Human Resource Management

Importance of Human Resources in Retailing

Human Resource is particularly important in Retailing as

employees perform an important role in selling.
Retailing is one business where people skills are
required in buying, displaying selling and providing
service to customers.

The strategic objective of human resource is to bring

inline the capabilities of employees with the goals and
objectives of the organization.

Gaining Competitive Advantage

H R Management can be a solid base for competitive

advantage due to three reasons.

1)

Labor cost accounts for a significant % of total expense

so employee management can give you cost advantage.

2)

Experience of customers with a retailer is through his

employees.

3)

This advantage can not be duplicated by the competition.

Objectives of H R Management in Retailing

Employee productivity can be improved with increase in

sales generated by employees through their training.

Reducing the number of employees

RESULT

This might increase short term productivity and profit but

has a bad effect on employees and results in customer
service decrease

Human Resource Triad

H R is responsible for policies and reinforce retailers

strategy.

The Store in charges are responsible to bring these

policies to life.

Employees provide feedback and prove to be eyes and

ears for the retailer.

Challenges for Retailers

Part Time Employees: due to working hours and

working trend retailers hire a lot of employees that work
part time.

These workers are more difficult to manage as they are

less committed and they are likely to quit when compared
to full time employees.

Expense Control: retailers work on thin margins and

must control expenses. They often dont pay high salaries
and often hire people with less or no experience. This
saves money but has a problem as poor appearance, low
commitment and direct contact with employees effects the
business.

Designing Organization Structure for A Retail Firm

The organization structure identifies the activities to be

performed by specific employees and determines the lines of
authority and responsibility in the firm.

The tasks are divided into four major categories

1)

Strategic Management

2)

Merchandise Management

3)

Store Management

4)

Administrative Management

Strategic Management

Develop a Retail Strategy

Identify the Target Market

Determine the Retail Format

Design Organizational Structure

Select Locations

Merchandise Management

Buy Merchandise

Control Merchandise Inventory

Price Merchandise

Store Management

Hire, Train the store personnel

Plan work schedule

Evaluate performance store personnel

Maintain store facility

Provide Services

Manage Inventory levels.

Administrative Management

Promote the firm

Manage Human Resource

Distribute Merchandise

Establish Financial Control

Retail Organizational Structure

Organization of a single store retailer: The owner of

the retail outlet (owner manager) can be the entire
organization. He hires employees as his business grows,
trains them assigns them duties and evaluates them.
Specialization in management may occur when he hires
employees in management.

Organization of a Regional Departmental Store:

Traditionally such department stores are family owned but
as they grow they hire manager who supervise units. The
chain of stores may be located in different towns.

Retail Organization Design Issues

There are two issues of a Retail Organization. These are

1)

Decision Making to be Centralized or to be Decentralized

2)

Approach to coordinate Merchandise management and Store

management.

The first issue is that decisions like merchandise selection and

purchase, HR management and information system are to be
made at store levels or at the regional level (Corporate Office).

The second issue is that retailers divide merchandise and store

management activities into different organizations within a
firm.

Centralization vs. Decentralization

Centralization: is when authority for retailing decisions is

with corporate managers rather than being with Regional store
managers.

Decentralization: is when more authority is with the regional

managers and less authority is at the corporate office.

Retailers reduce cost when decision making authority is with

corporate managers.
Because fewer managers are required to make retail decisions.
By coordinating buying for all retail outlets low prices are
bargained from suppliers.
Centralization increases efficiency as standard decisions are
taken for all outlets and uniformity is achieved.

1)
2)
3)

Centralization vs. Decentralization

While centralization has advantages it is difficult for retailer to adopt

the local market conditions.

We can not tailor merchandise for local need.

There is difficulty responding to local competition.

Pricing is central so cannot adjust as per local competitors.

If the policy is to be centralized then information system should be

quick and responsive to react to local needs.

The trend has been that retailers are improving their information
systems to make merchandise and operation decisions at the corporate
office.

Motivating Retail Employees

Policies and Supervision: this is the most basic method as policies are
made and supervisors are the ones who enforce them. These policies could
be for working hours and customer dealing and merchandise handling.
Policies sometimes reduce employee motivation level.

Incentives: Incentives can motivate employees but only if they are in line
with the firms profits.
Bonuses, Commission and gifts.
Organizational Culture: The final method could be developing a culture
on a set of values, traditions and customs in a firm that guides employee
behavior.
An organizational culture has stronger effect than rules or incentives.

The employees in return then use their best efforts.

Though it takes time to build such cultures but then its an advantage that
can not be quickly duplicated.

Building Employee Commitment

An important challenge is Employee Retention. High turnovers

increase cost and decrease sales. To retain the retailer must
develop an atmosphere where

1)

Employee skills should be developed

Employees should be empowered
Create a partnering relationship.
The first step is to hire the right people with the right attitude.
Training to employees is vital and they should learn the art of
clientele management.
Empowerment gives them confidence and that helps them in
providing better service to customers.

2)
3)

Building Employee Commitment

To build Commitment the retailer should

1)

3)

Reduce Status Difference.

Promote from the organization.
Enable employees to balance their career with families.

Flexible job timings and job sharing can help employees

2)

and will pay the retailer eventually.

Trends in H R Management

Managing Diversity
Diversity Training: It is all about developing cultural awareness
and building competencies.
Career development & Promotion
Legal & Regulatory Issues
Equal Employment Opportunity
Compensation
Employee Safety & Health
Gender Harassment
Employee Privacy
Use Of Technology: More use of technology to improve
standards.