Chapter 14

Managing People

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Learning Objectives

Explain why intangible people resources can provide a more competitive advantage than tangible resources.

Describe how to recruit both the right employees and the right customers to be the store’s partners.

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Learning Objectives

Explain how to manage employees and customers to develop long-term profitable relationships.

Discuss how to compensate employees and offer customers a compelling value proposition.

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Intangible People Resource Make the Difference

Similarities between employees and customersThey both perform retail tasks, and they both serve the

other.Recognizing that employees and customers must

always serve each other is the beginning point of servant leadership.

Servant leadership - An employee’s recognition that their primary responsibility is to be of service to others.

LO 1

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Intangible People Resource Make the Difference

Employees and customers are profit driversOnly by treating people right will retailers be able to

have enduring and profitable relationships with their employees and customers.

LO 1

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Obtaining the Right People

Customer relationship managementEmployee sourcesCustomer sourcesScreening and selection of employeesScreening and selecting customers

LO 2

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Obtaining the Right People

Customer relationship management (CRM) - An integrated information system where the fundamental unit of data collection is the customer, supplemented by relevant information about the customer.The overall goal of CRM is to generate reports and

provide the retailer with a tool to develop a long-term profitable relationship with a customer that is mutually beneficial.

LO 2

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Exhibit 14.1 - Sources of Retail Employees and Customers

LO 2

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Obtaining the Right People

Screening and selection of employeesApplication formPersonal interviewTestingReferences

LO 2

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Obtaining the Right People

Legitimate reasons for screening and selecting customers

The inability to adequately service certain customers.The deterioration of a retailer’s atmosphere if

customers of a certain type are admitted.The inability to profitably service customers.

LO 2

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Managing People

Training and developing employeesTraining is a process of continuing education, must

enable the employees to know their status within the firm, and should be supported by management.

Training and developing customers

LO 3

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Managing People

Evaluating employeesPerformance appraisal and review - The formal,

systematic assessment of how well employees are performing their jobs in relation to established standards and the communication of that assessment to employees.

Retailers should try to use objective criteria for the appraisal and review process whenever possible.

Evaluating customers

LO 3

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Managing People

Motivating employeesMotivation - Drive that a person has to excel at

activities, such as a job, that he or she undertakes.A variety of noneconomic motivators such as esprit

de corps, voice, scheduling, and feedback can either motivate or demotivate employees.

LO 3

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Managing People

Motivating customersKey nonprice elements that can motivate or

demotivate customers include merchandise, physical characteristics, sales promotions, advertising, convenience, services, and store personnel.

LO 3

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Compensation

Employee compensationCommon types of compensation programs for a

sales forceSupplemental benefitsCompensation plan requirementsJob enrichmentCustomer compensation

LO 4

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Employee Compensation

Compensation - Includes direct dollar payments (wages, commission, bonuses) and indirect payments (insurance, vacation time, retirement plans).Fixed component - Composed of some base wage per

hour, week, month, or year.Variable component - Composed of some bonus that

is received if performance warrants.

LO 4

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Employee Compensation

Fringe-benefit package - Part of the total compensation package offered to many retail employees and may include health insurance, disability benefits, life insurance, retirement plans, child care, use of an auto, and financial counseling.

LO 4

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Common Types of Compensation Programs for a Sales Force

Straight salarySalary plus commissionStraight commission

LO 4

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Exhibit 14.4 - Attributes Of Compensation Plans

LO 4

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Supplemental Benefits

Employee discountsInsurance and retirement benefitsChild carePush money (prize money or premium

merchandise)

LO 4

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Compensation Plan Requirements

FairnessAdequacyPrompt and regular paymentsCustomer interestSimplicityBalanceSecurityCost effective

LO 4

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Job Enrichment

Process of enhancing the core job characteristics to improve the motivation, productivity, and job satisfaction of employees.

The five core job characteristics that should be increased include skill variety, task identity, task significance, autonomy, and job feedback.

LO 4

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Customer Compensation

The best way to think of it is in terms of the concept of value proposition.

The better the value equation, the more compelling the retailer’s value proposition.

LO 4