McGraw-Hill/IrwinRetailing Management, 7/e © 2008 by The McGraw-Hill Companies, All rights reserved.

Chapter 9

Human Resource Management

09-2

Retail and Site Locations

Chapter 7,8

Retailing Strategy

Organizational Structure &

Human Resource Management

Chapter 9

Retail Market & Financial Strategy

Chapter 5, 6

Customer Relationship Management

Chapter 11

Information and Distribution Systems Chapter 10

09-3

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?

09-4

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.

09-5

Gaining Competitive Advantage through Human Resource Management

Why does human resource management give a sustainable competitive advantage?

■ Labor costs account for a significant percentage of a retailer’s total expenses

■ The customer experiences are determined by the activities of employees (selecting merchandise, providing information and assistance, etc.)

■ These potential advantages are difficult for competitors to duplicate

09-6

Objectives ofHuman 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

09-7

Human Resource Management Challenges in Retailing

Work Environment■ Open Long Hours■ Peak Sales Periods■ Emphasis on Cost

Control

Employees■ Unskilled■ Part-Time■ Diverse Backgrounds

High TurnoverHigh Turnover

09-8

Downward Performance Spiral

09-9

Human Resource Triad

09-10

Special HR Considerations Facing Retailers

■ Need for Part-Time Employees■ Demand on Expense Control■ Changing Employee Demographics■ International HR Issues

09-11

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

09-12

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

09-13

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

09-14

Tasks Performed in a Retail Firm

09-15

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

09-16

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

09-17

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

09-18

Administrative Management Tasks Performed in a Retail Firm

■ Promote the firm, its merchandise and its services

■ Manage human resources■ Distribute merchandise■ Establish financial control

09-19

Assignment of Responsibility for Tasks

■ Strategic – Top Management, Board of Directors■ Merchandise Management – Merchandise Division■ Store Management – Stores Division■ Administrative – Corporate Specialists

09-20

Organization of a Small Retailer

09-21

Organization of Macy’s Florida

09-22

Merchandise Division Organization: Macy’s Florida

09-23

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

09-24

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

09-25

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

09-26

Stores Division:Organization of Macy’s Florida Store

09-27

Corporate Organization of Macy’s Inc.

09-28

Activities Performed at the Macy’s Inc. Corporate Office

■ Support services and counsel to operating divisions■ Conceptualizing, designing, sourcing, and marketing

private label and exclusive merchandise sold at Macy’s and at Bloomingdale’s

■ Overall strategy, product development, merchandising and marketing of home-related merchandise

■ Logistics, distribution, and operations functions■ Services all proprietary and VISA credit card accounts■ Performance of most other non-store services for

customers and employees■ Development of distinctive sales promotions■ Provision of an integrated electronic commerce, and

data warehouse systems

09-29

Retail Organization Design Issues

■ The degree to which decision making is centralized or decentralized

■ The approaches used to coordinate merchandise and store management

09-30

Centralization vs. Decentralization

Advantages 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

■ 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

09-31

Methods for Coordinating Buying and Store Management

Ro

yalt

y-F

ree/

CO

RB

IS

■ Improving buyer’s appreciation for store environment■ Buyers making store visits■ Assigning employees to coordinating roles

09-32

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

09-33

Attracting Talent – Employment Marketing

Marketing programs that attract “best and brightest” potential employees

Starbucks – “Love What You Do” Southwest – “Free to Actually

Enjoy What You Are Doing”

Employment marketing (branding)

09-34

Attracting Talent – Employment MarketingJCPenney

To build its employment brand, JCPenney uses the tagline “A Perfect Fit” on all correspondence

and advertising directed toward potential employees

09-35

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

09-36

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

09-37

Use of Incentives

Advantages■ Aligns Employee and

Company Goals■ Strong Motivating Force

Disadvantages■ Employees Only Focus

on Sales■ Less Commitment to

Retailer

09-38

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

09-39

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

09-40

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 Employee Productivity

Keith Brofsky/Getty Images