Chapter Five – Safety, Health, and Competition in the Global Marketplace
1. Explain why and how global competition can have a negative impact on safety
and health in the workplace.
It is not uncommon for this pressure to create a harried atmosphere that
2. De ne the term competitiveness.
The Institute of Corporate Competitiveness de nes competitiveness as “the
3. What are the common characteristics of the most competitive companies?
Those who consistently outperform their competitors in the key areas of
4. Explain the importance of continual improvement as it relates to global
competitiveness.
The productivity record of today will be broken tomorrow. What is
considered world-class quality today will be considered mediocre tomorrow.
What is excellent service today will be unsatisfactory service tomorrow. The
5. De ne the terms productivity and value added. Explain their relationship.
Output / Input = Productivity
Value added is the di5erence between what it costs to produce a product
6. State two rules of thumb that explain how to recognize declining productivity.
7. State two rules of thumb that explain how to recognize improving productivity.
8. Explain the relationship between productivity and quality as it relates to
competitiveness.
Quality goes hand-in-hand with productivity in the competitiveness
9. De ne the term quality.
10. Write a brief rebuttal to the following statement: “A safety and health program
is just a bunch of bureaucratic regulations that get in the way of prots.”
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2 Gitman/Zutter • Principles of Managerial Finance, Fourteenth Edition
Instructor/student opinion.
Chapter Six – The OSH Act, Standards, and Liability
1. BrieBy explain the rationale for the OSH Act.
To assure so far as possible every working man and woman in the nation
2. What is OSHA’s mission or purpose?
Encourage employers and employees to reduce workplace hazards
Implement new safety and health programs
Improve existing safety and health programs
3. List those who are exempted from coverage by OSHA.
Persons who are self employed
Family farms that employ only immediate members of the family
4. Explain the di5erence between an OSHA standard and an OSHA regulation.
OSHA standards address speci c hazards such as working in con ned
5. Explain how the following processes relating to OSHA standards are
accomplished; passage of a new standard; request for a temporary variance;
appealing a standard.
Passage of a New Standard – OSHA must publish its intentions in the
Federal Register in either a notice of proposed rule making or an advance
notice of proposed rule making. After publishing notice, they must conduct
a public hearing if one is requested. After the close of the comment period
Chapter 1 The Role of Managerial Finance 3
Request for a Temporary Variance – Employers must demonstrate that
they are making a concerted e5ort to comply and taking the steps
Appealing a Standard – An appeal must be led with the U.S. Court of
Appeals serving the geographic region in which the complainant lives or
6. BrieBy describe OSHA’s record-keeping requirements.
Employers are required to keep injury and illness records for each location
7. What are OSHA’s reporting requirements?
All occupational illnesses must be reported, regardless of the severity.
Work-related injuries must be reported if they result in one or more of the
following:
Death of one or more workers
8. Explain what employers are required to do in order to keep employees informed.
Employers are required to keep employees informed about safety and health
issues that concern them. They are required to post the following material at
9. Explain the various components of OSHA’s enhanced enforcement policy.
Components of the enhanced enforcement policy include:
Follow-up inspections – OSHA’s area directors are empowered to
conduct follow-up inspections to verify compliance.
4 Gitman/Zutter • Principles of Managerial Finance, Fourteenth Edition
violation, OSHA makes the public aware of the fact and all
applicable enforcement actions by issuing press releases through
local and national media.
10. Describe how a hypothetical OSHA workplace inspection would proceed from
the rst step to the last.
The OSHA compliance oLce presents his or her credentials to a
company oLcial.
The compliance oLcer conducts an opening conference with pertinent
company oLcials and employee representatives.
11. List and explain three di5erent types of OSHA citations and the typical penalties
that accompany them.
Other than Serious Violation – A violation that has a direct relationship to
job safety and health, but probably would not cause death or serious
Repeat Violation – A violation of any standard, regulation, rule, or order
Failure to Correct Prior Violation – Failure to correct a prior violation
12. Describe the process for appealing an OSHA citation.
The rst step is to notify OSHA’s area director in writing. This is known as
ling a notice of contest. It must be done within fteen working days of
13. List and brieBy explain OSHA’s voluntary protection programs.
Star Program – The Star Program recognizes companies that have
incorporated safety and health into their regular management system so
Chapter 1 The Role of Managerial Finance 5
Merit Program – The Merit Program is less strenuous than the Star
Demonstration Program – The Department of Labor describes the
Demonstration Program as follows: “for companies that provide Star–
14. List ve employer responsibilities.
Meet the general duty responsibility to provide a workplace free from
hazards that are causing or are likely to cause death or serious physical
harm to employees, and comply with standards, rules, and regulations issued
under the OSH Act.
Be knowledgeable of mandatory standards and make copies available to
employees for review upon request.
Keep employees informed about OSHA.
Continually examine workplace conditions to ensure they conform to
standards.
6 Gitman/Zutter • Principles of Managerial Finance, Fourteenth Edition
15. List ve employee rights.
Complain to an employer, union, OSHA, or any other governmental
agency about job safety and health hazards.
File safety or health grievances.
Participate in a workplace safety and health committee or in union
activities concerning job safety and health.
Participate in OSHA inspections, conferences, hearings, or other OSHA
related activities.
Expect employers to make review copies available of OSHA standards
and requirements.
Ask employers for information on emergency procedures.
Receive safety and health training.
Be kept informed about safety and health issues.
Anonymously ask OSHA to conduct an investigation of hazardous
conditions at the work site.
16. Describe the purpose and organization of NIOSH.
The National Institute for Occupational Safety and Health (NIOSH) is part
of the Department of Health and Human Services (HHS). NIOSH has two
17. De ne the following legal terms as they relate to workplace safety: negligence;
liability; ability to pay; and tort.
Negligence – Negligence means failure to take reasonable care or failure
Chapter 1 The Role of Managerial Finance 7
Ability to Pay – The concept of ability to pay applies when there are a
number of defendants in a case, but not all have the ability to pay nancial
Tort – A tort is an action involving a failure to exercise reasonable care
18. Explain OSHA’s stand on safety incentives.
OSHA is not opposed to safety incentives per se. However, OSHA does
recommend caution in using them to ensure that the desire to earn incentives
Chapter Seven – Workers’ Compensation
1. Explain the underlying rationale of workers’ compensation as a concept.
The underlying rationale for workers’ compensation had two aspects: 1)
fairness to injured employees, especially those without the resources to
2. List four objectives of workers’ compensation.
Replacement of income
3. List ve types of employees who may not be covered by workers’ compensation.
Agricultural employees
Domestic employees
Casual employees
4. What is meant by the term contributory negligence?
5. What is meant by the term assumption of risk?
6. Explain the reasons for the unprecedented increases in medical costs in the
United States.
8 Gitman/Zutter • Principles of Managerial Finance, Fourteenth Edition
The unprecedented increases can be attributed to two factors: 1)
7. What are the three types of workers’ compensation insurance?
8. Insurance companies use one of six methods for determining the premium rates
of employers. Select three and explain them.
Schedule Rating – Insurance companies establish baseline safety
conditions and evaluate the employer’s conditions against the baselines.
Manual Rating – A manual of rates is developed that establishes rates for
Experience Rating – Employers are classi ed by type. Premium rates are
assigned based on predictions of average losses for a given type of
Retrospective Rating – Employees pay an established rate for a set
9. How can one determine if an injury should be considered serious?
10. Explain the concepts of AOE and COE.
When employees are injured when undertaking work prescribed in their
11. Distinguish between an employee and an independent contractor.
A person who is on the company’s payroll, receives bene ts, and has a
12. De ne the following terms: temporary disability, permanent disability.
Temporary Disability – Temporary disability is the state that exists when
it is probable that an injured worker who is currently unable to work will be
Permanent Disability – Permanent partial disability is the condition that
exists when an injured employee is not expected to recover fully. In such
Chapter 1 The Role of Managerial Finance 9
13. Explain the following theories of handling permanent partial disability cases:
whole-person, wage-loss, loss of wage-earning capacity.
Whole Person Theory – Once it has been determined that an injured
worker’s capabilities have been permanently impaired to some extent, the
Wage-Loss Theory – The wage-loss theory requires a determination of
Loss of Wage-Earning Capacity – The loss of wage-earning capacity
14. Distinguish between medical vocational rehabilitation.
Medical rehabilitation consists of providing whatever treatment is required
15. What are the three approaches for settling workers’ compensation claims?
16. Explain the concept of medical management of workplace injuries.
Out-of-control workers’ compensation cases in the ’90s led to the concept
of medical management of workplace injuries. Through better
17. Explain the theory of cost allocation.
Cost allocation is the process of spreading the cost of workers’
18. Summarize brieBy the problems most widely associated with workers’
compensation.
The most fundamental problem with workers’ compensation is that it is not
ful lling its objectives. Lost income is not being adequately replaced, the
19. What types of actions are workers’ compensation reform movements likely to
recommend in the future?
Stabilizing workers’ compensation costs over the long term.
Streamlining administration of the system.
Reducing the costs associated with the resolution of medical issues.
10 Gitman/Zutter • Principles of Managerial Finance, Fourteenth Edition
20. Explain the most common workers’ compensation cost reduction strategies.
Stay in touch with the injured employee.