1. CHAPTER 11: RETAIL ORGANIZATION AND HUMAN RESOURCE MANAGEMENT

2. Chapter Objectives
To study the procedures involved in setting up a retail organization
To examine the various organizational arrangements utilized in retailing
To consider the special human resource environment of retailing
To describe the principles and practices involved with the human resource management process in retailing

3. Figure 11-1a: Planning and Assessing a Retail Organization

4. Figure 11-1b: Planning and Assessing a Retail Organization

5. Figure 11-1c: Planning and Assessing a Retail Organization – Management Needs

6. The Value Profit Chain and Human Resource Management
Satisfaction Mirror– Employee satisfaction and loyalty (due to fairness of management, the quality of one’s peers in the workplace, employee empowerment and monetary compensation) translates into high levels of customer service and customer loyalty.
Recognizes that employees interact with customers not management

7. Trader Joe’s Employee Statement
“We will have well-trained, knowledgeable employees that create a fun store that is clean, WOW merchandised, informative, and one that continually kaizens (constantly improves) the customer experience.”

8. Wegman’s Employee Satisfaction
In a recent survey of Wegman’s employees, 33,000 of 37,000 employees responded (close to 90 percent). When asked, “Does management know what it’s doing?”, 96 percent responded with a “Yes” answer.
The most common response to another question to describe Wegman’s management, was the word “family.”

9. Figure 11-2: The Process of Organizing a Retail Firm

10. Figure 11-3: Division of Tasks in a Distribution Channel

11. Figure 11-4: A Job Description for a Store Manager

12. Table 11-1: Principles for Organizing a Retail Firm
Show interest in employees
Monitor employee turnover, lateness, and absenteeism
Trace line of authority from top to bottom
Limit span of control
Empower employees
Delegate authority while maintaining responsibility
Acknowledge need for coordination and communication
Recognize the power of informal relationships

13. Figure 11-6: Organization Structures Used by Small Independents

14. Mazur Plan Merchandising—buying/selling, stock planning,
Publicity—displays, event planning, advertising research
Store management—customer service, merchandise protection, receiving
Accounting and control—credit, expense budgeting, inventory management

15. Figure 11-7: The Basic Mazur Organization Plan for Department Stores

16. Chain Retailer Organizations
Centralized functional divisions– real estate, distribution, human resources (top management)
Elaborate information system and management controls
Centralization of much of buying with room to adapt to local markets

17. Department Store Organization Formats
Main store control– flagship executives oversee store units. Extreme centralization
Separate store organization—each store buys for itself and maintains sales responsibility
Equal store organization– buying is centralized; branch stores are sales units

18. Figure 11-8: Equal-Store Organizational Format Used by Chain Stores

19. Figure 11-9: The Organizational Structure of Kroger

20. Human Resource Management in Retailing
Recruiting
Selecting
Training
Compensating
Supervising

21. Employee Turnover Costs
The Coca-Cola Retailing Research Council found that the supermarket industry’s annual turnover costs can exceed its entire profits by over 40 percent
Annual employee turnover for Publix, Stew Leonard’s and Wegman’s is 5-6 percent versus 19 percent overall (Fortune and Coca-Cola data)

22. Direct and Indirect Costs of Employee Turnover
Direct Costs include: separation costs, exit interviews, replacement costs (advertising, screening, new employee orientation) and training costs
Indirect costs include: customer dissatisfaction, reduced suggestion selling, pricing errors, reduced morale among co-workers

23. Table 11-2: True Cost of Employee Turnover
Costs of using fill-in employees
Severance pay for exiting employees
Costs of hiring new employees
Training costs
Costs of mistakes and lower productivity while new employees gain experience
Customer dissatisfaction due to the loss of prior employees and the use of inexperienced workers.
Lower continuity among co-workers.
Poor employee morale when turnover is high.

24. Women in Retailing Issues to address with regard to female workers
Meaningful training programs
Advancement opportunities
Flex time: the ability of employees to adapt their hours
Job sharing among two or more employees who each work less than full time
Child care
Retailing empires
Mary Kay
Avon

25. Wal-Mart Sex Discrimination Case
Class action case involving 500,000 to 1.6 million women
Filed ten years ago when female average salary was $13,000 about $1,100 less than average male salary
Largest single litigation ever faced by Wal-Mart
Wal-Mart seeking to throw case out –argues that its policies prohibit discrimination, many different positions are involved, and personnel decisions are made at store level– not centralized ‘

26. Minorities in Retailing
Issues to address with regard to minority workers
Clear policy statements from top management as to the value of employee diversity
Active recruitment programs to stimulate minority applications
Meaningful training programs
Advancement opportunities
Zero tolerance for insensitive workplace behavior

27. Diversity Two premises:
That employees be hired and promoted in a fair and open way, without regard to gender, ethnic background, and other related factors
That in a diverse society, the workplace should be representative of such diversity

28. Labor Law Considerations
Retailers must not
Hire underage workers
Pay workers “off the books”
Require workers to engage in illegal acts
Discriminate in hiring or promoting workers
Violate worker safety regulations
Disobey the Americans with Disabilities Act
Deal with suppliers that disobey labor laws

29. Figure 11-10: A Goal-Oriented Job Description for a Management Trainee

30. Figure 11-10: A Goal-Oriented Job Description for a Management Trainee (cont.)

31. Figure 11-11: A Checklist of Selected Training Decisions

32. Components of Compensation
Total compensation
Salary plus commission
Profit-sharing

33. Employee Behavior and Motivation
Several attitudes may affect employee behavior
Sense of accomplishment
Enjoyment of work
Attitude toward physical work conditions
Attitude toward supervisors
Confidence in company
Knowledge of business strategy
Recognition of employee role in achieving corporate objectives

34. Employee Motivation I
Employee centered approach—Whole Foods team based hiring decision after 4 week trial period. Needs 2/3’s vote
Hire salaries– Publix store manager=$113,000 ; Nordstrom has salespeople making $100,000
Continuous assessment-Trader Joe’s every three months (punctuality, is always friendly, knows product features, promotes high store morale. For part-time as well as full-time employees

35. Employee Motivation II
Profit sharing—Publix current and former employees own 85 percent of company. If price earnings multiple is 20; every $1 of extra profit equals $20 in additional wealth. Encourages harder work for self and fellow workers
Au Bon Pain– store managers have compensation linked to profit goals at specific locations

36. Style of Supervising Retail Employees
Management assumes employees must be closely supervised and controlled; only economic inducements motivate
Management assumes employees can be assigned authority and be self-managers; motivation is intrinsic
Management applies self-management approach

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