1. PowerPoint Presentation by Charlie Cook The University of West Alabama Copyright © 2006 Thomson Business & Professional Publishing. All rights reserved. Part 5 Managing Growth in the Small Business Managing Human Resources

2. Copyright © 2006 Thomson Business & Professional Publishing. All rights reserved. Student 19–2 Looking Ahead After studying this chapter, you should be able to: 1. Explain the importance of employee recruitment and list some sources that can be useful in finding suitable applicants. 2. Identify the steps to take in evaluating job applicants. 3. Describe the role of training for both managerial and nonmanagerial employees in a small firm. 4. Explain the various types of compensation plans, including the use of incentive plans. 5. Discuss the human resource issues of employee leasing, legal protection, labor unions, and the formalizing of employer– employee relationships.

3. Copyright © 2006 Thomson Business & Professional Publishing. All rights reserved. Student 19–3 RecruitmentRecruitment Recruitment of good employees contributes to customer satisfaction and to profitability. Small firms can attract applicants by stressing unique work features and opportunities. Recruitment sources include help-wanted advertising, walk-ins, schools, public and private employment agencies, executive search firms, employee referrals, the Internet, and temporary help agencies. The increasing diversity of the workforce requires a broadening of the scope of recruitment. Job descriptions outline the duties of the job; job specifications identify the skills needed by applicants.

4. Copyright © 2006 Thomson Business & Professional Publishing. All rights reserved. Student 19–4 Evaluating Job Applicants In the first step, application forms help the employer obtain preliminary information from applicants. Employers must avoid questions about sex, race, religion, color, national origin, age, and disabilities. Additional evaluation steps are interviewing the applicant, checking references and other background information, and testing the applicant. The final evaluation step is often a physical examination, which may include drug screening.

5. Copyright © 2006 Thomson Business & Professional Publishing. All rights reserved. Student 19–5 TrainingTraining Training enables employees to perform their jobs effectively and also prepares them for advancement. An orientation program helps introduce new employees to the firm and its work environment. Training is one component of a firm’s quality management program. Training and development programs are appropriate for both managerial and nonmanagerial employees.

6. Copyright © 2006 Thomson Business & Professional Publishing. All rights reserved. Student 19–6 Compensation and Incentives Small firms must be competitive in salary and wage levels. Payments to employees either are based on increments of time or vary with employee output. Incentive systems relate compensation to various measures of performance. Fringe benefit costs are often equal to 40 percent or more of payroll costs. Employee stock ownership plans enable employees to own a share of the business.

7. Copyright © 2006 Thomson Business & Professional Publishing. All rights reserved. Student 19–7 Human Resource Issues Small firms can reduce paperwork by transferring personnel to the payroll of a leasing company. All small businesses with more than 15 employees must observe laws prohibiting discrimination and protecting employee health and safety. Some small businesses must work with labor unions. As small firms grow, they must adopt more formal methods of human resource management. Employment of a human resource manager becomes necessary at some point as a firm continues to add employees.

8. Copyright © 2006 Thomson Business & Professional Publishing. All rights reserved. Student 19–8 Key Terms headhunter workforce diversity job specification validity reliability Job Instruction Training fringe benefits employee stock ownership plans (ESOPs) employee leasing professional employment organization (PEO) Civil Rights Act Occupational Safety and Health Act Fair Labor Standards Act (FLSA) Family and Medical Leave Act