RETAIL ORGANIZATION AND HUMAN RESOURCE

MANAGEMENT1) Designing the organizational

structure for a Retail firms.2) Retail Organization Structures 3) Human Resource Management in

Retail 4) Trends in Human Resource

Management in Retail

Designing the Designing the organizational structure organizational structure

for Retail firmsfor Retail firms

Designing the Designing the organizational structure organizational structure

for Retail firmsfor Retail firms

Organization structure A formal structure where the

various activities to be performed by the specific employees are identified and delegated, indicating their authority and responsibility.

Organization structure is the formal system of task and

reporting relationships that controls, coordinates, and motivates employees so that they cooperate to achieve an organization's goals.

Organization structure should:

• Encourage employees to work hard and to develop supportive work attitudes

• Allow people and groups to cooperate and work together effectively

Organization structure• A retailer cannot survive unless its

organization structure satisfies the need of the target market, regardless of how well employee and management needs are met.

• Most of the retailers do similar tasks such as buying, pricing etc. but there are many ways of organizing a retail firm.

The process of organizing a Retail firm

1) Outlining the specific task to be performed in retail distribution channel.

2) Dividing the task among channel members.

3) Grouping the retailer’s task into jobs.4) Classifying the jobs.5) Integrating positions through an

organization chart.

1) Specifying the tasks to be performed

• Buying merchandise • Setting price• Inventory storage• Customer research• Customer contact• Facilitate shopping• Customer follow up and handling complaints

Specifying the tasks to be performed

• Personnel management• Billing customers• Handling receipts• Delivery to customer• Handling Returns• Sales forecasting and budgeting

2) Dividing the tasks among channel members• The tasks which are mentioned in

the previous step does not needs to be done by a retailer only. It can be divided among the retailer, manufacturer or wholesaler, specialist etc.

3) Grouping tasks in jobs

• The tasks can be grouped into jobs. For eg.

- Displaying merchandise and customer dealings can be the job of sales personnel.

- Entering data and managing cash can be the job of the cashier.

4) Classifying jobs• Here jobs are classified by

categorizing them into functional, product, geographic or combination.

5) Developing an organization chart

• The format of the retail organization should be designed in a coordinated and integrated way.

• With these things in mind , a retailer devises an organization chart which graphically displays the hierarchal relationships.

Organizational design is the process by which managers

select and manage various dimensions and components of organizational structure and culture so that an organization can achieve its goals.

Considerations of Organization design

1) Focus on Specialization2) Matching Authority and

responsibility3) Work out the reporting

relationships4) Matching organizational structure

to the retail strategy

Focus on Specialization The tasks should be assigned and

allocated to the employees on the basis of the expertise that they possess. This will help in improving the quality of the work as well as increase the job satisfaction amongst the employees.

For eg. An employee who is an expert in promotions and marketing should be assigned with the responsibility of promoting the retail store.

Matching Authority and Responsibility

Providing relevant authority and responsibility to the employees helps the employees in effectively undertaking the responsibilities which are assigned to them and get lead to maximization in sales and revenues.

But many times providing the authority and responsibility may also lead to serious conflicts between the employees.

For eg. Conflict between the store manager and the merchandise department regarding the purchase of stock.

Working out the reporting relationship

The organization should ensure that there are correct number of employees under the superior.

It should neither be too less nor too more.

Managing organization structure to retail

strategy The structure of the retail

organization should match the retail strategy. The structure will change according to the type of retailer and the size of the store. For eg. The structure of a single store retailer will differ from the structure of a chain store retailer.

FORMS OF RETAIL OWNERSHIP

Independent Retailer• An independent retailer owns one

unit.

• Less capital requirement.

• Word of mouth communication is very necessary.

Advantages• Flexibility

• Independence

• Consistency

• Quick decision making

Disadvantages• Less bargaining power

• No economy of scale

• Less technology

• No long run planning

Chain Retailer• A chain retailer operates multiple

outlets under a common ownership.

Advantages• Bargaining power

• Cost efficiencies

• Use of technology

• Long term planning

Disadvantages• Less flexibility

• High investment

• Delay in decision making

• Limited independence

Franchising• A contractual arrangement

between the franchisor and franchisee which allows the franchisee to conduct business under an establish name and according to the given pattern of business.

Advantages• Small capital investment.

• Brand name

• Standard operating policies

• Marketing efforts are facilitated.

Disadvantages• Over saturation may occur if too

many franchisee are located in the same area.

• They may be locked into contracts.

Leased Department• They are also termed as shop in

shops. When a section in a retail store is leased or rented to the outside party, it is termed as a leased department.

• It is used by the retailers to broaden their offerings into product category.

Advantages from store’s perspective

• Regular revenues.

• Tapping more customers.

Disadvantages from store’s perspective

• Conflicts

• Affecting store image

• Customer may blame the store rather than the lessee.

Advantages for leased dept. operators

• Brand names

• Reduction in cost

• Enhanced image

Disadvantages for leased dept. operators

• Inflexibility

• Renewal of lease

Retail Organization Structures

Single Store Retailer• A very uncomplicated

arrangement.• Usually two or three levels of

personnel including the owner, manager and the employees.

• No or very less specialization.

Department Stores• It divides the entire organization

into four main parts:-1) Merchandising2) Publicity3) Store Management4) Accounting and Control.

Chain Retailers• Many functional divisions• Merchandising, sales promotions,

distribution, real estate, personnel, IT etc.

• Centralization of authority.

Issues in Designing a Retail Organization

There are two main issues while designing a retail organization structure-

1) The degree of centralization.2) Coordinating merchandise and

store management.

The degree of centralization

Centralization is the process by which the activities of an organization, particularly those regarding decision-making, become concentrated within a particular location and/or group.

On the other hand, Decentralization is the distribution of power in the lower level of management.

Benefits of Centralization

1) Reduction in cost – Overhead costs are reduced because lesser managers are required to make decisions.

2) Improves efficiency – With the help of standard policies and guidelines.

3) Allows experts to take decision – The best people makes decision.

Limitations The major limitation is that the

person sitting in the corporate office does not know about the conditions in the local market and hence he can not take any relevant steps to fight the local competitors.

Coordinating Merchandise and store management

An independent retailer does not faces any problem in coordinating the store and the merchandise as he is in a direct touch with the customers, so he can look after the customer demands and fulfill it very easily.

On the other hand, a large retail firm having a lot of retail chains faces this problem as both the store and the merchandise department are dependent on each other for fulfilling the customer demands and requirement.

Approaches to coordinate

1) Increasing the contact with the customer.

2) Regular visits to the store.3) Involving the manager in

coordinating the buying and selling process.

HUMAN RESOURCE MANAGEMENT IN RETAIL

The Human resource environment of Retailing

• The Retailers face a special human resource environment characterized by a-

- large number of inexperienced workers,- long working hours, - highly visible employees and - variability in the customer demand.

• These factors make the hiring , staffing, and supervision of the employees a complex process.

• Because of all these difficulties, the retailers should consider points such as –

1) Recruitment and selection procedure must generate sufficient number of applicants.

2) The training programs must be short and should focus on developing the skills of employees.

3) Compensation must be perceived by the employees as “FAIR.”

4) Employee appearance and work habits must be explained.

5) Full and part time workers should not have any conflicts.

The human resource management process in

Retailing

• Recruitment is the process of searching the candidates for employment and stimulating them to apply for jobs in the organization.

• The purpose on Recruitment process is to make the job applicants available for the specific jobs.

Sources of RecruitmentExternal sources1) Educational Institutions2) Competition3) Advertisements4) Employment agency5) Unsolicited applicants

Sources of RecruitmentInternal Sources1) Current and former employees2) Employee recommendations

• Selection involves the series of steps by which the candidates are screened for choosing the most suitable persons for vacant posts.

• The basic purpose of selection process is to choose the right candidate to fill the various positions in the organization.

Process Of Selection

• The application blank• Interview• Testing• Reference check• Physical exam• Job offer

• Training is an important aspect of human resource management. Typically , in retail, training is needed at the following times-

- At the time of induction- At regular intervals to sales staff for skill

enhancement.

• Training to the retail sales staff is very important because they are the face of the organization. Training is given to improve their communication skills, product knowledge, company policies on Returns, Market awareness etc.

Methods of compensation

1) Straight salary Method AdvantagesEmployee security, Known expenses

DisadvantagesLess Motivation

Methods of compensation

2) Straight commission method AdvantagesHigh Motivation

DisadvantagesThe risk of low earnings

Methods Of compensation

3) Salary plus commission

It means to combine the attributes of both salary and commission plans. The employee gets a fixed salary and a commission on achievements of the targets.

Supervision is the manner of providing

a job environment that encourages the employee accomplishment. The goals are to oversee personnel, achieve good performance, maintain employee morale and motivation, control expenses, and communicate policies.

Proper supervision is needed to sustain a superior performance of the employees. Supervision is provided by personal contact, meetings and reports.

• 3 basic styles of supervision

1) Management assumes that the employees must be closely supervised and controlled.

2) Management believes that the employees can be self managers and assigned authority.

3) Management applies a self management approach and also advocates more employee involvement in decision making.

• In retailing, Motivation is very important because of the long working hours and the immense pressure on performance.

• The research on human behaviour has shown that most of the people at work are motivated by the following factors-

- The organization culture- The rewards- The monetary benefits- Growth and job enrichment

Performance evaluation

• The basis of the performance evaluation is the goals and targets that have been set for each individual.

• Through targets, the outstanding as well as the poor performances can be easily identified.

• In a retail organization, The goal set for a merchandiser will be different from the goal of a sales person.

Building Employee commitment

• The workplace is changing dramatically and demands for the highest quality of product and service is increasing. To remain competitive in the face of these pressures, employee commitment is crucial. This reality is applicable to all organizations but is of particular importance to small and medium sized businesses

Employee Retention• Employee Retention involves

taking measures to encourage employees to remain in the organization for the maximum period of time.