Chapter Outline

LO 15.1  Discuss the importance of hiring the right employees.

Some of the most valuable resources and competitive advan-tages a small business has are its employees. There are too many costs and risks involved in HR issues not to pay attention to them.

the education, skills, and personality that a person needs to have to be right for a job.

LO 15.2  Evaluate the advantages and disadvantages of the six major sources of employee recruitment.

Help-wanted advertising reaches numerous potential appli-cants, but many of them will not be right for the job you are trying to fill. Employment agencies pescreen applicants so that you do not have to deal with as many people. The agencies run by the government are usually appropriate only for posi-tions requiring lower-level skills. Private employment agencies and executive recruiters (headhunters) offer more expensive services but can help you find people with highe-level skills. Internet job sites offer limited resources, for a fee. Employee referrals are effective because your current employees know the skills and talents needed, but hiring in this manner can cre-ate cliques and build resentment if the new hire does not work out. Moreover, it can lead to underrepresentation of protected groups. Hiring friends and relatives gives you the advantage of knowing their abilities and expertise, but personal relationships can become strained on the job.

LO 15.3  Describe the four tools commonly used in employee selection.

In the selection process, you narrow the applicant pool generated by recruitment by trying to match the needs of your business with the skills of each person. Application forms and resumes, interviews, and testing are the most common tools of selection. Job analysis is the process of determining the duties and skills involved in a job and the kind of person who should be hired to do it. A job description is part of the job analysis; it lists the duties, responsibilities, and reporting relationships of a job. Job specifications ae another part of the job analysis; they identify 

LO 15.4  Discuss the need for employee training and name the seven methods of providing this training.

To become a better, more productive worker, every employee needs to have his knowledge and skills enhanced through orientation and training. On-the-job training; lectures; confer-ences; programmed learning; role-playing; job rotation; and correspondence courses, Internet classes, and webinars are seven common techniques.

LO 15.5  Explain the two components of a compensation plan and the variable elements of a benefits system.

Employees can be compensated for their efforts with hourly wages, with straight salary, or on the basis of piecework or commission plans. Incentive-pay programs offer a way to moti-vate and reward employees above their base pay by paying bonuses or profit-sharing amounts. Common benefits includeas part of a compensation package are flexible-benefit planshealth insurance, pension plans, and child care accounts. The most common pension plans adopted by small businesses are individual retirement accounts (IRAs), simplified employee pe-sion (SEP) plans, 401(k) plans, and defined contribution plans.

LO 15.6  Profile an efective sequence for disciplining and terminating employees.

The progressive disciplinary system, favored by many manag-ers today, begins with an oral reprimand, followed by a written warning, then suspension without pay, and, finall, termination from the company.