Chapter 17 Managing the Store

McGraw-Hill/Irwin Retailing Management, 6/e Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved.

Store Management Customer Service Layout, Design and Visual Merchandising 17-2 Managing the Store

Store Managers Run a Business 17-3

“ This is your business. Do your own thing. Don’t listen to us in Seattle, listen to your customers. We give you permission to take care of your customers.”

James Nordstrom, the CEO of Nordstrom’s

Strategic Importance of Store Management 17-4 Opportunity to Build Strategic Advantage – Difficult to Have Unique, Compelling Merchandise – Customer Loyalty Often Based on Customer Service Difficulty of Store Managers Job – Managing Diverse Set of Unskilled People – Increasing Empowerment and Responsibility to Tailor Merchandise and Presentation to Local Community

Store Managers’ Responsibilities

17-5 Varies Dramatically By Type of Retailers – Specialty Store vs. Department Store Entrepreneur – P & L Responsibility – Manage People

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Responsible for Two Critical Assets – People Sales/Employees – Space Sales/Square Foot

Responsibilities of Store Managers Undertaken by Store Managers 17-6

Steps in Employment Management Process 17-7

Recruiting and Selecting Employees 17-8 Undertake Job Analysis Prepare Job Description Find Potential Applicants Select Employees Screen Candidates

Job Analysis

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Job Description

A guideline for recruiting, selecting, training and evaluating employees The activities the employee needs to perform The performance expectations expressed in quantitative terms

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17-11 Approaches for Locating Prospective Employees • Look beyond the retail industry • Use your employees as talent scouts • Provide incentives for employee referrals • Recruit minorities, immigrants and older workers • Use your storefront creatively

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Sources of Information for Screening Applicants

• Application Forms • References • Testing • Providing a Realistic Job Preview

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Interviewing Questions

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Suggestions for Questioning Applicant 17-14 • Avoid asking questions that have multiple parts • Avoid asking leading questions like “Are you prepared to provide good customer service?” • Be an active listener. Evaluate the information being presented and sort out the important comments from the unimportant.

repeat or rephrase information summarize the conversation tolerate silence

Legal Considerations in Hiring and Selecting Employees

17-15 • Equal Employment Opportunity Commission (EEOC) • Age Discrimination and Employment Act – Disparate Treatment – Disparate Impact • Americans with Disabilities Act (ADA)

Socializing and Training Employees 17-16 Orientation Program Training -Where, when, what -Structured vs. unstructured -Classroom vs. on-the-job -Analyzing Successes and Failures

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Motivating and Managing Employees

17-17 Setting Goals Providing Incentives to Achieve Goals Measuring Performance Providing Feedback

Leadership

Process by which one person attempts to influence another to accomplish some goal or goals Leader Behaviors – Task-Oriented – Group Maintenance 17-18

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Types of Leaders Autocratic Democratic Transformational

Which Type of Leader Is the Most Effective?

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Setting Goals

How High? How Easy to Achieve?

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Get Participation of Employees in Setting Goals

Why Set Goals?

Employee performance improves when employees feel: • That their efforts will enable them to achieve the goals set for them by their managers • That they’ll receive rewards they value if they achieve their goals

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Individualized Motivation Programs

17-22 Impact of Goals Differs Across People Different People Seek Differ Rewards – A La Carte Reward Programs – Selection of Compensation Plans

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Maintaining Morale

Meetings before store opening to talk about new merchandise and hear employee opinions Educate, set sales goals and have a pizza party when goals are met Divide charity budget and ask employees how their share should be used Print stickers auto detailed by Rob” Give every employee a business card with the company mission statement printed on the back

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Sexual harassment is unwelcomed sexual advances, requests for sexual favors, and other verbal and physical contact.

showing obscene photographs making lewd comments and gestures staring in a sexual manner making work environment hostile 17-24

Procedure for Sexual Harassment Allegation 17-25

Evaluating and Providing Feedback to Employees Evaluation Who, when, how often?

Feedback Performance outcome vs. process 17-26

Jim Taylor’s Six Month Evaluation

17-27

Common Evaluation Errors

Strickness Leniency Haloing Recency Contrast Attributions Ratings unduly negative Rating unduly positive Using the same rating on all aspects of the evaluation Placing too much weight on recent events rather than evaluating performance over the entire period Having the evaluation of a salesperson unduly influenced by the evaluation of other salespeople Making errors in identifying causes of the salesperson’s performance

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Rewards

• Extrinsic Rewards are rewards provided by either the employee’s manager or the firm such as compensation, promotion and recognition.

• Intrinsic Rewards are rewards employees get personally from doing their job well like doing their job well because they think it is challenging and fun 17-29

17-30 Compensating Employees Compensation • - Type • Straight salary Straight commission • Quota bonus - Setting quotas - Individual vs. group incentives

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Advantages and Disadvantages of Straight Salary 17-31

Straight Salary

Offers flexibility in assigning employees to activities Builds stronger employee commitment Is easy for employees to understand

Incentive Compensation

Has high motivating potential Has more variable cost Relates compensation to productivity Is easy to administer Allows for better performance of non-selling activities such as customer service

Designing a Compensation Plan

17-32 Determine Appropriate Compensation $12/Hour Decide on Percent of Incentives 1/3 Salary 2/3 Incentive Use Average Sales Per Employee to Set Incentive Rate Sales/Person - $150  5.33% Commission $4/Hour Salary $4 = 5.33% x 150 = $12

Controlling Costs

Labor Maintenance Energy Heating Lighting Costs Controlled by Store Managers Inventory Shrinkage 17-33

Labor Scheduling System

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Calculating Shrinkage

Accounting Record – Actual Inventory Sales $1,500,000 - $1,236,00 = 6.7% $4,225,000 17-35

Sources of Inventory Shrinkage 17-36 Shoplifting 31% Mistakes and Inaccurate Records 17% Vendor Errors 6% Employee Theft 46%

17-37 Preventing Shoplifting Store design Employee training Good customer service - Security measures Dye capsules, TV cameras EAS Prosecution

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Spotting Shoplifters

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Use of Security Measures by Retailers 17-39

EAS Tags

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Reducing Employee Theft Trusting, supportive work atmosphere Employee screening Honesty, drug testing Security personnel - mystery shoppers Policies and procedures

Employee theft is an HR problem.

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