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.

coordinates. and motivates employees so that they cooperate to achieve an organization's goals. .Organization structure is the formal system of task and reporting relationships that controls.

Organization structure should: ‡ Encourage employees to work hard and to develop supportive work attitudes ‡ Allow people and groups to cooperate and work together effectively .

pricing etc. . regardless of how well employee and management needs are met. ‡ Most of the retailers do similar tasks such as buying.Organization structure ‡ A retailer cannot survive unless its organization structure satisfies the need of the target market. but there are many ways of organizing a retail firm.

. 5) Integrating positions through an organization chart.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.

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. . .Entering data and managing cash can be the job of the cashier.Displaying merchandise and customer dealings can be the job of sales personnel. For eg. .

4) Classifying jobs ‡ Here jobs are classified by categorizing them into functional. product. geographic or combination. .

‡ With these things in mind . a retailer devises an organization chart which graphically displays the hierarchal relationships. .5) Developing an organization chart ‡ The format of the retail organization should be designed in a coordinated and integrated way.

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 .

This will help in improving the quality of the work as well as increase the job satisfaction amongst the employees.Focus on Specialization The tasks should be assigned and allocated to the employees on the basis of the expertise that they possess. .

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.

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

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


. ‡ Word of mouth communication is very necessary.Independent Retailer ‡ An independent retailer owns one unit. ‡ Less capital requirement.

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.

‡ Brand name ‡ Standard operating policies ‡ Marketing efforts are facilitated. .Advantages ‡ Small capital investment.

Disadvantages ‡ Over saturation may occur if too many franchisee are located in the same area. ‡ They may be locked into contracts. .

‡ It is used by the retailers to broaden their offerings into product category. . When a section in a retail store is leased or rented to the outside party.Leased Department ‡ They are also termed as shop in shops. it is termed as a leased department.

. ‡ Tapping more customers.Advantages from store·s perspective ‡ Regular revenues.

Disadvantages from store·s perspective ‡ Conflicts ‡ Affecting store image ‡ Customer may blame the store rather than the lessee. .

operators ‡ Brand names ‡ Reduction in cost ‡ Enhanced image .Advantages for leased dept.

Disadvantages for leased dept. operators ‡ Inflexibility ‡ Renewal of lease .

Retail Organization Structures .

‡ No or very less specialization. ‡ Usually two or three levels of personnel including the owner. manager and the employees.Single Store Retailer ‡ A very uncomplicated arrangement. .

.Department Stores ‡ 1) 2) 3) 4) It divides the entire organization into four main parts:Merchandising Publicity Store Management Accounting and Control.

sales promotions. . IT etc.Chain Retailers ‡ Many functional divisions ‡ Merchandising. personnel. real estate. ‡ Centralization of authority. distribution.

.Issues in Designing a Retail Organization There are two main issues while designing a retail organization structure1) The degree of centralization. 2) Coordinating merchandise and store management.

Decentralization is the distribution of power in the lower level of management. particularly those regarding decision-making. .The degree of centralization Centralization is the process by which the activities of an organization. On the other hand. become concentrated within a particular location and/or group.

3) Allows experts to take decision ² The best people makes decision.Benefits of Centralization 1) Reduction in cost ² Overhead costs are reduced because lesser managers are required to make decisions. . 2) Improves efficiency ² With the help of standard policies and guidelines.

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. .

so he can look after the customer demands and fulfill it very easily.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. .

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.

. 2) Regular visits to the store.Approaches to coordinate 1) Increasing the contact with the customer. 3) Involving the manager in coordinating the buying and selling process.


staffing. long working hours. highly visible employees and variability in the customer demand. ‡ These factors make the hiring . . and supervision of the employees a complex process.The Human resource environment of Retailing ‡ The Retailers face a special human resource environment characterized by alarge number of inexperienced workers.

‡ Because of all these difficulties. . 2) The training programs must be short and should focus on developing the skills of employees. the retailers should consider points such as ² 1) Recruitment and selection procedure must generate sufficient number of applicants.

5) Full and part time workers should not have any conflicts.µ 4) Employee appearance and work habits must be explained. .3) Compensation must be perceived by the employees as ´FAIR.

The human resource management process in Retailing .


‡ The purpose on Recruitment process is to make the job applicants available for the specific jobs. .‡ Recruitment is the process of searching the candidates for employment and stimulating them to apply for jobs in the organization.

Sources of Recruitment External sources 1) Educational Institutions 2) Competition 3) Advertisements 4) Employment agency 5) Unsolicited applicants .

Sources of Recruitment Internal Sources 1) Current and former employees 2) Employee recommendations .


. ‡ The basic purpose of selection process is to choose the right candidate to fill the various positions in the organization.‡ Selection involves the series of steps by which the candidates are screened for choosing the most suitable persons for vacant posts.

Process Of Selection ‡ ‡ ‡ ‡ ‡ ‡ The application blank Interview Testing Reference check Physical exam Job offer .


‡ Training is an important aspect of human resource management. .At regular intervals to sales staff for skill enhancement.At the time of induction . in retail. training is needed at the following times. Typically .

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


Known expenses Disadvantages Less Motivation .Methods of compensation 1) Straight salary Method Advantages Employee security.

Methods of compensation 2) Straight commission method Advantages High Motivation Disadvantages The 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. .


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

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

2) Management believes that the employees can be self managers and assigned authority.‡ 3 basic styles of supervision 1) Management assumes that the employees must be closely supervised and controlled. .

.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. .

employee commitment is crucial.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. 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. .

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