Nordstrom Dissension in the Ranks ?

Organizational Behavior presented by : Akbar. Roliyanti. Yedida. Yoice

Februari 2011

Nordstrom Characteristics
Family company : The Nordstroms Retail company products o Shoes o Apparel Management o Philosophy: best in service, selection, quality, and value Entrepreneurship spirit Treat this like your own business o Prestigious award : the 1989 National Retail Merchants Associations Gold Medal
o

Company competitive advantage : superior customer service

Financial
o o

the most productive in industry (per square feet) Strong Financial growth for the last 20 years

Nordstrom Characteristics (cont)

Competitors
o
o o o

Competitors : RH Marcy, Bloomingdales, Neiman Marcus

Employee
higher employee annual income rate from National average expanding from 5000 in 1980 to 30,000 in 1989 intense competition between salespeople (more likely to be unhealthy) o extremely strong customer service skills

Root Cause
Nordstrom policy : the classification of task performed off the sales floor into "SELLING" and "NON SELLING" activities consequences : employees would continue to feel pressure not to report all their hours spent to the tasks.

Impact of the Reward System

The SPH implementation is not fair to all sales people, especially for those who do not achieve target Lack of a clear distinction between selling time and non-sell work time That condition will impact on employees motivation Implicitly push employees to work off the clock to increase their SPH and not report overtime Unhealthy competition among sales people

SPH-based commission system has impacted negatively to employees motivation

Gap Analysis
SPH policy aroused a significant difference between employees and top managements perception Customer service value versus employee satisfaction

Recommendation
Decentralization system --> centralization Standardized shift rotation system Group incentive reward beside individual incentive reward Commission based on weekly/ biweekly/ monthly sales target Overtime must be paid on approved time sheet Better communication on company's policy