Q1) What is the cause of the problems described in the case? Just how serious happen to be these problems?
The main concerns of Nordstrom are its compensation and incentives guidelines that are altered. This company uses a Sales-per-Hour ratio as the main in overall performance evaluation and work settlement. This efficiency indicator is usually not properly balanced simply by other key elements, such as customer satisfaction, it just emphasis the sales and the range of hours proved helpful.
The integral part of the issue is also the differentiation of non-sell and selling hours. The lack of translucent performance procedures also spelled trouble pertaining to the employees with the company. They are really always working a lot, if she is not paid for the additional hours of work and the assess used by the SPH are not the best ones.
Nordstrom’s personnel work off the clock and people hours are generally not paid. To have the excellent customer satisfaction that the business has, staff have to pay a whole lot of focus on their customers. That they spent a lot of hours with these a personal contact and all sorts of these several hours are not paid. The employees happen to be who build the image, the strong customer loyalty and their desires are generally not being valorized. The failing of management to professionalize the relationship between management and employees is another problem.
Personnel are expected to work over and above the prescribed working hours without spend in order to conform to company requirements. Nordstrom is usually concentrating just on quantities, they are developing a company tradition where it would appear that quantity considered more than quality. This payment and bonus system helped bring some effects to Nordstrom. The lack of an obvious distinction among selling time and non-sell leads to a large pressure to the employees considering that the SPH ratio doesn’t reflect the effort and work made by the sales agents.
This leads to staff complaints and lack of determination to work in the company. Likewise, the existence of these kinds of fear competition could lead to unwanted behavior including stealing credit for revenue from another sales personnel. This inspiration policy was one of the Nordstrom proud systems but started to be more a liability than an advantage. Workers started to complain and shortly this system started to be the target of law meets that destroyed Nordstrom standing and brought negative press attention to the business. Nordstrom was known features one of the best spots to function and with this unhappiness expressed simply by salespeople that reputation begun to drop off as well as the turn-over rate increased.
The focus of the law fits was the pressure maid and lack of compensation for the excess hours worked. Employees were encouraged to work extra hours yet were not compensated for them. Nordstrom was targeted with a lot of law suits and always denied the accusations made by the unions. Afterwards, the Buenos aires State Department of Labor & Companies stated that Nordstrom systematically violated condition wage and hour regulations, giving cause to the assemblage that required legal actions against Nordstrom and completely no various other choice but to review their very own record-keeping types of procedures and pay the worker’s loss.
Afterwards, due to the decrease of the company’s financial value as the stock selling price went down, another law suit was filled again against Nordstrom. This time this came from some stockholders that claimed to obtain suffered monetary losses due to Nordstrom Management’s failure to manage their labor problems and the claims maid. This law suit armed even more Nordstrom popularity.