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Case Study: Nordstrom

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Olivia Wisniewski

on 22 January 2015

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Transcript of Case Study: Nordstrom

Sales Force Reward System
Employe Reward System
Little to no group incentive
Mainly focused on individual incentives

Results of the Rewards Systems
Contributed to the intense competition between coworkers
Fostered a work environment with limited teamwork and high employee dissatisfaction
Higher turnover intentions

Recommended Solutions to Nordstrom's System
Sales-Per-Hour Performance and Automation
Sales-Per-Hour Performance
Automation
The ability for sales associates to track performance relative to peers
Tracking of peers performance was easily accessible to all employees which caused
Sharking
- Stealing of another employee’s commission

Get rid of Sales-per-Hour Performance evaluation because of the following reasons:
- Does not foster a positive work environment
- It is not a fair performance system
Automation and performance reviews should not be public or accessible to workers because of the following reasons:
- Reduces Moral in the Workplace
- Possibility of Sharking
- Violating Employee privacy

Ivona Wisniewski
Jan. 15, 2015

Day in the Life of a "Nordie"
Founded in 1901 by John W. Nordstrom and Carl F. Wallin in Seattle, Washington
John W. Nordstrom was an immigrant from Sweden to the US in search of a greater opportunity
John's approach to business was to provide exceptional service, selection, quality and value.
Carl F. Wallin was the cofounder, the owner of the adjacent shoe store
By 1960, the downtown Seattle shoe shop had become the largest shoe store in the country,with 8 locations in Washington and Oregon
Added Apparel after the purchase of Vest Apparel of Seattle in 1963
Restaurants were added in the beginning of 1979
As expansion continued throughout the U.S, they decided to venture into Canada in 2013

Nordstrom's Beginnings

In 2011, the company achieved all time record for total net sales at $10.5 billion.
289 stores in 38 states
Nordstrom opened its first full-line store in Canada in Calgary in 2014 and has plans to open five more full-line stores in Ottawa (spring 2015), Vancouver (fall 2015) and Toronto (2016 and 2017).
Worth: $ 2.81 billion
Continues to stay in Nordstrom family generations (4th)
Nordstrom was ranked No. 224 on the Fortune 500 for 2014.

Nordstrom Today
Case Overview
Problems With the Current System at Nordstrom
Decentralization
Due to rapid growth
Department, store, and regional managers free to make key decisions on business operations
Rewards systems- inconsistent

Timesheet Manipulation Sales-Per-Hour Ratio
“Sell Time” vs “Non Sell Time”
Associates on sales floor
Associates completing other expected “Nordie Heroics”

Sales Per Hour Ratio (SPH)
Affected by “time” classification
Once intended to guide, motivate, and measure performance led to unfair practices and employee dissatisfaction

*Has led to illegal timesheet manipulations and lawsuits*
Example:
A sales clerk who works 50 hours per week and generates weekly sales of $8,000.
Centralization
Corporate policies
Consistency in work environment in all stores
Enhancements to employee relations policies
Stronger connection between corporate and regional stores
Appointed HR staff
Responsible for:
Streamlining of HR policies related to PE and compensation
Promoting consistency among all store
Focusing on employee relations
Educating all store managers of new policies via:
one on one meetings
conferences designed for all store managers
blast emails with messages focusing on positive employee relations




Timesheet Manipulation Sales-Per-Hour Ratio
Legal Compliance to Fair Labor Standards Act

Timesheet Manipulation Sales-Per-Hour Ratio
Eradicate rigid SPH System
- Key player in timesheet manipulation
- Has led to legality issues and lawsuits

Alternative Compensation Options
- Annual Salary (optional bonus on commission)
- Hourly based pay (optional commission)
- 4.5%-7% per dollar sold

Alternative Sales Contests
Initiate group/team-friendly competitions
Teams:
- Department
- Goals
Awards
Benefits to New Group Rewards Program
Increase sales revenues
Enhance employees loyalty to company
Promote team approach amongst staff
Provide professional development and networking opportunities.

Employees perception of justice affects:
- Voluntary turnover
- Employee withdrawal
- Compromised company's reputation
- Lawsuits




Company Perception and Organizational Justice
Works Cited
Nordsrtom Case Study http://www.scribd.com/doc/177558301/HRM-Nordstrom-Case#scribd
Harvard Business School Case Study: Nordstrom: Dissension in the Ranks?
https://mcelhaney.wordpress.com/2010/03/01/harvard-business-school-case-study-nordstrom-dissension-in-the-ranks/
http://shop.nordstrom.com/c/company-history
Major Issues and Problems at Nordstrom www.studymode.com
Simons, Robert L., and Hilary Weston. "Nordstrom: Dissension in the Ranks? (A)." Harvard Business School Case 191-002, July 1990. (Revised October 1999.)
Nordstrom…A lesson in How Decentralization Can Kill You…https://sharonmarkovsky.wordpress.com/2009/10/07/nordstrom-a-lesson-in-how-decentralization-can-kill-you/
Fortune 500 companies 2014
http://www.zyxware.com/articles/4344/list-of-fortune-500-companies-and-their-websites
Timecards Converted to Digital Format
- Clock in and out
- Times stored in database
- In compliance with FLSA
Nordies to performed “heroics”
Business strategy focused on profit, expansion, and superior customer service
Nordstrom hunger for profits compromised their service level, reputation and ethics of their sales
Nordstrom’s salespeople were the envy of the industry in terms of quality and productivity.
Company Perception and Organizational Justice
Employee Work Environment
Team building outing
Appreciation of employees by the management

Implementation of suggested solutions will result in stronger:
management decisions/compensation and incentives
consistency, accuracy, and ethics behind decision processes
positive relations with employees
Case Study Analysis
Management SWOT
Strengths:
the ability to motivate staff
Weaknesses:
performance evaluation (PE)mechanism (SPH)
individual incentives
Opportunities:
changes in PE
group incentives
Treats:
high turnover
lawsuits
employee dissatisfaction
Full transcript