Customer-Centricity and Employee-Friendly Policies of Nordstrom - Case Study Example

Abstract The case study on Nordstrom, one of the biggest retailers in the United States, provides much insight into its practices and highlights the most certain causes for its enormous success and growth. Its customer-centricity and employee-friendly policies are core reasons for its growth and profits. Through its culture, Nordstrom has been able to instill strong belongingness among its employees. However, certain gaps do exist such as workload, ineffective leadership, and employee dissatisfaction. The reasons for these issues explored in the present case. Further, possible solutions have been proposed along with their potential repercussions highlighted. Analysis of Nordstrom: As one of the biggest retailers in the United States, Nordstrom’s growth and expansion remains a model for many businesses. Started by John W. Nordstrom during late 19th Century in Seattle as a shoe retailer, Nordstrom now has more than 100 stores and employs more than 35000 people (Freedman & Vohr, 1996). Such success is mainly because of the ‘Nordstrom Way,’ according to the employees and management team there. Nordstrom Way focuses on establishing strong customer relations, building strong employee motivation, and driving rigorous performance. Nordstrom does not follow any formal policies and procedures; it only assigns goals to their store managers who then manage the business according. Hence, employee empowerment is highest at Nordstrom. Employees receive no formal training; training is in the form of collaboration with seniors for acquiring information required to make sales. Such practice helps in establishing good interpersonal relationships with managers and coworkers; fosters teamwork and effective communication. Furthermore, their decentralized approach of management, opportunity and encouragement for innovation, guidance provided by managers, simple rules, and commission and incentive systems are few more factors that contributed to employee morale and Nordstrom’s success. Clarity in goals and objectives provides a clear direction to its employees and sets the right expectations. Regular performance monitoring and updation helps employees to assess their own position against the targets as well as their performance with respect to their peers; this is a driving force for performance in a competitive world (Taylor, 2003). Managers’ involvement in motivating their employees through motivational skits, self motivational programs, sales contests etc are exceptional. Managers are authorized to choose their performance targets and methods, which enhances their self motivation. Managers are given the responsibility for achieving certain goals; and, they are also allowed to do it in their own way. Both these methods set free great vigor and motivation (Bruce & Pepitone, 1998). Customer satisfaction is crucial for a business to grow and sustain (Feigenbaum, A.V & Feigenbaum, D.S, 2003). Customer satisfaction is given the highest importance at Nordstrom. Even this aspect gets measured and the employees with best customer relations get rewarded and recognized. Such motivation drives employees to go beyond their job to satisfy their customers. Prominent Issues at Nordstrom: While Nordstrom seems to be doing everything right in terms of customer, people and process, employee dissatisfaction, rebellion, low sales etc have also been reported. The most prominent issue that emerges is their measurement method, which only takes into account number of sales per hour, customer service and teamwork; this excludes the aspect of extra hours worked, delivering business beyond one’s call of duty etc. Performance measurements have a close link with employee motivation (McFarland, 1977). Secondly, sales targets, incentive programs etc are highly pressurizing for employees; further failure to achieve the targets can cost their job. Both these factors put substantial pressure and stress on employees, which ultimately causes work stress and lowers employee motivation and loyalty. These have also resulted in employee turnover, which is a huge loss for Nordstrom if they lose experienced staff to their competitors. Further, not compensating employees for the extra work hours is also immoral and lowers employee motivation and commitment. Another prominent issue is that employee empowerment and effective leadership is not uniform across Nordstrom stores. This is evident from the way few employees were ill-treated despite their outstanding performance. Resolutions proposed: Performance management becomes more important than performance measurement, as the former provides a way for the latter (Lebas, 1995). Performance measurement alone will not be able to achieve sustainable results and motivation. Secondly, higher pay scales, incentives and commissions do not produce sustainable performance and commitment if the work involves high stress, which has been the issue at Nordstrom. Hence, work must be reduced by employing more staff, proper resource allocation, and appropriate working hours (Flach & Kuperman, 2001). When employees are managed properly, their commitment increases. While Nordstrom seems to be doing everything right to motivate its employees in order to deliver highest customer service and make highest sales, it should also address employee conflicts effectively. For this, leadership at Nordstrom should be groomed to handle employee conflicts and manage people effectively. Managers employed should be assessed for leadership qualities, apart from their sales performance, teamwork and customer relations. Possible repercussions for Nordstrom: When performance management is effective, employee morale improves and they develop trust in the organization and their leaders. Nordstrom’s decision to pay all the employees for their extra hours certainly restored their confidence in the company, but this has to be continued in order to derive sustainable results. Besides pay and work environment, employees expect effective organization and discipline, fair treatment, satisfaction of employee needs, restructuring of work, and work-life balance (Russell & Taylor-lii, 2008). Through effective management, workload can be distributed equally and according to individuals’ capacities. Nordstrom should care for its employees’ work-life balance by providing periodic work-offs, scheduled breaks, leaves etc; these will not only keep the employees relaxed but also invigorate employees to take on responsibilities with renewed motivation. Paying employees for their non-selling work is a kind of acknowledgement of their efforts. Then, all their efforts become accountable, which includes the non-selling work too that had been the bone of contention at Nordstrom. Effective leadership will be able to inspire, mentor, coach and develop employees in the right direction and align the employees’ expectations with organizational goals (Philllips & Edwards, 2008). Conclusions : To conclude, Nordstrom has been extremely successful in the United States, and also one of the best employers. Their customer-service focus, employee empowerment, lively work atmosphere, and competitive sales have been the reasons for their growth. However, extreme workloads, lack of work-life balance, inefficient leadership at some stores have caused employee dissatisfaction, turnover, and lower sales and profits. To overcome these, the company has to incorporate new methods into the Nordstrom Way, like acknowledging employees’ contribution through payment for non-selling activities, overtime pay, and providing breaks, leaves and scheduled offs. Moreover, leadership teams at managerial positions have to be trained/groomed for effective people management, conflict resolution, and effective resource allocation. Addressing these issues will help Nordstrom regain its original flair as an employer and retain its talented and experienced employees. References Bruce, A and Pepitone, J.S. (1998). Helping employees accept responsibility for motivation. In Motivating Employees. (pp:59-73). Wisconsin: McGraw-Hill Professional. Feigenbaum, A.V and Feigenbaum, D.S. (2003). The Character of the Company: “Signature” Capabilities and Management Innovation. In The Power of Management Capital: Utilizing the New Drivers Of Innovation, Profitability, and Growth In a Demanding Global Economy. (pp:57-72). USA: McGraw-Hill Professional. Flach, J.M and Kuperman, G. (2001). The Human Capacity for Work: A (Biased) Historical Perspective. In Hancock, P.A and Desmond, PA’s (Eds.) Stress, Workload, and Fatigue. (pp: 429-442). New Jersey: Routledge. Freedman, R.D and Vohr, J. (1996). Nordstrom. In Schuler, R.S and Buller, P.F. (Eds.) Cases in Management, Organizational Behavior and Human Resource Management. (pp: 249-257). Ohio: Western Publications Co. Lebas, M.J. (1995). Performance measurement and performance management. International Journal of Production Economics. 41(1): 23-35. McFarland, W.B. (1977). Manpower Cost and Performance Measurement. National Association of Accountants Phillips, J.J and Edwards, L. (2008). Managing Talent Retention: An Roi Approach. USA: John Wiley and Sons. Russell, R.S and Taylor-lii, B.W. (2008). HR in Operations Management. In Operations Management Along The Supply Chain. (pp: 307-337). UK: John Wiley and Sons Inc. Taylor, D. (2003). The Brand Gym: A Practical Workout for Boosting Brand and Business. New Jersey: John Wiley & Sons. Read More