McGraw-Hill/Irwin Retailing Management, 6/e Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter 17 Managing the Store

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

17-3 Store Managers Run a Business “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

17-4 Strategic Importance of Store Management 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

17-5 Store Managers’ Responsibilities Varies Dramatically By Type of Retailers –Specialty Store vs. Department Store Entrepreneur –P & L Responsibility –Manage People Responsible for Two Critical Assets –People Sales/Employees –Space Sales/Square Foot © Digital Vision

17-6 Steps in Employment Management Process

17-7 Job Analysis

17-8 Job Description The activities the employee needs to perform The performance expectations expressed in quantitative terms A guideline for recruiting, selecting, training and evaluating employees Steve Mason/Getty Images

17-9 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 Jack Star/PhotoLink/Getty Images

17-10 Sources of Information for Screening Applicants Application Forms References Testing Providing a Realistic Job Preview The McGraw-Hill Companies, Inc./Lars A. Niki, photographer

17-11 Suggestions for Questioning Applicant 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

17-12 Equal Employment Opportunity Commission (EEOC) Age Discrimination and Employment Act –Disparate Treatment –Disparate Impact Americans with Disabilities Act (ADA) Legal Considerations in Hiring and Selecting Employees

17-13 Socializing and Training Employees Orientation Program Training ­Where, when, what ­Structured vs. unstructured ­Classroom vs. on-the-job ­Analyzing Successes and Failures (c) image100/PunchStock

17-14 Motivating and Managing Employees Setting Goals Measuring Performance Providing Incentives to Achieve Goals Providing Feedback

17-15 Leadership Process by which one person attempts to influence another to accomplish some goal or goals Leader Behaviors –Task-Oriented –Group Maintenance C Squared Studios/Getty Images

17-16 Types of Leaders Autocratic Democratic Transformational © Digital Vision Which Type of Leader Is the Most Effective?

17-17 Setting Goals How High? How Easy to Achieve? Get Participation of Employees in Setting Goals Royalty-Free/CORBIS

17-18 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 Royalty-Free/CORBIS

17-19 Individualized Motivation Programs Impact of Goals Differs Across People Different People Seek Differ Rewards –A La Carte Reward Programs –Selection of Compensation Plans Steve Cole/Getty Images

17-20 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 Pando Hall / Getty Images

17-21 Evaluating and Providing Feedback to Employees Evaluation ­ Who, when, how often? Feedback ­ Performance outcome vs. process

17-22 Jim Taylor’s Six Month Evaluation

17-23 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

17-24 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

17-25 Compensating Employees Compensation ­ Type Straight salary Straight commission Quota bonus ­ Setting quotas ­ Individual vs. group incentives Royalty-Free/CORBIS

17-26 Advantages and Disadvantages of Straight Salary Straight SalaryIncentive Compensation Offers flexibility in assigning employeesHas high motivating potential to activities Builds stronger employee commitmentHas more variable cost Is easy for employees to understandRelates compensation to productivity Is easy to administer Allows for better performance of non-selling activities such as customer service

17-27 Designing a Compensation Plan Determine Appropriate Compensation Decide on Percent of Incentives Use Average Sales Per Employee to Set Incentive Rate $12/Hour 1/3 Salary 2/3 Incentive Sales/Person - $150  5.33% Commission $4/Hour Salary $4 = 5.33% x 150 = $12

17-28 Controlling Costs Costs Controlled by Store Managers Labor Maintenance Inventory Shrinkage Energy Heating Lighting

17-29 Labor Scheduling System

17-30 Calculating Shrinkage Accounting Record – Actual Inventory Sales $1,500,000 - $1,236,00 = 6.7% $4,225,000

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

17-32 Preventing Shoplifting Store design Employee training Good customer service ­ Security measures ­ Dye capsules, TV cameras ­ EAS Prosecution PhotoLink/Getty Images

17-33 Spotting Shoplifters

17-34 Use of Security Measures by Retailers

17-35 EAS Tags

17-36 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.