Posted by: Brandon W. Jones | February 28, 2010

Nordstrom: Dissension in the Ranks?

The system at Nordstrom was a failed system. It did not reward the employees based on the hours that the employees put in. There are three areas that the company went wrong. First, it didn’t let the employees know upfront what kind of hours they would be expected to work. Second, it had an overly strong competition between the sales associates within the stores. And third, their pay structure was broken. All three of the above points illustrate that the system was broken.

As the first point indicates, Nordstrom would hire people under a specific set of duties and responsibilities and expect a completely different set. The managers wouldn’t explain how the compensation system was going to be set up based on the sales per hour structure. Once the employee was hired on, they would then expect them to work extra hours without pay or they would give them bad reviews as not being a team player.

The second point stated that they had an overly strong competition system between coworkers. The employees that had the highest sales per hour ratings received the best working hours. They were also encouraged to work hours without pay so that they would get higher per hour ratings. Because the sales per hour ratings were so important, employees would do what they could to steal customers from other associates. They would also avoid helping their associates to keep them from getting the good ratings. This created a culture of cut-throat competition.

The third area that Nordstrom was broken was in the pay structure that they used for their employees. They required the employees to attend meetings and stock shelves/inventory and counted their hours towards selling hours or non-compensated time. The meetings and shelving time added significant time to the employees working time, but hurt their sales-per-hour rating. They also expected the employees to “go the extra mile” on their own time without extra pay.

The system should reward the employees for the work they do and not hurt them for time spent in meetings and shelving. They should be working in the favor of the employees. They should set up a system that encourages the employees to “go the extra mile” without penalizing them on their hours. If Nordstrom expects the employees to work extra time without pay, they should put them onto salary so that they are getting paid accordingly.

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