Why are Store Managers paid higher than other in-store staff?

Managing a retail store is no easy task. There are many challenges and de-motivations.
Managing a retail store is no easy task. There are many challenges and de-motivations.

So Store Managers are paid more...

One complain store managers get from their staff is how the managers can sit in the office instead of being on the selling floor. Thus, when the staff found out the salary of their managers, they begin to complain.

"All you do is click and type," they would say.

But surely there's a reason the companies are paying the store managers more in salary and in bonus. Let's explore some of the many responsibilities of the store manager and uncover why they get more money.


The work arrangements

Hiring and firing are merely the tip of the iceberg. Having employees are meant to ease the manager's work. They, too, need their rest time. Besides hiring and firing, a store manager's tasks include:

  • Arranging work schedule
  • Arranging off-days and applying for leave
  • Approving transfers from and into the branch
  • Appraising and evaluating the employee's performance

Store Hiring

Hire

No matter how grand a store is and how well stocked it is, without staff, it's a nightmare to run. When the retail chain goes beyond metropolitan boundaries, it's impossible for the headquarters to effectively hire the staff to fill those stores.

Because of that, the task of hiring staff is delegated to the respective store managers. Being on site, the store managers would understand the economic landscape their stores are in. Branches of the same company would sell products catered to their locality. Otherwise, they would miss the opportunity of the ready market. So, it is the responsibility of the store manager to be able to meet those demands and satisfy the local "culture".

The hiring process, no doubt, would be in accordance with the company's standard operating procedure (SOP), but it begins with the store manager. She would process and screen the applications first. She needs to interview the candidate and make the recommendation to the headquarters or her superior, either the Regional Sales Manager or the Area Sales Manager as the case may be.

Retention & Appraisal

Staff retention is one key performance area (KPI) for any retail chain. High turnovers usually amount to high costs. Both direct and indirect costs are involved when it comes to orienting and training new staff.

The HQ delegates the responsibility of retaining staff in the hands of the store manager. After hiring a person, the store manager is responsible to managing that person's performance. Managing in a away that permits adapting of the work procedure, understanding the work culture as well as the market segments that the store is catering for. In addition to that, the store manager must teach or train the staff, or delegate that function, to ensure the new personnel would be able to perform his duties effectively and efficiently.

A staff's performance may be assessed by quantitative reports, e.g. how many customers he served in his shift, how much overtime (OT) he has applied, how many days leave he applied, how much sales he made, how many customer membership cards sold etc. But this would not present the whole picture. More importantly, quantitative assessment methods helps the management aid assess his effectiveness in doing things. It does not take into account the qualitative nature of the personnel. By this, we look at his character, his relationship with his colleagues, his relationship with the manager as well as his relationship with the customers.

All that needs to be assessed by someone who can observe the personnel more closely. Thus, the appraisal would be done by the store manager.

Resignation

Every now and then, the store's staff would like to resign. There are many reasons to that such as:

  • Better job opportunity
  • Pursuing studies
  • Getting married
  • Relocation to another place
  • Dissatisfied with the store management
  • Dissatisfied with the company
  • Health reasons

Because the staff are accountable to the store manager, the store manager must handle the resignation professionally and properly.

Discipline and Dismissal

Every now and then, there are staff with disciplinary problems. In order to maintain the integrity of the store and the personnel in that store, the store manager may need to intervene. She is given the authority to warn and dismiss in accordance with the SOP and the labour law.

Store managers are given the discretionary authority to issue warning letters to these staff. A copy of those letters would be supplied to the HQ.

Training

Some companies have their in-house training and development teams. Regularly, staff from the branches would be sent to a central location for training.

However, the training must be adapted to the store they are working in. Thus, application of the newly acquired knowledge and skills would be overseen by the store manager or his assistants. Based on the newly-trained staff's performance, the store manager would be asked to feedback to the trainer(s) on the effectiveness of their training.

Most companies emphasise training as a prerequisite for promotion. The person responsible in identifying individuals for training and re-training would be the store manager.

Mentorship

Whether a formal or informal mentorship is in place, chances are the staff look to the store manager in terms of conduct and performance of their duties. Irrespective of the SOP - to a degree - they would do what the manager does.

Motivation

A simple "good job" goes a long way. Similarly, a proper pep talk and reminding can make or break an employee. Managers today cannot afford to be mere bosses. The "intergenerational mindset", logic and values are different. What was true in the past may not be true now.

For instance, money, i.e. bonuses and incentives, may excite some, but not all. They might prefer an extra day off or collective off-day. A performing employee may even be empowered to decide his or her shift as a reward for last week's performance.

Trainers and HQ staff are too remote from the store. The store manager comes in and uses his discretionary power to make such arrangements - as long as it doesn't go against company policy. His main "HR duty" is to motivate his staff by any means necessary and proper.

Targets and Reports

Sales Targets

In general, store managers set the weekly and daily sales target based on the quarterly target given by the HQ. On top of all these, the sales manager would have to include the company's other requirements or KPI, e.g. how much own-brand products to be sold, how many customer membership cards to be sold or registered etc.

The sales manager needs to communicate with his assistants and supervisors so they know the expectations of the day. Collectively, they need to work with their subordinates in finding ways to meeting that target - especially during periods of low traffic.

Sales Reports

While the HQ is alerted of the daily sales. It is the responsibility of the store manager to produce an executive summary based on the detailed report each month or as the company may specify.

Products are the primary source of revenue to a retail store. Having enough stock, and the right products for the local market, is crucial. But keeping stock also means a store needs to properly manage it.
Products are the primary source of revenue to a retail store. Having enough stock, and the right products for the local market, is crucial. But keeping stock also means a store needs to properly manage it.

Stock Management

Receiving of Stock

Stocks are typically received by the supervisors. But the manager is responsible to ensure they know how to receive these arrivals accordingly. Besides the quantity, the store must record the condition in which it is received.

Technology can be useful here: smartphones and camera phones may be used to take the photos of the stock arriving. These photos are then sent to the HQ for verification.

In addition to that, the receiving paperwork must be properly made and documented. These are typically assessed during compliance audits.

Monitoring of Stock

The store must ensure it has enough products in store to sell. For some companies, the monitoring of stock is automated. The store may be required to have a fixed quantity of product. If the figure is less, the HQ is automatically updated and the necessary stock sent. But in some companies, the order must be made manually.

Having the right amount of goods in stock minimises waste. Waste comes in many forms, including expiration & waste of space. In the eyes of operations, storage takes up by stock adds to the cost. Especially where the storage space is limited.

Return of Goods

Every now and then, there are products that needs to be taken off the shelves. The SOP would usually dictate which goods must be returned and how soon. Occasionally the HQ would send an email informing the store to return or remove the goods.

The store manager needs to relay this information to her subordinates for their action.

New Products

A retail chain must be dynamic enough to meet the customer's demand - especially where new and attractive products are introduced into the market. But specialised stores may not have the room to sell all the ranges typically available in the same company. This is influenced by the store's size and locality. It is common to see a branch of the same company selling an item not available in other branches.

In this instances, the store manager may recommend to her superiors to introduce "new" products into her store. A company's SOP would usually require a proper proposal paper for that request. Ultimately, the HQ would decide to permit or reject such sale.

Shrinkages, Damaged and Shoplifted Goods

Shrinkage refers to the any reduction of product in quantity due to any reason other than it being purchased. This includes a product removed due to expiration and damages. The store needs to be alert on expiry dates of products it is selling. Being sensitive prevents the accumulation of stock expiring soon. It's placement on the shelves, for instance, would influence buyers. Thus, it is prudent that new stock be placed behind and the older arrivals in front.

Yet, there are times when a product is expiring soon. It may have been stored to long in the warehouses. The store needs to identify these products and set them aside for return to the respective parties.

Retail stores are prone to shoplifting. Hundreds of thousands of ringgit are lost each day through this activity. Store managers are charged with the duty to prevent or reduce this. They have been trained or be informed of the latest shoplifting techniques by their counterparts.

Any shrinkages not properly sold, or disposed of, must be paid for by the store. Typically, the store manager and staff would collect money to pay for these. If the problem persists, it would reflect poorly on the store during stock takes and audits.

Performance, Accountability & Compliance

KPI

Key Performance Indicators, KPIs, are no alien to the retail world. It is a management tool to evaluate a company's effectiveness to perform economically and functionally. The HQ would normally set a general KPI for the Regional Sales Managers (RSM) and Area Sales Managers (ASM). The ASM communicates these KPI to the store manager.

KPIs for each company vary. Yet, they are nearly similar. KPIs take into account operation costs, staff headcount, revenue, shrinkages, audit results, mystery shopper results, stock take results.

The store manager is accountable and responsible for failure to meet these KPI. The HQ and her superiors would demand answers from her. The common question she must be ready to answer is, "why have you not performed?"

Store Audits

Depending of company policy, store audits are conducted regularly. The idea is to check compliance of the system in place. It gauges its effectiveness. But more importantly, store audits are focus on that compliance.

Auditors would check filing, greetings, cashier scripts, cash shortages, and documentation among many things. Many firms have a minimum mark to which a store must achieve. But the idea is not to merely meet that mark, but go beyond.

Mystery Shoppers

Unlike auditors, mystery shoppers are unknown to the store. These shoppers would be given a set of criteria to assess. They would report their findings to the HQ. The HQ would then inform the respective RSM or ASM, who, in turn, would inform the store manager.

Stock Takes

Stock takes weigh in on the store and stock management. Store managers are usually driven up the wall by this exercise. Some companies attach bonuses to staff when it comes to stock takes.

On the other extreme, many store managers have been demoted or placed under observation. In more serious cases, they would face domestic inquiries, which they may be dismissed from the company.

It Ain't Easy

It's not easy being a store manager. Thus, it's only fair that they be compensated for their effort. In any company, the higher a person's position is, the more strategic and less operative functions. The higher a person is in the organisation, the more is expected of him. Sure, strategic tasks are not as physically demanding as arranging stock. But the risks are higher and the accountability being larger.

Being a store manager is a thankless job. It is not easy. That is why store managers are paid more than a regular store staff.

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