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Chapter Ten: Human Resource Management
Key Terms
Bonus: Similar to profit sharing, a reward offered to the employees based on their
performance. Typically, bonus systems are not as well defined as profit sharing; instead,
the level of reward is left to the discretion of the entrepreneur. (LO 10-3)
Commission: Payment by the entrepreneur of some percentage of sales, typically
associated with the compensation of sales representatives. (LO 10-3)
Discrimination: In the workplace, hiring, dismissal, level of pay, or promotions based
on race, color, gender, religious beliefs, or national origin of the employee. Such actions
are prohibited by federal and state laws. (LO 10-2)
Equity Theory: The theory that we all judge how we are treated relative to how we see
others being treated. (LO 10-3)
Fair Labor Standards Act (FLSA): The act that established a minimum wage for
workers. (LO 10-3)
Hourly Wage: The amount paid per hour for work performed. (LO 10-3)
Human Resources: As defined in economics, the quantity and quality of human effort
directed toward producing goods and services. (LO 10-1)
Hybrid compensation system: A compensation system where there is a salary along
with commission. (LO 10-3)
Job description: Document that describes the job that is to be filled. (LO 10-2)
OSHA: The Occupational Safety and Health Administration, which is charged with
protecting the health of workers. (LO 10-5)
Performance Review: Review by the entrepreneurial business owner of the
employees’ goals and outcomes on those goals over some given period. (LO 10-3)
Profit Sharing: An example of a hybrid compensation system. The firm may set some
relatively low level of salary but offer to share a percentage of the profits at the end of
the year or some other period of time with the employees. (LO 10-3)
Salary: A set amount of compensation for a given time period. (LO 10-3)
IM 10-1
Copyright © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Chapter Ten: Human Resource Management
Opening Vignette – “Olga Kay-Moosh Walks” – p. 185
Student responses will vary
Exercise 1 – p. 188
Student responses will vary
Exercise 2 – p. 190
Student responses will vary.
Exercise 3 – p. 192
Student responses will vary.
Ethical Challenge – p. 196
1. The questions that your partner is posing are illegal and can lead to legal action by
the candidate. There is no justification for the questions. Your partner should not be part
of the interviewing process.
2. It doesn’t matter. The questions should not be asked.
3. Thank the candidate for his candor and continue with legal questions. A candidate
may become leery of the company based on the type interview that is being conducted.
Review Questions – p.202
1. What means would you suggest to improve the process of hiring the right
people for a new business? Hiring a new employee should include the following
2. What elements should a good job description contain? The job description
3. What are the various ways to advertise a job opening? There are several ways to
IM 10-2
Copyright © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Chapter Ten: Human Resource Management
4. What means would you suggest to help avoid job discrimination? Job
5. What techniques improve the interviewing process? The interviewer should have
6. How can testing be used to improve the hiring decision? Testing candidates on
7. What is the best method for making an offer to a candidate? The owner may
8. How does compensation impact the ability to retain an employee? Employees
9. What legal issues are related to the retaining and firing of employees? The key
10. What benefits might be offered to new employees? Benefits may include paid
11. How are performance reviews related to employee retention? The performance
IM 10-3
Copyright © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Chapter Ten: Human Resource Management
12. Describe the impact that OSHA could have on a new restaurant operation. The
13. How does ADA affect retail organizations? Retail organizations need to provide
14. What is the impact on hiring decisions when the business is family owned and
Activities and Sample Assignments
1. Discuss the various methods of recruitment to hire qualified employees. How does
this recruitment process differ from that of a large firm? (LO 10-2)
2. Ask students to discuss the key concepts related to employee benefits. Why is
health care important to an employee of a small business? Ask students to express
their opinion of a government regulated health care system versus an employer
offered health care package. (LO 10-2)
3. Divide the students into groups of four. Assign the students to a specific job. Next,
ask students to discuss how they would advertise their available jobs in the following
categories. (LO 10-2):
a. Receptionist
b. Office Manager
c. Executive Director
d. Vice President
4. In groups, ask students to discuss how employee benefits can help to retain
employees. Next, ask students why small business owners should offer competitive
compensation and benefits. (LO 10-3)
5. Discuss discrimination in the workplace with the students. Ask students what a small
business owner can do to prevent discrimination. Why is this important? (LO 10-2)
6. Ask students their opinion of employee drug testing. Next, ask students if they
believe it is an invasion of their privacy. (LO 10-2)
7. In groups, ask students to discuss the Fair Labor Standards Act (FLSA). Next, ask
each group to summarize the various issues that can arise as they relate to legal
IM 10-4
Copyright © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Chapter Ten: Human Resource Management
issues with pay. What can the small business owner do to assure compliance with
this act? List responses on a flip chart or the blackboard. (LO 10-3)
Discussion Questions for Online/Hybrid classes
1. Summarize some of the human resource management issues that occur within a
family owned business. Discuss some of the specific obstacles that occur in family
owned businesses. What can the business owner implement to assure the
business runs in the owner’s absence? Be specific. (LO 10-6)
2. Why is workers’ compensation important to a new small business owner? (LO
10-5)
3. Discuss why human resource managers and small business owners document
employee positive and negative employee behaviors? (LO 10-3, 10-4)
4. Explain why benefits are an important part of employee compensation? (LO 10-3)
5. Discuss how small business owners retain employees. Discuss the different
compensation methods as they relate to a small business. (LO 10-3)
6. Explain how an employee with poor performance impacts a small firm. How does
it impact a larger firm? (LO 10-1)
7. Discuss the elements of human resources. Why are they important? (LO 10-1,
10-2, 10-3, 10-4, 10-5, 10-.6)
8. What is the Occupational Safety and Health Administration (OSHA)? Explain why
it is important to a business owner. Be specific. (LO 10-5)
9. What is unemployment compensation? Why do small business owners pay an
unemployment tax to help fund the system? (LO 10-5)
10.Discuss how performance reviews can help an employee to improve job
performance. Be specific. (LO 10-3)
IM 10-5
Copyright © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Chapter Ten: Human Resource Management
Discussion Questions for Online/Hybrid classes
1. Summarize some of the human resource management issues that can occur
within a family owned business. Discuss some of the specific obstacles that
occur in family owned businesses. What can the business owner implement
to assure the business runs in the owner’s absence? Be specific. (LO 10-6)
2. Why is worker’s compensation important to a new small business owner?
3. Discuss why human resource managers and small business owners
document employee positive and negative employee behaviors? (LO 10-3,
4. Explain why benefits are an important part of employee compensation? (LO
5. Discuss how small business owners retain employees. Discuss the different
compensation methods as they relate to the small business. (LO 10-3) It is
6. Explain how an employee with poor performance impacts a small firm. How
does it impact a larger firm? (LO 10-1) Any employee who does not perform
7. Discuss the elements of human resources. Why are they important? (LO
10-1, 10-2, 10-3, 10-4, 10-5, 10-6) The elements of human resources are hiring
IM 10-6
Copyright © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Chapter Ten: Human Resource Management
8. What is the Occupational Safety and Health Administration (OSHA)? Explain
why it is important to a business owner. Be specific. (LO 10-5) OSHA is
9. What is unemployment compensation? Why do small business owners pay
an unemployment tax to help fund the system? (LO 10-5) Unemployment
10.Discuss how performance reviews can help an employee to improve job
performance. Be specific. (LO 10-3) During a performance review, the owner
Lecture Links
Lecture Link 10.1: The ADA & the New Entrepreneur
(LO 10-5)
The authors in the text discussed how the various laws, rules and regulations affect the
new small business. One important law for a new small business owner to study is The
Americans with Disability Act (ADA). This is a civil rights law that prohibits the
discrimination against people with disabilities in their everyday activities (Government,
2009)i. It is a good resource that ensures a new small business owner complies with the
law.
Visit the ADA website at http://www.ada.gov and type in “ Business Connection Link” in
the search box at the upper right hand corner and review the data provided in order to
learn more about the ADA and how the laws mandate businesses to accommodate
those individuals with disabilities.
Lecture Link 10.2: The Attorney Relationship at the New Small Business
(LO 10-2)
IM 10-7
Copyright © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Chapter Ten: Human Resource Management
The authors in the text stressed the important reasons why a new small business owner
should establish a relationship with an attorney or other professional to assist the owner
with the needs associated with the business. The new small business owner explores
many new areas of the business that are regulated by laws and regulations.
An attorney is a valuable asset to a new small business owner. Visit the FindLaw
Lawyer Directory.at www.findlaw.com and search for an attorney in your area to assist
you with your new small business needs.
Lecture Link 10.3: The Entrepreneur & the EEOC
(LO 10-2)
The U.S. Equal Opportunity Commission (EEOC) is the agency charged with the
enforcement of federal laws as they relate to discrimination. The laws prohibit the
discrimination against job applicants and employees (Laws and Guidance)ii. Visit the
EEOC website at http://www.eeoc.gov/laws/ and study the resources that provide
pertinent data that relates to discrimination in the workplace.
IM 10-8
Copyright © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
iADA Homepage. (2009). U.S. Department of Justice. http://www.ada.gov. Retrieved on
February 9, 2015.
iiLaws and Guidance. U.S. Equal Opportunity Commission. http://www.eeoc.gov/laws/. Retrieved on February
9, 2015.
