14MANAGING CHAPTER PEOPLE
MULTIPLE CHOICE
1. Successful retailers of the future will be those that:
a.
develop ways to minimize the need for employee labor.
b.
minimize the need for re-training employees.
c.
devote the maximum effort to hiring good employees now.
d.
find ways to increasingly pass on more insurance costs to employees.
e.
invest in tangible assets.
ANS: C
PTS: 1
REF: p. 526
2. Which of the following is NOT a tangible asset?
a.
b.
c.
d.
e.
ANS: B
PTS: 1
OBJ: LO 14-1
Land
Customers
Buildings
Merchandise
Technology
REF: p. 527
OBJ: LO 14-1
3. By empowering an employee, the retailer is giving the employee:
a.
permission to handle any customer refund under $10.
b.
the ability to join the firms profit sharing
plan.
c.
permission to work in any department in the
store.
d.
the ability to set his/her own work schedule
for the upcoming month.
e.
the power to make things right for the customer.
ANS: E
PTS: 1
REF: p. 528
OBJ: LO 14-1
4. _____ occurs when employees are given the power in their jobs to do the things necessary to satisfy
and make things right for customers.
a.
Empowerment
b.
Servant leadership
c.
Customer relationship management
d.
Commission selling
e.
Performance appraisal and review
ANS: A
PTS: 1
REF: p. 528
OBJ: LO 14-1
5. Which of the following is NOT something a retailer should expect empowered employees to do?
a.
Try to understand the customers problem
b.
Determine their own work schedules
c.
d.
e.
ANS: B
Provide outstanding customer service
Understand the value of customer loyalty
Be allowed to solve the customers problem
PTS: 1
REF: p. 529
OBJ: LO 14-1
6. _____ is an employees recognition that their primary responsibility is to be of service to others.
a.
Empowerment
b.
Servant leadership
c.
Customer orientation
d.
Change management
e.
Leadership ethics
ANS: B
PTS: 1
REF: p. 529
OBJ: LO 14-1
7. In the case of customers, as a rule, retailers have found that _____ percent of customers generate
_____ percent of a retailers sales.
a.
50; 50
b.
70; 30
c.
10; 90
d.
20; 80
e.
35; 65
ANS: D
PTS: 1
REF: p. 531
OBJ: LO 14-1
8. A _____ is the promised benefits a retailer offers in relation to the cost the customer incurs.
a.
value proposition
b.
utility surplus
c.
job enrichment program
d.
value plan
e.
CRM
ANS: A
PTS: 1
REF: p. 532
OBJ: LO 14-2
9. _____ is comprised of an integrated information system where the fundamental unit of data collection
is the customer, supplemented by relevant information about the customer.
a.
Customer relationship management
b.
Supply chain management
c.
Computerized customer screening
d.
Hierarchy of needs
e.
Performance appraisal and review
ANS: A
PTS: 1
REF: p. 532
OBJ: LO 14-2
10. Which of the following is NOT a question CRM systems can answer?
a.
What is the average transaction size in terms
of dollars and units purchased by a type of
customer?
b.
What is the profitability of groups of customers or the profitability of a particular customer?
c.
Is the customer profile at a retailers stores in
one region or part of a city different from the
profile in another area?
How effective is management in the selection
of new-hire employees?
Was the recent direct mail promotion cost effective?
d.
e.
ANS: D
PTS: 1
REF: p. 532-533
OBJ: LO 14-2
11. Given the economic environment, the employee source seeing the most expanded use in recent years
is:
a.
employment agencies.
b.
schools and colleges.
c.
advertisements.
d.
customer referrals.
e.
former employees.
ANS: E
PTS: 1
REF: p. 534
OBJ: LO 14-2
12. Which of the following is NOT a source of customers?
a.
Competitors
b.
Walk-ins
c.
Recommendations
d.
Employees
e.
Affinity programs
ANS: C
PTS: 1
REF: p. 534
OBJ: LO 14-2
13. Which of the following laws prohibits employers from discrimination in employment on the basis of
race, color, religion, sex, or national origin?
a.
The Equal Pay Act
b.
Title VII of the Civil Rights Act
c.
The Age Discrimination in Employment Act
d.
The Fair Labor Standards Act
e.
The Americans with Disabilities Act
ANS: B
PTS: 1
REF: p. 536
OBJ: LO 14-2
14. The _____ Act of 1967 prohibits employers from discrimination in employment on the basis of age.
a.
Equal Pay Act
b.
Civil Rights Act
c.
Age Discrimination in Employment Act
d.
Fair Labor Standards Act
e.
Americans with Disabilities Act
ANS: C
PTS: 1
REF: p. 536
OBJ: LO 14-2
15. The _____ Act of 1990 prohibits employers from discrimination in employment on the basis of handi cap/disability.
a.
Equal Pay Act
b.
Civil Rights Act
c.
Age Discrimination in Employment Act
d.
Fair Labor Standards Act
e.
Americans with Disabilities Act
ANS: E
PTS: 1
REF: p. 536
OBJ: LO 14-2
16. When interviewing a job applicant, the employer is effectively prohibited from asking:
a.
any questions that capture conveniently and
compactly the individuals identity, training,
and work history that will relate to his or her
projected performance if given the job.
b.
if the applicant is over 18.
c.
where the applicant lives.
d.
any questions which have answers that could
be used to discriminate between two different
groups of applicants
e.
whether the applicant is currently working, or
if they have previously worked.
ANS: D
PTS: 1
REF: p. 536
OBJ: LO 14-2
17. Once an employee has completed an application form, the next step that a potential retail employee is
most likely to be subjected to is a(n):
a.
IQ test.
b.
personal interview.
c.
check of police records.
d.
reference check.
e.
credit check.
ANS: B
PTS: 1
REF: p. 537
OBJ: LO 14-2
18. Which of the following is true regarding the checking of applicants references?
a.
References should not be requested or
checked until all other phases of the applica tion process are complete.
b.
References usually provide an excellent
source of information about an employee;
they should, therefore, be done early in the
process.
c.
Applicants must be contacted before refer ences are checked.
d.
In general, references should not be requested
at all for retail applicants.
e.
Next to credit checks, reference checks are the
easiest way of obtaining information about
applicants.
ANS: A
PTS: 1
REF: p. 540
OBJ: LO 14-2
19. At what point in the screening process should references for an application be checked?
a.
Prior to the personal interview
b.
Prior to checking the applicants police record
c.
As the last step
d.
While the drug test is being analyzed
e.
They can be checked any time
ANS: C
PTS: 1
REF: p. 540
OBJ: LO 14-2
20. The credit check assessments used by retailers include all of the following EXCEPT:
a.
payment history.
b.
unpaid parking fines
c.
library fines.
d.
unpaid speeding tickets.
e.
any other bills less than 30 days old.
ANS: E
PTS: 1
REF: p. 540
OBJ: LO 14-2
21. Which of the following is a direct employee turnover cost?
a.
Lost sales resulting from the employees initial lack of product knowledge.
b.
Effect of the employees lower morale on customers.
c.
Decrease in employee morale caused by the
departure of an employee.
d.
Loss of customers who were loyal to former
employee.
e.
Cost of training classes (including managements time).
ANS: E
PTS: 1
REF: p. 542
OBJ: LO 14-3
22. Which of the following is an indirect employee turnover cost?
a.
Lost sales and potential profits missed from
alienated customers resulting from inexperience in retail selling.
b.
Cost of evaluating applicants (including interviews, reference checks, and any testing).
c.
Cost of training classes (including managements time).
d.
Pay (including benefits) during period when
new employee is taking training course.
e.
Part of supervisors pay (including benefits)
to cover time spent helping new employee
during first few weeks of job.
ANS: A
PTS: 1
REF: p. 542
OBJ: LO 14-3
23. A retailers training and development programs should:
a.
be targeted primarily at entry-level employ ees.
b.
not be a one-time happening, but a process
of continuing education.
c.
result in the survival of the fittest.
d.
concentrate solely on educating the employee
on how to handle current duties.
e.
focus on teaching selling skills.
ANS: B
PTS: 1
REF: p. 543
OBJ: LO 14-3
24. A do-it-yourself tile installation course at the Home Depot is an example of:
a.
b.
c.
d.
e.
ANS: C
employee training.
employee selection.
customer training.
customer appraisal.
customer testing.
PTS: 1
REF: p. 544
OBJ: LO 14-3
25. The formal, systematic assessment of how well employees are performing their jobs in relation to es tablished standards, and the communication of that assessment to employees is called:
a.
performance appraisal and review.
b.
annual evaluation and review.
c.
standardized employment evaluation.
d.
employee assessment and performance re view.
e.
performance evaluation review.
ANS: A
PTS: 1
REF: p. 545
OBJ: LO 14-3
26. Prevents merchandise shrinkage due to mishandling of merchandise, is an example of a _____ criter ia used in the appraisal and review process.
a.
merchandise procedures
b.
customer service ability
c.
merchandise profitability
d.
product/merchandise knowledge
e.
store policy
ANS: A
PTS: 1
REF: p. 545
OBJ: LO 14-3
27. Works well with fellow workers in primary merchandise department, is an example of a _____ cri teria used in the appraisal and review process.
a.
merchandise procedures
b.
customer service ability
c.
sales ability
d.
product/merchandise knowledge
e.
store policy
ANS: C
PTS: 1
REF: p. 545
OBJ: LO 14-3
28. Shows up on time for work, sales meetings, and training sessions, is an example of a _____ criteria
used in the appraisal and review process.
a.
merchandise procedures
b.
customer service ability
c.
sales ability
d.
product/merchandise knowledge
e.
store policy
ANS: E
PTS: 1
REF: p. 545
OBJ: LO 14-3
29. Follows proper procedures concerning merchandise returns and layaways, is an example of a _____
criteria used in the appraisal and review process.
a.
merchandise procedures
b.
customer service ability
c.
d.
e.
ANS: B
sales ability
product/merchandise knowledge
store policy
PTS: 1
REF: p. 545
OBJ: LO 14-3
30. A retailer should do all of the following when conducting a performance appraisal of an employee EX CEPT:
a.
make sure the process is an ongoing affair, not
just a periodic review.
b.
provide employees with feedback about how
well they are doing their jobs.
c.
use the free-form essay method.
d.
have at least two people perform the review.
e.
make sure the person doing the review understands what the job being evaluated entails
and what the performance standards for the
job are.
ANS: C
PTS: 1
REF: p. 546
OBJ: LO 14-3
31. Human resource management goes beyond selecting, training, and compensating employees. It also in volves _____ them to improve current performance.
a.
reprimanding
b.
motivating
c.
firing
d.
scheduling
e.
medically caring for
ANS: B
PTS: 1
REF: p. 547
OBJ: LO 14-3
32. _____ occurs when a group of workers feel a common mission and a passion for that mission and a
pride in being a part of the group.
a.
Voice
b.
Discipline
c.
Feedback
d.
Esprit de corps
e.
Scheduling
ANS: D
PTS: 1
REF: p. 548
OBJ: LO 14-3
33. _____ is the extent to which employees can express their ideas, suggestions, and views with their su periors.
a.
Esprit de corps
b.
Voice
c.
Scheduling
d.
Feedback
e.
Discipline
ANS: B
PTS: 1
REF: p. 548
OBJ: LO 14-3
34. _____ reflects the hours and days an employee is required to work.
a.
Feedback
b.
c.
d.
e.
ANS: E
Esprit de corps
Discipline
Voice
Scheduling
PTS: 1
REF: p. 548
OBJ: LO 14-3
35. _____ reflects the extent to which superiors provide regular appraisals and coaching of employees.
a.
Job enrichment
b.
Esprit de corps
c.
Feedback
d.
Scheduling
e.
Voice
ANS: C
PTS: 1
REF: p. 548
OBJ: LO 14-3
36. Which of the following is a factor outside of the retailers influence that would motivate consumer pur chases?
a.
Merchandise assortment.
b.
Physical characteristics of the store.
c.
Sales promotions.
d.
Advertising.
e.
A customers new home purchase.
ANS: E
PTS: 1
REF: p. 549
OBJ: LO 14-3
37. In retailing, employee costs typically represent about _____ percent of total operating expenses.
a.
10
b.
20
c.
25
d.
33
e.
50
ANS: E
PTS: 1
REF: p. 550
OBJ: LO 14-4
38. The quality of employees that a retailer can attract to its organization has been found to be directly pro portional to the _____ offered to the employees.
a.
compensation package
b.
security
c.
employee discounts
d.
percentage of free weekends (this means the
employee does not have to work on weekends)
e.
fringe benefit plan
ANS: A
PTS: 1
REF: p. 550
OBJ: LO 14-4
39. In addition to basic compensation, a recent study found that more retail associates desire:
a.
greater job security.
b.
more flexible, portable benefit systems with
fewer links to age and service.
c.
more interesting work.
d.
a cleaner working environment.
e.
ANS: B
higher employee discounts.
PTS: 1
40. Compensation refers to:
a.
b.
c.
d.
e.
ANS: B
PTS: 1
REF: p. 550
OBJ: LO 14-4
only direct dollar payments such as salary, bonuses, and commissions.
direct-dollar payments and indirect payments.
direct-dollar payments plus the employee discount.
direct-dollar payments, indirect payments, and
intangible payments.
direct-dollar payments and intangible payments.
REF: p. 550
OBJ: LO 14-4
41. The basic compensation plan for most retailers usually has one or more of which three components?
a.
Seasonal component, fixed component, and
variable component
b.
Taxable component, nontaxable component,
and fringe benefit component
c.
Fixed component, variable component, and
fringe benefit component
d.
Fixed component, variable component, and
intangible component
e.
Tangible component, intangible component,
and fringe benefit component
ANS: C
PTS: 1
REF: p. 550
OBJ: LO 14-4
42. The store where you work offers department managers a bonus based on their departments profit per formance. Bonuses are considered the _____ of the compensation plan.
a.
supplemental benefit
b.
fringe benefit
c.
variable component
d.
fixed component
e.
job enrichment
ANS: C
PTS: 1
REF: p. 550
OBJ: LO 14-4
43. The _____ component of a compensation plan helps fulfill the employees physiological needs.
a.
variable
b.
salary
c.
fixed
d.
fringe benefit
e.
commission
ANS: C
PTS: 1
REF: p. 551
OBJ: LO 14-4
44. The _____ of a compensation plan helps to fulfill the safety and security needs of retail employees.
a.
variable component
b.
salary component
c.
d.
e.
ANS: D
fixed component
fringe benefit package
commission
PTS: 1
REF: p. 551
OBJ: LO 14-4
45. The _____ of a compensation plan helps to fulfill a retail employees belongingness and social needs.
a.
fringe benefit package
b.
employee discount
c.
push money
d.
fixed component
e.
variable component
ANS: E
PTS: 1
REF: p. 551
OBJ: LO 14-4
46. For an individual who wants the greatest amount of security, the _____ compensation plan would be
best.
a.
straight commission
b.
straight salary
c.
salary plus commission
d.
fringe benefit
e.
base salary
ANS: B
PTS: 1
REF: p. 552
OBJ: LO 14-4
47. Which of the following is true regarding straight salary?
a.
It offers little security
b.
It is used by 96 percent of retailers today
c.
It prevents clerks from performing nonselling
tasks
d.
It gives little incentive for extraordinary effort
and performance
e.
It offers the employee the greatest incentive to
go the extra mile in an attempt to get a sale
ANS: D
PTS: 1
REF: p. 552
OBJ: LO 14-4
48. The _____ compensation plan provides substantial incentive for retail salespeople to generate sales.
a.
salary plus commission
b.
straight commission
c.
straight salary
d.
variable salary
e.
hourly wage
ANS: B
PTS: 1
REF: p. 552
OBJ: LO 14-4
49. A salesperson is NOT likely to receive straight commission for selling:
a.
grocery products.
b.
automobiles.
c.
furniture.
d.
insurance.
e.
real estate.
ANS: A
PTS: 1
REF: p. 552
OBJ: LO 14-4
50. _____ is a supplemental benefit for a retail employee typically paid by someone other than the retailer.
a.
Push money
b.
Employee discounts
c.
Insurance
d.
Retirement benefits
e.
Commission
ANS: A
PTS: 1
REF: p. 554
OBJ: LO 14-4
51. Which one of the following is NOT a required characteristic of an effective compensation plan?
a.
Fair to all parties
b.
Offers irregular payments
c.
Cost-effectiveness
d.
Simplicity
e.
Security
ANS: B
PTS: 1
REF: p. 554
OBJ: LO 14-4
52. _____ is the process of enhancing the core job characteristics of employees to improve their motiva tion, productivity, and job satisfaction.
a.
Value proposition
b.
Compensation
c.
Job rotation
d.
Job enrichment
e.
Job enlargement
ANS: D
PTS: 1
REF: p. 555
OBJ: LO 14-4
53. Job enrichment programs are based on _____ theory, which suggests that job factors themselves are
powerful motivators.
a.
need
b.
social
c.
labor productivity
d.
motivation
e.
compensation
ANS: D
PTS: 1
REF: p. 555
OBJ: LO 14-4
54. The degree to which an employee can use different skills and talents is:
a.
feedback.
b.
complexity.
c.
autonomy.
d.
skill variety.
e.
task significance.
ANS: D
PTS: 1
REF: p. 555
OBJ: LO 14-4
55. The degree to which a job requires the completion of a whole assignment that has a visible outcome is:
a.
feedback.
b.
complexity.
c.
task identity.
d.
e.
ANS: C
skill variety.
task significance.
PTS: 1
REF: p. 555
OBJ: LO 14-4
56. The degree to which the job impacts other employees is:
a.
feedback.
b.
autonomy.
c.
task identity.
d.
skill variety.
e.
task significance.
ANS: E
PTS: 1
REF: p. 555
OBJ: LO 14-4
57. The degree to which the employee has freedom, independence, and discretion in achieving the out come is:
a.
autonomy.
b.
complexity.
c.
task identity.
d.
skill variety.
e.
task significance.
ANS: A
PTS: 1
REF: p. 555
OBJ: LO 14-4
58. The degree to which the employee receives information about the effectiveness of his/her performance
is:
a.
job feedback.
b.
complexity.
c.
task identity.
d.
skill variety.
e.
task significance.
ANS: A
PTS: 1
REF: p. 555
OBJ: LO 14-4
59. Job enrichment involves all of the following core job characteristics EXCEPT:
a.
feedback.
b.
complexity.
c.
autonomy.
d.
skill variety.
e.
task significance.
ANS: B
PTS: 1
REF: p. 555
OBJ: LO 14-4
60. Which of the following is NOT one of the core job characteristics for job enrichment?
a.
Content analysis
b.
Job feedback
c.
Skill variety
d.
Task significance
e.
Autonomy
ANS: A
PTS: 1
REF: p. 555
OBJ: LO 14-4
TRUE/FALSE
1. A retailers tangible resources are more important than its people resources.
ANS: F
PTS: 1
REF: p. 526
OBJ: LO 14-1
2. Successful retailers of the future will be those that devote the maximum effort to hiring good employ ees now.
ANS: T
PTS: 1
REF: p. 526
OBJ: LO 14-1
3. Investments in tangible assets will produce a profitable return regardless of whether or not the retailer
invests in recruiting, motivating, and retaining employees.
ANS: F
PTS: 1
REF: p. 527
OBJ: LO 14-1
4. Retailers must view labor costs as investments in obtaining a sustainable competitive advantage.
ANS: T
PTS: 1
REF: p. 527
OBJ: LO 14-1
5. As a result of the recent recession, many retailers began to look at their workers as costs to be reduced,
not as revenue generators.
ANS: T
PTS: 1
REF: p. 527
OBJ: LO 14-1
6. Some forward-thinking retailers have begun to refer to employees as internal customers.
ANS: T
PTS: 1
REF: p. 528
OBJ: LO 14-1
7. Just like employees, customers need to be recruited, motivated, and compensated for their efforts.
ANS: T
PTS: 1
REF: p. 528
OBJ: LO 14-1
8. All employees are part of the service delivery chain where each, in turn, performs some task in the
economic-exchange process.
ANS: T
PTS: 1
REF: p. 528
OBJ: LO 14-1
9. Empowerment means the employee has the power to make things right for the customer.
ANS: T
PTS: 1
REF: p. 528
OBJ: LO 14-1
10. Because retailers operate on a high net profit margin, even a small increase in sales-force productivity
whether measured in sales per employee hour or gross margin per employee houroften translates
directly into an improvement in profits.
ANS: F
PTS: 1
REF: p. 529
OBJ: LO 14-1
11. What customers and employees have in common is that they both perform retail tasks, and they both
serve the other.
ANS: T
PTS: 1
REF: p. 529
OBJ: LO 14-1
12. A key benefit of empowerment is that it leads to higher self-esteem among employees, which in turn
reduces employee turnover.
ANS: T
PTS: 1
REF: p. 529
OBJ: LO 14-1
13. Retailers must view their employees and customers as investments.
ANS: T
PTS: 1
REF: p. 529
OBJ: LO 14-1
14. Furniture, jewelry, auto, and insurance salespeople all generally do not follow the 8020 rule.
ANS: F
PTS: 1
REF: p. 531
OBJ: LO 14-1
15. In general, 80 percent of retail sales come from 20 percent of the salespeople.
ANS: T
PTS: 1
REF: p. 531
OBJ: LO 14-1
16. The gross profit generated by an employee or customer must exceed the cost of servicing these em ployees or customers.
ANS: T
PTS: 1
REF: p. 531
OBJ: LO 14-1
17. Retailers must remember that human resources are acquired in a competitive marketplace.
ANS: T
PTS: 1
REF: p. 532
OBJ: LO 14-2
18. Even in poor economic times, good employees will seldom come knocking at a retailers door.
ANS: T
PTS: 1
REF: p. 532
OBJ: LO 14-2
19. Historically, retailers have thought of their businesses in terms of merchandise.
ANS: T
PTS: 1
REF: p. 532
OBJ: LO 14-2
20. Merchandise is the ultimate of source profitability.
ANS: F
PTS: 1
REF: p. 532
OBJ: LO 14-2
21. A compelling value proposition and long-term relationships with customers is not necessary to recruit
the most profitable customers.
ANS: F
PTS: 1
REF: p. 532
OBJ: LO 14-2
22. Customer relationship management is beginning to decrease in popularity as a technological choice for
cultivating and maintaining the right customers.
ANS: F
PTS: 1
REF: p. 532
OBJ: LO 14-2
23. The overall goal of CRM is not just to generate reports or data but also to provide the retailer with a
tool to develop a long-term, profitable relationship with a customer that is mutually beneficial.
ANS: T
PTS: 1
REF: p. 533
OBJ: LO 14-2
24. Those retailers who are on the leading edge of CRM are the ones that have integrated their CRM sys tem with their suppliers, advertising agencies, and other members of the supply chain.
ANS: T
PTS: 1
REF: p. 533
OBJ: LO 14-2
25. Customers are rarely obtained from competitors that have stockout problems or other failures in cus tomer service.
ANS: F
PTS: 1
REF: p. 534
OBJ: LO 14-2
26. Regardless of the specific source, all job applicants should be subject to a formal screening process to
sort the potentially good from the potentially bad employees.
ANS: T
PTS: 1
REF: p. 535-536
OBJ: LO 14-2
27. Today, some retailers have attempted to reduce costs in the hiring process by using online personality
tests early in the process.
ANS: T
PTS: 1
REF: p. 536
OBJ: LO 14-2
28. Retailers tend to use four types of screens in the hiring process: application forms, the personal inter view, testing, and references.
ANS: T
PTS: 1
REF: p. 536
OBJ: LO 14-2
29. The application form should capture conveniently and compactly the individuals identity, training,
and education; however, it is now illegal to ask the applicant about his/her previous work history, even
if it relates to his/her performance of the job tasks the retailer is hiring for.
ANS: F
PTS: 1
REF: p. 536
OBJ: LO 14-2
30. Many small retailers now keep a huge database of job applicants so they can search for certain key
words such as supervised staff if they want someone with management experience.
ANS: F
PTS: 1
REF: p. 536
OBJ: LO 14-2
REF: p. 537
OBJ: LO 14-2
31. By its very nature, an interview is objective.
ANS: F
PTS: 1
32. Effective interviewing should be a one-way communication process where the employer gathers as
much information about the applicant as possible.
ANS: F
PTS: 1
REF: p. 538
OBJ: LO 14-2
33. It is illegal for retailers to use credit checks as a screening device during the employment hiring pro cess.
ANS: F
PTS: 1
REF: p. 540
OBJ: LO 14-2
34. To save time and money, retailers should check the applicants references before interviewing the ap plicant.
ANS: F
PTS: 1
REF: p. 540
OBJ: LO 14-2
35. Negligent hiring is a legal issue when it can be proven that an employer did not reasonably investigate
an employees background and then placed the employee in a position where he/she caused harm to a
customer.
ANS: T
PTS: 1
REF: p. 540
OBJ: LO 14-2
36. When references are obtained and checked, the retailer should try to assess the honesty and reliability
of the applicant.
ANS: T
PTS: 1
REF: p. 541
OBJ: LO 14-2
37. Although most references provided by the applicant can be expected to give a neutral or favorable re commendation (if they give one at all), the reference check does give the retailer a means to verify the
accuracy and completeness of the application.
ANS: T
PTS: 1
REF: p. 541
OBJ: LO 14-2
38. Letters enable retailers to gather more complete and honest evaluations than telephone interviews.
ANS: F
PTS: 1
REF: p. 541
OBJ: LO 14-2
39. The ADEA requires that all businesses have access for handicapped individuals.
ANS: F
PTS: 1
REF: p. 541
OBJ: LO 14-2
40. Turnover is thought to be a very serious problem in specialty stores since they typically hire parttimers at entry-level positions.
ANS: T
PTS: 1
REF: p. 542
OBJ: LO 14-3
41. Training and development are consistent with the concept of human resource planning.
ANS: T
PTS: 1
REF: p. 543
OBJ: LO 14-3
42. On average, it costs a retailer 10 times as much to recruit a new customer as it does to retain an exist ing customer.
ANS: F
PTS: 1
REF: p. 543
OBJ: LO 14-3
43. Retailers should only provide training and development for new employees as it is too expensive to
provide development classes for current employees also.
ANS: F
PTS: 1
REF: p. 543
OBJ: LO 14-3
44. Retailers should view training as a process of continuing education.
ANS: T
PTS: 1
REF: p. 543
OBJ: LO 14-3
45. Online training is one of the fastest-growing ways of training employees at small retailers who cannot
afford to have a complete training staff.
ANS: T
PTS: 1
REF: p. 544
OBJ: LO 14-3
46. The best training and development program devised is useless unless management adopts a philosophy
of complete support.
ANS: T
PTS: 1
REF: p. 544
OBJ: LO 14-3
47. Retailers of all sizes should try to use objective criteria for the appraisal and review process whenever
possible.
ANS: T
PTS: 1
REF: p. 545
OBJ: LO 14-3
48. It is important for employers not only to evaluate employees on their performance but also to evaluate
customers for their contributions to the retailers financial objectives.
ANS: T
PTS: 1
REF: p. 546
OBJ: LO 14-3
49. To be successful, a retailers appraisal system should be an ongoing affair, not just a periodic review.
ANS: T
PTS: 1
REF: p. 546
OBJ: LO 14-3
50. Human resource management goes beyond selecting, training, and compensating employees; it also in volves motivating them to improve current performance.
ANS: T
PTS: 1
REF: p. 547
OBJ: LO 14-3
51. Motivation is the drive that a person has to excel at the activities he/she undertakes, such as a job.
ANS: T
PTS: 1
REF: p. 547
OBJ: LO 14-3
52. Retailers use a variety of demand stimulation tools to motivate customers to purchase or purchase in
greater quantities.
ANS: T
PTS: 1
REF: p. 548
OBJ: LO 14-3
53. Labor typically accounts for 25 percent of a retailers operating expenses.
ANS: F
PTS: 1
REF: p. 550
OBJ: LO 14-4
54. The more work you ask the customer to perform, the higher the price they will be willing to pay.
ANS: F
PTS: 1
REF: p. 550
OBJ: LO 14-4
55. The three components of a typical retailers compensation plan are the fixed component, the variable
component, and the fringe benefit component.
ANS: T
PTS: 1
REF: p. 550
OBJ: LO 14-4
56. Bonuses are considered a fixed component of compensation.
ANS: F
PTS: 1
REF: p. 550
OBJ: LO 14-4
57. Wages are an example of a variable benefit component of employee compensation.
ANS: F
PTS: 1
REF: p. 550
OBJ: LO 14-4
58. The fixed component of an employees compensation package ensures that the employee has a source
of income to meet his/her most basic financial obligations.
ANS: T
PTS: 1
REF: p. 551
OBJ: LO 14-4
59. An employees fringe benefit package includes such things as health insurance, disability benefits, life
insurance, retirement plans, and financial counseling.
ANS: T
PTS: 1
REF: p. 551
OBJ: LO 14-4
60. A retailers compensation package needs to be tailored to the individual, the job, and the retailers or ganization.
ANS: T
PTS: 1
REF: p. 551
OBJ: LO 14-4
61. The straight commission plan provides substantial incentive for retail salespeople to generate sales.
ANS: T
PTS: 1
REF: p. 552
OBJ: LO 14-4
62. Tracys pay is limited to a percentage commission on each sale generated. Tracy is compensated, then,
on the straight salary program.
ANS: F
PTS: 1
REF: p. 552
OBJ: LO 14-4
63. Almost all retailers offer their employees discounts on merchandise or services they purchase for
themselves or their immediate family.
ANS: T
PTS: 1
REF: p. 553
OBJ: LO 14-4
64. In an effort to attract employees from two-wage-earner families, some U.S. businesses have begun to
provide child care for employees children during working hours.
ANS: T
PTS: 1
REF: p. 553
OBJ: LO 14-4
65. Push money is money paid to a salesperson in addition to base salary and regular commission for
selling specific items.
ANS: T
PTS: 1
REF: p. 554
OBJ: LO 14-4
66. Retailers are allowed to offer push money commissions to their employees to sell a specific product,
but suppliers can not offer push money to a retailers employees for selling their products.
ANS: F
PTS: 1
REF: p. 554
OBJ: LO 14-4
67. A conflict may occur between a retailer and supplier when the supplier offers push money on the re tailers least profitable items.
ANS: T
PTS: 1
REF: p. 554
OBJ: LO 14-4
68. Compensation plans should be cost effective to the retailer.
ANS: T
PTS: 1
REF: p. 554
OBJ: LO 14-4
69. Job enrichment is the process of enhancing the core job characteristics of employees to improve their
motivation, productivity, and job satisfaction.
ANS: T
PTS: 1
REF: p. 555
OBJ: LO 14-4
70. Retailers using a job enrichment program must be careful when presenting it to the employees; other wise, the employees may feel that they are being asked to do too many tasks without being com pensated for the extra workload.
ANS: T
PTS: 1
REF: p. 555
OBJ: LO 14-4
71. If the consumer is expected to do more work, then that customer will want to be compensated with a
lower price.
ANS: T
PTS: 1
REF: p. 555
OBJ: LO 14-4
72. If the retailer wants more pricing power, it can only do this by offering the customer less number of
benefits.
ANS: F
PTS: 1
REF: p. 555
OBJ: LO 14-4
ESSAY
1. Why should retailers view their employees and customers as investments? How will this lead to being
a high-performance retailer?
ANS:
Retailers realize that all investments in tangible assets (land, building, technology, equipment and fix tures, and merchandise) will not produce a profitable return unless the retailer is willing to invest in re cruiting, motivating, and retaining the right people. These people are the retailers employees and cus tomers because a store without employees and customers cannot make any sales. A retailer with super ior employee and customer resources will enjoy a differential advantage over the competition. To be
successful, retailers must view labor costs, as well as the expenses of attracting and retaining custom ers, not as costs but as investments in obtaining a sustainable competitive advantage. Not to be over looked is the fact that the retailer wants to have employees who love what they are doing. After all, in teracting with an unhappy and disgruntled employee often makes co-workers and customers unhappy.
Just like employees, customers need to be recruited, motivated, and compensated for their efforts. In
this sense, clearly the customer is similar to an employee, but what about the employee as a customer?
Some forward-thinking retailers have begun to refer to employees as internal customers. Retailers must
remember that all employees are part of the service delivery chain in which each performs some task
in the economic-exchange process. With a division of labor, each employee performs microspecializa tions that are combined with the work of other microspecialists to create value along a service chain.
The profit impact of empowering employees is dramatic. For many retailers, providing good customer
service can make the difference between success and failure. Because retailers operate on a low net
profit margin, even a small increase in sales-force productivitywhether measured in sales per em ployee hour or gross margin per employee houroften translates directly into an improvement in
profits. Good customer and employee relationships are more than just additive in their effect on a re tailers performance; the effect is synergistic.
PTS: 1
REF: p. 527-531
OBJ: LO 14-1
2. What is employee empowerment? Can retailers use this concept to improve both customer and em ployee satisfaction?
ANS:
Empowerment simply means giving the employee the power to make things right for the customer.
An empowered retail employee:
Seeks to understand the customers problem.
Desires to develop a relationship with the customer.
Understands the value of customer loyalty.
Is allowed or encouraged by management to solve the customers problem.
The profit impact of empowering employees is dramatic. For many retailers, providing good customer
service can make the difference between success and failure. As mentioned in the previous question,
empowering employees assures a happy workplace thus leading to better employee and customer satis faction.
PTS: 1
REF: p. 528-529
OBJ: LO 14-1
3. Customer Relationship Management (CRM) is an increasingly popular technology for cultivating and
maintaining the right customers. Describe some of the questions CRM can help answer.
ANS:
Following are some fundamental questions that a CRM system can answer.
How many unique customers patronize the store over a given time frame (week, month, and
year)?
What is the average transaction size in terms of dollars and units purchased by type of custom er?
What is the profitability of groups of customers or the profitability of a particular customer?
Is the customer profile at a retailers stores in one region or part of a city different from the
profile in another area?
Was the recent direct-mail promotion cost effective? This analysis can be broken down to the
level of the specific customer.
Which customers purchase the same items repeatedly versus trying new items?
PTS: 1
REF: p. 532-533
OBJ: LO 14-2
4. Hiring retail employees can often be a significant challenge to retailers. You have been hired as a retail
consultant to help a large retailer in its recruitment strategy. What sources would you suggest that the
retailer explore for potential applicants? What are the advantages and disadvantages of each source?
ANS:
The various employee sources that the student can suggest are:
competitors
walk-ins (both in person at the store and online at the retailers website)
employment agencies (including online at websites such as monster.com)
schools and colleges
former employees
advertisements
recommendations, and
customer referrals.
Given the economic environment, the source seeing the most expanded use in recent years is former
employees.
As a consultant, the student may suggest that recommendations, competitor, and former employees
would be the ideal sources for finding the right employees. In addition to that, advertising in local
newspapers/tabloids and walk-ins should also be considered. Recommendations from trusted sources
should be valued as the person suggesting it would be informed of the culture and atmosphere of the
retailer. Finding competent employees from a competitor could add value to the salesforce as the re cruit could be familiar with competing products and strategies. Former employees who are willing to
rejoin may be expected to be loyal. Additionally, they would be familiar with the culture and work at mosphere.
The benefits and disadvantages of each employee source are beyond the scope of the book. Students
are encouraged to research for more information. The instructor could prompt a class discussion on
this.
PTS: 1
REF: p. 534-535
OBJ: LO 14-2
5. An employer can be held responsible, under negligent hiring laws, for an employees unlawful actions
if it did not reasonably investigate an employee before hiring the individual. As any employee can
cause harm to a customer, how should a retailer screen job applicants?
ANS:
Negligent hiring is a major issue in current employment law. The premise is that an employer can be
held responsible for an employees unlawful actions if it did not reasonably investigate an employees
background and then placed the employee in a position where he or she caused harm to a customer.
After all, the time and money spent here is a good investment. Whether it is sales, service, delivery, or
administration, the failure to investigate a new hires background is a major mistake.
When references and credentials are obtained and checked, the retailer should try to assess the honesty
and reliability of the applicant. The reason for leaving the prior place or places of employment should
also be investigated. The retailer should be interested in finding out what type of person will vouch for
the prospective employee. Although most references provided by the applicant can be expected to give
a neutral or favorable recommendation (if they give one at all), the reference check does give the re tailer a means to verify the accuracy and completeness of the application. Many retailers have found
greater success using telephone interviews instead of asking for written recommendations. This meth od enables retailers to gather more complete and honest evaluations than do letters, even if it is only in
what the reference does not say about the applicant. After all, many reference sources, due to an anxi ety of litigation, may fear putting any negative comments in writing. The retailer must tread carefully
to avoid breaking federal and state laws. The personnel manager is well advised to visit the firms legal
staff yearly to determine the firms and the applicants legal rights.
PTS: 1
REF: p. 540-541
OBJ: LO 14-2
6. What key factors should a retailer use when evaluating its employees?
ANS:
It is important to recognize several key factors in conducting performance appraisals. First, evaluation
should be an ongoing process, not just a periodic review. Regularly scheduled review times should not
keep supervisors from appraising or coaching their subordinates whenever necessary. Second, employ ees seek feedback, or information about how well they are doing their jobs, and this feedback should
be provided on a timely and relevant basis. Third, the person doing the review should know what the
job being reviewed entails and what the performance standards are. Employees can justifiably become
upset with the review process when the reviewer is not aware of the problems and limitations of the
job under review. Fourth, different supervisors are likely to rate personnel with different degrees of le niency or severity. Therefore, not only should the person conducting the review understand the per formance standards, but at least two people should contribute to the evaluation. Finally, research has
shown that the particular method of reviewing the employee does not matter. Retailers have found suc cess with various types of measures, including the rating scale, checklist, free-form essay, and rank ings.
PTS: 1
REF: p. 545-546
OBJ: LO 14-3
7. Explain the various elements of a compensation plan. What type of compensation plan should a small
retailer use?
ANS:
Compensation plans in retailing can have as many as three basic components: a fixed component, a
variable component, and a fringe-benefit component. The fixed component typically is composed of
some base wage per hour, week, month, or year. The variable component is often composed of some
bonus that is received if performance warrants. Finally, a fringe-benefit package may include such
things as health insurance, disability benefits, life insurance, retirement plans, the use of automobiles,
and financial counseling.
Many small retailers use the straight salary compensation method because they typically assign tasks
such as stock rearranging, merchandise display, and other nonselling duties to their salespeople. There fore, if the employees were paid on a commission basis, they would spend little, if any, time on their
nonselling duties, and the retail organization would suffer. Many promotional and price-oriented chain
stores whose salespeople are merely order takers will use the straight salary method because the sales person is not much of a factor in generating sales.
PTS: 1
REF: p. 550-552
OBJ: LO 14-4
8. Regardless of the compensation plan a retailer uses, the plan should meet a number of requirements.
Discuss the requirements a compensation plan should meet.
ANS:
Regardless of what method a retailer ultimately determines to use in compensating its employees, the
method should meet the following requirements.
Fairness: The plan does not favor one group or division over any other group or division or en able such a group to gather disproportionate reward to contribution. It must also keep com pensation costs under control so that they do not put the store at a competitive disadvantage.
Adequacy: The level of compensation should enable the employee to maintain a standard of
living commensurate with job position and to maintain job satisfaction.
Prompt and regular payments: Payments should be made on time and in accordance with the
agreement between employer and employee. In incentive plans, greater stimulation is provided
when reward closely follows the accomplishment.
Customer interest: The plan should not reward any actions by an employee that could result in
customer ill will.
Simplicity: The plan must be easy to understand so as to prevent any misunderstandings with
the resultant ill will. This should also enable management to minimize the worker hours
needed to determine compensation levels.
Balance: Pay, supplemental benefits, and other rewards must provide a reasonable total reward
package.
Security: The plan must fulfill the employees security needs.
Cost effective: The plan must not result in excessive payments, given the retailers financial
condition.
PTS: 1
REF: p. 554
OBJ: LO 14-4