Nordstrom Nordstrom Case Analysis

Nordstrom

Overview

Nordstrom is a successful retailer with hundreds of branches all over the US.  Despite its raped expansion, Nordstrom has remained a family operation. The family orientation of the business led Nordstrom to treat its employees like family members too, encouraging them to adopt the "Nordstrom Way." One core value in Nordstrom is the state of the art customer service, above and beyond the call of duty. This superior customer service has paid off. It resulted in more loyal customers, which allowed Nordstrom to enjoy high customer retention rates, and, consequently, higher bottom line.

Issues

According to the case in hand, which was written in mid 90s, Nordstrom was facing few issues. The culture that required outstanding customer service and superior sales figures forced employees to take extra burden. A number of employees have alleged that the company was unfair and unethical in its dealing with them. The employees’ union accused Nordstrom of creating an overbearing pressure on its employees, and that it is expecting them to work “off-the-clock” preforming non-selling activities like stocking, delivering, and picking up merchandise in addition to sending thank-you notes and, sometimes, personal deliveries to customers. On the other hand, majority of the Nordstrom employees feels that the company policies are necessary and that nothing should be altered.

Finally, Nordstrom pays higher than the industry standard wages and commissions; however, some former employees claimed that they found themselves working harder than they used to in previous retail jobs for less money.

From pure business perspective, I argue that Nordstrom is doing great job in terms of motivating its employees. The issues that are discussed above have to do more with best policies and fair practices and less bout motivation, although job dissatisfaction may affect performance^[1].

Below are some reasons to support my conclusion, as well as few suggestions on how to better motivate Nordstrom sales force.

Discussions and recommendations

• Monetary rewards: Nordstrom pay above average hourly wages, and its commission system relies on Sales Per Hour (SPH) ratio for each employee. Managers encourage salespeople to reach high SPH levels. Successive failure to reach targets can lead to dismissal. Having a clear system to monitor performance and tying reward directly with it can help motivate employees to achieve desired outcome. According to the expectancy theory, motivation is a function of the perceived connections between performance and outcomes. Also, this is supported by the Equity theory, which suggest that work performance in the recent past (an input) should play a role in rewards (outcomes).

On the other hand, SPH commission system incentivize employee to not report their non-selling times^[2]. Although this practice does not necessarily means less payment (in fact, omitting non-selling times may result in higher payments if the employee is meeting his/her targets^[3]), many employees and union members maintained that this practice is unfair, evident by Mr. Joe Peterson’s complaints against Nordstrom.