RETAIL ORGANIZATION AND HUMAN RESOURCE MANAGEMENT

1) 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 organizational structure for 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
• 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:

• Outlining the specific task to be performed in retail distribution channel.
• Dividing the task among channel members.
• Grouping the retailer’s task into jobs.
• Classifying the jobs.
• Integrating positions through an organization chart.
• 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

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 Specialization
2) Matching Authority and responsibility
3) Work out the reporting relationships
4) 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) Merchandising
2) Publicity
3) Store Management
4) 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.

RECRUITMENT
• 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 Recruitment
External sources
1) Educational Institutions
2) Competition
3) Advertisements
4) Employment agency
5) Unsolicited applicants

Internal Sources
1) Current and former employees
2) Employee recommendations

SELECTION

• 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
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.

COMPENSATION
Methods of compensation
1) Straight salary Method
Advantages
Employee security, Known expenses

Disadvantages
Less Motivation

2) Straight commission method

 Advantages
High Motivation

Disadvantages
The risk of low earnings

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.

SUPERVISING
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.

MOTIVATION
• 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.