Human Resource Management Chapter 9 Human Resource Management

Retailing Strategy Retail and Site Locations Chapter 7,8 Retail Market & Financial Strategy Chapter 5, 6 Organizational Structure & Human Resource Management Chapter 9 Information and Distribution Systems Chapter 10 Customer Relationship Management Chapter 11

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?

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.

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

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

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 Turnover

Downward Performance Spiral

Human Resource Triad

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

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

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

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

Tasks Performed in a Retail Firm

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

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

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

Administrative Management Tasks Performed in a Retail Firm Promote the firm, its merchandise and its services Manage human resources Distribute merchandise Establish financial control

Assignment of Responsibility for Tasks Strategic – Top Management, Board of Directors Merchandise Management – Merchandise Division Store Management – Stores Division Administrative – Corporate Specialists

Organization of a Small Retailer

Organization of Macy’s Florida

Merchandise Division Organization: Macy’s Florida

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

What does a category manager do? 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

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

Stores Division: Organization of Macy’s Florida Store

Corporate Organization of Macy’s Inc.

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

Retail Organization Design Issues The degree to which decision making is centralized or decentralized The approaches used to coordinate merchandise and store management

Centralization vs. Decentralization Advantages of Centralization Disadvantages 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 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

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

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

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”

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

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

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

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

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

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

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