Chapter 20-Managing Human Resources: True/False

Chapter 20—Managing Human Resources
TRUE/FALSE
1. Human resource management of small firms should be identical to large companies but adjusted for
size.
ANS: F
Small businesses cannot duplicate the personnel programs of such industry giants, but they can adopt
approaches that work best for small firms.
PTS: 1 DIF: Difficulty: Easy REF: p. 531

OBJ: LO: 20-0 NAT: BUSPROG: Analytic STA: DISC: Dynamics
KEY: Bloom’s: Comprehension
2. The goal of recruitment is to obtain a pool of applicants large enough to contain a number of talented
prospects.
ANS: T PTS: 1 DIF: Difficulty: Easy

REF: p. 531 OBJ: LO: 20-1 NAT: BUSPROG: Analytic
STA: DISC: Dynamics KEY: Bloom’s: Knowledge
3. The quality of a firm’s employees determines the firm’s potential.

REF: p. 532 OBJ: LO: 20-1a NAT: BUSPROG: Analytic
KEY: Bloom’s: Knowledge
4. Payroll is typically a small expense for most small businesses.
ANS: F
Payroll is one of the largest expense categories for most businesses.
PTS: 1 DIF: Difficulty: Easy REF: p. 532-533

OBJ: LO: 20-1a NAT: BUSPROG: Analytic STA: DISC: Dynamics
5. Small firms need to identify their distinctive advantages if they are to recruit outstanding prospects
successfully.

REF: p. 533 OBJ: LO: 20-1b NAT: BUSPROG: Analytic
STA: DISC: Dynamics KEY: Bloom’s: Comprehension
6. Small firms suffer a recruiting handicap because of the ability of large companies to offer more
freedom on the job.
ANS: F
In reality, small firms can structure the work environment to offer personnel greater freedom (and
variety) than they would have in a larger business.

OBJ: LO: 20-1b NAT: BUSPROG: Analytic STA: DISC: Dynamics
7. The Internet is a low-cost, effective tool for recruiting qualified candidates.
ANS: F
The initial cost may be low but the overall process may be expensive and may not be useful in the end.
PTS: 1 DIF: Difficulty: Moderate REF: p. 534

OBJ: LO: 20-1c NAT: BUSPROG: Analytic KEY: Bloom’s: Analysis
8. Universities are good sources of candidates for positions that require a high level of experience.
ANS: F
Universities and other schools are desirable sources of personnel for positions that require no specific
work experience.

OBJ: LO: 20-1c NAT: BUSPROG: Analytic KEY: Bloom’s: Analysis
9. Public employment offices are a useful source of clerical workers, unskilled laborers, production
workers, and technicians.

REF: p. 535 OBJ: LO: 20-1c NAT: BUSPROG: Analytic
10. Private employment agencies administer the various state unemployment insurance programs.
ANS: F
It is public employment offices that administer the various state unemployment insurance programs,
and these offer employment assistance to small businesses at no cost.

OBJ: LO: 20-1c NAT: BUSPROG: Analytic STA: DISC: Dynamics
11. The fees charged by a private employment agency are paid by the hiring firm, not the applicant.
ANS: F
The fees are more often paid by the hiring firm but can also be paid by the applicant in some cases.

12. Temporary help agencies are good sources of employees when extensive training is required.
ANS: F
Staffing with temporary employees is less practical when extensive training is required.

13. The use of temporary employees provides management with an introduction to individuals whose
performance may justify an offer of permanent employment.

14. Employee referrals provide a rich source of good applicants for many small firms.

15. The source that accounts for most new hires is help-wanted ads in newspapers.
ANS: F
Employee referrals are responsible for more new hires than any other source.

OBJ: LO: 20-1c NAT: BUSPROG: Analytic KEY: Bloom’s: Knowledge
16. Executive search firms should only be used by large companies because of their cost.
ANS: F
At times the need for a manager who can help the firm move to the next level justifies the small
company’s use of an executive search firm that can conduct a wide-ranging search for individuals who
possess the right combination of talents for the available position.

OBJ: LO: 20-1c NAT: BUSPROG: Analytic KEY: Bloom’s: Comprehension
17. The cost of using a headhunter makes using their services unrealistic for small businesses.
ANS: F
The cost of the services may be cost effective when identifying management recruits with more
advanced skills.

18. Because help-wanted advertising tends to be ineffective, most well-managed organizations reject this
method of recruitment.
ANS: F
Although some have questioned the effectiveness of help-wanted advertising, many well-managed
organizations recruit in this way.

19. The balance of the U.S. workforce is rapidly shifting toward higher proportions of women, older
workers, and racial minorities.

REF: p. 537 OBJ: LO: 20-1d NAT: BUSPROG: Analytic
STA: DISC: Global Dynamics | DISC: Dynamics KEY: Bloom’s: Comprehension
20. Small companies are more likely to employ immigrants than larger firms.

21. When innovation is important to a firm’s competitiveness, the company should steer clear of hiring
minorities.
ANS: F
The opposite is true.

OBJ: LO: 20-1d NAT: BUSPROG: Analytic KEY: Bloom’s: Comprehension
22. A job description refers to a listing of the knowledge, skills, abilities, and other characteristics
necessary to perform a job.
ANS: F
A job description refers to an outline, or summary, of the work to be performed.

OBJ: LO: 20-1e NAT: BUSPROG: Analytic STA: DISC: Dynamics
23. In small firms, a professional’s versatility and flexibility may be more important than technical
competence.

REF: p. 538 OBJ: LO: 20-1e NAT: BUSPROG: Analytic
24. The job specifications list the duties the incumbent is expected to perform.
ANS: F
The job specifications are the knowledge, skills, abilities, and other characteristics that an individual
must have to perform the job.

OBJ: LO: 20-1e NAT: BUSPROG: Analytic KEY: Bloom’s: Comprehension
25. Job descriptions are used primarily to avoid lawsuits that might result from the Americans with
Disabilities Act.
ANS: F
Job descriptions are used primarily to aid in personnel recruitment.
OBJ: LO: 20-1e NAT: BUSPROG: Analytic KEY: Bloom’s: Comprehension
26. A person who interviews well should not automatically be hired.

27. Released employees are much less likely to sue if they feel their former employer provided ample
opportunities to improve their performance before being fired and the company was fair throughout
the process.

28. A negligent hiring lawsuit can ensure from a failure to check the background of a new hire.

29. Most small businesses complete their own background investigations of job applicants by using
information readily available online.
ANS: F
Most companies outsource this function to one of hundreds of vendors that specialize in performing
this service even if they use the Internet for searches.

30. Requesting a credit report to establish an applicant’s employment eligibility is illegal according to the
Fair Credit Reporting Act.
ANS: F
It is not illegal but companies should require applicants to sign a written consent (detailing how and
what the company plan to check) and must notify the candidate in writing that the report has been
requested.

OBJ: LO: 20-2c NAT: BUSPROG: Analytic STA: DISC: Ethical and Legal
31. The hiring practices at 37signals support small firms using additional “test drives” even if a
prospective employee has passed a reliable and valid test.

32. According to the Occupational Health and Safety Administration, 85 percent of all on-the-job
accidents can be traced to substance abuse.
ANS: F
Substance abuse is linked to 65 percent of all on-the-job accidents, and employees who abuse drugs
file six times more workers’ compensation claims than those who don’t.

OBJ: LO: 20-2e NAT: BUSPROG: Analytic STA: DISC: Ethical and Legal
33. Obviously, training helps prepare a new employee to perform the duties for which he or she has been
hired.

34. Continual training is necessary to update knowledge and skills in firms of all sizes.

35. Orientation refers to instructions given during the interview with an applicant.
ANS: F
Orientation begins with an individual's first two or three days on the job and can be used to help new
employees get settled into their new positions.

36. A small business can facilitate the orientation process by providing an employee handbook, which
outlines the company's practices and procedures.

37. The purpose of job instruction training is to help supervisors eliminate employees who are weak hires.
ANS: F
Job instruction training is intended to help supervisors become more effective in training employees.

38. Research indicates that more than 40 percent of the training provided to employees each year is
applied on the job.
ANS: F
The figure is between 10 to 40 percent.

OBJ: LO: 20-3d NAT: BUSPROG: Analytic STA: DISC: Dynamics
39. The small firm has a particularly strong need to develop both managerial and professional employees.

40. Small firms must be exceed large firms in wage and salary levels in order to attract well-qualified
personnel.
ANS: F
Small firms must be roughly competitive but need not exceed.

41. A sales commission compensation plan is a type of time-based compensation system.
ANS: F
A sales commission compensation plan is a type of incentive plan.

42. Profit-sharing is of little use as an incentive in small companies because profits are often too small to
share.
ANS: T
Profit sharing provides a more direct work incentive in small firms than it does in large firms.

43. Employee benefits are expensive, amounting to more than 40 percent of payroll expense for many
small firms.
ANS: F
The cost of employee benefits for many firms is equal to 31 percent of salary and wage payments.

OBJ: LO: 20-4d NAT: BUSPROG: Analytic STA: DISC: Dynamics
44. ESOPs can motivate employees as well as allow for owners to withdraw from a business without
having to sell the firm to outsiders.
45. A limited but growing number of small businesses now use flexible benefit plans so employees can
select the benefits they wish to receive.

46. PEOs typically charge a fee of at least 7 percent of payroll to a small business.
ANS: F
For a fee of 2 to 6 percent of payroll, a PEO writes paychecks, takes care of payroll taxes, and files
reports required by government agencies.

47. Because outsourcing companies typically employ hundreds or thousands of people, they can afford to
offer benefits superior to those offered by the typical small firm.

48. Unions typically concentrate their primary attention on small companies, where their influence is most
needed.
ANS: F
Unions typically focus their attention on large companies.

49. By following constructive personnel policies, small firms can improve the relationship between
management and a union.

50. As a firm grows, it experiences pressure to formalize its personnel policies and procedures.

51. In a small business, a human resource manager is generally desirable when employee morale is
satisfactory and the labor turnover is extremely low.
ANS: F
Conditions such as unsatisfactory employee morale and high labor turnover are favorable to the
decision to appoint a human resource manager.

OBJ: LO: 20-5e NAT: BUSPROG: Analytic STA: DISC: Dynamics
MULTIPLE CHOICE
1. One of the largest expense categories for most businesses is

a. advertising.
b. research and development.
c. payroll.
d. professional fees.
ANS: C PTS: 1 DIF: Difficulty: Moderate
REF: p. 532-533 OBJ: LO: 20-1a NAT: BUSPROG: Analytic
STA: DISC: Dynamics KEY: Bloom’s: Analysis
2. Judy, a small business owner of a CPA firm, wishes to persuade a highly qualified applicant to consider
a position with her firm, even though the applicant has also had offers from large corporate CPA firms.
What should Judy emphasize to the applicant?
a. family atmosphere with only three employees
b. long history of the firm with no take overs
c. more freedom to structure job responsibilities
d. retirement program and other benefits
3. Tom is experiencing difficulty in recruiting competent technicians for his business. One way to
increase the attractiveness of his small business is by using
a. flexible work schedules.
b. job descriptions.
c. performance testing.
d. private employment agencies.
ANS: A PTS: 1 DIF: Difficulty: Moderate
4. Since Cynthia needs to obtain a replacement for Olivia (who is having a baby and will be out for 12
weeks), what would be the expected first choice to locate a replacement?
a. employee referrals
b. help-wanted advertising
c. public employment agencies
d. temporary help agencies
ANS: D PTS: 1 DIF: Difficulty: Moderate
5. Which source of candidates do small business owners say accounts for most of their hires?
a. Walk-ins
b. Schools
c. Internet
d. Employees
6. Jan is ready to franchise her retail clothing store and is needing to hire a new manager that has
knowledge in the franchising process. Which recruiting source would be best?
a. temporary help agencies
b. leasing companies
c. headhunters
d. employees
7. The differences among employees on such dimensions as gender, age, ethnicity, and race is known as
a. job specification.
b. workforce diversity.
c. human resources.
d. workforce differences.
ANS: B PTS: 1 DIF: Difficulty: Easy
STA: DISC: Dynamics KEY: Bloom’s: Knowledge
8. The U.S. Department of Labor projects which trend in workforce composition?

a. Increased numbers of Hispanic workers
b. Decreased average age
c. Decreased numbers of Black and Asians workers
d. Increased participation of women in the workforce
9. The owner of a small automobile garage has been advised to use an application form in evaluating
applicants. This form will be most useful in discovering
a. arrest records.
b. general background information.
c. physical disabilities.
d. religious orientation.
10. Prospective employers can legally select employees based on the applicant’s
a. age.
b. disabilities.
c. education.
d. gender
11. What type of interviewing involves asking applicants how they might react to hypothetical situations?
a. Behavioral
b. Depth
c. Stress
d. Traditional
12. Which question would be expected from a small business using behavioral interviews?
a. How did you learn to write so well?
b. Where did you attend school?
c. What do you do for fun?
d. Tell me about a time when you managed a major project.
13. Karen is checking references and finds former employers reluctant to do more than verify dates of
employment even though the applicants have given their consent. A probable reason for their
reluctance is that
a. records for former employees are typically not readily available.
b. the former employee is glad to have the potential employee not employed with their
company.
c. respondents may fear litigation by former employees who fail to get jobs they seek.
d. Karen is asking too many personal questions.
14. Which percentage of recruiters and human resource professionals report that they research job
applicants online with most using sources such as Facebook?
a. 91%
b. 67%
c. 43%
d. 35%
ANS: A PTS: 1 DIF: Difficulty: Challenging
STA: DISC: Ethical and Legal KEY: Bloom’s: Analysis
15. To be the most useful, a test for a potential applicant should be

a. general in nature.
b. practical.
c. psychological in nature.
d. valid and reliable.
16. Marcia knew the importance of testing candidates before hiring them, but 40% of the employees who
successfully passed the employment test later performed poorly on the job. Marcia’s employment test
lacked
a. applicability.
b. interpretability.
c. reliability.
d. validity.
17. The Americans with Disabilities Act requires employers of at least ____ employees to make ____
adaptations to facilitate the employment of individuals protected by the act.
a. 50, minimal
b. 15, reasonable
c. 100, specific
d. 10, verifiable
ANS: B PTS: 1 DIF: Difficulty: Moderate
18. Preparation of employees for career advancement through education, job experiences, network
development, and performance assessment is called
a. employee training.
b. human resources.
c. management development.
d. workforce diversity.
ANS: C PTS: 1 DIF: Difficulty: Easy
19. New employees benefit most from orientation when it is given

a. during the employment review.
b. after selection, but prior to reporting for work.
c. during the first two or three days on the job.
d. during the first year of employment.
20. Planned efforts to help workers master the knowledge, skills, and behaviors they need to perform their
duties is known as
a. employee training.
b. human resources.
c. management development.
d. workforce diversity.
ANS: A PTS: 1 DIF: Difficulty: Easy
21. A systematic step-by-step method for training non-managerial employees on the job is known as
a. On-the-Job Training.
b. Employee Development Training.
c. Job Instruction Training.
d. Intensive Job Orientation.
22. Which item plays the central role in attracting and motivating employees?
a. Flexible work duties
b. Job sharing arrangements
c. Compensation
d. Vacation benefits
23. Amanda is paid $0.45 for every widget she produces. This type of pay plan is:
a. a cafeteria plan.
b. called piecework.
c. part of a salary level.
d. included in stock incentives.
24. A compensation system based on time is most appropriate for jobs in which
a. performance is not easy to measure.
b. responsibilities are difficult to understand.
c. fringe benefits are an important part of the compensation offered.
d. commissions make up a significant portion of compensation received.
25. Management and other key personnel “get a piece of the action” through
a. fringe benefits.
b. time-based compensation.
c. profit sharing.
d. tax benefits.
26. Profit-sharing plans
a. provide a more direct incentive in small firms than in large firms.
b. are practically impossible to use successfully in small firms.
c. are similar to individual incentive plans in their motivational effect.
d. are an expensive fringe benefit for small firms, costing 40 percent of payroll.
ANS: A PTS: 1 DIF: Difficulty: Easy
27. Katie owns a catering company where employees work both in preparing the food as well as serving at
the events. What would be the best compensation system?
a. time-based
b. profit-sharing plan
c. piece rate
d. commission
28. Small firms give employees a share of ownership in the business through
a. profit plans.
b. group incentive plans.
c. employee stock ownership plans.
d. action-sharing plans.
29. In addition to it use to attract and hold key personnel, ESOPs can also:
a. allow employees to veto management decisions.
b. give employees a share of liability.
c. give owners a way to cash out of the business
d. provide an incentive for managers to reduce labor costs.
30. Employers will often provide such perks as health insurance and paid vacation that are designed to be
attractive and useful to employees. Collectively these perks are known as:
a. stock.
b. piecework.
c. human resources.
d. employee benefits.
ANS: D PTS: 1 DIF: Difficulty: Easy
31. The cost of employee benefits is ____ the cost of salary and wage payments.
a. 25 percent
b. 31 percent
c. 66 percent
d. 200 percent
32. As his business grows, George finds he does not have either the time or the skills to manage the human
resources function. He has decided to outsource part of personnel management to an organization that
handles paperwork and administers benefits for his employees in an arrangement called:
a. a joint venture.
b. co-employment.
c. employment benefits.
d. human resourcing.
33. James is investigating the advantages of employee outsourcing. It appears that the greatest benefit will
be to free him and his firm from
a. the need for extensive training.
b. fringe benefit costs.
c. concern about disciplinary action.
d. excessive paperwork.
34. The Civil Rights Act applies to any employer of _______ or more people.
a. 3
b. 15
c. 27
d. 40
STA: DISC: Ethical and Legal KEY: Bloom’s: Comprehension
35. Legislation that provides protection to employees within a business is called the
a. Family and Medical Leave Act.
b. Occupational Safety and Health Act.
c. Fair Labor Standards Act.
d. All of the above provide protection.
REF: p. 553-554 OBJ: LO: 20-5b NAT: BUSPROG: Analytic
STA: DISC: Ethical and Legal KEY: Bloom’s: Comprehension
36. A small electrical contractor with nine employees hears that they would like to join a union. This
contractor realizes that the firm
a. must follow the bargaining pattern set by large contractors.
b. can lawfully refuse to negotiate.
c. must negotiate if a majority of employees decide to unionize.
d. must deduct union dues from employees' paychecks.
37. Which condition is most likely to encourage the appointment of a human resource manager?
a. Labor turnover rate is low
b. Competition for personnel is low
c. Employees are represented by a union
d. There are 35 employees in the firm
38. The owner of a growing business wonders when to hire a human resource manager. The most likely
time would be when
a. labor turnover rate is low.
b. total employment exceeds 100.
c. employees are not unionized.
d. morale is high.
ESSAY
1. Identify and explain the advantages of five “selling points” a small company can use to attract
candidates.
ANS:
1. Entrepreneurial companies allow new managers to work more closely with the CEO, which can lead
to quicker action.
2. A small business can provide opportunities for the general, high-level management or professional
experience that achievement-oriented hires find attractive.
3. Rather than toiling away in obscure, low-level, specialized positions in a large firm while “paying
their dues” and working their way up the corporate ladder, capable newcomers can quickly move
into positions of responsibility.
4. Small firms can also structure the work environment to offer professional, managerial, and technical
personnel greater job variety and freedom than they would normally have in a larger business.
5. Individual contributions can be recognized rather than hidden under numerous layers of
bureaucracy.
6. Compensation packages can be structured to create powerful incentives for outstanding
performance.
PTS: 1 DIF: Difficulty: Challenging REF: p. 533-534

OBJ: LO: 20-1b NAT: BUSPROG: Communication KEY: Bloom’s: Analysis
2. Explain the strengths and weaknesses for the following sources of employees: (a) walk-ins, (b)
schools, (c) public employment offices, (d) private employment agencies, (e) executive search firms,
(f) employee referrals, (g) Internet recruiting, (h) help-wanted advertising, and (i) temporary help
agencies.
ANS:
a. Walk-ins or unsolicited applicants are sometimes qualified, and the cost of recruiting
them is zero. There is a selection cost involved in talking with them, but some
minimum time must be given as a matter of good public relations. The quality of the
applicants will vary.
b. Schools, as a source, have applicants that require extensive training or on-the-job
experience, but the employer can obtain necessary basic talent from this source.
Students who are interested in the firm’s industry may be better prepared and
motivated.
c. Public employment offices provide applicants without cost to the employer. A
frequent limitation, of course, is the type of manpower or quality level that is
available through this source. The recession has resulted in more highly trained
individuals being listed.
d. Private employment agencies are a good source of applicants with specific skills,
such as accountants, computer operators, or managers. In some cases, the firm may
not even be charged a fee for the service provided by the agency; other cases may
result in charges to the company.
e. Executive search firms are effective for filling key positions in the firm, but the cost
of these services is high, rendering this option impractical for some small businesses.
Other businesses who are trying to move up to the next level may cost effectively
take advantage of the firms ability to locate possible employees.
f. Employee referrals produce good-quality applicants if the firm's current employees
are well qualified. Current employees typically only recommend personnel who they
know and trust can fill a position. Some small business owners state this sources
results in the most hires.
g. Internet recruiting is becoming more popular, owing to the efficiency of this
approach in matching qualified applicants with potential employers. Initial costs are
low but the overall process cost may be higher and not result in finding a suitable
employee.
h. Help-wanted advertising permits businesses to go after the type of personnel they
need and to stir up interest on the part of qualified applicants who may not be listed
with employment agencies. Effectiveness varies.
i. Temporary help agencies can provide workers to small businesses obtain temporary
replacements. Agencies tend to have less specialized trained persons.

OBJ: LO: 20-1c NAT: BUSPROG: Communication STA: DISC: Dynamics
KEY: Bloom’s: Analysis
3. Mona has recently been named the CEO of a small production company that she and her parents co-
own. She is concerned with the lack of innovation in the company and plans to hire at a minimum ten
more employees in the next three years. Currently 92% of the production workforce are white, males
who have some college education and are expected to retire in the next five years. What are
suggestions for Mona?
ANS:
Mona should direct efforts towards more workforce diversity both in the new hires and when others
retire. Finding new employees could be from numerous sources and she should expect and encourage
increased diversity in ethnic, gender, race, age and work week arrangements. Having individuals with
different social backgrounds would be positive for increased innovation to remain fully competitive.
Mona should also be aware that adding 10 more employees requires the company to be in compliance
with the American with Disabilities Act which may also introduce diversity to the company.
OBJ: LO: 20-1d NAT: BUSPROG: Communication STA: DISC: Dynamics
4. A band manager is designing an application form for hiring new band members. After discussing
information that should and should not be on the form, how will the form’s information be used for the
remaining steps of the interview process?
ANS:
The application should ask for the applicant’s name, address, Social Security number, educational
history, employment history, and references. It does not need to be lengthy or elaborate and must be
carefully written to avoid legal complications. The band manager cannot seek information about sex,
race, religion, color, national origin, age, or disabilities.
The information requested should be focused on helping the employer make a better job-related
assessment. Based on the job description and job specification of the band position, the band manager
may ask questions that would determine if the prospective employee should be brought in for an
interview (possibly with other band members) and testing (plays with the other band members). The
form should have the applicants indicate they understand that references (both musical and non-
musical) will be checked and that certain physical examinations will be required (drug screening, able
to lift at least 50 pounds).
PTS: 1 DIF: Difficulty: Challenging REF: p. 539

OBJ: LO: 20-2a NAT: BUSPROG: Communication STA: DISC: Dynamics
5. Describe the five steps involved in selecting employees.
ANS:
Use application forms: An employer can collect enough information to determine whether a prospect
meets minimum qualifications for the job.
Interview the applicant: The employer can obtain some idea of an applicant’s appearance, job
knowledge, intelligence, and personality.
Check references and other background information: Employers should carefully check former
employers, schools, an applicant’s references, and credit scores. The process should include Internet
searches as well as possibly outside companies checking information.
Test the applicant: Tests that are reliable and valid over skills needed to perform the job is a good
idea.
Require physical examinations: The applicant should be able to meet the physical demands of the
job. Care must be exercised, however, so as not to discriminate against the physically disabled.

OBJ: LO: 20-2 NAT: BUSPROG: Communication STA: DISC: Dynamics
6. Considering the weaknesses of interviewing, how can the procedure be made more effective in
selecting employees?
ANS:
A weaknesses of the interviewing process is that unskilled interviewers may think they are infallible
judges of human nature. Interviewers must be careful to avoid questions that conflict with the law.
Since the correlation between interview-based assessments and actual performance is a mere 0.20,
interviewing can be made more effective by
· using behavioral interviews. Questions are asked to judge how a persons reacts to
situations, how they spend their free time and how they embody core values.
· having the applicant interviewed by two or more persons. The expense may be
worth the decrease in bias and errors in judgement.
· plan questions before the interview. Questions can be eliminated that are in violation
of the law.
· remembering that the process is a two-way process. The applicant is evaluating the
employer as well so let them allow questions to have a clear idea of what the job will
entail.

OBJ: LO: 20-2b NAT: BUSPROG: Communication STA: DISC: Dynamics
7. Explain the nature of orientation programs and why they are needed.
ANS:
Orientation programs consist of training given during the first two or three days of employment. They
include instruction not only about job duties but also about company policies, procedures, and benefits.
They also acquaint the newcomer with personnel and the physical layout of the office or other
facilities.
New employees are very sensitive when they begin a job. Orientation presents a valuable opportunity
to help them start off on the right foot. The employer has the employee's attention in an unusual way
and can use the orientation to lay the foundation for a long-term commitment or, inadvertently, to
create feelings of alienation.

OBJ: LO: 20-3b NAT: BUSPROG: Communication STA: DISC: Dynamics
8. Ollie has hired a front office manager, Todd. What suggestions should Ollie follow to make the
implementation of training more effective for Todd?
ANS:
-Put it on paper: Ollie should have Todd develop a personal action plan for implementing the training
including details on how Todd will apply the concepts, the results he expects, how they will be
measured and when he expects to see results. Ollie should check to see how he can help Todd if
Todd indicates he will need assistance to implement the plan.
-Measure results: By setting measurable goals, Ollie provides a benchmark for his new employee to
reference. By having a clear goal, Todd knows how his performance will be assessed.
-Get peers to help: Ollie should organize a way for new trainees to get together in hopes they will
discuss the training concepts.
-Involve supportive superiors: Ollie and other management should meet with Todd and other new
trainees to communicate feedback, promote focus on the concept, communicate expectations, and
eliminate obstacles.
-Provide access to experts: Ollie should provide Todd with reference materials, additional
information and experts as a follow up to the training in hopes to have it used on the job.

OBJ: LO: 20-3c NAT: BUSPROG: Communication STA: DISC: Dynamics
9. Tim and Tina own an independent pet grooming business in which employees are hired to groom the
animals, take care of customer needs and clean the facility. Other area competitors offer the same
services and pay their employees minimum age. Tim and Tina have decided to pay employees
$12.00/hr, and include unlimited services for the employee’s animals and allow them to provide
grooming for one guest of their choice each month. What could the grooming business gain from this
payroll decision?
ANS:
*The grooming business may see an improvement in recruiting and retention, particularly if the
positions are difficult to fill. These improvement could lead to higher employee morale and decreased
training costs.
*The employees may feel more appreciated and the longer hours may be worth the effort due to the
higher pay and benefits.
*The public image of the grooming business could be improved with customers and the community.
The positive word of mouth could draw more people into the business because the customers may
think the appreciation of the employees may lead to their pets receiving better care.

KEY: Bloom’s: Synthesis
10. Discuss the use of compensation and incentives in recruiting employees for small businesses.
ANS:
Except in very unusual situations, small firms must be roughly competitive with larger firms in
financial remuneration. If the small firm pays substantially less than competitors, it will have difficulty
obtaining comparable talent. To some extent, of course, weaknesses in the area of salaries might be
offset by strengths in other areas (e.g., commission systems, bonus and profit sharing plans, fringe
benefits, and employee stock ownership plans.) However, employers are viewed as attractive to
potential applicants only to the degree that they can offer competitive rates.
In the area of non-financial incentives, small firms have the potential for superiority. They can offer
applicants an escape from bureaucracy and red tape. They may offer applicants the opportunity to
perform challenging work, as well as the opportunity to obtain diversified experience quickly. These
are meaningful incentives if the firm is strong and growing and knows where it is going.

11. Identify and discuss the advantages and disadvantages to using a PEO.
ANS:
Co-employment or outsourcing the human resource management aspects of a company involves the
use of professional employer organizations (PEO). The law holds both companies responsible for
payment of payroll taxes and workers’ compensation insurance and compliance with government
regulations.
Advantages
*The PEO will assume the burden of managing payroll and other administrative processes such as
writing paychecks, taking care of payroll taxes, and filing governmental reports.
*It may allow small employers to provide better benefit packages since a PEO can obtain better rates
by pooling employee numbers.
Disadvantages
*Fees range from 2 to 6 percent of payroll.
*Small business must bear any increased benefit costs if the PEO is used for benefits.
*Joining a PEO may cause a change in a small company’s governmental compliance since the
government will consider the number of employees for the small business to be the larger PEO
number.

OBJ: LO: 20-5a NAT: BUSPROG: Communication STA: DISC: Dynamics
12. After defining each of the following statutes, state who has to abide by the law: a) Civil Rights Act, b)
Occupational Safety and Health Act, c) Fair Labor Standards Act and d) Family and Medical Leave
Act.
ANS:
a) Civil Rights Act prohibits discrimination based on race, color, religion, sex, or national origin.
While the act is for small businesses with at least 15 employees, the law is applicable for any business
size and impacts all aspects of hiring, firing, promotion, transfer and compensation. Protection against
sexual harassment is also included. This law is the basis for other laws that extends similar protection
to the aged and handicapped.
b) Occupational Safety and Health Act regulates the safety of workplaces and work practices. This
law applies to firms of any size involved in interstate commerce and resulted in the formation of the
Occupational Safety and Health Administration (OSHA) to enforce any necessary safety and health
standards.
c) Fair Labor Standards Act established a minimum wage (which is periodically increased by
Congress) and specifies time-and-a-half pay for non-supervisory employees who work more than 40
hours per week. Employers who have more than one employee and who are involved in interstate
commerce are required to abide by the law.
d) Family and Medical Leave Act guarantees employees meeting certain conditions will receive
unpaid leave for childbirth, adoption or other family needs. The worker must have been employed by
the firm for 12 months and have worked at least 1,250 hours. The business
must continue health care coverage during the leave and guarantee that the employee can return to the
same job or one that is comparable. The law applies to firms with at least 50 employees.

OBJ: LO: 20-5b NAT: BUSPROG: Communication STA: DISC: Ethical and Legal
13. Having been in business for five years, Secondhand Treasures specializes in antique home and
personal items made before 1960. The company has expanded into ten locations with 103 employees
in part due to the recession having led to increased business. The company is having trouble
maintaining employees for longer than three months, especially for positions requiring extensive
knowledge of an item’s value. What conditions in Secondhand Treasures would justify the owner’s
decision to hire a human resource manager?
ANS:
Conditions that justify Secondhand Treasures hiring a HR manager would include:
-There are a substantial number of employees: Currently, the company has 103 employees and with
the growth rate, that number is likely to increase.
-The labor turnover rate is high: The company has a difficult time keeping employees for longer
than three months.
-The need for skilled or professional personnel creates problems in recruitment or selection: Due
to the need for a highly skilled appraiser, these positions are difficult to fill.
-Supervisors or operative employees require considerable training: Again, the need for personnel
who are specialized is known.
Other issues that support hiring a human resource manager would include:
-Employee morale is unsatisfactory: While not stated in the case, high turnovers can lead to
problems with employee morale.
-Competition for personnel is keen: A logical assumption would be having difficulty finding a
person with the specialized knowledge may be due to increased competition.
-Employees are represented by a union: Depending on future need, Secondhand Treasures may have
the employees unionize requiring a human resource manager.

OBJ: LO: 20-5e NAT: BUSPROG: Communication STA: DISC: Dynamics
MATCHING
Match the term with its definition. Some terms may not be used.
a. Cafeteria plan e. Job specification
b. Employee training f. On-the-job training
c. Job description g. Reliability
d. Job Instruction Training h. Validity
1. The consistency of a test in measuring job performance ability
2. A systematic, step-by-step method for on-the-job training of non-managerial employees
3. The extent to which a test assesses true job performance ability
4. An outline of the work to be performed for a particular position
5. Instruction at the place of employment, supervised by a professional trainer or experienced employee
6. Planned efforts to help workers master the knowledge, skills, and behaviors they need to perform their
duties
7. A list of the knowledge, skills, abilities, and other characteristics needed to perform a specific job
1. ANS: G PTS: 1 DIF: Difficulty: Easy

2. ANS: D PTS: 1 DIF: Difficulty: Easy
3. ANS: H PTS: 1 DIF: Difficulty: Easy
4. ANS: C PTS: 1 DIF: Difficulty: Easy
5. ANS: F PTS: 1 DIF: Difficulty: Easy
6. ANS: B PTS: 1 DIF: Difficulty: Easy
7. ANS: E PTS: 1 DIF: Difficulty: Easy
a. Behavioral interview e. Headhunter
b. Co-employment f. Management development
c. Employee benefits g. Piecework
d. Flexible benefit programs h. Professional employer organization
8. An arrangement to outsource part of personnel management to an organization that handles paperwork
and administers benefits for those employees
9. A search firm that locates qualified candidates for executive positions
10. An approach that assess the suitability of job candidates based on how they would respond to
hypothetical situations
11. Benefit programs that allow employees to select the types of benefits they wish to receive
12. Financial incentive based on number of units produced
13. Supplements to compensation designed to be attractive and useful to employees
14. Preparation of employees for career advancement through education, job experiences, network
development, and performance assessment

9. ANS: E PTS: 1 DIF: Difficulty: Easy
10. ANS: A PTS: 1 DIF: Difficulty: Easy
a. Civil Rights Act e. Management development
b. Fair Labor Standards Act f. Occupational Safety and Health Act
c. Family and Medical Leave Act g. PEO
d. Human resource management h. Workforce diversity
15. Legislation prohibiting discrimination based on race, color, religion, sex, or national origin
16. Legislation that regulates the safety of workplaces and work practices
17. Legislation that assures employees of unpaid leave for childbirth or other family needs
18. A company that sets up co-employment agreements
19. Federal law that establishes a minimum wage and provides for overtime pay
20. Differences among employees on such dimensions as gender, age, ethnicity, and race
21. The management of employees in a way that enables a firm to reach its strategic objectives
15. ANS: A PTS: 1 DIF: Difficulty: Easy

20. ANS: H PTS: 1 DIF: Difficulty: Easy

Chapter 20-Managing Human Resources: True/False

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Chapter 20-Managing Human Resources: True/False

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Chapter 20—Managing Human Resources

PTS: 1 DIF: Difficulty: Easy REF: p. 531

ANS: T PTS: 1 DIF: Difficulty: Easy

3. The quality of a firm’s employees determines the firm’s potential.

ANS: T PTS: 1 DIF: Difficulty: Easy

4. Payroll is typically a small expense for most small businesses.

PTS: 1 DIF: Difficulty: Easy REF: p. 532-533

ANS: T PTS: 1 DIF: Difficulty: Easy

PTS: 1 DIF: Difficulty: Easy REF: p. 534

7. The Internet is a low-cost, effective tool for recruiting qualified candidates.

PTS: 1 DIF: Difficulty: Moderate REF: p. 534

PTS: 1 DIF: Difficulty: Moderate REF: p. 535

ANS: T PTS: 1 DIF: Difficulty: Easy

PTS: 1 DIF: Difficulty: Easy REF: p. 535

PTS: 1 DIF: Difficulty: Easy REF: p. 535

PTS: 1 DIF: Difficulty: Easy REF: p. 535

ANS: T PTS: 1 DIF: Difficulty: Easy

ANS: T PTS: 1 DIF: Difficulty: Easy

PTS: 1 DIF: Difficulty: Easy REF: p. 536

PTS: 1 DIF: Difficulty: Moderate REF: p. 536

PTS: 1 DIF: Difficulty: Easy REF: p. 537

PTS: 1 DIF: Difficulty: Easy REF: p. 536

ANS: T PTS: 1 DIF: Difficulty: Easy

ANS: T PTS: 1 DIF: Difficulty: Easy

PTS: 1 DIF: Difficulty: Easy REF: p. 538

PTS: 1 DIF: Difficulty: Easy REF: p. 538

ANS: T PTS: 1 DIF: Difficulty: Easy

PTS: 1 DIF: Difficulty: Easy REF: p. 538

26. A person who interviews well should not automatically be hired.

ANS: T PTS: 1 DIF: Difficulty: Easy

ANS: T PTS: 1 DIF: Difficulty: Easy

ANS: T PTS: 1 DIF: Difficulty: Easy

PTS: 1 DIF: Difficulty: Easy REF: p. 541

PTS: 1 DIF: Difficulty: Moderate REF: p. 541

ANS: T PTS: 1 DIF: Difficulty: Easy

PTS: 1 DIF: Difficulty: Moderate REF: p. 544

ANS: T PTS: 1 DIF: Difficulty: Easy

ANS: T PTS: 1 DIF: Difficulty: Easy

PTS: 1 DIF: Difficulty: Easy REF: p. 545

ANS: T PTS: 1 DIF: Difficulty: Easy

PTS: 1 DIF: Difficulty: Easy REF: p. 546

PTS: 1 DIF: Difficulty: Moderate REF: p. 548

ANS: T PTS: 1 DIF: Difficulty: Easy

PTS: 1 DIF: Difficulty: Easy REF: p. 550

41. A sales commission compensation plan is a type of time-based compensation system.

PTS: 1 DIF: Difficulty: Easy REF: p. 550

PTS: 1 DIF: Difficulty: Easy REF: p. 550

PTS: 1 DIF: Difficulty: Moderate REF: p. 551

ANS: T PTS: 1 DIF: Difficulty: Easy

PTS: 1 DIF: Difficulty: Moderate REF: p. 552

ANS: T PTS: 1 DIF: Difficulty: Easy

PTS: 1 DIF: Difficulty: Easy REF: p. 554

ANS: T PTS: 1 DIF: Difficulty: Easy

ANS: T PTS: 1 DIF: Difficulty: Easy

PTS: 1 DIF: Difficulty: Easy REF: p. 555

1. One of the largest expense categories for most businesses is

8. The U.S. Department of Labor projects which trend in workforce composition?

15. To be the most useful, a test for a potential applicant should be

19. New employees benefit most from orientation when it is given

PTS: 1 DIF: Difficulty: Challenging REF: p. 533-534

PTS: 1 DIF: Difficulty: Challenging REF: p. 534-536

PTS: 1 DIF: Difficulty: Challenging REF: p. 539