Harvard Business School Case Study: Nordstrom

Unlike my previous post, this case is an example of a failed system.  Nordstrom’s employee performance evaluation system not only failed to increase performance but it resulted  in creating a hostile working environment that eventually ended up in a labor dispute between Nordstrom and abor unions representing its employees.

The unions accused Nordstrom of not paying its employees for time they spent working off the clock, or on their own time, performing extra tasks such as writing thank you notes to customers, delivering merchandise.

In my opinion, from reading the two Case Studies, Nordstrom did not deliberately force employees to work off the clock but the system they had in place was not right and the way they measured their employee performance was not mathematically sound.  How Nordstrom, measured its employees was by their Sales per hour and if the Sales per Hour number for an employee was low, they punished the employee by lowering their hours; forcing the employees to either report lower number of hours worked per week or to spend some of their own personal time to do work to compensate and ensure job stability.

Not only this system didn’t improve performance but it also brought down moral and teamwork by creating a competitive environment that created “sharks” who would steal other clerks’ customers and take credit for their work to increase their number.

Nordstroms answer to the problem was to close their eyes to problem by focusing on how their system allows their employees to make up to $80,000 a year which is substantially higher than industry average.  What they failed to see was that their system punished their employee just as much as it rewarded them, if not more.   They failed to acknowledge the fact that some people just want to go to work and do the best they can in the hours they are expected to work and go home.  Not everybody is programmed to come to work and be an entrepreneur to find ways to get more and more sales.

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~ by aliahmadian on February 28, 2010.

3 Responses to “Harvard Business School Case Study: Nordstrom”

  1. Interesting post. Excellent point about not all sales employees having the entrepreneurial spirit. It is very unlikely to make up a well balanced staff that all shares that industrious spirit…even Nordstrom.

  2. Thank you. You’re right. Usually most of these decisions happen by upper management who are clueless of what impact they are going to have for the people who have to actually follow them on day-to-day basis. They do it just for the sake of having a system in place and they are usually not flexible enough to change these systems around even after they show to be a failure.

  3. business skillss…

    […]Harvard Business School Case Study: Nordstrom « Ali Ahmadian's Blog[…]…

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