Nordstrom Analysis
Nordstrom uses a sales per hour (SPH) program to rate their sales employees. The more the employee sells in the total hours they work, the more their SPH. Nordstrom management uses this SPH figures for remuneration, compensation and promotions but again this was used as a tool for identifying non-performance as well. If an employee had a low SPH, they are ought to have a bad time shift, scheduled fewer work hours, or even terminated.
The integral part of the problem was also identified in poor differentiation of “non-sell” and “selling” time. In order to sustain the tradition and their competitive advantage of superior customer services, the sales team would have to write thank you notes, deliver purchases timely, participation in mandatory meetings, and the likes, on “off the clock” time, because they were coerced by the existing performance evaluation system to keep their” sales per hour” ratio high. If they booked those hours, their SPH would go down because they weren’t actively selling anything and would most likely be penalized for it in the end. But there really wasn’t a clear definition as to what was “selling time” and “non-sell” time. The employees struggled with this because they weren’t exactly sure how the types of activities they did would impact their SPH. Nordstrom intended the SPH to be an incentive and a way to reward top sellers through commission, but they were really using it as a tool to force employees to work off the clock as to not impact their SPH and would punish them if they booked all the hours they worked.
Another problem in Nordstrom was their decentralized system of operations. Managers at all levels, department, store, and regional, were not very controlled as to how they should be treating their sales staff. Without proper protocol some managers misused their authority by improper and biased work schedules,