Chapter 09 – Human Resource Management
9-1
CHAPTER 9
HUMAN RESOURCE MANAGEMENT
ANNOTATED OUTLINE
INSTRUCTOR NOTES
• Retailers achieve their financial objectives
by effectively managing their five critical
assets: locations, merchandise inventory,
stores, employees, and customers.
I. Gaining Competitive Advantage through
Human Resource Management
• Human resource management can be the
basis of a sustainable competitive
advantage for three reasons.
• Second, the experience that most customers
have with a retailer is determined by the
activities of employees who select
merchandise, provide information and
assistance, and stock displays and shelves.
Thus, employees can play a major role in
differentiating a retailer’s offering from its
competitor’s offering.
• Finally, these potential advantages are
difficult for competitors to duplicate.
See PPT 9-3
Ask students why managing people is so
important to retailers? Will the number of
The people employed in retailing are often low in
motivation and thus difficult to manageme and
motivate. Ask students who have worked retail to
relate their experiences. How were they motivated?
What skills and characteristics did their co-workers
have?
A. Objectives of Human Resource Management
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• One human resource management
performance measure is employee
productivity—the retailer’s sales or profit
divided by the number of employees.
• Employee productivity is directly related to
the retailer’s short-term profits, while
employee attitudes have important effects
on customer satisfaction and subsequent
long-term performance of the retailer.
• A failure to consider both long- and short-
term objectives can result in
mismanagement of human resources and a
downward performance spiral. Short term
cost reductions often have an adverse effect
on long-term performance.
and high labor productivity.
[Department stores have low productivity
because they have high labor costs to provide
Discuss the downward performance spiral as
shown in PPT 9-7
B. The Human Resource Triad
• The full potential of a retailer’s human
See PPT 9-8
C. Special HR Conditions Facing Retailers
• Human resource management in retailing is
very challenging due to (1) the need to use
part-time employees, (2) the emphasis on
expense control, and (3) the changing
demographics of the workforce.
1. Expense Control
See PPT 9-9
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employees and often hire people with little
or no sales experience in order to control
2. Part-Time Employees
• To deal with peak periods such as lunch
hours, night and during sales, as well as the
See PPT 9-10
3. Employee Demographics
• The changing demographic pattern will
result in a chronic shortage of qualified
sales associates. Thus, retailers need to
explore approaches for operating
effectively in a tight labor market.
See PPT 9-11
4. International Human Resource Issues
• The management of employees working
for an international retailer is especially
challenging because differences in work
values, economic systems, and labor laws
See PPT 9-12
Ask students to consider what might be some
unique challenges of hiring employees in foreign
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• The staffing of management positions in
foreign countries raises a wide set of
II. Designing The Organization Structure For A
Retail Firm
• The organization structure identifies
activities to be performed by specific
employees and determines the lines of
authority and responsibility in the firm.
See PPT 9-13
Before you begin this lecture, ask students to
diagram how they think a retail organization is
structured. Discuss the differences between their
diagrams and the way that most retailers are
A. Matching Organization Structure to Retail
Strategy
• The design of the organization structure
needs to match the firm’s retail strategy.
For example, category specialists and
warehouse clubs target price-sensitive
customers and thus are very concerned
about building a competitive advantage
based on low cost.
B. Organization of a Single-Store Retailer
• Owner-managers of a single store may be
the entire organization. Coordinating and
controlling employee activities is easier in
See PPT 9-19
Small stores typically violate the principles of
organization —unity of command and
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one store than in a large chain of stores.
specialization. Ask students why?
C. Organization of a National Retail Chain
• In contrast to the management of small
retailers, retail chain management is
complex.
• Managers must supervise units that are
geographically distant from each other.
• In most retail firms, the two senior
executives, typically called the CEO and
COO work closely together in managing
the firm. They are frequently referred to as
principals or partners.
• One member of the partnership is primarily
responsible for the merchandising activities
of the firm—the merchandise, stores, and
marketing divisions.
See PPT 9-20
The Mazur plan emphasized the separation of
buying and store management functions. What
are the advantages of different employees
doing each of these activities? What are the
disadvantages?
1. Merchandise Division
See PPT 9-16
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2. Buyers
• Buyers are responsible for procuring
merchandise, setting prices and
markdowns, and managing inventories for
specific merchandise categories.
• Buyers are given considerable autonomy,
but they must adhere to an inventory
budget that will vary from season to
season.
In discussing each division, mention the skills
needed to be successful in each type of job. Ask
students in which division they would like to
work. Why?
3. Planners
• The merchandising planner is responsible
for allocating merchandise and tailoring the
assortment of several categories for
specific stores in a geographic area.
4. Stores Division
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• A store manager is responsible for
activities performed in each store.
becoming more important?
5. Corporate Organization of Macy’s Inc.
• The decisions made at the corporate office
6. Organization Structures of Other Types
of Retailers
• Most retail chains have organization
structures very similar to the Macy’s
Florida structure.
headquarters.
III. Retail Organization Design Issues
A. Centralization versus Decentralization
• Centralization is when the authority for
retailing decisions is delegated to corporate
managers rather than to geographically
dispersed regional, district, and store
managers. Decentralization is when
authority for retail decisions is assigned to
lower levels in the organization.
See PPT 9-24
Ask students what types of merchandise would
be better managed centrally? Decentralized?
What about toys and games? High fashion
clothing? Groceries?
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• By coordinating its efforts across
geographically dispersed stores, the
company achieves lower prices from
suppliers.
• Centralization has disadvantages as well:
• While centralization has advantages in
reducing costs, it is more difficult for a
retailer to adapt to local market conditions,
to respond to local competition, and to
adapt to local labor markets.
B. Coordinating Merchandise and Store
Management
• Small, independent retailers have little
difficulty coordinating their stores’ buying
See PPT 9-25
Why is there a need to coordinate buying and
store management activities?
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environment, (2) making store visits, and
roles.
• On the other hand, large retail firms
organize the buying and selling functions
into separate divisions. Buyers specialize
in buying merchandise and have little
contact with the store management
responsible for selling it.
1. Improving Appreciation for Store
Environment
• Management trainees, who eventually
become buyers, are required by most
retailers to work in the stores before they
enter the buying office.
2. Making Store Visits
• Another approach for increasing customer
What are the benefits and costs of having
buyers visit the stores frequently?
3. Assigning Employees to Coordinating
Roles
• Some retailers, like TJX, have people in
the merchandise division (the planners who
Would being a coordinator be an interesting
job? Would it be stressful? Why or why not?
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• Most national retail chains have regional
and even district staff personnel to
coordinate buying and selling activities.
IV. Winning the Talent War
• The pool of potential retail employees is
decreasing due to changing demographics.
• Thus retailers are engaged in a “war” with
their competitors for talent, that is for
effective employees and managers.
See PPT 9-26
A. Attracting Talent: Employment Marketing
• HR departments for large, national retailers
develop marketing programs to attract
See PPT 9-27
B. Developing Talent: Selection and Training
1. Selective Hiring
• The first step in building a committed
workforce is recruiting the right people.
The job requirements and firm strategy
dictate the type of people hired.
See PPT 9-28
2. Training
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• Investing in developing employee skills
tells employees that the firm considers
them important.
C. Motivating Talent: Aligning Goals
• The task of aligning employees’ and the
firm’s goals is often difficult, because
employees’ goals usually differ from those
of the firm.
1. Policies and Supervision
Ask students whether written policies provide
2. Incentives
• Incentives can be used to motivate
employees to perform activities consistent
with the retailer’s objectives.
See PPT 9-29
a. Types of Incentive Compensation
• Two types of incentives are commissions
and bonuses.
What is the difference between commissions
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• Besides incentives based on individual
performance, retail managers often receive
additional income based on their firm’s
performance.
b. Drawbacks of Incentives
• Incentives are very effective in motivating
employees to perform the activities on
Commissions motivate salespeople to make
more sales. Ask students why some retailers
use commission if it is not good for improving
customer service and developing customer
3. Organization Culture
• An organization culture is the set of
values, traditions, and customs in a firm
that guides employee behavior. These
guidelines aren’t written in a set of policies
and procedures, but experienced employees
do pass along traditions to new employees.
Ask a student to describe the organizational
culture at Disney World.
Have the students give their own descriptions
of the “culture” of organizations they belong to
such as clubs, teams, fraternities or sororities.
This will help the students to identify the
meaning of “corporate culture.” They can also
consider the culture of the college.
4. Developing and Maintaining a Culture
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• Organization cultures are developed and
maintained through stories and symbols.
Values in an organization culture are often
explained to new employees and reinforced
to present employees through stories.
See PPT 9-31
Ask students about the culture of their living
group — dormitory, fraternity, or sorority. Are
there stories, customs, and symbols used to
D. Keeping Talent: Building Employee
Commitment
• An important challenge in retailing is to
reduce turnover. High turnover reduces
sales and increases costs.
• To reduce turnover, retailers need to build
an atmosphere of mutual commitment in
their firms.
See PPT 9-32
Ask students who work, what keeps them motivated
and committed to their jobs? What keeps them
motivated to work in student groups or engage in
1. Empowering Employees
• Empowerment is the process of managers
sharing power and decision making
authority with employees.
Ask students for examples of a service
encounter with a retailer in which the
employee was/was not empowered to solve a
problem.
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lower levels in the organization. These
employees are close to the retailer’s
customers and in a good position to know
what it takes to satisfy customers.
2. Creating a Partnering Relationships
• Three human resource management
activities that build commitment through
developing partnering relationships with
Ask students if they believe that their employer has
reached out to develop a relationship with them.
Then ask what their employers did to develop that
a. Reducing Status Differences
• By reducing status differences, employees
feel they play an important role in the
firm’s achieving its goals and that their
contributions are valued.
b. Promotion from Within
• Promotion from within is a staffing
policy that involves hiring new employees
only for positions at the lowest level in the
job hierarchy and then promoting
employees for openings at higher levels in
the hierarchy.
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employees.
c. Balancing Careers and Families
• The increasing number of two income and
single parent families makes it difficult for
employees to effectively do their jobs and
manage their households.
• With job sharing, two employees
voluntarily are responsible for a job that
was previously held by one person.
• Both programs let employees
accommodate their work schedules to other
demands in their life such as being home
when children return from school.
VI. Issues in Retail Human Resource
Management
• Three issues in human resource
management are: (1) the increasing
A. Managing Diversity
• Managing diversity is a human resource
management activity designed to realize
See PPT 9-34
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the benefits of a diverse work force.
• Managing a diverse work force isn’t a new
issue for retailers. The traditional approach
for dealing with diverse groups was to
blend them into the “melting pot.”
Minority employees were encouraged to
adopt the values of the majority, white,
male-oriented culture.
• Besides gaining greater insight into
customer needs, retailers must deal with
the reality that their employees will
become more diverse in the future.
• Many retailers have found that these
emerging groups are more productive than
their traditional employees.
Why are retailers interested in programs for
managing diversity? How do they benefit from
these programs? How do their customers
benefit?
Ask the students if any one has had the
opportunity to be involved in a corporate
1. Diversity Training
• Diversity training typically consists of two
components: developing cultural awareness
and building competencies. The cultural
awareness component teaches people about