Sales and Employees

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Nordstrom: Dissension in the Ranks?
(1) What problems does Nordstrom’s evaluation/compensation system have? Think about this question while considering the objectives of the company’s evaluation/compensation system, what measures it took, and what happened as a result. A. Nordstrom was renowned for its superior customer service that was the result of the exceptional customer service efforts (or “heroics”) put by their salespeople. So in order to retain their competitive advantage of superior customer service in the highly competitive retailing market, they designed a evaluation/compensation system that had the following objectives: (1) To support its high-service strategy, and (2) To motivate its sales employees. They tried to evaluate
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They would also avoid helping their associates to keep them from getting the good SPH ratios. This created a culture of cutthroat competition. (2) Poor differentiation of “Selling” and “Non-Selling” time There was a lack of clear differentiation of “Selling” and “Non-Selling” time. Employees were not clear about recording time spent in activities such as hand deliveries, merchandise preparation, sales promotion and customer correspondence, etc. as “Selling” or “Non-Selling” time. If they recorded it as “Non-Selling” work time, they were entitled to the guaranteed base wage with no effect in their SPH. However, if they recorded it as “Selling” work time, their SPH would be low. The evidence of this ambiguity in defining the “Selling” and “Non-Selling” time is presented by the fact that the Nordstrom family had to issue the Internal Memo Differentiating “Selling” vs. “Non-Selling” Time amidst the labor disputes crisis in mid-1989. (3) No evaluation/compensation service/satisfaction of work time related to customer

There was no evaluation/compensation of work time related to activities for improving customer service/satisfaction such as home deliveries, calling up valued customers

informing them of newly arriving merchandises, helping customers with their sales, writing “thank you” notes, etc. So the system lacked in providing motivation for employees to perform such activities and also did not compensate the employees
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