefits department has just completed its review,
and leadership believes benefit offerings are not reflective of the
organization's total rewards philosophy. A gap analysis yields
overlapping benefits. What action should be taken to remedy the
