Nordstrom Case Analysis

The main issue identified by the case study is the harsh treatment of the employees by the
management at Nordstrom. This included the usage of unfair SPH (sells per hour) metric
and off the clock work encouragement to keep that metric high. The case provides
polar view points among the employees - Pati, Lori & Cindy (-ve) vs. Bob, Doris and
Tim (+ve). This polar view points to the difference in deriving motivation from the same
situation. Lets take a look at the view points and see how different theories of motivation
could have been applied to solve the dissension that employees felt.
In analyzing the root of the problem we need to acknowledge that the concept of
evaluating performance of sales personnel on the basis of SPH isnt inherently evil. As a
matter of fact, SPH metric implementation at Nordstrom had proven effective since its
introduction, its high profit margins and customer satisfaction ratings speaks to that. As
stated by Tim Snow in the study, it was a matter of pride to be working for a company
where people loved to shop. But the SPH metric shouldnt have been the only metric.
Other KPIs such as punctuality and customer satisfaction (CSATs) should also be
weighted into the equation as performance standards.
The lack of distinction between sell and non-sell hours also proved to be an issue.
The employees off the clock hours were routinely treated as sales hours, thus
effectively reducing their SPH ratio. This practice lead to high pressure on associates to
not record their hours while performing all-star activities (such as personal deliveries)
for customer satisfaction. A clear demarcation of selling and non selling hours while
using the goal setting theory would solve the issue. A goal such as getting 120 orders
while working no more than 150 selling hours and 30 non selling hours would set limits
as well as provide motivation for the sales personnel.
The management practices such as displaying Do Not Punch the Clock signs during the
mandatory meetings and having sales clerks stocking, delivering and picking up
merchandise during their off hours led to detrimental effect on employees morale. The
notion that management didnt have their back affected the social and belongingness
needs (level 3) of the employees. At this level in Maslows Hierarchy of Needs (HON)
theory, a person seeks supportive co-workers and peer-group relationship. Pitting sales
personnel against each other doesnt support this theory. A solution to this would be to
form sales teams. That doesnt mean that if one person performs exceptionally in the
team they are rewarded accordingly, but the whole team gets small incentives for
reaching their goals.
Although HON states that people who reach level 3, typically have fulfilled their safety
and physiological needs, it wasnt the case in this scenario. Mid-management at

Nordstrom believed that the fear of getting fired would be a good motivation factor, but it
negated the fulfillment of the safety needs. As stated in the case, there was a much higher
than average turnover rate at Nordstrom than other retail stores.
In theory, promoting from within is great, combined with Nordstroms decentralized
management and incentive system, it stifled the voices of the employees. It provided a
negative motivation force due to negative instrumentality. Without good oversight, midmanagement took advantage of the sales clerks and inhibited their promotion.
On the flipside, Nordstrom did a good job of providing certain motivational factors to
have the employees excel. Honoring the sales clerks for their efforts, such as announcing
sales figures aloud, sales contests and providing higher discounts for merchandise, helped
keep the motivators (such as achievement and recognition), ergo satisfaction high. It also
helped with the hygienes (such as status), leading to lesser dissatisfaction.
The most noticeable, however, was the employees ability to track their performances.
Computer printouts in the back office visually depicted performances and allowed
everyone to be aware of their standings. This satisfied the equity theory as it clearly
defined the outcome (sales performance) based on input by an individual vs that of
others.
In conclusion, the system should be designed so as to reward the employees for the work
they do and not hurt them for time spent in meetings or shelving. They should be working
in the favor of the employees. They should set it up such that it encourages the employees
to go the extra mile without penalizing them on their hours.
Nordstroms answer, by focusing on how their system allows their employees to make
higher than industry average wages, seems like them turning a blind eye to the real
problem. They fail to see was that their system punishes their employee just as much as it
rewards them, if not more. Rather than having a single metric be the deciding factor,
including other metrics would balance the scales. Groups vs individual sales planning
would foster comradery while maintaining the competitiveness, they are looking for.
Defining limits of work hours and ethics would help the decentralized management
function better.