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 retailers 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

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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

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 firms 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 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 o Locate vendors o Evaluate vendors o Negotiate with vendors o Place orders Control merchandise inventory o Develop merchandise o Budget plans o Allocate merchandise to stores o Review open-to-buy and stock position Price merchandise o Set initial prices o 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

Organization of a Small Retailer

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Organization Design

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What does a Buyer do?

A buyer is responsible for:

procuring merchandise
setting prices

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
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What does a category manager do?

A category manager
o Is responsible for a set of products that are viewed as substitutes by customers (Ex: all pastas fresh, frozen, packed, or canned) o Is evaluated on the profitability of category o Is motivated to eliminate me to products and keep essential niche products o Is used primarily by supermarkets, big 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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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 Disadvantages of Centralization

Reduce costs (overhead falls It is difficult for a retailer to with fewer managers) adapt to local market conditions Coordinated buying achieve It may have problems lower prices from suppliers responding to local competition and labor markets Opportunity to have the best people make decisions for Personnel policies make it hard the entire corporation for local managers to pay competitive wages Increases efficiency

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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 o Starbucks Love What You Do o Southwest Free to Actually Enjoy What You Are Doing

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Attracting Talent Employment Marketing

To build its employment brand, use 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: o Recruit the right people. o Simply seeking the best and the brightest may not always be the most effective approach. Training: o Increasing investments in management training programs and developing leaders. o Increasing attention to college graduates.

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Motivating Talent Aligning Goals

Policies and Supervision
o Indicate what employees should do. o Behavior Enforced by Managers.

Incentives
o Commission, Bonus, Stock Options.

Organization Culture
o The set of values, traditions, and customs of a firm that guides employee behavior. o 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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Keeping Talent Building Employee Commitment

Empowering Employees
o 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 firms success

Creating Partnering Relationships with Employees

o Reducing Status Differences o Promotion From Within o Balancing Careers and Families

Flextime, job sharing

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Issues in Retail Human Resource Management

Managing Diversity
o Diversity Training o Support Groups and Mentoring o Career Development and Promotions

Growth in Legal Restrictions on HR Practices

o o o o o o Equal employment opportunity Compensation Labor relations Employee safety and health Sexual harassment Employee privacy

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