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Key Issues

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  1. Key Issues • Store operation • The productivity cycle • Burnout & rustout • Motivating employees • Personnel functional areas • Compensation plans; benefits & disadvantages of each

  2. Personnel Functional Areas Merchandise Division design, negotiate, buy merchandise determine inventory levels Stores Division store operations store merchandising Marketing Division advertising/promotion visual display, special events Human Resources Division recruit, select, train, compensate Finance Division maintain records, budgets manage MIS department Operations Division loss prevention distribution centers

  3. Store Operations & HR Tasks • Utilization of personnel • Store format & size • Space allocation • Store maintenance • Energy management • Inventory management • Store security • Insurance • Credit management

  4. Objectives ofHR Management • Short Term • Increasing customer satisfaction • Increasing Employee Productivity • Productivity = Revenue per employee • Long-Term • Increasing Employee Satisfaction  Reducing Turnover

  5. Work Environment Open Long Hours Peak Sales Periods Emphasis on Cost Control Employees Unskilled Part-Time Diverse Backgrounds HR Management Challenges in Retailing

  6. Our Burnout StudyWork Week & Income A sample of U.S. business-school graduates • two-stage cluster sample • selection of schools (14 schools) • selection of graduates • graduated within the previous 15 years • mail administration of questionnaire • mail-out sample of 7266 individual graduates • final sample of 1418 (19.5% return rate)

  7. Our Burnout StudyWork Week & Income Mean hours per week Income category

  8. Our Burnout StudyJob Characteristics on … 1 = Low … 5 = High

  9. Our Burnout StudyJob Satisfaction with … 1 = Low … 5 = High

  10. Store retailing jobs: not “burnout” but “rust-out” Our Burnout StudyJob Stress & Burnout What do you see here? 1 = Low … 5 = High

  11. Retailer’s Response Layoffs Freeze on hiring & promotion Reduced training Salary freeze Use more part-time workers Downward Performance Spiral Financial Performance Problems Low profits High costs

  12. Increasing Employee Productivity Ability Effort Role Clarity Selection Training Motivation Goals Incentives Rewards Policies, Rules Incentives Org Culture

  13. Motivating and Controlling Employees • Policies and Supervision • Behavior Enforced by Managers • Incentives • Commission, Bonus • Organization Culture • unwritten rules, norms • behavior enforced by social pressure

  14. Developing an Organizational Culture • Stories • Nordstrom – Hero Service Stores • Wal-Mart – Saturday Meeting • Symbols • McDonald’s – Ronald McDonald • CEO Leadership • Wal-Mart – Sam Walton • Dell – Michael Dell

  15. Organizational Design Considerations • Specialization • Responsibility and Authority • Reporting Relationships • Defined by Organization Structure

  16. Strategic Management Tasks Performed in a Retail Firm

  17. Merchandise Management Tasks Performed in a Retail Firm

  18. Store Management Tasks Performed in a Retail Firm Recruit Motivate Prevent Shrinkage Maintain Facilities Sell Merchandise Train Employees Provide Services Take Inventory Hire Personnel Plan Schedules Evaluate Performance Display Merchandise

  19. Administrative Management Tasks Performed in a Retail Firm • Promote the Firm, its Merchandise and its Services • Manage Human Resources • Distribute Merchandise • Establish Financial Control

  20. Assignment of Responsibilityfor Tasks • Strategic – Top Management, Board of Directors • Merchandise Management – Merchandise Division • Store Management – Stores Division • Administrative – Corporate Specialists

  21. Department Store Organization

  22. Corporate Organization: Federated Stores And now … May Company 

  23. Video … and Meier & Frank WSJ 2/28/05

  24. Advantages of Centralized Decision-Making? • Retailers can reduce overhead, i.e. fewer managers • Coordinating efforts, it can achieve lower prices from suppliers • Opportunity to have the best people making decisions

  25. Methods for Coordinating Buying and Store Management • Better Appreciation for Store Environment • Making Store visits • Employees performing coordinating roles • Involving Store Management in Buying Decisions

  26. High incentive Equitable Good cost control Easy to understand Little control No security Cherry picking Poor customer service Coats, Shoes, Jewelry, Major HH Compensation Plans Plan When Advantages Disadvantages Office staff, Non-tech., Staple/low cost items Control Security Low turnover Low incentive Hard to administer Can be equitable