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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
09-10
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
09-15
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
09-23
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
09-28
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
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■ 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