CHAPTER 16 MANAGING THE STORE ANNOTATED OUTLINE INSTRUCTOR NOTES • Store managers are on the firing line in retailing. Due to their daily contact with customers, they have the best knowledge of customer needs and competitive activity. From this unique vantage point, retail managers play an important role in formulating and executing retail strategies. • Even in national chains, store managers are treated as relatively independent managers of a business within the corporation. Some department store managers are responsible for $150 million in annual sales and manage over 1,000 employees. Have a store manager or a department manager speak in class about problems they have encountered and how they handled them. Discuss the factors affecting store employee performance and management tools used by store mangers to impact these factors. I. Store Management Responsibilities • The responsibilities of managers are divided into four major categories: managing employees, controlling costs, managing merchandise, and providing customer service. • Store managers are responsible for increasing the productivity of two of the retailer’s most important assets: the firm’s investment in its employees and its real estate. • In addition to increasing labor productivity, store managers affect their stores’ profits by controlling costs. These costs include compensation and benefits for employees, and the costs associated with operating and maintaining their buildings. • Store managers increase the productivity of the store's employees by (1) recruiting and selecting effective people, (2) improving their skills through socialization and training, (3) motivating See PPT 16-3 For most retailers, the store management activities are becoming more important while the importance of buying activities is declining. Why is this change occurring? them to perform at higher levels and then, (4) evaluating and rewarding them. • Store managers also need to develop employees who can assume more responsibility and be promoted to higher-level management positions. • By developing subordinates, the firm benefits from having more effective managers, and the manager benefits because the firm has a qualified replacement when the manager is promoted. II. Recruiting And Selecting Store Employees • To effectively recruit employees, store managers need to undertake a job analysis, prepare a job description, find potential applicants with the desired capabilities and screen the best candidates to interview. See PPT 16-4 to review the steps in the employment management process. Ask students if they think good employees are made or born. In other words, which is more important, recruiting (step 1) or training and motivation (steps 2 & 3). A. Job Analysis • The job description identifies essential activities and is used to determine the qualifications of potential employees. • Managers can obtain the information needed for a job analysis by observing employees presently doing the job and by determining the characteristics of exceptional performers. Information collected in the job analysis is used to prepare a job description. See PPT 16-6 for a list of sample questions to aid in the job analysis process Ask students to analyze the job of a salesperson in a specialty store using the questions and write a job description. B. Job Description • A job description includes (1) activities the employee needs to perform and (2) the performance expectations expressed in quantitative terms. • The job description is a guideline for recruiting, selecting, training, and eventually evaluating employees. C. Locating Prospective Employees • Staffing stores is a critical problem because changing demographics are reducing the size of the labor pool. • In addition to placing ads in local newspapers and posting job openings on Web sites are: Ask students to list the sources a sporting goods store could use for salespeople, store managers, accountants, and a manager for its computer information system. 1. Recruiting Minorities, Immigrants, and Older Workers • Retailers may use strategies like printing application forms in multiple languages and developing training programs for people who aren’t familiar with U.S. business practices to reach potential employees in immigrant populations. • Seniors are another attractive source for new recruits. Retailing is often attractive to seniors because its wide range of store hours fits seniors’ need for flexible work schedules. 2. Partnering with Government Agencies • Partnering with local employment offices, religious and social organizations is another option for retail recruiting. These partnerships provide mutual benefit, helping to employ individuals in the communities while providing retailers with the staff they need. 3. Use of Employees as Talent Scouts • Retailers often ask their own employees if they know someone they could hire, if they have recently encountered a particularly good salesperson at another store, or if they know of a customer whom they believe would make a good employee. 4. Using the Storefront Creatively • Today’s retailers are getting creative with their store signage announcing job opportunities: going beyond the typical “Help Wanted” sign. D. Screening Applicants to Interview • The screening process matches the applicants' qualifications with the job description. • Many retailers use automated pre- screening programs as a low-cost method for identifying qualified candidates. 1. Application Forms • Job application forms contain information about the applicant's employment history, previous compensation, reasons for leaving previous employment, education and training, personal health, and references. • This information enables the manager to determine whether the applicant has the minimum qualifications and also provides information for interviewing the applicant. Ask the students to comment on applications they have completed. 2. References • A good way to verify the application form's information is to contact the applicant's references or do an online check. • Due to potential legal problems, however, many companies have a policy of not commenting on past employees. • Store managers generally expect to hear favorable comments from an applicant’s references or previous supervisors, even if they may not have thought highly of the applicant. One approach for reducing this bias is to ask the reference to rank the applicant relative to others in the position. Have students role play a telephone conversation requesting references on a specific student being considered for a job. One student can play the employment manager and another can play the student's professor listed as a reference. Ask student how useful they feel references are. • The Internet has become an excellent source of information on prospective employees. • Social media such as Twitter, Facebook, and LinkedIN are great sources of information on prospective employees. these sites often reveal more about the person than a face-to-face interview. 3. Testing • Intelligence, ability, personality, and interest tests can provide insights about potential employees. • It is illegal to use tests assessing factors that are not job related or that discriminate against specific groups. • Due to potential losses from theft, many retailers require applicants to take drug tests. Some use tests to assess applicants’ honesty and ethics. • The use of lie detectors in testing employees is prohibited. Ask students to indicate the type of tests they would use to hire salespeople, management trainees, and buyers for The Gap, Radio Shack, or Home Depot. Ask students to comment on employment tests they have taken. 4. Realistic Job Preview • Turnover is reduced when the applicants understand both the attractive and unattractive aspects of the job. • Retailers typically want their new hires to have previous retail experience. This experience will give the applicant an understanding of what working retail is all about. • Retail internships are an excellent way for the employee to gain a realistic view of what a more permanent job might entail, and the retailer gets access to good talent and potential future full-time employees. E. Selecting Applicants Should employers use a student’s grades when determining who to interview and selecting people to hire? Why or why not? • After screening applications, the selection process typically involves a personal interview. • Since the interview is usually the critical factor in the hiring decision, the store manager needs to be well prepared and to have complete control over the interview. 1. Preparation for the Interview • The objective of the interview is to gather relevant information, not simply to ask a lot of questions. • The most widely used interview technique, the behavioral interview, asks candidates how they handle actual situations they encountered in the past-- situations requiring skills outlined in the job description. • Managers should develop objectives for what they want to learn about the candidate. • The broad opening question is followed by a sequence of more specific questions. • Managers need to avoid asking questions that are discriminatory. 2. Managing the Interview • Some suggestions for questioning the applicant include (1) encouraging longer responses by asking broader questions, (2) avoiding questions that have multiple parts, (3) avoid asking leading questions, and (4) be an active listener. • Some managers interview candidates while giving a candidate a tour through the store. This gives the manager an opportunity to find out if the candidate will jump in and help out in straightening out a display. See PPT 16-07, 16-08, 16-09, and 16-10 Have students role play an employment interview. One student is looking for a management trainee position at J.C. Penney and the other student is looking for a personnel manager position. F. Legal Consideration in Selecting and Hiring Store Employees • Title VII of the Civil Rights Act prohibits discrimination on the basis of race, national origin, sex, or religion in company personnel practices. • Discrimination is specifically prohibited in recruitment, hiring, discharge, layoff, discipline, promotion, compensation, and access to training. In 1972, the Civil Rights Act was expanded by the Equal Employment Opportunity Commission (EEOC) to allow employees to sue employers that violate the law. • Discrimination arises when a member of a protected class (women, minorities, etc.) is treated differently from nonmembers of that class (disparate treatment) or when an apparently neutral rule has an unjustified discriminatory effect (disparate impact). • The Age Discrimination and Employment Act makes it illegal to discriminate in hiring and termination decisions concerning people between the ages of 40 and 70. • The American with Disabilities Act (ADA) requires employers to provide accommodating work environments for the disabled. A disability is defined as any physical or mental impairment that substantially limits one or more of an individual's major life activities or any condition that is regarded as being such impairment. See PPT 16-11 III. Socialization of New Store Employees • After hiring employees, the next step in developing effective employees is introducing them to the firm and its policies. See PPT 16-12 The text indicates that turnover of retail employees is very high. Ask student why they think this is the case? Ask students to comment on the differences between life as a student and what they would expect life to be as a management trainee A. Orientation Programs • Orientation programs are critical in overcoming entry shock and socializing new employees. • Orientation programs can last from a few hours to several weeks. • Effective orientation programs need to avoid information overload and one-way communication. Managers need to give newly hired employees a chance to have their questions and concerns addressed. • The orientation program is just one element in the overall training program. It needs to be accompanied by a systematic follow-up to ensure that any problems and concerns arising after the initial period are considered. Where should an orientation program take place for newly hired management trainees — in the stores or corporate headquarters? How long should the orientation program be – a day, a week, or a month? Why? B. Training Store Employees • Effective training for new store employees includes both structured and on-the-job learning experiences. Have a recruiter from a retail recruiting firm on campus describe their company's management training program. 1. Structured Program • During the structured program, new employees are taught the basic skills and knowledge they will need to do their job. • The initial training might be done using virtual or real classrooms or with manuals and correspondence distributed to new employees. • Some larger firms are finding that structured programs using e-training over the Internet has some benefits over on-the-job training. E-training offers greater consistency, lower costs, and more flexible scheduling. Ask students whether they would prefer to go to work for a company with a structured or unstructured training program. Why? From the company's viewpoint, what are the advantages of a structured versus unstructured program? • Structured training programs need to be supplemented with on-the-job training so that new employees learn to apply the policies and skills they’ve learned about. 2. On-the-Job Training • In the next training phase new employees are assigned a job, given responsibilities, and coached by their supervisor. • New employees learn by doing activities, making mistakes, and then learning how not to make those mistakes again. • Information learned through classroom lectures tends to be forgotten quickly unless it’s used soon after the lecture. Ask students if they would rather work for a company that emphasizes on-the-job training versus classroom training. Why? 3. The Blended Approach • Because of the relative advantages of structured and on-the-job training, many firms use a blended approach. 4. Analyzing Successes and Failures • Store managers should provide an atmosphere in which salespeople try out different approaches for providing customer service and selling merchandise. • Managers should not criticize an individual salesperson for mistakes. Instead, they should talk about the situation, analyze why the approach did not work, and discuss how the salesperson could avoid the problem in the future. • Managers can help salespeople to constructively analyze their successes and failures by asking salespeople “why” questions that force them to analyze the reason for effective and ineffective performance. Ask students if they analyze their successes and failures in classes. Why or why not? Have them describe a success and a failure and give the reasons for both. Use this to illustrate that people tend to blame failures on others and take credit for successes. What impact does this bias have on learning? IV. Motivating And Managing Store Employees • After employees have received their initial training, managers must work them to help them meet their performance goals. See PPT 16-17 A. Setting Goals or Quotas • Employee performance improves when employees feel that (1) their efforts will enable them to achieve the goals set for them by their managers and (2) they will receive rewards they value if they achieve their goals. • If goals are set too high, employees might become discouraged, feel the goals are unattainable, and thus not be motivated to work harder. • If goals are set too low, employees can achieve them easily and won’t be motivated to work to their full potential. See PPT 16-14 Ask students what happens to motivation if goals are set too low. If they are set too high. How can managers make sure they are set at the right level? Should newly hired salespeople have the same sales per hour selling goal as more experienced salespeople? What are the advantages and disadvantages of having different goals for each employee? What are the advantages and disadvantages of having employees participate in establishing goals? B. Evaluating Store Employees And Providing Feedback * The objective of the evaluation process is to identify employees who are performing well and those who are not. * Based on the evaluation, high- performing employees should be rewarded. Plans need to be developed to increase the productivity of employees performing below expectations. See PPT 16-15 1. Who Should Do the Evaluation? * In large retail firms, the evaluation system is usually designed by the human resources department. But the evaluation itself should be done by the employee's immediate supervisor -- the manager who works most closely with the employee. See PPT 16-16 Ask students to discuss the advantages and disadvantages of having the employee's supervisor evaluate them versus a human resource specialist. * Inexperienced supervisors are often assisted by a senior manager in evaluating employees. 2. How Often Should Evaluations Be Made? * Most retailers evaluate employees annually or semiannually. * Feedback from evaluations is the most effective method for improving employee skills. Thus, evaluation should be done more frequently when managers are developing inexperienced employees' skills. * Manager should supplement formal evaluations with frequent informal ones. What problems arise if evaluations are done too frequently? Not frequently enough. Should newly hired salespeople be evaluated more frequently than experienced salespeople? Why? Should senior executives be evaluated more frequently than management trainees? Why? 3. Format for Evaluations * Evaluations are only meaningful if employees know what they're required to do, what level of performance is expected, and how they'll be evaluated. * An employee's formal, six-month evaluation form may list results for various factors in terms of what's considered average performance for the company, and the employee's actual performance. See PPT 16-17 Ask students if they agree or disagree with this format. Do they think that this much emphasis should be placed on each category? 4. Evaluation Errors * Managers can make evaluation errors by first forming an overall opinion of the employee's performance and then allowing this opinion to influence the ratings of each performance factor (haloing). * Managers are often unduly influenced by recent events (recency) and by their evaluations of other salespeople (contrast). * Managers have a natural tendency to attribute performance (particularly poor performance) to the salesperson and not Review the evaluation errors. What can managers do to minimize the effects of these errors? to the environment the salesperson is working in. * To avoid potential biases in evaluations, most ratings might be based on objective data. * To avoid potential bias when making subjective ratings, managers should observe performance regularly, record their observations, avoid evaluating many salespeople at one time, and remain conscious of the various potential biases. V. Compensating And Rewarding Store Employees * This is the final step in improving employee productivity. Store employees receive two types of rewards from their work -- extrinsic and intrinsic. * 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. See PPT 16-18 Employees work for different reasons. They seek different rewards. Ask students what rewards they are seeking from their first job after graduation. What rewards might a part- time salesperson be seeking? Why does a parent who has been raising children decide to return to the working force when the children are in high school or college? A. Extrinsic Rewards * Store employees don’t all seek the same rewards. Some employees want more compensation; others strive for a promotion in the company or public recognition of their performance. * Large retailers find it difficult to develop unique reward programs for each individual. One approach is to offer à la carte plans that give effective employees a choice of rewards for good performance. This type of compensation plan enables employees to select the rewards they want. To illustrate the differences between intrinsic and extrinsic rewards have students discuss the rewards they get from attending a class. What are their intrinsic rewards? What are the extrinsic rewards? Are the intrinsic rewards affected when the extrinsic rewards (high grades) are reduced (pass-fail versus grades)? * Recognition is an important nonmonetary extrinsic reward for many salespeople. Telling employees they have done a job well is appreciated. * It's typically more rewarding when good performance is recognized publicly. Public recognition can motivate all store employees because it demonstrates management’s interest in rewarding employees. * An emphasis on extrinsic rewards can make employees lose sight of their job’s intrinsic rewards. B. Intrinsic Rewards * When employees find their job intrinsically rewarding, they are motivated to learn how to do it better. * One approach to making work fun is to hold contests with relatively small prizes. Contests are most effective when everyone has a chance to win. * Another approach for motivating more experienced employees is providing intrinsic rewards through job enrichment. Job enrichment is the redesign of a job to include a greater range of tasks and responsibilities. These could include giving employees responsibility for merchandising a particular area, training new salespeople, or planning and managing a special event. Ask students why employees are motivated to learn and try new, creative approaches when they have a high level of intrinsic interest in their work. How can managers make work fun -- intrinsically rewarding? Ask students to share experience when they have had fun doing a job. C. Compensation Programs * The objectives of a compensation program are to attract and keep good employees, motivate them to undertake activities consistent with the retailer's objectives, and to reward them for their effort. * A compensation plan is most effective for motivating and retaining employees when the employees feel the plan is fair See PPT 16-19 when their compensation is related to their efforts. D. Designing the Compensation Program * A compensation program’s two elements are the amount of compensation and the percentage of compensation based on incentives. * Typically, market conditions determine the amount of compensation. When market conditions are good and labor is scarce, retailers pay higher wages. * Incentive compensation plans are most effective when a salesperson's performance can be measured easily and precisely. * When the salesperson’s activities have a great impact on sales, incentives can provide additional motivation. * Incentives are less effective with inexperienced salespeople because they inhibit learning. * Compensation plans with too many incentives may not promote good customer service. Salespeople on commission become interested in selling anything they can to customers. See PPT 16-20 Ask students if people always take the highest paying job? What are the factors they consider in taking a job after graduation? Will they take the best paying job? Why? What can a retailer do to attract and keep good employees and not offer more compensation then competitors? Review the factors used to determine the appropriate use of incentives. For which of the following situations would you place more emphasis on incentives versus salary -- a counter person in a fast food restaurant: the manager of the fast food restaurant; a department store salesperson in the hosiery and underwear department, designer dresses, men' suits, women's sportswear; a department manager in a discount store; the manager of an exclusive restaurant? 1. Setting the Commission Percentage * Assume that a specialty store manager wants to hire experienced salespeople. To get the type of person she wants, she feels she must pay $12 per hour. Her selling costs are budgeted at 8 percent of sales. With compensation of $12 per hour, salespeople need to sell $150 worth of merchandise per hour ($12 divided by 8 percent) for the store to keep within its sales cost budget. * The manager believes the best compensation would be one-third salary and two-thirds commission, so she decides to offer a compensation plan of $4 per hour salary (33 percent or $12) and a 5.33 percent commission on sales. * If salespeople sell $150 worth of merchandise per hour, they’ll earn $12 per hour ($4 per hour in salary plus $150 multiplied by 5.33 percent, which equals $8 per hour in commission). E. Legal Issues in Compensation * The Fair Labor Standards Act of 1938 set minimum wages, maximum hours, child labor standards, and overtime pay provisions. Enforcement of this law is particularly important to retailers because they hire many low-wage employees and teenagers and have their employees work long hours. * The Equal Pay Act, now enforced by the EEOC, prohibits unequal pay for men and women who perform equal work or work of comparable worth. VI. Leadership * Leadership is the process by which one person attempts to influence another to accomplish some goal or goals. * Store mangers are leaders of their group of employees. Ask students what are the characteristics of a good leader? 1. Leader Behaviors * Leaders engage in task performance and group maintenance behaviors. * Task performance behaviors are the store manager's efforts to make sure that the store achieves its goals, such as planning, organizing, motivating, evaluating, and coordinating store employees' activities. * Group maintenance behaviors are activities store managers undertake to make sure that employees are satisfied and work well together. These activities include considering employees' needs, Ask students to describe managers who they have worked for that were very effective and not very effective. When it is good for a leader to be task-oriented? Relations-oriented? showing concern for their well-being, and creating a pleasant work environment. 2. Leader Decision Making * Store managers vary in how much they involve employees in making decisions. * Autocratic store managers make all decisions on their own and then announce them to employees. * A democratic store manager seeks information and opinions from employees and bases decisions on this information. A. Maintaining Morale * Store morale typically goes up when things are going well and employees are highly motivated. But when sales are not going well, morale tends to decrease and employee motivation declines. * Store managers could build morale by having storewide or department meetings prior to the store opening, educating employees about the firm's finances and having parties when such goals are met, etc. See PPT 16-22 E. Sexual Harassment * Managers must avoid and make sure that store employees avoid actions that are, or can be interpreted as, sexual harassment. * EEOC guidelines define sexual harassment as a form of gender discrimination: "Unwelcome sexual advances, requests for sexual favors, and other verbal and physical conduct of a sexual nature constitutes sexual harassment when … submission to or rejection of such conduct by an individual is used as a basis for employment decisions affecting such individual, or … such conduct has the See PPT 16-23 Should a manager avoid dating an employee? Based on the EEOC guidelines, when would such a behavior be interpreted as sexual harassment? purpose or effect of unreasonably interfering with an individual's work performance or creating an intimidating, hostile, or offensive working environment." VII. Controlling Costs * Labor scheduling, making stores “green” and more energy efficient, and store maintenance, offer three opportunities for reducing store operating expenses. See PPT 16-24 A. Reducing Inventory Shrinkage * Inventory losses due to employee theft, shoplifting, mistakes and inaccurate records must be reduced. * Although shoplifting receives most of the publicity, employee theft accounts for about the same amount of inventory loss. * The key to an effective loss prevention program is determining the most effective way to protect merchandise while preserving an attractive atmosphere and a feeling among employees that they are trusted. See PPT 16-25 A. Calculating Shrinkage * Shrinkage is the difference between the recorded value of inventory (at retail prices) based on merchandise bought and received, and the value of the actual inventory (at retail prices) in stores and distribution centers divided by retail sales during the period. B. Organized and High-Tech Retail Theft • Professional shoplifters account for an estimated 25% of retail shoplifting cases ($15-30 billion in losses annually). • These gangs of professional thieves concentrate in O-T-C medicines, infant See PPT 16-27 formula, health and beauty items, electronics and specialty clothing. • The Internet, especially auction sites, has proven to be a ready market for these types of shoplifted merchandise. C. Detecting and Preventing Shoplifting * Losses due to shoplifting can be reduced by store design, employee training, and special security measures. See PPT 16-28 1. Store Design * Security issues need to be considered when placing merchandise near store entrances, delivery areas, and dressing rooms. * Dressing room entrances should be visible to store employees. Many department stores have small boutiques in the store. Does this increase shoplifting? Why? 2. Merchandise Policies * Requiring receipts for all returns and locking up small, expensive items are two merchandise policies that should be used to reduce inventory shrinkage. 3. Security Measures * Security measures to help reduce inventory shrinkage include: using closed-circuit TV cameras that can be monitored from a central location. * Using electronic article surveillance (EAS) systems. With the EAS system, special tags are placed on merchandise. When the merchandise is purchased, the tags are deactivated by the POS scanner. Security measures reduce shoplifting. What negative consequences do they have? An example of such a tag is a small strip enclosed within a plastic-wrapped DVD. The POS deactivates the security device without the need to cut open the plastic cover. 4. Personnel Policies • The following personnel policies may help to deter shoplifting: • Using mystery shoppers • Having store employees monitor fitting rooms • Training employees to be alert to possible shoplifting situations • Providing excellent customer service 5. Prosecution * Many retailers have a policy to prosecute all shoplifters. * Some retailers also sue shoplifters in civil proceedings for restitution of the stolen merchandise and the time spent in the prosecution. B. Reducing Employee Theft * The most effective approach for reducing employee theft and shoplifting is to create a trusting, supportive work environment. Retailers with a highly committed work force and low turnover typically have low inventory shrinkage. * Additional approaches for reducing employee theft are carefully screening employees, creating an atmosphere that encourages honesty and integrity, using security personnel, and establishing security policies and control systems. See PPT 16-30 Would you expect employee theft to be higher in an independent, women's specialty store or in a chain like the Limited? Why? 1. Screening Prospective Employees * Many retailers use paper-and-pencil honesty tests and make extensive reference checks to screen out potential employee theft problems. * A major problem related to employee theft is drug use. Some retailers now require prospective and current employees with erratic performance to submit to drug tests as a condition of employment. Ask students if they have taken drug tests or paper and pencil honesty tests when applying for jobs. What do they think of these screening techniques? 2. Using Security Personnel * In addition to uniformed guards, retailers often use undercover shoppers to discourage and detect employee theft. 3. Establishing Security Policies and Control Systems * To control employee theft, retailers need to adopt policies relating to certain activities that may facilitate theft. In addition, computer software is available to detect unusual activity at POS terminals. IX. Summary * Effective store management can have a significant impact on a retail firm’s financial performance. Store managers increase profits by increasing labor productivity, decrease costs through labor deployment decisions, and reduce inventory loss by developing a dedicated workforce. ANSWERS TO “GET OUT AND DO ITS” 3. GO SHOPPING Go to a store, observe the security measures in the store, and talk with a manager about the store’s loss prevention program. Students’ answers will vary. Students should show the loss prevention manager proof of participation in a retailing class before asking questions about the store’s security systems. 4. INTERNET EXERCISE Go online and research the shoplifting laws implemented by the state where you live or attend school. What are the fines, jail time, community service, or punishments for perpetrators in your local jurisdictions? What factors are weighed and evaluated in shoplifting cases? Are the laws in your state a deterrent to shoplifting? Answers will vary by state. Some states are stricter and some are more lenient on shoplifting. 5. LIBRARY EXERCISE Go to one of your library’s business databases and find an article that describes a case of a retailer violating TITLE VII in either its hiring or promotion practices. Summarize the case and court decision. What should this retailer do differently in the future to improve its employment policies? Student responses will vary. This could be a good class or team discussion topic. You may decide to assign one of the following articles so that the class can discuss the same case. http://www.eeoc.gov/eeoc/newsroom/release/6-11-13.cfm http://www1.eeoc.gov//eeoc/newsroom/release/9-26-13d.cfm?renderforprint=1 Retail store image, bona fide occupational qualifications, and job discrimination: Establishing the essence of the business for retail organizations. By: Borna, Shaheen; Stearns, James M. Stearns; Smith, Brien N.; Emamalizadeh, Kian. Marketing Management Journal, Spring 2008, Vol. 18 Issue 1, p54-62, 9p. The business case for diversity and the perverse practice of matching employees to customers. By: Bendick Jr, Marc; Egan, Mary Lou; Lanier, Louis. Personnel Review, 2010, Vol. 39 Issue 4, p468-486, 19p. Reflections from Employers on the Disabled Workforce: Focus Groups with Healthcare, Hospitality and Retail Administrators. By: Hernandez, Brigida; McDonald, Katherine; Divilbiss, Marielle; Horin, Elizabeth; Velcoff, Jessica; Donoso, Oscar. Employee Responsibilities & Rights Journal, Sep 2008, Vol. 20 Issue 3, p157-164, 7. INTERNET EXERCISE: Go to the homepage for Greening Retail and examine their research and programs that help retailers implement environmental best practices at http://www.greeningretail.ca. Select a company in the “Featured Retailer Archive” (http://www.greeningretail.ca/featured/archive.dot) as a case example and briefly describe what this retailer is doing to be a more sustainable company. From the web page students will pick one of these retailers: TESCO MUSGRAVE MONSOON ACCESSORIZE MONOPRIX MARKS AND SPENCER ALLIANCE BOOTS CARREFOUR MOUNTAIN EQUIPMENT CO-OP HOME DEPOT LUSH IKEA H-E-B GROCERY If IKEA was selected this is the type of information available: IKEA has received recognition at the community, national and international levels for their far- reaching and innovative programs related to sustainability. IKEA was founded in the south of Sweden by a farmer's son, Ingvar Kamprad, in 1943. Today the company has 231 stores in 24 countries. COMPANY CULTURE Sustainability has long been core to IKEA's culture. In more recent years, it has become formalized into strategies, policies and processes throughout the company. Every new employee at IKEA is given environmental training, and the aim is for all co-workers to receive regular follow-up courses. CODES OF CONDUCT IKEA monitors the sustainability of its supply chain practices through their IWAY Code of Conduct for purchasing and distribution. Every two years, IWAY-approved suppliers are audited to make sure they maintain their IWAY status Third-party auditors always take part in Compliance and Monitoring Group (CMG) audits, and they also conduct their own audits at IKEA ENERGY USE Webess is an IT application used by IKEA buildings for reporting energy consumption, including electricity, fuel oil, gas and water. Through this monitoring system, energy consumption can be compared between buildings. IKEA co-workers in Shanghai, China, have reduced energy use per sold cubic meter by 23 percent in their store. Lighting is turned off during non-business hours, and a new system controls the use of air-conditioning. By installing motion sensors that regulate store lighting in the IKEA distribution centre in Tejon, electricity costs have been reduced by 50 percent. The motion sensors allow the company to light only areas which are in use. SOLID WASTE IKEA tries to minimize damage to products. However, when damage does occur, they attempt to repair the products, which can then be used as spare parts, or they are sold at a reduced price. The Canadian operation has a 64% damaged goods recovery rate, but has targeted 75%. Approximately 0.41% of their goods are internally damaged; thus, a significant amount of money can be saved through the recovery program. Waste could amount to $600,000 to $700,000 per year for the Canadian operation, thus, reducing waste is a priority. An individual was recently hired to oversee this area. Packaging is constantly being scrutinized for ways of reducing its size and weight. Recently, 1 cm was removed from sofa packaging, which resulted in four more units being added to a container and decreasing the transportation cost per unit. TRANSPORTATION IKEA ships all its furniture in flat packs, resulting in greater density, fewer journeys, less fuel and fewer emissions Generally IKEA tries to locate the stores in areas where there is efficient public transport. The company has formulated a list of requirements for efficient public transport: IKEA stores in North York and Etobicoke in Canada have shuttle buses running between each store and downtown Toronto. Nearly 300,000 passengers took advantage of the service during 2006. The company has increased the number of meetings done online or through video conferencing. Management believes this not only reduces their carbon footprint and saves money, but also promotes a healthier lifestyle and a greater life/work balance. IKEA is SmartWay-compliant under the U.S. Environmental Protection Agency. This is a model to continuously decrease greenhouse gases. ANSWERS TO DISCUSSION QUESTIONS AND PROBLEMS 1. How do on-the-job, Internet training, and classroom training differ? What are the benefits and limitations of each approach? Classroom training might include lectures, audiovisual presentations, manuals, and correspondence distributed to the new employees. The initial structured program should be relatively short so new employees don't feel they are simply back in school. Effective training programs try to bring new recruits up to speed as quickly as possible and then get them involved in doing the job for which they've been hired. Use of the Internet for training store employees has become increasingly popular. The Internet provides a lower cost alternative, allowing employees a preparation phase before on- the-job training without the costs associated with classroom training. Benefits of training employees online include greater consistency as all employees are trained with the same program, lower costs, and the ability to launch significant programs over a large geographic area quickly. The next training phase emphasizes on-the-job training. New employees are assigned a job, given responsibilities, and coached by their supervisor. The best way to learn is to practice what has been taught. New employees learn by doing activities, making mistakes, and then learning how not to make those mistakes again. Information learned through classroom lectures tends to be forgotten quickly unless it's used soon after the lecture. The actual hands-on experience and getting feedback provides more complete and lasting knowledge. 2. Give examples of a situation in which a manager of a McDonald's fast-food restaurant must utilize different leadership styles. In the text, we discuss leadership styles in terms to type of leader behaviors, task performance and group maintenance, and two types of decision-making approaches, authoritative and participative. Task performance behaviors are the McDonalds manager's efforts to make sure that the store achieves its goals. Group maintenance behaviors are activities undertaken by the store managers to make sure that McDonald's employees are satisfied and work well together. Autocratic When the McDonald manager make all decisions on their own and then announce the decision to employees. Democratic When the McDonald manager seeks information and opinions from employees and bases decisions on this information. Effective managers use all styles, selecting the style most appropriate for each situation. For example, the McDonald manager might be more autocratic and relations-oriented with an insecure new trainee and more democratic and task-oriented with an effective, experienced employee. The chapter also discusses another style, transformation leadership, getting people to transcend their personal needs for the sake of the group or organization. This style might be very useful when the store manager is new and trying to turn around a poor-performing restaurant—trying to generate excitement and revitalize restaurant's employees. 3. Use the interview questions in Exhibit 16-3 and role play with another student in the class as both the interviewer and the applicant for an Assistant Store Manager position with the store of your choice. Students should be encouraged to select a variety of questions for their role plays. Additionally, encourage them to remember the following: (1) word questions to require longer responses, (2) avoid leading questions and (3) be an active listener. Evaluate the information being presented to sort out important and unimportant points. 4. Name some laws and regulations that affect the employee management process. Which do you believe are the easiest for retailers to adhere to? Which are violated the most often? Title VII of the Civil Rights prohibits discrimination on the basis of race, national origin, sex, or religion in company personnel practices. Potential violations are investigated by the Equal Employment Opportunity Commission (EEOC). The Age Discrimination and Employment Act makes it illegal to discriminate in the hiring and termination decision concerning people between the ages of 40 and 70. Americans with Disabilities Act (ADA) opens up job opportunities for the disabled by requiring employees to providing accommodating work environments. Sexual harassment includes lewd sexual comments and gestures, sexual joking, showing obscene photographs, staring at a co-worker in a sexual manner, alleging that an employee got rewards by engaging in sexual acts, and commenting on an employee's moral reputation. Managers must avoid such behaviors because they are both unethical and illegal. Equal Pay Act, now enforced by the EEOC, prohibits unequal pay for men and women who perform equal work. Equal work means that the jobs require the same skills, effort, and responsibility and are performed in the same working environment. The Fair Labor Standards Act of 1938 set minimum wages, maximum hours, child labor standards, and overtime pay provisions. Retailers may find that acts are very specific, such as the Age Discrimination and Employment Act and the Equal Pay Act, are more easily adhered to as compared to others that require detailed examination and assessment of each situation. Enforcement of the Fair Labor Standards Act is particularly important to retailers because they hire many low-wage employees and teenagers and have their employees work long hours. Some would argue that this may be violated the most. 5. What's the difference between extrinsic and intrinsic rewards? What are the effects of these rewards on the behavior of retail employees? Under what conditions, would you recommend that a retailer emphasize intrinsic rewards over extrinsic rewards? Extrinsic rewards are rewards provided by the retailer. These rewards include financial compensation and recognition. Intrinsic rewards are positive feelings that people get from doing the job well. For instance, retailers can help employees identify the intrinsic rewards of their jobs through contests, which emphasize the "fun" aspects of their jobs and through job enrichment programs. Retail employees feel a sense of fulfillment and motivation by these rewards. The employees in turn will work harder because they feel motivated. However, extrinsic rewards often make employees feel the only purpose of their job is to make money and they lose sight of all intrinsic rewards. Intrinsic rewards should be emphasized over extrinsic rewards in order to avoid making the employees feel they only come to work to get a paycheck. Intrinsic rewards should be used when an employee feels his job is mundane and boring. These rewards can make the jobs feel rewarding and motivate employees to learn how to do their jobs better. For example, experienced employees often lose interest in their jobs. They no longer find them exciting and challenging. Extrinsic rewards, such as pay or promotion might not be so attractive to them. They might be satisfied with their present income and job responsibilities. Intrinsic rewards should be emphasized in this case to motivate and inspire the employees. 6. Many large department stores and specialty stores are changing their salespeople's reward system from a traditional salary to a commission-based system. What problems can commission based systems cause? How can department managers avoid these problems? Commission based systems can be a struggle for retail sales associates. To begin with, it might create uncertainty and more risk-averse sales associates might not like straight commission salaries. In addition, straight commission might create more competition among sales associates in order to earn more wages. Finally, straight commission might cause some sales associates to oversell customers and sell customers products that they don’t really need. Since the sales manager is the direct link from the corporate office to the sales people it is up to him/her to convince the sales people to accept the change. To begin with, the department manager is going to have to eliminate the suspicion that the new system is designed to help management get larger profits at the expense of the sales force. The manager should show how employees' earnings should not be negatively affected. In fact, the effective department manager will use this as an opportunity to show how earnings can be increased. The sales manager must be especially careful to explain all facets of the change so that employees' questions and concerns are addressed. The new system should also be periodically examined and discussed with employees to get their feedback. 7. When evaluating retail employees, some stores use a quantitative approach that relies on checklists and numerical scores similar to the form in Exhibit 16-5. Other stores use a more qualitative approach whereby less time is spent checking and adding and more time is devoted to discussing strengths and weaknesses in written form. Which is the best evaluation approach? Why? Each evaluation approach has its strengths. Quantitative methods are useful in that they provide a scale that can be utilized uniformly across departments and stores. This enables evaluators to get a more balanced appraisal of performance from a broad perspective. In addition, quantitative methods leave little question as to the relevant evaluative criteria, such as, did the salesperson make quota, or what were the total sales for the individual for a specific period? Qualitative methods allow the manager to give individual insight into strengths and weaknesses, and suggestions to correct the weaknesses. They allow the evaluator to focus on the sales person as an individual and therefore allows for specific evaluation pertinent to each person. An effective evaluation system should probably use a combination of both. 8. Some staff pharmacists working for retail chains refuse to dispense the Plan B “morning after” contraceptive pill because of their religious beliefs. In another situation, Muslims and Jewish checkout clerks working for supermarket chains refused to touch, scan, or bag products that contained any pork because of their religious beliefs. Do managers have the right to force employees to take actions that are contrary to their beliefs? Should customers be unable to buy products they want because of an employee’s beliefs? Should employees be required to ignore their religious beliefs? What would you do if you were faced with these or similar ethically sensitive situations Retailers should be very clear of the expectations of sales associates when they are first hired. If associates are uncomfortable with certain parts of a job because of their religious beliefs, then store managers should work with them to identify roles that they can effectively complete without jeopardizing their beliefs. The store manager is in a tricky role because he/she has to maximize the customer experience while also creating a welcoming and non- discriminatory work environment. If a pharmacy dispenses medicine that a pharmacist disagrees with, the store manager should be respectful of the pharmacist’s beliefs while also reminding the pharmacist of the merchandise strategy and retail mix of the retailer. 9. Discuss how retailers can reduce shrinkage from shoplifting and employee theft. Losses due to shoplifting can be reduced by store design, employee training, and special security measures. To stop employee theft, retailers can screen perspective employees, encourage honesty and integrity, use security personnel, and administer security policies and control systems. 10. Drugstore retailers, such as CVS, place diabetic test strips and perfume behind locked glass cabinets and nearly all over-the-counter medicines behind Plexiglas panels. These efforts are designed to deter theft. How do these security measures impact honest customers. Despite their effectiveness in reducing losses through shoplifting, the security measures described above can unfortunately make the shopping experience less pleasant for honest customers. These customers are inconvenienced by the need to request assistance in getting to the merchandise they wish to buy. Retailers must carefully balance security with convenience. In the situation described above, the retailer should clearly remind customers that its security precautions help to service its loyal customer by keeping losses, and therefore merchandise prices, down for everyone. Solution Manual for Retailing Management Michael Levy, Barton A. Weitz, Dhruv Grewal 9780078028991
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