Chapter 16

Human Resource & Managing

the Store

McGraw-Hill/Irwin
Retailing Strategy

Retail Market & Retail and

Financial Strategy Site Locations
Chapter 6, 7 Chapter 8,9

Organizational
Structure &
Human Resource
Management
Chapter 16

Information and Customer

Distribution Relationship
Systems Management
Chapter 10 Chapter 11
9-2
Questions

■ In what way does the management of human resources

play a vital role in a retailer’s performance?
■ How do retailers build a sustainable competitive
advantage by developing and managing their human
resources?
■ What activities do retail employees undertake, and how
are they typically organized?
■ How does a retailer coordinate employees’ activities, and
motivate them to work toward the retailer’s goals?
■ What are the human resource management programs
for building a committed workforce?
■ How do retailers manage diversity among their
employees?

9-3
 HR is the key

A study of Sears’ employees found a 5%

increase in employee satisfaction resulted
in a 1.3% increase in customer
satisfaction. This led to a 0.5% growth in
sales.

9-4
Objectives of
Human Resource Management

■ Short Term
 Increasing Employee Productivity
 Productivity = Sales/ Number of Employees

■ Long-Term
 Employee attitude  customer satisfaction and loyalty
 long-term performance
 Increasing Employee Satisfaction  Reducing Turnover
 Employee turnover

= # of employees leaving their job during the year

# of positions
9-6
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

9-7
Downward Performance Spiral

9-8
Special HR Considerations Facing
Retailers
■ Need for Part-Time Employees
■ Demand on Expense Control
■ Changing Employee Demographics
■ International HR Issues

9-10
Increasing Workforce Diversity

■ Workforce employing more

minorities, handicapped
people, and the elderly
■ Older workers are more reliable
than younger workers
■ Cost effective as training and
recruitment costs are low

Royalty-Free/CORBIS

9-11
Strategic Issues
Facing Retail HR Professionals

■ The design of the organization structure for

assigning responsibility, and authority for tasks
to people and business units
■ The approaches utilized coordinate the activities
of the firm’s department and employees, while
motivating employees to work toward achieving
company goals
■ The programs used to build employee
commitment, and retain valuable human
resources

9-12
 HR attrition - Pakistan

■ USA – 25%
■ EU – 20%
■ Pakistan – 55% *
■ Pakistan is the highest attrition rate in the world due
 12 hrs shift
 Weekly off not provided
 Letters of employment not issued
 Salaries not paid till the 10th and some cases even later
 Demotions / downward salary revisions

* 2016 research -
Static

9-13
 Leadership Styles and Behaviour

Leadership Styles and Behaviour

■ Directive
■ Visionary
■ Affiliative
■ Participative / Democratic
■ Pacesetting
■ Coaching
Leadership Versatility Index

FORCEFUL ENABLING

STRATEGIC OPERATIONAL

SOURCE:
KAPLAN
DEVRIES
INC
The Leadership Ladder (in terms of Impact)

The Leadership Ladder (in terms of Impact)

■ Environment
■ Behaviour
■ Capability
■ Purpose
■ Vision Always Be
Positive
Store Managers Responsibilities

■ Managing Store Employees

 Recruiting and Selecting
 Training
 Motivating
 Evaluating and providing constructive feedback
 Rewarding and compensating

■ Controlling Costs
 Increasing labor productivity
 Reducing maintenance and energy costs
 Reducing inventory losses

18-17
Store Managers Responsibilities

■ Managing Merchandise
 Displaying merchandising and maintaining visual standards
 Working with buyers
• Suggest new merchandise
• Buying merchandise
• Planning and managing special events
• Marking down merchandise

■ Providing Customer Service

18-18
 Training

■ Up to 3% of turnover
■ Orientation Programs
 Can take up to several weeks
■ Trainings can be
 Structured
 On the Job
 Analyze the impact

18-19
Designing the Organizational Structure

Organizational structure
Identifies the activities to be performed by
specific employees, and determines the lines of
authority and responsibility in the firm

9-20
Tasks Performed in a Retail Firm

9-21
Strategic Management Tasks
Performed in a Retail Firm

■ Develop a retail strategy

■ Identify the target market
■ Determine the retail format
■ Design organizational structure
■ Select locations

9-22
Merchandise Management Tasks
Performed in a Retail Firm

■ Buy merchandise
 Locate vendors

 Evaluate vendors

 Negotiate with vendors

 Place orders

■ Control merchandise inventory

 Develop merchandise

 Budget plans

 Allocate merchandise to stores

 Review open-to-buy and stock

position
■ Price merchandise
 Set initial prices

 Adjust prices

9-23
Store Management Tasks
Performed in a Retail Firm

■ Recruit, hire, and train store personnel

■ Plan work schedules
■ Evaluate performance of store personnel
■ Maintain store facilities
■ Locate and display merchandise
■ Sell merchandise to customers
■ Repair and alter merchandise
■ Provide services
■ Handle customer complaints
■ Take physical inventory
■ Prevent inventory shrinkage

9-24
Administrative Management Tasks
Performed in a Retail Firm

■ Promote the firm, its merchandise

and its services
■ Manage human resources
■ Distribute merchandise
■ Establish financial control

9-25
Assignment of Responsibility for Tasks

■ Strategic – Top Management, Board of Directors

■ Merchandise Management – Merchandise Division
■ Store Management – Stores Division
■ Administrative – Corporate Specialists

9-26
Organization of a Small Retailer

Normal
structure for
medium sized
retailers in
Pakistan

9-27
Organization of Macy’s Florida

9-28
Merchandise Division Organization:
Macy’s Florida

9-29
What does a Buyer do?

A buyer is responsible for:

■ procuring merchandise
■ setting prices and markdowns
■ managing inventories
■ building and maintaining relationships
■ attending trade and fashion shows
■ negotiating with vendors on price, quantities,
assortments, delivery dates and payment
terms
■ specifying private label merchandise © Digital Vision

Are Portals
used?
9-30
What does a category manager do?

■ A category manager
 Is responsible for a set of products that are viewed as
substitutes by customers (Ex: all pastas – fresh,
frozen, packed, or canned)
 Is evaluated on the profitability of category
 Is motivated to eliminate “me to” products and keep
essential niche products
 Is used primarily by supermarkets, big box retailers

9-31
Allocator vs. Planner

Allocator – responsible for allocating the merchandise

and tailoring the assortments in several categories for
specific stores in a geographic area.

Planner – responsible for the financial planning and

analysis of the merchandise category. They develop
the budget plan and monitor performance

9-32
Centralization vs. Decentralization
Advantages of Centralization
■ Reduce costs (overhead
falls with fewer
managers)
■ Coordinated buying
achieve lower prices from
suppliers
■ Opportunity to have the
best people make
decisions for the entire
corporation
■ Increases efficiency
Disadvantages of Centralization
■ It is difficult for a retailer to
adapt to local market
conditions
■ It may have problems
responding to local
competition and labor
markets
■ Personnel policies make it
hard for local managers to
pay competitive wages
9-37
Methods for Coordinating
Buying and Store Management

■ Improving buyer’s appreciation for store environment

■ Buyers making store visits
■ Assigning employees to coordinating roles

Royalty-Free/CORBIS 9-38
Winning the Talent War

■ Retailers are engaged in a “war” with their

competitors for talent – for effective employees
and managers – who can effectively deal with
the incased complexities of retail jobs (the use of
new technologies, increased profit & loss
responsibilities, increased global competition, a
diverse workforce).
■ Develop programs to attract, develop, motivate,
and keep talent

9-39
Attracting Talent – Employment Marketing

Employment marketing (branding)

Marketing programs that

attract “best and brightest”
potential employees
 Starbucks – “Love What You Do”
 Southwest – “Free to Actually
Enjoy What You Are Doing”

9-40
Attracting Talent – Employment Marketing
JCPenney

To build its employment brand, JCPenney uses

the tagline “A Perfect Fit” on all correspondence
and advertising directed toward potential
employees

9-41
Developing Talent –
Selection and Training

■ Selective Hiring:
 Recruit “the right people”
 Simply seeking the best and the brightest may not always
be the most effective approach
■ Training:
 Increasing investments in management training programs
and developing leaders
 Increasing attention to college graduates - Generation Y

9-42
Motivating Talent – Aligning Goals

■ Policies and Supervision

 Indicate what employees should do

 Behavior Enforced by Managers

■ Incentives
 Commission, Bonus, Stock Options

■ Organization Culture
 The set of values, traditions, and customs of a

firm that guides employee behavior

 Behavior enforced by social pressure

9-43
Use of Incentives

Advantages
■ Aligns Employee and
Company Goals
■ Strong Motivating Force

Disadvantages
■ Employees Only Focus
on Sales
■ Less Commitment to
Retailer

9-44
Developing and Maintaining a Culture

■ Stories
 Nordstrom – Hero Service Stores
 Ritz-Carlton – “wow story” reading
 Whole Foods – working in teams and
using its employees in the hiring
process
 Wal-Mart – Saturday Morning Meeting
■ Symbols
■ CEO Leadership

Remember
Sam
Walton ?

9-45
Keeping Talent –
Building Employee Commitment
■ Empowering Employees
 Empowerment is the process of managers sharing power
and decision-making authority with employees
• Gives employees confidence
• Provides greater opportunity to provide service to
customers
• Employees are more committed to firm’s success
■ Creating Partnering Relationships with Employees
 Reducing Status Differences
 Promotion From Within
 Balancing Careers and Families
• Flextime, job sharing
9-46
Issues in Retail Human Resource Management

■ Managing Diversity
 Diversity Training
 Support Groups and Mentoring
 Career Development and Promotions

■ Growth in Legal Restrictions on HR

Practices
 Equal employment opportunity
 Compensation
 Labor relations
 Employee safety and health
 Sexual harassment
 Employee privacy

■ Use of Technology to Increase Keith Brofsky/Getty Images

Employee Productivity

9-47
 Retention Factors Identified in Global
Researches for Fast Food Retail
■ Training and Development
■ Compensation
■ Work Environment
■ Work Life Balance
■ Job Satisfaction
■ Career Development
■ Supervisor Support
■ Recruitment and Selection
■ Flexible Work Hours
■ Retirement Plans /Health Benefits for self and family
■ Job Security
■ Ease of Commute / Location
■ Brand Image
■ Performance Appraisal (Fair)
Conceptual Framework - FF

Job Satisfaction

Career Development
Employee
Supervisor Support Retention

Brand Image

Job Security
Self
Developed
Retention Factors in PK Fast Food Industry-
Conclusion
■ Job Satisfaction, Brand Image and Job Security impact
Employee Retention , but Career Development and Supervisor
Support do not impact Employee Retention in the fast food
industry
■ Career development is not a factor because
 Not all employees want a career in the fast food industry
 Employees might feel that there talents are being fully utilized
 Career enhancement in the field of operations is limited
■ Managers consider too much supervision to be a hindrance.
They want empowerment
■ Results would change according to the organizational level of
respondent.