Q1) What is the main cause of the problems explained in the case? Just how serious are these challenges? The main concerns of Nordstrom are the compensation and incentives guidelines that are distorted. This company uses a Sales-per-Hour percentage as the leading in efficiency evaluation and work compensation. This functionality indicator is usually not properly balanced by other key elements, such as customer satisfaction, it just focus the sales and the quantity of hours proved helpful. The integral part of the problem is also the differentiation of “non-sell” and “selling” several hours.
The lack of clear performance measures also spelled trouble intended for the employees from the company.
They are really always your lot, if she is not paid for the additional hours of work and the measure used by the SPH are generally not the best kinds. Nordstrom’s staff work off of the clock and people hours are generally not paid. To achieve the excellent customer satisfaction that the organization has, employees have to pay a lot of awareness of their customers.
They put in a lot of hours with them with a personalized get in touch with and all of these types of hours are not paid. The employees are whom build the image, the solid customer loyalty and their wishes are not becoming valorized.
The failure of management to professionalize the partnership between managing and workers is another problem. Employees are expected to operate beyond the prescribed doing work hours with no pay in order to comply with organization requirements. Nordstrom is focusing only in numbers, they are really developing a company culture where it seems that amount mattered a lot more than quality. This compensation and incentive system brought a lot of consequences to Nordstrom.
The lack of a clear difference between “selling time” and “non-sell” causes a big pressure to the employees since the SPH ratio does not reflect the effort and work made by the salespeople. This leads to employee grievances and not enough motivation to work in the organization. Also, the existence of such dread competition could lead to undesired behavior such as stealing credits pertaining to sales via another revenue staff. This kind of motivation plan was among the Nordstrom very pleased systems yet became even more a the liability than an advantage. Employees started to complain and soon this technique became the point of legislation suits that damaged Nordstrom reputation and brought negative media awareness of the company.
Nordstrom was noted has among the best places to work and with this unhappiness stated by salesmen that popularity started to go away and the turn-over rate increased. The focus of the legislation suits was the pressure cleaning service and deficiency of compensation for the extra hours worked. Employees were motivated to operate extra hours but were not compensated to them. Nordstrom was targeted with several law suits and always denied the allegations manufactured by the unions.
Later, the Washington Condition Department of Labor & Industries stated that Nordstrom systematically violated state wage and hour laws, giving reason to the unions that took legal actions against Nordstrom and it had no other decision but to assessment their record-keeping procedures and compensate the worker’s loss. Later, because of the decrease of you can actually financial worth as the stock selling price went down, another law suit was filled again against Nordstrom.
This time that came from a lot of stockholders that claimed to obtain suffered monetary losses as a result of Nordstrom Management’s failure to take care of their labor problems and the claims cleaning service. This suit armed a lot more Nordstrom status.
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