MANAGING PEOPLE AND ORGANIZATIONS October 11, 2011

CASE STUDY ANALYSIS OF NORDSTROM

SUBMITTED BY GROUP 1: - AABHAS RASTOGI - ABHAY GAHLOT - ABHISHEK GUPTA - ADESHWAR RAJA - ADITI ANIL KUMAR SANGANERIA - AKSHAY PRASAD - AKANKSHA GUPTA (11 DCP 053) (11 DCP 054) (11 DCP 055) (11 DCP 056) (11 DCP 057) (11 DCP 058) (11 DCP 059)

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CONTENTS
OVERVIEW CHARACTERS CASE ANALYSIS PROBLEMS AND CAUSES SOLUTIONS RECOMMENDATION

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OVERVIEW

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PROBLEMS IN NORDSTROM AND THEIR SOLUTIONS

1.

THE LACK OF CLEAR DISTINCTION BETWEEN SELLING TIME AND "NON SELL" WORK TIME EXACERBATED THE PRESSURES ON EMPLOYEES.

As there was no clear distinction between selling and non selling hours. All the hours the employee worked for were considered as selling hours and were used while calculating Selling per hour. Hence the SPH of the employees accounted to be lower than what it accentually should have been. This fear of having lower SPH forced employees to make the non selling hours off the record and this resulted in loss to employees in both monetary as well as recognition of extra efforts work.

There should be a clear demarcation of the hours which would be categorized under selling hours and the non selling hours. And Nordstrom should keep track of these hours of each of its employees judiciously. However the per hour rate of payment for selling and non selling hours could differ. As the time spent by employee under non selling hours is not adding any immediate profits to the company. This would equip the employees to declare both thier hours clearly.

2. IS SPH AN APT PERFORMANCE MEASURING CRITERIA? The main cause of the problem is the commission incentive for the sales people. It causes employees to work while off the clock to increase their SPH. Since they work off the clock, the employees get paid less. It also causes management to schedule people with high SPH on good hours. Management punishes people with low SPH by giving them bad hours.

Hence it should not be the only performance measuring criteria. Behaviour of the employee on the floor, punctuality and the way he or she deals with customer should also be given considerable weightage.

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3. PEER PRESSURE Employees at Nordstrom were facing the problem of peer pressure. In order to get the best paying shifts, for example, the first day of a sale, employees had to put in a no. of off-duty hrs. Every employee wanted to be in the shifts that had maximum sales to increase their sales-per-hour. So, there was a lot of competition between the employees themselves which sometimes proved unhealthy. Policies like All Star rating and making the sales figures of individual employee public also put a lot of pressure on the employees.

A solution to this problem could be forming sales teams instead of individual sales persons. Even if one member of a team performs exceptionally well and is suitably rewarded, the whole team should also be given a minor incentive at least.

4. MISGUIDING THE EMPLOYEES Employees were also lied about the distinction between selling and non-selling hours. For example, they were repeatedly told on Saturday morning meetings that the punching clock was broken or the time cards were not accessible. They were accused of not being team players if they protested against this practice.

Employees should have been clearly told that they would have to put in extra working hours sometimes. It should also have been the companys responsibility to maintain the records of an employees working hours.

5. LAWSUIT FROM SHAREHOLDERS The company also faced a lawsuit from three individual shareholders who alleged that they had suffered financial losses because the company had failed to report their labour problems and early claims for unpaid work.

The company should have reported the problems sufficiently early in time so that they could have been taken care of. These problems should not have been allowed to reach the level of a lawsuit. There should have been a system in place to handle the grievances of the employees as and when they are encountered.

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6. WORK ON OFF-DAYS WITHOUT COMPENSATION The system in Nordstrom was decentralized, hence it gives a lot of power to supervisor and store managers. When an employee is not able to meet the unachievable sale target set for him then as a punishment the managers forced the person to come on his day off, without any extra compensation or salary for that day. Due to this most of the time majority of the sale force works off the clock. The system in Nordstrom should be centralized and there should be proper guidelines and procedure must be there as what to do and in what situation. Every single second an employee works must be compensated whether it is on off day or on regular day. And above all there should be a proper criterion for setting the sale targets otherwise it will give rise to favourism.

7. FEAR AMONG EMPLOYEE: There was a lot of fear among employee of being fired due to unavailability in achieving the sale target; there is a fear of falling SPH which leads to termination.

The employee should be given much more time to perform. The Manager should reduce their targets a little and manager should try to recognise the persons ability clearly because a person good in selling cosmetics may not be good in selling apparel. Therefore manager should take an informed decision by taking into consideration the persons interest while allocating the person to different counters. Obviously the person should be given two months notice period if there is no other option other than fire him.

8. FOSTERING JEALOUSY, PETTINESS AMONG EMPLOYEES: In Nordstrom there is so much focus on individual performance. The management and their policies have created an environment of fierce competition among employees which leads to problem of starking in order to get ahead of others.

When an individual performs well then motivating an individual is good but at the same time some credit must be given to his team and all co workers, who works and help him directly or indirectly in achieving the desired target. There is a strong need of culture change in Nordstrom; there should be a culture which focuses on Team spirit. People should be giving training and lectures on helping others and they should be taught the importance of team.

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RECOMMENDATIONS

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