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CHAPTER OUTLINE AND TEACHING NOTES
Business owners should decide ahead the
policy as to Holiday and vacation rules.
7. The Office of Federal Contract Compliance
VI. COMPENSATING EMPLOYEES
Learning Objective 6.
Describe how to compensate employees with money and employee ben-
efits.
A. Employee compensation should be high enough to
motivate employees, but low enough for the busi-
ness to stay profitable.
B. Legal Influences
1. Many federal and state laws affect how much
small business owners pay their employees.
C. Setting Rates of Pay
1. Many variables influence what employees
consider a fair wage.
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CHAPTER OUTLINE AND TEACHING NOTES
c. Through collective bargaining unions in-
fluence wage rates in an area whether the
company is unionized or not.
D. Using Money to Motivate
1. Many small businesses use financial incen-
tives to motivate employees.
REAL WORLD EXAMPLE 10.7
Each year Archives One provides an unusual incentive for two em-
ployees—a low-interest home loan. The program has significantly reduced
employee turnover.
2. MERIT INCREASES are based on the em-
ployee’s ability and performance.
3. An INCENTIVE WAGE, which is extra com-
pensation paid for all production over a speci-
Chapter 10 – How to Obtain and Manage Human Resources and Diversity in Small Companies
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CHAPTER OUTLINE AND TEACHING NOTES
REAL WORLD EXAMPLE 10.8
4. PROFIT SHARING is an arrangement—an-
nounced in advance—whereby employees re-
ceive a prescribed share of company profits.
a. Profit sharing is an effective motivator, be-
cause it ties rewards to company perfor-
mance.
longevity.
E. Compensating Managerial and Professional
Personnel
1. Small business managers are usually paid on
a merit basis, based on the firm’s earnings.
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CHAPTER OUTLINE AND TEACHING NOTES
VII. PROVIDING EMPLOYEE BENEFITS
Learning Objective 7.
List some factors influencing employee health and safety, and tell how
to safeguard employees in small firms.
A. EMPLOYEE BENEFITS, or FRINGE BENEFITS,
are the rewards and services provided to workers
in addition to their regular earnings.
1. Benefits become more important as employ-
REAL WORLD EXAMPLE 10.9
The high cost of health care benefits has reduced one restaurateur’s
profits and may force him to close one of his stores.
B. Legally Required Benefits
1. Small employers are legally required by the
Social Security Act to provide:
a. Retirement, disability, survivors, and med-
c. Workers’ compensation.
2. Under the COBRA law, employers with 20 or
more employees must continue health insur-
ance for up to 18 months for employees when
they leave.
3. SOCIAL SECURITY is a federal program that
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CHAPTER OUTLINE AND TEACHING NOTES
a. Under the system, the business must pay
a tax on employees’ earnings and deduct
4. UNEMPLOYMENT INSURANCE provides
some financial support to employees laid off
for reasons beyond their control.
5. WORKERS’ COMPENSATION involves pay-
ments made to employees for losses from ac–
cidents and occupational diseases.
a. Each employer is required to pay insur-
6. The FAMILY AND MEDICAL LEAVE ACT re-
quires employers with 50 or more employees
to provide up to 12 weeks of unpaid leave for
births or adoptions, and to care for sick chil-
dren, spouses, or parents.
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CHAPTER OUTLINE AND TEACHING NOTES
employer can exclude the top-paid 10% of
employees.
C. Some Other Popular Benefits
1. Health, accident, life, and disability insurance
are popular voluntary benefits.
a. However, because of the cost, most em-
2. With the passage of the Employee Retirement
Income Security Act (ERISA), providing pen-
REAL WORLD EXAMPLE 10.11
Ronald Turner dropped his employee pension plan and gave his em-
ployees the cash due them after required paperwork requirements became
too excessive.
3. Most small businesses now let their employ-
ees establish private pension programs.
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CHAPTER OUTLINE AND TEACHING NOTES
b. The contributions may be made through
mulated in his or her account.
4. A DEFINED-BENEFIT PLAN is a pension
plan, whereby the amount an employee is to
receive at retirement is specifically set forth.
5. 401(K) RETIREMENT PLANS, the most pop-
ular plans, permit workers to place up to a cer-
D. Flexible Approach to Benefits
1. A CAFETERIA-STYLE BENEFIT PLAN, or
FLEXCOMP, allows the employer to provide
all employees with the legally required bene-
VIII. PROTECTING EMPLOYEES’ HEALTH AND SAFETY
A. Because totally safe working conditions are impos-
sible to provide, employee safety involves relative
freedom from danger or injury.
1. Employees need to know that you care about
B. Factors Influencing Workers’ Health and Safety
1. Type of industry. The least safe industries in-
clude wood product and metal manufacturers.
10–28
2. Type of occupation
a. Back injuries are more prevalent among
c. REPETITIVE-STRESS INJURIES (RSIS),
or CUMULATIVE TRAUMA DISORDERS
(CTDS), are muscular or skeletal injuries
to the hand, wrist, or other areas that bear
the brunt of repeated motions.
CARPAL TUNNEL SYNDROME .
(See handout at end of chapter 10.)
d. But the most common work-related prob-
lem for both men and women is back inju-
C. The Role of the Occupational Safety and Health
Act
1. The OCCUPATIONAL SAFETY AND
HEALTH ADMINISTRATION (OSHA) estab-
lishes specific safety standards to ensure, to
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CHAPTER OUTLINE AND TEACHING NOTES
2. Employee rights
a. Workers may request an OSHA inspec-
tion without being disciplined.
3. Employer obligations and rights
a. OSHA holds employers responsible for
making employees wear safety equip-
ment.
REAL WORLD EXAMPLE 10.12
Millard Refrigerated Services was fined by OSHA in the amount of
$52,500 for multiple violations, concerning fatal ammonia leaks and their
lack of “a safe and timely shutdown”.
c. Employers should provide safety training
for employees, encourage and follow up
4. Some generalizations about OSHA enforce-
ment
a. Firms with fewer than eight employees
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CHAPTER OUTLINE AND TEACHING NOTES
b. OSHA doesn’t inspect firms with 10 or
5. OSHA’s hazard communications standard
a. This standard requires every employer to
identify hazardous substances in the
workplace, list them, and train employees
to use them safely.
b. Small businesses have found that the pa-
perwork burden makes it difficult for them
to comply.
D. Environmental Protection
1. The Environmental Protection Agency (EPA)
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LEARNING OBJECTIVES REVISITED
1. Explain how small business managers plan human resource needs and develop sources
from which to recruit personnel.
● Staffing involves (1) planning, (2) recruiting, (3) selecting, (4) training and developing, (5)
paying.
2. Name some methods used for recruiting human resources, and describe the steps in the
employee selection process.
● Recruitment is reaching and attracting applicants to fill a job vacancy.
● Employees can be recruited through advertising, employment agencies, temporary help ser-
vices, networking, employee referrals, scouting, Internet postings, and social media.
3. Explain the importance of employee development, and discuss some development meth-
ods.
● After employees are hired, they should be retrained and upgraded periodically.