...Founded by J.W. Nordstrom in 1880 as a small shoe store, by 1995 Nordstrom had become a giant retailer with net earnings of $203 million and over 35,000 employees. Nordstrom remains a family operation to date. The idea of the ‘Nordstrom Way’ - with strong commitment to the firm, emphasis on proactive service, no external hiring, and a decentralized management structure (e.g., Nordstrom has no CEO) - is central to their employee relations, and is seen as central to their success. Average compensation within the company is above industry average. Despite this, the company has encountered problems over the years with its employees, leading to high turnover rates and lawsuits. While some employees are very happy with the way company operates, others criticize Nordstrom for unjust labor practices. As the company continuous to expand, the labor-force becomes further divided on whether or not the working conditions and compensation systems are fair. Improvements that would increase employee job satisfaction and organizational commitment can be made on the basis of two basic issues: the company’s compensation system and management style. The following factors contribute to the two major problems described above, and must be dealt severally in order for them to be a positive outcome for firm. 1. Sales per Hour (SPH): double edged sword. SPH is a commission structure based on which the “employees receive either their commission percentage times their total sales for that...
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...Altering the Reward System Brief Summary - * The Reward system of “Sales Per Hour” is flawed and an alternative solution that improves the morale along with customer satisfaction is required at Nordstrom. * It wants to improve performance. However, promotes sharking (stealing other sales) and fraud * Nordstrom wants to offer customer service like no one offers * Nordstrom employees are upbeat, ambitious but, at the same time selfless * Our staffs genuinely interested in seeing that all your needs are met. They are Professionals—will help you with everything from gift suggestions to wardrobe planning. They will even accompany you from department to department until you find exactly what you're looking for * What motivates Nordstrom employees * High Salaries * Only people within company are promoted * Managers who meet department goals will rise to buyer or store manager positions * The three Nordstrom performance criteria – Customer Service, Productivity and teamwork * One Page Wisdom from Nordstrom – “Use your best judgment in all situations” and “Do whatever it takes to make the customer happy” * Employees are rewarded for Sales Per Hour (SPH) * Employees receive their commission rate times the Total Sales for their pay period OR their hourly rate times total work hours – Which ever is higher * Everyone is formally or informally aware of their sales performance * Clearly the best sales person are entrepreneurial...
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...Nordstrom, Inc. Comprehensive Overview Davenport University BUSN520 Management and Marketing Professor Philip Shaps Shyla Allers August 12, 2015 Table of Contents Introduction 3 Organization, subsidiaries and business units, history 4-5 Scope of the business and current products or services provided 5-6 Scope of market distribution-are they local, regional, global 7 Leadership and management structure and individuals 7 Current issues that may affect the future of the organization 7-8 Description of Strengths 8-9 Description of Weaknesses 9-10 Description of Opportunities 10 Description of Threats 10-11 Description of External Factors Impacting Decisions 11 Description of Possible future scenarios 12 Recommendations for changes in culture, leadership and/or structure 12 Description of project company’s primary market 12-13 Description of project company’s secondary market 13-14 Description of one target group and demographic profile 14-15 Description of project company’s market position 15-16 Recommendations for leadership and organizational structure 16-17 Recommendations for placement 18-19 Conclusion 19-21 References 22-23 Appendix A 24 Introduction/Overview Nordstrom, Inc. is an upscale fashion retail company that approaches a broad variety of fashion clothing, shoes, accessories and cosmetics. It started out...
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...Nordstrom In the assigned case, we are introduced to Nordstrom – a successful line of department stores who hold customer service as a priority, and encourage employees to develop their own client bases while working the field. Customer satisfaction is essentially the backbone of Nordstrom’s business model, which is also its key success indicator. The potential challenge in this model is the perception of unfair hours worked vs. pay of some of its employees. One way that Nordstrom is presented to distinguish themselves as an organization is by encouraging an environment where employees are the face and brand of the company. Through training of “the Nordstrom Way” values, employees are given the freedom to handle situations as they see fit. They are encouraged to “use [their] best judgment in all situations” and “do whatever it takes to make the customer happy”. In that case, policies seem to instill a sense of trust and ownership amongst employees, which in turn may give each employee a sense of leadership and worth in the company. Such freedom however is limited to managerial positions and higher. Nordstrom pays its salespeople on a commission system that is personalized to each salesperson’s abilities, length of employment with the company, as well as their sales per hour (SPH). They are paid in a “draw” system where they will receive the higher of their commission percentage x total sales, or their hourly rate x total work hours. It would appear that Nordstrom is thereby...
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...Nordstrom “Fashion changes. Shopping changes. Our commitment to happy customers doesn't.” Nordstrom today is currently operated by a fourth generation of the Nordstrom family, an executive team, and a talented team of innovators and fashion leaders. Nordstrom has grown from a small downtown Seattle shoe store into a nationwide fashion specialty chain. It offers a tremendous selection of shoes, accessories and an extensive range of services to make shopping a fun, efficient and convenient process. In 2011, the company was recorded as achieving an all-time record for total net sales at $10.5 billion. In 2014, Nordstrom “serves customers in 38 states with 118 full-line stores in the United States and one in Canada, 167 Nordstrom Rack locations. We also serve customers online in 96 countries through Nordstrom.com” (Nordstrom Website). This company clearly has shown their business philosophy to provide exceptional service, selection, quality and value has lasted over time. Nordstrom’s organizational structure is set up a little different than most companies. Individually, each employee must excel to reach their personal selling goal on a daily basis. This is important because each group, or department an individual works in, must also reach their selling numbers to prosper as an organizational or company level. Nordstrom uses an inverted social structure. Since Nordstrom prospers on their ability to sell to their customers, selling employees are at the top of their pyramid...
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...Harvard Business School 9-191-002 Rev. October 15, 1999 Nordstrom: Dissension in the Ranks? (A) The first time Nordstrom sales clerk Lori Lucas came to one of the many “mandatory” Saturday morning department meetings and saw the sign—”Do Not Punch the Clock”—she assumed the managers were telling the truth when they said the clock was temporarily out of order. But as weeks went by, she discovered that on subsequent Saturdays the clock was always “broken” or the time cards were not accessible. When she and several colleagues hand-wrote the hours on their time cards, they discovered that their manager whited-out the hours and accused them of not being “team players.” Commenting on the variety of tasks that implicitly had to be performed after hours, Ms. Lucas said, “You couldn’t complain, because then your manager would schedule you for the bad hours, your sales per hour would fall, and next thing you know, you’re out the door.”1 Patty Bemis, who joined Nordstrom as a sales clerk in 1981 and quit eight years later, told a similar story: Nordstrom recruiters came to me. I was working at The Broadway as Estee Lauder’s counter manager and they said they had heard I had wonderful sales figures. We’d all heard Nordstrom was the place to work. They told me how I would double my wages. They painted a great picture and I fell right into it. . . The managers were these little tin gods, always grilling you about your sales. . . . You felt like your job was constantly...
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...It all started with a man named John W. Nordstrom. I n1887, a 16 year old boy from Sweden left his home country for New York City, with only five dollars in his pocket, and not speaking a word of English. John crossed the United States working to make ends meet, and after two years he earned 13,000 dollars, and was ready to go into a partnership with a man named Carl Wallin. In 1901 the two opened their very own shoe sore, Wallin & Nordstrom, in downtown Seattle. John’s business philosophy was based on exceptional service, selection, quality and value, which ended up becoming a retail legend, also allowing them to build a customer base, and open their second store in 1923. In 1928, John Nordstrom sold his share of the company to his sons, and in 1933 Carl retired and sold his shares to the Nordstrom brothers. Nordstrom’s began building their reputation becoming the largest independent show chain in the U.S. In 1960, the company expanded offering customers shoes and fine apparel, called Nordstrom Best. Then in 1966, they offered men’s clothing and children’s wear. The company went public in 1971 just after the sales passed $100 million mark, and the company was recognized as the largest volume West Coast fashion specialty store. This same year, the name was changed to Nordstrom, Inc. Nordstrom’s today focuses on catering to customer’s needs, and individuality. They do not categorize their merchandise by departments, but by individual’s lifestyles. Nordstrom’s now...
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...Demographic Segment * Population The percentage of urban residents was increased from 54% in 1941 to 81% in 2011. The most popular cities are Toronto, Vancouver and Montreal. Montreal and Vancouver accounted for 35% of Canada’s population. Since more and more Canadians move from rural areas to urban areas, department store retailers can reach more customers if they open their stores in urban areas. * Age Structure Canada is facing population aging. In 2014, the median age of male Canadians was 40.4 years old and the median age of female Canadians was 42.9 years old. Moreover, it is reported by the latest population projections, the proportion of Canadian aged 65 years old and older will increase to 20.1% of Canada’s population in July, 2024. According to Sotheby’s International Realty, the average household income of baby boomers is from $300,000 to $500,000. After a lifetime hard work, they want to enjoy upper class lifestyles. Thus, baby boomers have the ability and motivation to purchase high-end brands. * Geographic Distribution In 2013, 86.2% of Canadians lived in Ontario, Quebec, British Columbia, and Alberta. In 2015, there were 13,792,100 Canadians who lived in Ontario. Quebec had the second largest population size in 2015 at 8,263,600. British Columbia had the population size at 4,683,100 in 2015 and Albert had the population size at 4,196,500 in 2015. People live in Ontario, Quebec, British Columbia, Alberta play a large part of the Canada’s entire...
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...Intro: Nordstrom, one of the nation’s top specialty retailers of clothing and accessories, was historically known for its superior, best-in-class customer service. The Nordstrom sales clerks, or “Nordies”, were famous for routinely going above and beyond what was considered common industry practice to ensure that customers received the best shopping experience imaginable. On the surface, this key competitive advantage was what set Nordstrom apart from other department store chains. But upon digging deeper into the incentive commission system that was in place, coupled with unclear guidance for mid-level managers on how to manage their sales teams, it soon became apparent that Nordstrom unintentionally created a hostile work environment that contributed to a huge drop in employee morale and led to a publically humiliating and costly class action lawsuit filed by the local union in Washington. This paper will attempt to explain the intended benefits and unintended consequences of Nordstorm’s incentive compensation system, how it motivated or demotivated its employees to behave in certain ways, and provide two possible solutions that could help foster a higher level of intrinsic motivation while retaining the spirit of the company’s key competitive advantage: its superior customer service. 3rd question (Unintended consequences of compensation system): The way in which the compensation system was structured by the sales-per-hour (SPH) ratio measurement, coupled with a lack...
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...customers of Nordstrom, not leaving out certain groups because of industry ‘norms’. This speaks volumes to all customers that Nordstrom recognizes them as individuals, but also, as O’Connell mentioned in an interview, “people with disabilities represent a significant marketing opportunity with $225 billion in discretionary income… and companies that understand this will have a competitive advantage.” (http://www.santacruzsentinel.com/business/ci_26254983/models-disabilities-star-nordstrom-catalog) * Has a customer first attitude to differentiate Nordstrom from other high-end retailers and department stores and build customer loyalty. They are in a highly competitive market involving high fashion, quality items at a premium price, but their service is what drives their business in. They invest in high quality staff, greet customers by name, write personal thank you notes, make follow up calls about satisfaction with products, have large well lit stores and fitting rooms, have a price match system, as well as a very lenient no questions return policy, all combined to keep their customers as satisfied as they can. (http://wwwiebe.com/nordstrom-customer-service-first/) * Nordstrom has different brands and product lines to reach different market segments and keep up with trends. These include: Rack, Haute Look, Treasure & Bond, and Trunk Club. This offers mid price markets opportunities to join with regular high price markets, online exclusive shoppers to join the Nordstrom network...
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...singular coin has marked the online collective consciousness and “pennyhunters” boast of a ludicrous following on social media. We’re not talking about cheap crap either. $200 designer shoes for a penny! Ding! A Rag & Bone sweater that retails for $350 for a penny? Ding, ding! A Dyson vacuum for $0.01 cents? Ding, ding, ding! Toys, clothes, shoes, jewelry, appliances, home goods -- the list goes on to infinity and perhaps even further. You the customer- you WIN. You just beat the system! And with the addictive seduction, the rush of adrenaline once you hit one of these penny unicorns, you will be a penny crackhead in no time, I guarantee it. The first time it happened to me, I found a pair of brand new shoes that retailed for under $50 at Nordstrom Rack. It was...
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...Nordstrom Market Selection 1.) I feel Nordstrom’s is opening more Nordstrom Rack stores, as they trying to target customers who are middle class and may not have a very strong cash flow. They may be customers that would shop at Nordstrom and spend money on the name brands in the store, but they do not have the money so they shop at the Rack. This may help move customers to shopping Nordstrom’s, if their financial situation improves. I feel with the economy in the past 10 years there are thriftier shoppers and the majority of people are probably middle class or lower. These people are able to afford items at the Rack and save money. I personally will go into Nordstrom to check out the more specialty items and to be shocked to look at the clothing prices. However, I am more likely to buy clothes from the Rack, but I still find some of the Rack prices to be high. 2.) It appears Nordstrom’s market expansion strategy is producing positive results. The annual sales have increased, however profit seemed to decline. That may be expected when putting money into expanding stores and opening in new territories. For a while I feel business may have to lose a little money to before the profits start coming in. By now the profits may have already started in as the research is from 2011. It appears inventory is turning over and more discounted stores are opening. Also they did open more stores from 2008 to 2011. This may have helped them to get in better business districts...
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...MORALES, Marc Russel M. BSBA-MM II-C MM100 – Fundamentals of Marketing Management MABEZA, RYAN MARVIN Nordstrom’s Case Analysis Companies are everywhere. Competition in a global business world are in left and right scenarios. So companies must find the right ingredient for them to be successful. Creating loyal customers is at the heart of every business. Improving efficiency in connecting to customers, building customer satisfaction, customer value and loyalty leads to improved and better business results. Marketing experts Don Peppers and Martha Rogers say, “The only value your company will ever create is the value that comes from customers—the ones you have now and the ones you will have in the future. Businesses succeed by getting, keeping, and growing customers. Customers are the only reason you build factories, hire employees, schedule meetings, lay fiber-optic lines, or engage in any business activity. Without customers, you don’t have a business.” Companies must establish and maintain a high customer value for their products and services because consumers use customer value to make buying decisions. You make buying decisions in day-to-day life experiences. For example in buying for a bottled water drink. Should you buy the wilkins worth P15 or the evian water worth P65? In every buying decision, a consumer asks the same question: 'is what I am going to receive worth what I have to give up in order to get it?' The gain the consumer receives for the benefit is...
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...The case study about Nordstrom describes about the Sales per Hour (SPH) incentives compensation system to employees as a performance measure instrument. The main problems that have been face by Nordstrom are employee’s dissatisfaction and labor disputes. Under this system employer measures the performance of a sales person by weekly sales divided by hours worked. The employee that meets the target or achieve more than the targeted amount will be rewarded better rewards such as working shift which no need to be reported to the manager while the employee that fail to meet the target will be given with hourly wages. As a result, employee must compete against each other under this incentives system. Thus, this cause end up with employees who stealing the credits with other commissions. Apart from that, the unclear distinction between “selling time” and “non-sell” work time create a pressure among the employees. If more “selling time” has been recorded, then the employee will have lower ratio of SPH and the worst is the employee will not entitled to any extra pay for reporting extra working hours. Thus the employees should have to record more activities that related to customer relationship such as Thank You notes and addressing sale notices as “non-sales” working hours. Since the department’s managers worked closely with the buyers and have direct buying authority, top management has endorsed a decentralization management among the operations, store and regional managers. Top...
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...Paper Communications 530 Aug-Monday 12th, 2013 Organizational Behavior and Communication Paper Nordstrom Inc., started as a small shoe store in Seattle, Washington in 1901. Since that time it has become one of the leading and successful shoe and apparel retailers in operation today. After reviewing different information regarding Nordstrom Inc. espoused values and enacted values, it is apparent that they are in alignment. Espoused values are the core values of the company. The history and organizational beliefs, developed into policy for the company. The goal of the espoused values is to create standard of behavior for the company. The enacted values are norms exhibited by employees (Answers, 2013). If the espoused and enacted values are misaligned problems could occur within the organization. If the Nordstrom leadership does not live up to the espoused values of the organization, the employees become disassociated and will not work to their potential. Nordstrom Inc. has a strong communication and organizational behavior characteristic of the brand. A generation family business, Nordstrom has grown the company into 240 stores, in 31 states with 11 full line stores, 119 Nordstrom Racks, two Jeffery Boutiques, and Treasure & Bond. This paper will review Nordstrom’s mission and organizational behavior and the communication used in their continued success. Nordstrom does not have a mission however they do have a goal. Their number one goal is: to provide outstanding service...
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