1. Human Resource Management
Chapter 9
Human Resource Management
McGraw-Hill/Irwin
Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.

2. 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

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?

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.

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

6. 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

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 Turnover

8. Downward Performance Spiral

9. Human Resource Triad

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

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
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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

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

14. Tasks Performed in a Retail Firm

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

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

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

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

19. Organization of a Small Retailer

20. Organization of Macy’s Florida

21. Merchandise Division Organization: Macy’s Florida

22. 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

23. 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

24. 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

25. Stores Division: Organization of Macy’s Florida Store

26. Corporate Organization of Macy’s Inc.

27. 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

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

29. 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

30. Methods for Coordinating Buying and Store Management
Improving buyer’s appreciation for store environment
Buyers making store visits
Assigning employees to coordinating roles
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31. 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

32. 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”

33. 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

34. 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

35. 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

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

37. 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

38. 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

39. 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
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