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Nordstrom: Dissension in tbe Ranks?

Pankul Kohli 11DCP031
Parth Moondhra 11DCP032
Piyush Sharma 11DCP033
Prantar Pratap Goswami 11DCP034
Prashant Gupta 11DCP035
Priyanka Dang 11DCP036
Rajath Ravikumar 11DCP037
N: Nordstrom: Dissension in tbe Ranks?
verview - what are the major issues at play in this case? Who are the important players in the
story and what is their culpability in the organization's current state?
Ma|or Players
1. ohn W. Nordstrom: Founder oI Nordstrom Co.
2. ohn, im and Bruce Nordstrom: Co-Chairmen oI Nordstrom. The third generation oI
Nordstrom Iamily managers, at the helm since 1970.
3. oe Peterson: Local 1001 President
4. United Food and commercial Workers (UFCW) Local 1001: Local 1001 were based in
Washington and represented nearly 1500 employees oI Nordstrom`s nearly 30000
employees. Angered by management`s actions during contract negotiations, UFCW
Local 1001 began a publicity campaign against Nordstrom, challenging the legality oI the
company`s labour practices. The major grievance oI the employees oI Nordstrom,
according to the representatives oI Local 1001, was that they coerced employees to work
beyond hours, and perIorm many such duties that were not directly included in their job
proIile, and without being paid or compensated. Their basic demand was that the
management reimburse the employees the millions oI dollars oI the back pay which they
5. Lory Lucas: Sales Clerk at Nordstrom
6. Petty Bemis: ex-employee, sales clerk, at Nordstrom

auses and olutions

The problems can be broadly classiIied into six categories. They are:

1. !oor Management:

Manager was noL Lrue Lo Lhe employees and noL LrusLable Lmployees were falsely Lold LhaL clock
was broken and Llme cards were noL accesslble Manager used Lo whlLe ouL Lhe hand wrlLLen hours and
accused employees of noL belng Leam players 1here was no open communlcaLlon beLween Lhe
employees and manager no one could complaln as lL would affecL Lhelr performance hours
1he ManagemenL has Lo puL a value sysLem ln place Lo brlng ln more moral and eLhlcal values
among Lhe managers Puman 8esource of nordsLorm was responslble for lLs Lremendous growLh 1he
managemenL has Lo recognlze lLs conLrlbuLlon and brlng ln pollcles Lo keep Lhem moLlvaLed and happy
1he Lop managemenL dld noL show any lnLeresL Lowards employee lssues and saLlsfacLlon 1here
ma[or alm was Lo maxlmlze proflLs and provlde beLLer cusLomer servlces Also Lhe Lop managemenL
conLlnued wlLh Lhe same values and sysLem slnce sLarL of company and dld noL change as per new
markeL envlronmenL
1he Company was owned by Lhe famlly for decades
1hroughouL Lhe chaln's rapld growLh Lhe managemenL focused on decenLrallzed meLhod of
operaLlons and hence Lhe reglonal managers were relaLlvely free Lo Lake Lhelr own declslons 1he
declslon maklng was delegaLed Lo fronL llne sales people who were closesL Lo Lhe real cusLomers 1hls
llmlLed Lop managemenL's conLrol over Lhe sales force managemenL sysLems WlLhouL meanlngful
conLrol Lhese sysLems whlch supporLed compensaLlon promoLlons eLc were vulnerable Lo abuse
1he managemenL had Lo be more proacLlve ln Lhelr employee managemenL 1he managemenL
had Lo clearly sLaLe lLs pollcles Lo avold amblgulLy among lLs employees 1he managemenL had Lo be
more conslderaLe Lowards lLs employees lssues and had Lo brlng ln a mechanlsm Lo help lLs employees
express Lhelr problems and lssues more openly
1hree lndlvldual nordsLrom sLockholders flled a sulL agalnsL Lhe company clalmlng Lo have
suffered flnanclal losses due Lo nordsLrom managemenL's fallure Lo dlsclose adequaLely Lhelr labor
problems and Lhe early clalms for unpald work 1he sulL requesLed LhaL lL be made a class acLlon sulL on
behalf of nordsLrom's more Lhan 73000 sLockholders
1he managemenL had Lo resolve all lLs lssues wlLh lLs sLakeholders dlscreeLly raLher Lhan
washlng dlrLy llnen ln publlc lL could be more LransparenL wlLh lLs sLakeholders and could have kepL
Lhem well lnformed and Laken Lhelr feedback lL should have Laken lLs sLakeholders lnLo confldence
before Laklng ma[or declslons lndependenLly
. Employee evaluation policy
lL dld noL maLLer how well Lhe employee was worklng handllng cusLomers or how long Lhey have
been worklng erformance was measured only drlven by sales per hour 1hls was noL a falr sysLem
A loL of pressure was creaLed upon Lhe employees Managers used Lo grlll Lhe employees on sales
consLanLly noL llmlLlng Lo sales managers used Lo wrlLe up Lo employees for peLLy lssues llke slckness
dresslng sLyle eLc
eLerson also crlLlclzed Lhe nordsLrom pollcy of classlfylng Lasks performed lnLo selllng and non
selllng Pe argued LhaL employees would conLlnue Lo feel pressure noL Lo reporL all Lhelr hours spenL on
Lasks such as wrlLlng Lhank you messages
1he peer pressure Lo become an All sLar" resulLed ln undeslred behavlor llke sharklng" where
employees used Lo sLeal credlL for sales made by oLher sLaff
Sales people were able Lo Lrack Lhelr performances by Laklng ouL prlnL ouLs avallable ln Lhe back
offlces 1he prlnL ouLs llsLed lndlvldual sales people by Lhelr ldenLlflcaLlon number so clerks could
compare Lhelr performances wlLh LhaL of Lhelr peers 1he ease of avallablllLy of such lnformaLlon ofLen
added Lo Lhe peer pressure of Lhe sLaff
1he compeLlLlon creaLed by Lhe managemenL Lhrough lLs employee evaluaLlon pollcy had
helped nordsLorm grow ln lLs lnlLlal years buL lL also lead Lo lncreased compeLlLlon among lLs employees
resulLlng lnLo sLressful work envlronmenL 1he peer pressure felL by Lhe employees was Lremendous
1he managemenL needs Lo change lLs employee evaluaLlon pollcy such LhaL Lhe compeLlLlon ls healLhy
so LhaL Lhe employees flnd Lhelr work place less sLressful Also Lhe company could lnvolve lLs employees
lnLo more recreaLlonal acLlvlLles Lo help reduce Lhelr sLress levels

. Labor Related policies
Angered by managemenL's acLlons durlng Lhe conLracL negoLlaLlons Lhe unlLed lood
Commerclal Workers (ulCW) Local 1001 began a publlclLy campalgn agalnsL nordsLrom challenglng Lhe
legallLy of company's labor pracLlces
8epresenLaLlves of local 1001 complalned LhaL Lhe company coerced employees Lo work off Lhe
clock" wlLhouL belng pald 1hey malnLalned LhaL nordsLrom nelLher recorded nor compensaLed
employees for all Lhe Llme Lhey spenL performlng duLles noL relaLed Lo selllng dlrecLly such as dellverlng
packages Lo cusLomer's homes eLc
1he unlon clalmed LhaL nordsLrom's use of sales per hour as a performance measure lmpllclLly
encouraged Lhe employees Lo work off Lhe clock"
1he Company was also forced Lo respond Lo a varleLy of charges flled agalnsL Lhem by Lhe
naLlonal Labor relaLlons board (nL88) 1he nL88 clalmed LhaL nordsLrom's bargalnlng LacLlcs wlLh Lhe
ulCW vlolaLed federal labor laws and LhaL managemenL had falled Lo provlde Lhe unlon wlLh requesLed
wagerelaLed daLa and Llme card records
1he admlnlsLraLlve rullng sLaLed LhaL nordsLrom sysLemaLlcally vlolaLed sLaLe wage and hour laws
ln lLs fallure boLh Lo record all hours worked and Lo pay sales clerks for performlng cerLaln servlces 1he
sLaLe regulaLory agency ordered Lhe company Lo bolsLer lLs recordkeeplng operaLlons Lo pay
employees ln Lhe fuLure for Llme spenL on such Lasks as dellverles meeLlngs and wrlLlng Lhank you
noLes 1he regulaLors dld noL speclfy Lhe number of employees affecLed or Lhe dollars lnvolved ln Lhe
backpay relmbursemenLs
Local 1001 presldenL !oe eLerson esLlmaLed LhaL nordsLrom could be llable for as much as $30
mllllon Lo $40 mllllon ln back pay clalms from lLs WashlngLon employees alone and for several hundred
mllllon dollars lf Lhe unlon followed Lhrough wlLh a naLlonwlde classacLlon sulL on behalf all nordsLrom
employees 8y mldlebruary Lhe unlon sald lL had doubled lLs november back pay" collecLlon and held
lndlvldual clalms LoLallng over $2 mllllon from roughly 400 sales clerks ln WashlngLon Callfornla and
1he managemenL has Lo adhere Lo Lhe local labour laws and employee wage pollcles Lo
funcLlon more legally 1he damage caused Lo Lhe repuLaLlon of Lhe company by varlous law sulLs agalnsL
Lhe company for vlolaLlng Lhe labour laws was Lremendous 1he managemenL could easlly have avolded
Lhe slLuaLlon Lo go ouL of conLrol by negoLlaLlng wlLh lLs employees amlcably and by allowlng a sysLem
whlch provldes Lhe employees Lo puL forLh Lhelr vlews more openly wlLhouL fearlng for Lhelr [obs

1 1he managemenL has Lo work Lo brlng ln a value sysLem ln place Lo make lLs managers and
employees more eLhlcal and moral were Lhey would supporL help and gulde one anoLher
2 1he company has Lo pay more aLLenLlon Lo lLs Puman 8esource as lL ls lLs prlme caplLal More
happy employees lead Lo more happy cusLomers 1he managemenL could be more flexlble wlLh
Lhe sales per hour LargeL seL Lo lLs employees and be more LransparenL ln lLs wage evaluaLlng
3 1he compensaLlon of Lhe employees should [usL noL be based on Lhelr sales per hour flgures
1he managemenL should have a more deLalled employee evaluaLlon process whlch Lakes oLher
facLors llke employees commlLmenL and hls aLLlLude Lowards hls work lnLo conslderaLlon 1he
evaluaLlon process musL be made more fare and musL be dlscreeL Lo avold confllcLs due Lo
comparlsons among employees
4 1he managemenL has Lo adhere Lo local laws Lo operaLe lLs acLlvlLles legally
3 lL has Lo be more LransparenL abouL lLs pollcles and Lurnovers Lo lLs sLakeholders Lo avold
confllcLs among sLakeholders
6 1he managemenL needs Lo Lake lLs sLakeholders lnLo confldence and Lake Lhelr oplnlon on
lmporLanL pollcles