Nordstrom Executive Summary

First Nordstrom should NOT pre-empt “60 Minutes” by changing their sales-force compensation practices,. At this point, the various complaints against Nordstrom were well publicized. However,it was mostly a few current and former employees who were complaining, while most employees were not dissatisfied and their customers were very happy with the service they were receiving.

The sales-force compensation practices at Nordstrom had been used for over 20 years without previous complaints, so what caused the current problems and how can Nordstrom explain this to “60 Minutes” and the “60 Minutes” audience.

Does incentive pay work? According to BSZ (page 432) critics of incentive pay rely on two arguments. The first is that money does not motivate employees. The second, and more prominent criticism is that it is difficult (if not impossible) to design an effective incentive compensation plan. Overall, incentive plans have survived for a long period of time in the marketplace and this suggests that the ultimate benefits outweigh the cost.

Incentive problems exist because of conflicts of interest between employers and employees. In the
In addition, Executive Management should promise to study and then modify the sales-force management practices to more closely match the current size of the company. These changes will actively encourage the sales-force to continue providing the “industry leading” customer service they have provided, monitor very closely that none of the sales-force works any uncompensated hours, and implement both sales and non-sales time for clocking-in. Furthermore, Executive Management will provide additional training for local managers in order that they enforce these new sales-force management practices, instead of encouraging work off-the-clock as they have mistakenly done in the