Chapter 9

Human Resource
Management

McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.
Retailing Strategy

Retail Market & Retail and

Financial Strategy Site Locations
Chapter 5, 6 Chapter 7,8

Organizational
Structure &
Human Resource
Management
Chapter 9

Information and Customer

Distribution Relationship
Systems Management
Chapter 10 Chapter 11
9-2
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?

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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.

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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

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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
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Human Resource Management
Challenges in Retailing
Work Environment Employees
■ Open Long Hours ■ Unskilled
■ Peak Sales Periods ■ Part-Time
■ Emphasis on Cost ■ Diverse Backgrounds
Control

High Turnover

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Downward Performance Spiral

9-8
Human Resource Triad

9-9
Special HR Considerations Facing
Retailers
■ Need for Part-Time Employees
■ Demand on Expense Control
■ Changing Employee Demographics
■ International HR Issues

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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

9-11
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

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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

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Tasks Performed in a Retail Firm

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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

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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

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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

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Administrative Management Tasks
Performed in a Retail Firm

■ Promote the firm, its merchandise

and its services
■ Manage human resources
■ Distribute merchandise
■ Establish financial control

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Assignment of Responsibility for Tasks

■ Strategic – Top Management, Board of Directors

■ Merchandise Management – Merchandise Division
■ Store Management – Stores Division
■ Administrative – Corporate Specialists

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Organization of a Small Retailer

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Organization of Macy’s Florida

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Merchandise Division Organization:
Macy’s Florida

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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 © Digital Vision

■ specifying private label merchandise

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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

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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

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Stores Division:
Organization of Macy’s Florida Store

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Corporate Organization of Macy’s Inc.

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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

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Retail Organization Design Issues

■ The degree to which decision making is

centralized or decentralized
■ The approaches used to coordinate
merchandise and store management

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Centralization vs. Decentralization
Advantages 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
Disadvantages 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
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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 9-31
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

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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”

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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

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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

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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

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Use of Incentives

Advantages
■ Aligns Employee and
Company Goals
■ Strong Motivating Force

Disadvantages
■ Employees Only Focus
on Sales
■ Less Commitment to
Retailer

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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

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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
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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
Keith Brofsky/Getty Images

■ Use of Technology to Increase

Employee Productivity
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