Nordstrom
Nordstrom: Dissension in the Ranks?
Q1) What is the cause of the problems described in the case? How serious are these problems?
The main problems of Nordstrom are its compensation and incentives policies that are distorted. This company uses a Sales-per-Hour ratio as the leading in performance evaluation and work compensation. This performance indicator is not properly balanced by other important factors, such as customer satisfaction, it just focus the sales and the number of hours worked. The integral part of the problem is also the differentiation of “non-sell” and “selling” hours. The lack of transparent performance measures also spelled trouble for the employees of the company. They are always working a lot, not being paid for the extra hours of work and the measure used by the SPH are not the best ones.
Nordstrom’s employees work off the clock and those hours are not paid. To have the excellent customer satisfaction that the company has, employees have to pay a lot of attention to their customers. They spent a lot of hours with them with a personalized contact and all of these hours are not paid. The employees are who build the image, the strong customer loyalty and their desires are not being valorized.
The failure of management to professionalize the relationship between management and employees is another problem. Employees are expected to work beyond the prescribed working hours without pay in order to comply with company requirements. Nordstrom is concentrating only on numbers, they are developing a company culture where it seems that quantity mattered more than quality.
This compensation and incentive system brought some consequences to Nordstrom. The lack of a clear distinction between “selling time” and “non-sell” leads to a big pressure to the employees since the SPH ratio doesn’t reflect the effort and work made by the salespeople. This leads to employee complaints and lack of motivation to work in the company. Also, the existence of such
Q1) What is the cause of the problems described in the case? How serious are these problems?
The main problems of Nordstrom are its compensation and incentives policies that are distorted. This company uses a Sales-per-Hour ratio as the leading in performance evaluation and work compensation. This performance indicator is not properly balanced by other important factors, such as customer satisfaction, it just focus the sales and the number of hours worked. The integral part of the problem is also the differentiation of “non-sell” and “selling” hours. The lack of transparent performance measures also spelled trouble for the employees of the company. They are always working a lot, not being paid for the extra hours of work and the measure used by the SPH are not the best ones.
Nordstrom’s employees work off the clock and those hours are not paid. To have the excellent customer satisfaction that the company has, employees have to pay a lot of attention to their customers. They spent a lot of hours with them with a personalized contact and all of these hours are not paid. The employees are who build the image, the strong customer loyalty and their desires are not being valorized.
The failure of management to professionalize the relationship between management and employees is another problem. Employees are expected to work beyond the prescribed working hours without pay in order to comply with company requirements. Nordstrom is concentrating only on numbers, they are developing a company culture where it seems that quantity mattered more than quality.
This compensation and incentive system brought some consequences to Nordstrom. The lack of a clear distinction between “selling time” and “non-sell” leads to a big pressure to the employees since the SPH ratio doesn’t reflect the effort and work made by the salespeople. This leads to employee complaints and lack of motivation to work in the company. Also, the existence of such