Case Analysis: Nordstrom
October 6th 2011
Former Nordstrom employees accuse them of using unfair labor and discriminatory practices to intimidate employees and force them to perform tasks like stocking and picking up merchandise during non-working hours . Nordstrom employees receive little formal training when hired or promoted to new positions, but they are expected to perform their duties consistent with the “Nordstrom Way” which is customer service above and beyond the call of duty. Training is informally provided through on-the-job communication, which increases the opportunity for miscommunication. This communication can be deliberate due to peer competition and pressures to succeed from managers, or lack of knowledge by co-workers and managers from whom they are encouraged to seek training.
Management skills are not required to manage employees, nor is training provided to employees who achieve management positions. There is no real evaluation system in place to measure employee performance. There is no goal setting process that requires “manager – employee pair sets benchmarks for measuring progress, particularly when the employee is new in the role” (Harvard Business School Press, 2007). Goals help to define what managers expect from their employees. The only employee metric used that is measurable is Sales per Hours (SPH) even-though there are other performance criteria such as customer service and teamwork which are part of the employee evaluation process. Employees who do not achieve the minimum required SPH are categorized as under-performers. If SPH is consistently below the minimum standard set by the department manager, this can lead to termination or isolation as employees feel uncomfortable and inadequate.
Upon being hired by Nordstrom employees are told that “the three Nordstrom performance criteria: customer service, productivity and teamwork” (Buller, Paul F. and Schuler, Randall S., 2003) are needed to be promoted. However employees are not advised as to how the criteria will be evaluated. The only evaluation employees receive is from their manager, there is no secondary layer of management to review the employee performance evaluation to ensure fairness. Nordstrom does not have a formal company-wide evaluation form, therefore there is no consistency in the evaluation process. The evaluation technique is different for each manager, making it difficult to compare employee performance across the different functional areas in the company. Employees performing tasks not directly related to merchandise sale, are not compensated for hours worked. Observational learning was used to encourage employees to work non-selling hours off the clock “If one employee is donating a lot of time it forces others to do the same” (Buller, Paul F. and Schuler, Randall S., 2003). Employees are forced to adhere to the informal organizational culture or they are not considered team players.
Nordstrom should establish formal and consistent Standard Operating Procedures, to which their employees can resort to for guidance. Managers should be required to attend training programs. This would enable managers to provide their employees with formal training base on the company’s policies and procedures. Formal training along with on-the-job training would help to alleviate some of the obstacles faced by current or new employees who are promoted to new positions within the organization. Employees should be provided with handbooks and/or training materials that specifically outlines how performance criteria will be measured and evaluated. Managers and employees need to establish goals and ways to achieving them. They should meet on an on-going basis to discuss employee progress for each performance criteria.
Nordstrom has used their decentralized management approach to build a very successful and profitable retail empire. They encourage entrepreneurial...
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