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
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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
All employees analyze their environment and strive to be recognized and rewarded for their hard work and dedication they put into the company, in a word they are seeking justice. Justice can be defined as a person receiving what they feel they are entitled to and if they do not receive what they deserve the situation may board on injustice. Unfortunately in today’s society justice and appreciation are not given out to all those deserving (Pinder, 1998). A major problem to address is how to keep the motivation level high in a company when the employees do not feel appreciated.
The main cause of these symptoms is the lack of motivation among customer service employees. As according to the results of employee survey and informal comments given by employees, we can conclude that most of the employees do not meet their job satisfaction. This is the main factor for the lack of engagement in doing their task, ended with poor performance in their customer service. The work effectiveness is strongly affected by employees’ work motivation and job satisfaction.
The most important component of Nordstrom's retail mix is its customer service. The retail environment is completely customer driven and giving the customer satisfaction in every possible manner is very important. The point of view that ‘Service Pays’ is accepted by the retailer today
National sales rep: All the benefits and reward systems the company provided made a huge impact on job performance. The
Some responsibilities which originally fell upon management were shifted to line employees which was not received in a favorable manner
Encourage everyone to attend meetings. In this meeting employees must take interest and discuss about problems currently facing in organization related to their work. Provide training related to work Training means providing the method to do work in an organization. Training is an important element of human resource management. Training must be provided to reduce job stress. When people know how to do work and through which means, then They feel a great sense of accomplishment and organization progress more. Give proper compensation and avoid Unfair evaluation Compensation is something through which employees feel a part of organization. Compensation means providing in return something to employees for their efforts that they put in to organization for the development and progress of the organization. Unfair evaluation is a different concept. If evaluation is done on the basis of favoritism. Then employees whose performance and work is not appreciated by the supervisor, their peers and also from organization side. Then employees get frustrated. On the other side the employee who is doing the same work and also gain the same output as the first employee. Then Employee’s intention is to quit the job. Get opinion from employees Giving the respect to employees is the phenomenon that helps employees to engage them in their work. And there is less chance of
Nordstrom has a different corporate structure than most stores. The corporate structure in order, first to last: customers, employees, supervisors, middle managers, vice presidents, than the CEO. Nordstrom’s consumer culture and reputation is all about how it empowers the frontline employees to succeed. Nordstrom wants to do what they think is right for customers. Everyone at Nordstrom starts at the “top” regardless of the employee’s job title is currently (Haaff).
This also reveals that the employees do not have an authority to choose their method of working. It burdens her and doesn’t provide any sense of satisfaction at work. Secondly, it was evident from this case of how the employees
Cicerone et al (2007) suggests that “Rewarding employees for their job performance that meets or exceeds customer expectations is important because:
Nordstrom’s employees and management are the company’s most valuable resource. An article written in the Seattle PI describes exactly why this is true. It states that, “Nordstrom salespeople make decisions as if managing their own business; they are trusted to do what is right. Everyone else in the company is there to help the sales staff make the sale and please the customer” (Mulady, 2009). The way the employees are treated and valued is a perfect portrayal of the company’s mission of providing the best possible customer service and value to the customer.
Employees require motivation, reward and encouragement for maximum productivity. Punishment to workers not performing is also mandatory to prevent cases of poor performance. Ethical considerations must be looked at and employees must follow rules and company policies for plans made by management to be successful. Workers and management relate like a family and this has enabled the company perform to its expectation. These plans are aimed at ensuring total customer satisfaction and delight.
The reward system is just as important as any business or innovation strategy as it maintains a continuous cycle of creativity based on the idea that individuals and teams are rewarded either monetarily or non-monetarily for their successful ideas and implementation of innovative strategies. According to Birkinshaw, Bouquet, and Barsoux (2011), the social recognition received for successful accomplishments rivals that of the monetary reward. Nordstrom was one of the first retailers to provide a commission to its sales staff which was highly successful, however when other industry leaders began instituting the same commission reward, it failed to accomplish the desired objectives (Pfeffer, Hatano, & Santalainen, 1995). This was primarily due to the fact that the base pay was reduced by competitors where Nordstrom actually increased their base pay. The other piece that Nordstrom implements successfully is the concept that promotion is from within only. This provides for that sense of accomplishment
Low morale among employees in any company eventually leads to decreased profits with other factors of the business decreasing along the way. “And US Airways employees, who have seen their pay cut by more than 20 percent and their health insurance and pension plans shrink, are certainly an unhappy lot” (Claudia H. Deutsch). In order to increase profits, the airline has decreased pay and took away some of the earned vacation. “Company executives say they are taking steps that will improve working conditions and profitability” (Claudia H. Deutsch). Many employees were calling in sick which the company believed would eventually lead to poor customer service.
Several problem listed above have been recognized by management but little progress has been made on improving the situation over the last six years. Although many programs have been implemented to try and get buy in from hourly employees, little has been done to empower them to participate in decisions affecting them. (DuBrin, 2004, p. 140). More than a few characteristics of an enriched job need to be enhanced in order to for both hourly and salaried employees to find intrinsic motivation. More control of resources at the floor level