Chap. 9. Retailing

Chapter 9 (Retailing)

This chapter focuses on the broad strategic issues involving organization structure; the general approaches used for motivating and coordinating employee activities; and the management practices for building an effective, committed workforce and reducing turnover.

Objectives of Human Resource Management

Objectives of Human Resource Management

The strategic objective of human resource management is to align the capabilities and behaviour of employees with the short- and long- term goals of the retail firm.

Employee productivity

The retailer’s sales or profit divided by the number of employees.

Employee turnover

The number of employees leaving their job during the year divided by the number of positions.

The Human Resource Triad

The full potential of a retailer’s human resource is realized when (3) elements of the HR triad work together – HR professionals, store managers, and employees.

HR professionals

Responsible for establishing HR policies that enforce the retailer’s strategy and provide tools and training used by managers.

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Store or line managers

They are responsible for bringing the policies to life through their daily management of the employees who work for them.

Employees

They can play an active role by providing feedback on the policies, managing their own careers, defining their job functions and evaluating their managers and co-workers.

Special HR Conditions Facing Retailers

Human resource management in retailing is very challenging due to:

1. The need to use part – time employees.

2. The emphasis on expense control.

3. The challenging demographics of the workforce.

Retailers operating in international markets face additional challenges

1. Part-time employees – Part-time workers can be more difficult to manage than full-time employees because they are often less committed to the company and their jobs and more likely to quit than full-time employees.

2. Expense control – Retailers often operate on thin margins and must control their expense. Thus, they are cautious about paying high wages to hourly employees who perform low-skill jobs.

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3. Employee demographics – The changing demographic pattern will result in chronic shortage of qualified sales associates. Retailer need to explore various approaches for operating effectively in a tight-labour market – increase retention; recruit, train, and manage minorities, handicapped, and mature workers; and use incentives and technology to increase productivity.

4. International human resource issues – Labour law means that HR practices that are effective in one country might not be effective in another.

DESIGNING THE ORGANIZATION STRUCTURE FOR A RETAIL FIRM

Organizational Structure – Identifies the activities to be performed by specific employees and determines the lines of authority and responsibility in the firm.

The task are divided into (4) major categories in retail firms

1. Strategic management

2. Administrative management (operations)

3. Merchandise management

4. Store management

Matching Organization Structure to Retail Strategy

The design of the organizational structure needs to match the firm’s retail strategy.

Retailers tends to have more managers and make decisions at the local store level

When more decisions are made at the local store level, human resource cost are higher, but sales also increase because the merchandise and services are tailored to meet the needs of local markets.

Organization of a Single-Store Retailer The owner-manager of a single store maybe the

entire organization. The owner-manager simply assigns task to each

employees and watches to see that these task are performed properly.

Each employee must perform a wide range of activities, and the owner-manager is responsible for all the task.

Owner-ManagerStrategic management

Merchandise Mngr.Merchandise Mgnt.

Advertising & Promotion

Store ManagerStore Mgnt.

Human resource Mgnt.Distribution

Salespeople

AccountantFinancial control

Organization of a National Chain Store

Managing a national retail chain is much more complex because managers must supervise units that are geographically distant from one another.

Chairman &CEO

President & chief Merchandising

Officer

General Merchandise

Managers

Chief Operating Officer

Director of Stores

Director of supply chain

Director of store Environment, Design, and construction

President of JCPenny Direct

Director of planning & Allocation

Chief Marketing Officer

Director of product Development &

Sourcing

Chief Financial Officer

Chief Information Officer

Chief of Human Resource &

Administration Officer

General Council & Secretary

MERCHANDISE MANAGEMENT

The merchandise division is responsible for procuring the merchandise sold in the store and insuring that the quality, fashionability, assortment, and pricing of that merchandise is consistent with the firms strategy.

M.A.T. The buyer, allocator, and planner for each

merchandise category for a merchandise action team (MAT) that is responsible for managing the merchandise category.

BUYERS Buyers are responsible for procuring

merchandise and building and maintaining relationships with vendors.

ALLOCATORS

Is responsible for allocate merchandise and tailoring the assortment in several categories for specific stores in a geographic area.

PLANNERS

The planner is responsible for financial planning and analysis of the merchandise category.

Centralization Centralization is when authority

for retailing decisions is delegated to corporate managers rather than to geographically dispersed managers.

DECENTRALIZATION Is when authority for

retail decisions is assigned to lower levels in the organizations.

Coordinating Merchandise and Store Management

Improving Appreciation for the Store Environment

Making Store Visits

ASSIGNING EMPLOYEES TO COORDINATING

ROLES

Motivating Retail Employees A critical task of human resource management

is to motivate employees to work toward achieving the firm’s goal and implementing strategy.

Policies and Supervisions The most fundamental method of coordination

is to:

1. Repair written policies that indicate what employees should do.

2. Have supervisors enforce this policies.

INCENTIVES

The second method of motivating and coordinating employees uses incentives to encourage them to perform activities consistent with the retailers objectives.

TYPES OF INCENTIVE COMPENSATION

1. Commissions – is compensation based on a fixed formula.

2. Bonus – is additional compensation awarded periodically on the basis of an evaluation of the employees performance.

Drawbacks of Incentives Incentives are very effective at motivating

employees to perform the activities on which the incentives are based. But incentives also may cause employees to ignore other activities.

Organization Culture An organization culture is the set of

values, traditions, and customs of a firm that guides employee behavior.

Developing and Maintaining a

Culture

Building Employee Commitment

• Developing skills• Empowering employees• Creating partnering relationships

Developing skills

SELECTIVE HIRINGThe process of recruiting, selecting and training of personnel; to fill the right people for the right job.

Developing skills

STEPS IN SELECTIVE HIRING

1.Job analysis

2.Requisition of new employee

3.Actual recruitment of applicants

SOURCES OF APPLICANTS

1.Internal

2.External

Developing skills

STEPS IN SELECTION1.Reception of applicants2.Preliminary interview3.Application Form4.Employment test5.Final selection of immediate supervisor or department head6.Physical and medical exam7.Hiring8.Orientation/Induction/ Indoctrination

Developing skills

TRAININGThe systematic development of attitude, knowledge and behavior patterns for the adequate performance of a given job or task.

Developing skills

COMMON TYPES OF TRAINING

1.On-the-job training & job rotation

2.Vestibule training

3.Apprenticeship

4.Classroom training

5.Programming instruction

6.Management development program

Empowering employees

This is the process in which managers share power and decision-making authority with employees.

Creating partnering relationshipsREDUCING STATUS DIFFERENCEThis is an attempt to create less difference from the higher level of management from the lower level employees by changing job titles and changing wage differences.

Creating partnering relationshipsPROMOTION FROM WITHINThis is a staffing policy that involves hiring new employees for a higher position only from within the company. This is to promote fairness and loyalty to the company.

Creating partnering relationshipsBALANCING CAREERS AND FAMILIESThis is a benefit provided by some companies for employees to effectively manage their time for work and family. Some services include shift scheduling, job sharing, childcare and employee assistance program.

Issues in Retail Human Resource Management

• Managing diversity• Legal and regulatory issues• Use of technology

Managing diversity

DIVERSITY TRAININGThis consists of two components which are developing cultural awareness and building competencies.

Managing diversity

SUPPORT GROUPS AND MENTORINGThis assigns higher-level managers to help lower-level managers learn the firm’s values and meet the senior executives.

Managing diversity

CAREER DEVELOPMENT AND PROMOTIONThis is a form of management by providing career paths to different workers depending on their strengths, gender, skills and other factors that would help in their career in a company.

Legal and regulatory issues

EQUAL EMPLOYMENT OPPORTUNITIESThis is a policy wherein companies cannot treat employees differently simply on the basis of their race, color, religion, sex, national origin, age or disability status.


COMPENSATIONThese are laws related to compensation of employee with the apropos pay rates, benefits and allowances regardless of their race, color, religion, sex, national origin, age or disability status.


LABOR RELATIONSThese are laws where it describes the process by which unions can be formed and the ways in which companies must deal with the unions.


EMPLOYEE SAFETY AND HEALTHThese laws are about the basic premise that employers are obligated to provide a working environment that is free from hazards that are likely to cause death and serious injuries


SEXUAL HARASSMENTThese are laws that govern the protection of workers toward unwelcome sexual advances, requests for sexual favors and other inappropriate verbal and physical conduct.


EMPLOYEE PRIVACYThese are policies regarding the privacy of employees in their workplace. These include their workspace, personal property and other scrutinizing tests.


DEVELOPING POLICIESThis is the responsibility of the human resource department to formulate new policies that will be applied to the management depending on the nature and need.

Use of Technology

This is the use of intranets in retail chains in order to streamline the workflow and to automate other processes to reduce time on filing and paperwork by employees.

Business

Chap. 9. Retailing