Chapter 10 – How to Obtain and Manage Human Resources and Diversity in Small Companies
10-1
CHAPTER
How to Obtain and Manage
Human Resources and Diversity
in Small Companies
CHAPTER CONTENTS
Learning Objectives 10.2
Chapter Overview 10.2
Brief Chapter Outline 10.3
10
Chapter 10 – How to Obtain and Manage Human Resources and Diversity in Small Companies
10-2
LEARNING OBJECTIVES
After studying the material in this chapter, the student will be able to:
1. Explain how small business managers plan human resource needs and develop sources
from which to recruit personnel.
2. Name some methods used for recruiting staff, and describe the steps in the employee selec-
tion process.
CHAPTER OVERVIEW
Small businesses have three types of resources: (1) financial or monetary resources, (2) physical
or material resources, and (3) human resources. Human resources include not only the number of people
in the organization, but their abilities, training and development, and motivation to perform.
The primary duty of small business managers is to properly plan for, recruit, select, place, train,
develop, and compensate the employees. The success of a business depends on its personnel as well as on
its product or service.
Special attention is given to complying with equal employment laws. The legal influences on
Equal Employment Opportunity (EEO) and Affirmative Action (AA) are delineated and some practical
applications presented. Next, enforcing the laws and terminating employment are treated, then compen-
sating employees and providing appropriate benefits. Finally, the importance of maintaining a safe work
place is discussed.
Chapter 10 – How to Obtain and Manage Human Resources and Diversity in Small Companies
10-3
BRIEF CHAPTER OUTLINE
I. PLANNING FOR HUMAN RESOURCE NEEDS
A. Determining Types of Employees Needed
B. Developing Sources of Employee Recruitment
II. RECRUITING AND SELECTING EMPLOYEES
III. TRAINING AND DEVELOPING EMPLOYEES
A. Ways of Training Non-managerial Employees
B. Outside Help with Training
IV. SELECTING AND DEVELOPING MANAGERS
V. COMPLYING WITH EQUAL EMPLOYMENT OPPORTUNITY (EEO) LAWS
A. Laws Providing for Equal Employment Opportunity
B. Enforcing EEO Laws
VI. COMPENSATING EMPLOYEES
VIII. PROTECTING EMPLOYEES’ HEALTH AND SAFETY
A. Factors Influencing Workers’ Health and Safety
B. The Role of the Occupational Safety and Health Act
Chapter 10 – How to Obtain and Manage Human Resources and Diversity in Small Companies
10-4
CHAPTER OUTLINE AND TEACHING NOTES
CHAPTER OPENING PROFILE:
Mary H. Partridge and Michael Levy: Even Small Companies Merge!
The opening profile for this chapter features two entrepreneurs, Michael Levy and Mary H.
I. PLANNING FOR HUMAN RESOURCE NEEDS
Learning Objective 1.
Explain how small business managers plan human resource needs and
develop sources from which to recruit personnel.
A. Importance of Human Resources
1. While physical and financial resources are im-
portant to a business, human resources are
vital.
nearly half of all workers.
B. The basic management function of STAFFING in-
volves (1) planning for, (2) recruiting, (3) selecting,
and (4) training and developing employees, as well
as compensating them and providing for their
health and safety.
1. Small businesses must plan for HR needs by:
Chapter 10 – How to Obtain and Manage Human Resources and Diversity in Small Companies
10-5
CHAPTER OUTLINE AND TEACHING NOTES
a. The U.S. workforce is aging.
4. To meet this declining workforce supply, small
businesses can:
a. Spend more on technology and using new
methods to attract more applicants.
C. Determining Types of Employees Needed
1. Even the smallest business should have some
type of JOB SPECIFICATIONS, detailed writ-
ten statements of work assignment and the
qualifications needed to do the job acceptably.
2. Creating the job specifications begins with a
Chapter 10 – How to Obtain and Manage Human Resources and Diversity in Small Companies
10-6
CHAPTER OUTLINE AND TEACHING NOTES
D. Developing Sources From Which to Recruit Po-
tential Employees
1. Internal sources
a. Filling jobs with present employees:
(1) raises morale and improves em-
ployee motivation
b. UPGRADING involves retraining workers
so they can do increasingly complex
work.
2. External sources may be used to provide new
ideas and to obtain needed skills:
a. Former employees
REAL WORLD EXAMPLE 10.1
Chapter 10 – How to Obtain and Manage Human Resources and Diversity in Small Companies
10-7
CHAPTER OUTLINE AND TEACHING NOTES
b. Friends and relatives of present employ-
ees
g. Retirees and older workers
(1) Many retirement programs now re-
ward workers who stay in the work-
REAL WORLD EXAMPLE 10.2
At the age of 65, John Kerr changed from a 40 year fundraising career to a
Park Ranger position at Yellowstone Park.
h. Part-time and temporary workers
(1) These workers provide scheduling
flexibility and reduce hiring (and ben-
Chapter 10 – How to Obtain and Manage Human Resources and Diversity in Small Companies
10-8
CHAPTER OUTLINE AND TEACHING NOTES
(5) Temporary workers are best for tem-
porary assignments.
3. LEASED MANPOWER refers to employees
obtained from an outside firm that specialized
in performing a particular service.
4. Today’s workforce consists of a small core of
permanent employees surrounded by a flexi-
ble border of temporary and part-time work-
ers.
II. RECRUITING AND SELECTING EMPLOYEES
Learning Objective 2.
Name some methods used for recruiting human resource, and describe
the steps in the employee selection process.
B. Methods of Recruiting Employees
1. RECRUITMENT is reaching out to attract ap-
plicants to fill a job vacancy.
2. Methods include advertising, employee refer-
rals, temporary services, networking, state
12
Chapter 10 – How to Obtain and Manage Human Resources and Diversity in Small Companies
10-9
CHAPTER OUTLINE AND TEACHING NOTES
own or another organization as infor-
mation development or promotion sys-
tems.
C. Methods of Selecting the Right Person for
the Job
1. SELECTION involves choosing the applicant
with the qualifications to perform the job.
a. Some qualities to look for: work ethics,
ability, integrity: high standards.
c. The selection and hiring process involves:
(1) Gathering information about the ap-
plicant.
2. In any pre-employment or employee testing,
make sure that the procedures and instru-
ments used are valid.
Chapter 10 – How to Obtain and Manage Human Resources and Diversity in Small Companies
10–10
CHAPTER OUTLINE AND TEACHING NOTES
b. VALIDITY is making sure that the test
given actually relates or corresponds to
job performance.
3. Gathering information about the applicant
a. Finding out about potential employees:
(1) In general, what a person has done in
b. Using employee input in an advisory ca-
pacity can be valuable.
c. Preliminary screening can be done in a
formal interview or informally through re-
viewing a candidate’s application form or
resume.
d. Gathering biographical information
through application forms, résumés,
school records, military records, credit ref-
Chapter 10 – How to Obtain and Manage Human Resources and Diversity in Small Companies
10–11
CHAPTER OUTLINE AND TEACHING NOTES
(2) Having applicants complete the appli–
cation form in long-hand serves as a
e. Giving pre-employment tests
(1) In 1971 the U.S. Supreme Court
ruled that employment tests must be
job related.
(5) A 1989 law bars most private employ-
ees from using polygraph tests.
(6) Written and computerized tests for
f. Interviewing applicants in depth
(1) Applicants who have survived the
Chapter 10 – How to Obtain and Manage Human Resources and Diversity in Small Companies
10–12
CHAPTER OUTLINE AND TEACHING NOTES
(2) The IN-DEPTH, PREEMPLOYMENT,
or DIAGNOSTIC INTERVIEWS are
detailed, probing, and penetrating in-
g. Checking references
(1) The three most frequently used types
of references are personal, aca–
demic, and past employment.
(2) References from former employers
are the most valuable. By law, former
(3) Be sure to get the applicant’s permis-
sion before contacting the present
(5) In today’s world, vetting employees is
more important than ever. Ethical
h. Giving physical examinations
Chapter 10 – How to Obtain and Manage Human Resources and Diversity in Small Companies
10–13
CHAPTER OUTLINE AND TEACHING NOTES
(1) For employers with 15 or more em-
(2) The law prohibits asking questions
4. Making a job offer
a. The job offer should include details of
5.Orienting the new employee
a. A new job is usually a difficult and frustrat-
ing experience. Handing an employee a
b. Orientation should include:
(1) a tour of the property along with
an introduction to co-workers
Chapter 10 – How to Obtain and Manage Human Resources and Diversity in Small Companies
10–14
CHAPTER OUTLINE AND TEACHING NOTES
REAL WORLD EXAMPLE 10.3
A poor orientation can leave a new employee discouraged. After being
III. TRAINING AND DEVELOPING EMPLOYEES
Learning Objective 3.
Explain the importance of employee development, and discuss some
development methods.
A. Need for Training and Development
1. Business success depends on:
a. The strength, abilities, and actions of the
owner
2. Present employees must be retrained and up-
graded to adjust to changing job require-
ments.
3. Training and developing workers results in:
a. Increased productivity.
b. Reduced turnover.
B. Ways of Training Non-managerial Employees
Chapter 10 – How to Obtain and Manage Human Resources and Diversity in Small Companies
10–15
CHAPTER OUTLINE AND TEACHING NOTES
1. On-the-Job training is the most universal form
of employee development.
a. ON-THE-JOB TRAINING (OJT) or ON–
THE-JOB LEARNING (OJL) has the
c. OJT usually involves Show and Tell:
(1) Explaining what needs to be done.
(2) Telling them how to do the job.
(3) Showing them how it must be done.
d. The main advantages of OJT are:
(1) Low out-of-pocket costs.
(2) Production continues during training.
e. The disadvantages are:
Chapter 10 – How to Obtain and Manage Human Resources and Diversity in Small Companies
10–16
CHAPTER OUTLINE AND TEACHING NOTES
(1) Excessive waste caused by mistakes.
(2) Poor learning environment provided
by the production area.
2. Apprenticeship training
a. APPRENTICESHIP TRAINING blends
OJT with the learning of theory in the
classroom.
3. INTERNSHIP TRAINING combines OJT with
learning at a cooperating school or college.
a. Can be a great source of future employ-
ees as well as helping students. Intern-
REAL WORLD EXAMPLE 10.4
Kansas City high school students can participate in an internship pro-
gram sponsored by local Jiffy Lube franchises.
4. CROSS-TRAINING involves workers learning
many job skills, so they can fill in when
Chapter 10 – How to Obtain and Manage Human Resources and Diversity in Small Companies
10–17
CHAPTER OUTLINE AND TEACHING NOTES
a. Specialized training can improve perfor-
mance, but it may also result in boredom
and fatigue.
b. Cross-training, in which workers perform
REAL WORLD EXAMPLE 10.5
Kirk’s Suede-Life conducts classes to cross-train laundry/dry-cleaning
workers.
5. E-TRAINING involves computer interaction
with either specific software packages or spe-
cific online sites for employee training.
a. E-training can be used by educators for
teaching and learning and by insurance
REAL WORLD EXAMPLE 10.6
Human resource managers can use online training for entry-level em-
C. Outside Help with Training
Chapter 10 – How to Obtain and Manage Human Resources and Diversity in Small Companies
10–18
CHAPTER OUTLINE AND TEACHING NOTES
1. The National Apprenticeship Act of 1937 sets
IV. SELECTING AND DEVELOPING MANAGERS
Learning Objective 4.
Tell how selection of managers differs from selection of non-manage-
rial personnel, and describe some methods of manager development.
A. The skills needed to be a good manager are differ-
ent from those for non-managers.
1. A good non-managerial employee will not nec-
essarily be a good manager.
B. Selecting Managers
1. In small firms, managers are usually promoted
from within.
2. Many businesses hire college graduates for
C. Developing Managers
Chapter 10 – How to Obtain and Manage Human Resources and Diversity in Small Companies
10–19
CHAPTER OUTLINE AND TEACHING NOTES
1. Other managerial development techniques in-
clude:
2. Many franchisers have their own schools at
which their franchise owners learn the desired
system.
V. COMPLYING WITH EQUAL EMPLOYMENT OPPOR-
TUNITY (EEO) LAWS
Learning Objective 5.
Discuss the laws that affect recruiting, selection, and development.
A. Laws Providing for Equal Employment Oppor-
tunity
1. The Americans with Disabilities Act (ADA)
2. The AMERICANS WITH DISABILITIES ACT
(ADA) requires the removal of social and
physical barriers to employing the disabled, in-
cluding access to sidewalks, doors, re-
strooms, break rooms, work areas, and more.
3. This law requires positive actions on the part
Chapter 10 – How to Obtain and Manage Human Resources and Diversity in Small Companies
10–20
CHAPTER OUTLINE AND TEACHING NOTES
B. Enforcing EEO Laws
1. All employees—temporary as well as perma-
nent—are entitled to equality in all conditions
of hiring.
2. Posting available job openings gives present
4. The EQUAL EMPLOYMENT OPPORTUNITY
COMMISSION (EEOC) is the federal agency
primarily responsible for enforcing EEO laws.
5. Defining what sexual harassment is depends
as much in the reaction of the victim as in the
intentions of the offender. Any personal touch
6. Religious discrimination is another tricky em-
ployee issue that must be dealt with carefully,
especially in this time of xenophobia. Small