We don't have an HR professional in our office and we really should. Can you advise on these issues?
Ethics and good business practices start at the top of any organization; and when the top guy is a coward, his management team will most often be comprised of bullies, which is just another name for mean-spirited cowards.
You can really only govern your own behavior. You might try responding to the manager with whom you have lingering issues with remarks or e-mails that focus on proper professional behavior. You could point out that there might be a better way to instruct, a kinder way to correct, a more polite way to make a request or how nice it would be for her to express appreciation more often, etc.
But most likely she will not accept such suggestions in a positive way and will likely just target you (the messenger) for even more strident rudeness.
If other employees feel as you do about the current state of affairs, you might ask them to accompany you to present your case to the owner asking for a defined way for the employees to deal with matters that affect morale or effectiveness on the job.
Gather their ideas, too. Choose a time to present your ideas when the owner is most likely to listen. Have your thoughts in good order regarding what you specifically want to see done differently than in the past. Generalizations will not help the owner understand what you want.
For example, you might ask if a team could be put together comprising one or two managers plus one or two employees that would meet monthly to address suggestions and/or complaints raised by the general employee population. The make-up of this team could change every six months or so.
Be as upbeat as you can, versus ultra critical. And do your utmost to leave individual names out of the mix. (He would be superhuman not to be defensive about his girlfriend, for example.)
Be prepared for your co-workers to be apathetic and/or fearful. Jobs are hard to find in these challenging economic times. You might want to consider confidentially looking for a new career spot for yourself.
Owners--especially those who have their girlfriends running departments in their companies--are not likely to take risks and/or change their way of operating to make the general employee population happier or to make it feel more valued.