Chapter 9

Organizational Structure and

Human Resource Management

McGraw-Hill/Irwin
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Levy/Weitz: Retailing Management, 5/e Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved.
 Retailing Strategy

Retail Market and Retail and Site

Financial Strategy Locations
Chapter 5, 6 Chapter 7 and 8

Organizational
Structure and
Human Resource
Management
Chapter 9

Information and Customer

Distribution Relationship
Systems Management
Chapter 10 Chapter 11
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 Objectives of
Human Resource Management

• Short Term
– Increasing Employee Productivity
– Productivity = Sales/Number of Employees
• Long-Term
– Increasing Employee Satisfaction  Reducing
Turnover

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 Human Resource Management
Challenges in Retailing
Work Environment Employees
• Open Long Hours • Unskilled
• Peak Sales Periods • Part-Time
• Emphasis on Cost • Diverse Backgrounds
Control

High Turnover

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 Downward Performance Spiral

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 Human Resource Triad

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Special HR Considerations Facing Retailers

Need for Part-Time Employees

Demand on Expense Control
Changing Employee Demographics
Differing Cultural and Legal Requirements

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 • The organization structure:
Identifies the activities to be performed
by specific employees and determines the
lines of authority and responsibility in the firm

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 Organizational Design Considerations

 Specialization: focusing employees on a

limited set of activities, enables
employees to develop expertise and
increase productivity
 Responsibility and Authority: productivity
increases when employees have the
proper amount of authority to effectively
undertake the responsibilities assigned
to them
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  Reporting Relationships: productivity can
decrease when too many or too few employees
report to a supervisor. The effectiveness of
supervisors decreases when they have too
many employees reporting to them

 Matching Organization Structure to Retail

Strategy

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 Strategic Management Tasks
Performed in a Retail Firm

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 Merchandise Management Tasks
Performed in a Retail Firm

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 Store Management Tasks
Performed in a Retail Firm

Recruit Motivate
Prevent Shrinkage Maintain Facilities

Sell Merchandise Train Employees

Provide Services Take Inventory

Plan Schedules Hire Personnel

Evaluate Performance Display Merchandise

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 Administrative Management Tasks
Performed in a Retail Firm

Promote the Firm, its Merchandise and

its Services
Manage Human Resources
Distribute Merchandise
Establish Financial Control

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 Assignment of Responsibility for Tasks

• Strategic – Top Management, Board of

Directors
• Merchandise Management –
Merchandise Division
• Store Management – Stores Division
• Administrative – Corporate Specialists

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 Organization of a Small Retailer

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 Organization of a Regional
Department Store: Rich’s

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 Merchandise Division
Organization: Rich’s

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 Department Store Organization at
Rich’s/Lazarus/Goldsmith’s

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 Corporate Organization:
Federated Stores

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 • Centralization: when authority for retailing
decisions is delegate to corporate managers
rather than to geographically dispersed
regional, district and store managers
• Decentralization: when authority for retailing
decisions is assigned to lower lever in the
organization

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 Advantages of Centralized
Decision-Making

• Retailers can reduce overhead, i.e. fewer

managers
• Coordinating efforts, it can achieve lower prices
from suppliers
• Opportunity to have the best people making
decisions

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 Methods for Coordinating
Buying and Store Management

• Better Appreciation for Store Environment

• Making Store visits
• Employees performing coordinating roles
• Involving Store Management in Buying
Decisions

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 Increasing Employee Productivity

Role
Ability Effort
Clarity

Selection Motivation Policies, Rules

Training Goals Incentives
Incentives Org Culture
Rewards
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 Motivating and Controlling Employees

• Policies and Supervision

– Behavior Enforced by
Managers
• Incentives
– Commission, Bonus
• Organization Culture
– unwritten rules, norms
– behavior enforced by social
pressure
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 Types of Incentives

Commissions on Sales
Bonus
Stock Options
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 Use of Incentive

Advantages Disadvantages
• Aligns Employee • Employees Only
and Company Focus on Sales
Goals
• Less Commitment
• Strong Motivating to Retailer
Force

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 Developing an Organizational Culture

• Stories
– Nordstrom – Hero Service Stores
– Container Store – Man in the Desert
– Wal-Mart – Saturday Meeting

• Symbols
– Container Store – Gumby for Flexibility

• CEO Leadership

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 Building Employee Commitment

• Building Employee Skills

– Selective hiring
– Extensive training
• Empowering Employees
• Creating Partnering Relationships
– Reducing Status Differences
– Promotion From Within
– Balancing Careers and Families
• Flex Time, job sharing, day care

When Do You Want to Spend the Money to

Build Employee Commitment?
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 Summary

• Increasing Labor Productivity, Reducing Labor

Cost Important in Retailing
• Tradeoff -- Increase Cost Vs High Turnover
• Positives and Negatives of Approach for
Controlling and Motivating Employees

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 Trends in Retail Human Resource
Management

• Managing Diversity
– Diversity Training
– Support Groups and
Mentoring
– Career Development for
Promotion
• Legal and Regulatory Issues
• Use of Technology
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 Legal Issues in
Human Resources: Overview

Equal opportunity and

anti-discrimination laws
What can (or can’t) be asked
Legal rights of a new employee
Sexual harassment

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 Regulations

• Equal Employment
Opportunity
• Compensation
• Labor Relations
• Employee Safety and Health
• Sexual Harassment
• Employee Privacy

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