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Nordstrom Case Paper
Nordstrom’s mission has always been to provide customers with outstanding service. This
simple promise not only contributes to organizational strategies, but to tactical goals as well. So
far, they have been able to out-perform competitors. However, internal disputes have become a
growing issue. Should Nordstrom, despite its success, modify their policies to accommodate for
these internal disputes, or should they continue to conduct business the way that they have always
done. All factors that go into possible organizational changes should be considered and analyzed.
Should Nordstrom look into the issues it has been faced with recently, it will have to study
leadership/managerial aspects and cultural characteristics to observe the motivational effects it has
been having on their employees. They can then use this information to try and make the best
organizational decision.
It is expected that every employee will go above and beyond to create an unparalleled
shopping experience. This is the identity of Nordstrom, but sometimes what management expects
is different from that which employees would like to see. Former employee Lori Lucas remembers
an issue with the countless hours spent off the clock working both on site and at home. Adding
up all the time spent on thank-you notes, off-the-floor duties, and “mandatory” Saturday meetings
equals many hours that have been donated to Nordstrom. Lori Lucas cannot be the only employee
who feels like they are being cheated out of hours worked. Another story depicts Cindy Nelson
being fired, without examination, for unsigned complaints regarding her stealing co-workers sales.
Though no real evidence is presented in the case, Cindy Nelson was let go. Allegedly, Ms. Nelson
had been near promotion before her premature dismissal, offering evidence that she was a quality
employee who enjoyed her job. Her story may lend to the idea that employees want added job
security to prevent incidents like this. Management by objectives (MBO) can be utilized to form
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teams between employees and managers to set goals and assign responsibilities for goal
accomplishment. Develop an action plan for both employees and departments. Periodically review
the progress to ensure meaningful results. Finally, appraise overall performance for achieved
success and reward employees with possible wage increases. This idea is illustrated by the diagram
below.
Management Mission/Goals
Be profitable by offering
unparalleled customers
service
Being effective by creating
return customers through
amazing customer service
Being efficient by telling
employees to punch out for
mundane, everyday tasks
Recognition based largely on
Sales Per Hour
No universal set of
rules/guidelines that govern
evaluation or performance
Managers given free-reign
when managing employees
Pay is hourly wage OR
commission
Contests and recognition
provided for motivation
Possible Employee Changes
-
-
Offer a separate punch card
for tasks completed outside
of “floor-time”
Develop standards for
recognition
Implementation of universal
evaluation process to reduce
number of confused workers
-More structure to better
relay expectations and
opportunities
-Schedule employees on an
equally rotating schedule
Better internal marketing
strategy
Pay is hourly wage AND
commission (to a point)
Include more guarantees and
fewer contests. Recognition is
more carefully specified
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Change of Nordstrom Managament to benefit employees
Allow/require breaks
Enforce a limit for consecutive days worked
Leading to..
Offer significant rewards: more pay and longer
breaks for more sales.
Give better service than other employees
Results
Less employee turnover rate
Employees who feel more motivated and
rewarded
Employees and managers to
set goals and assign
responsibility for goal
accomplishment.
Finally, appraise overall
performance for achieved
success and reward employees
with possible salary increases.
Develop an action plan for
both employees and
departments
Periodically review the
progress to ensure meaningful
results.
The table below tries to relate the Nordstrom situation to as many leadership models as
possible. However, it is not realistic or expected that a company try to utilize all possible models
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and theories when dealing with management styles. However, it may be possible to create more
effective and efficient employees if they use some of the possible suggestions. It should be said
that there are no guarantees in changing leadership styles.
Leadership Model
Level 5 Leadership
Servant Leadership
Authentic Leadership
Interactive Leadership
Leadership Grid
Situational Model of
Leadership
Current Nordstrom
Managers
Level 3: Manages team
members and assets to reach
objectives
Possible Ways to Improve
-try to stimulate high
standards rather than set high
standards
-help everyone reach their
potential by offering more
external support
-Offer recognition and money -Transcend self-interest by
to subordinates
helping employees succeed
-Exercises their free-reign to -Find ways to more easily
their own advantage
give employees credit for
-Still dedicated to own selfaccomplishments
interest because are
-Offer additional incentives
succumbed to commission as
well
-Compete with employees for
recognition
-form connected relationships -Form connected relationships
with customers
with employees at a friendly,
-disconnected with
but manager/subordinate level
employees to “let them do
-Communicate goals and how
what they do best”
to achieve them
-pursue “Nordstrom Way”
-Pursue managing with a
with a passion
passion rather than practices
-do not lead as much as
that focus on self-interest
monitor
-Encourage values that accent
-Instead of solid values,
free reign, but advise on
offers free reign
limitation
-Encourages individualism
-Build on values that promote
and independence
inclusion, collaboration
-Focuses largely on
competition between each
other
-Authority-Compliance
-Could find ways to make the
Management
workplace more teamoriented
-Directing Style
-Like Leadership Grid: find
ways to manage taking more
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Transformational vs.
Transactional
Styles of Followership
Types of Power
-Transactional
-Creates alienated and
conformist followers
-Promotes self-management
-Purely Positional
into account the needs that
employees require
-No need to change this
-try and create effective
followers
-Try to gain some personal
power
-Creating personal
relationships through
teamwork and openness
After assessing the types of leadership, it is important to observe cultural artifacts and what
assumptions and beliefs drive them. Culture is defined as a set of key beliefs, values,
understandings and norms shared by an organization. Nordstrom holds a very definitive internal
culture. “Some are religious about it, happily dedicating their lives to master ‘The Nordstrom
Way.” They go on the beliefs, “use your best judgment in all situations,” and “do whatever it takes
to make the customer happy.” These beliefs represent the artifacts pertaining to customer service.
Also, employees record all activities and correspondence of each of their customers in personal
books and write thank-you notes, providing evidence for the belief that good relationships create
sales. The underlying assumption here is that relationships are important. Artifacts also include
salespeople are honored as “Customer Service All Stars” when receiving letters from pleased
customers, consequentially their pictures are hung on the wall by the customer service desk to be
acknowledged. This will lead to recommendations on their personal records as well as extra
discounts. This suggests the belief that competition will bring about better employee output, which
holds the underlying assumption that competition makes people better.
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Artifacts
 Galas Ceremonies
 Dinner Shows
 Valet Parking
 Concierge
Smiling Contests
Values & Beliefs
Underlying Assumptions
Nordstrom is more sophisticated; Sophistication is sought and desired
therefore,
better
than
other by people
organizations
Promotes the idea that recognition is Recognition is earned, not awarded
earned through one’s own actions
Secret shoppers
Nordstrom making sure that their Cordial behavior is essential to
employees act cordially towards success
customers
Thank You letters
Nordstrom wants to have personal Relationships are meaningful to
relationships with their customers
customers
Nordstrom appears to possess small power distance through lack of centralization. “Each
department manager runs his or her department like an individual boutique.” Employees have the
freedom to do whatever it takes to make the customer happy. There are also no uniforms employees
are required to wear. They encourage employees not to conform to the standards of competitors.
Employees with less power can contribute to decision making except when dealing with
promotions. There are also examples of large power distance when dealing with control over
favoritism and sales per hour (SPH).
There are visible feminine qualities Nordstrom holds. “All employees are made to feel like
members of a family sharing in ‘the Nordstrom Way.’” The self-importance of family orientation
is collective to employees who are ambitious yet selfless. They possess masculine characteristics
such as the ambition of achievement through SPH which will lead to the promotion of manager.
They are competitive with their co-workers for SPH and commission. Nordies hold the behavior
for material success, “We all heard Nordstrom was the place to work.”
Low uncertainty avoidance appears to be present through employees having few rules and
practices bound only by the law. Another example is Nordstrom allowing individual managers to
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manage their branches as they see fit. However, Nordstrom has not tangibly brought about any
change to their policies even after receiving complaints that stem from within their union. They
are choosing their original organizational structure; therefore, demonstrating high uncertainty
avoidance. So when you analyze this dimensions as a whole, it appears that on the bottom of the
hierarchy, Nordstrom demonstrates low uncertainty avoidance by allowing free reign on the storelevel managers and employees, but as the dimension works up the ladder, there seems to be more
uncertainty avoidance as it gets higher up in positions.
Collectivism appears to be promoted throughout the Nordstrom organization through all of
the team building days, and the idea of the Nordstrom family. However, even though it is
promoted, collectivism is not necessarily what is taking place. Individualism seems to be more
prevalent in Nordstrom stores. This idea is supported by the intense competitions between the
employees that are put in place by management. Employees often have to stand their own ground
and pave their own way in order to survive. The case even says that management turns the
employees loose to do what they do best. This suggests that the environment is very sink or swim,
forming the overall feel of an individualist organization.
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Nordstrom’s employees need to be people motivated by very specific criteria. Nordstrom’s
employees are often motivated by highly intrinsic rewards. These are rewards are non-material
satisfactions that are received for a job well done. Nordstrom uses things like: who has top sales
per hour (SPH), who is the top seller, and who reaches company goals. This information is clearly
displayed in break rooms for the employees. If employees are more motivated by internal rewards,
such as being the top sales leader, they are focusing on the competition aspect of their jobs. An
employee may be constantly striving to find new ways to grow and develop to their full potential
to receive recognition and respect. If Maslow’s Hierarchy of Needs model is applied, the needs of
the employees at Nordstrom are at the top of the pyramid in the ‘Esteem Needs” section. In order
to fulfill these esteem needs, the pyramid must be climbed from the bottom. Physiological, safety,
and belonging needs must also be met. However, for some employees some of the lower-level
needs were not met. For example Patty Bemis was constantly worrying that her job was in
jeopardy, a safety need. If higher level needs are not met, then an employee may fall back into an
already fulfilled lower-ordered need. This is called the frustration-regression principle. In Patty’s
case there was nothing to regress to; this made her decide to leave. Another way to look at this
idea is through the acquired needs model. This model outlines three needs most strived toward in
an individual’s lifetime: Need for achievement, need for affiliation, and need for power. Those
people who have a need for achievement will do well in Nordstrom’s work environment but those
looking for more power or affiliation may not be met as easily.
In Nordstrom’s case some employees were satisfied by the work they have done while
others were extremely unsatisfied. When looking at this through the two-factor approach, the
employees that were satisfied had two factors met: motivators and hygiene factors. Motivators are
things like recognition responsibility and personal growth. Hygiene factors are things like working
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conditions, pay security company policies. Those who are dissatisfied don’t agree with hygiene
factor and this prevents them from being influenced by motivating factors. Those who are satisfied
are positively affected by hygiene factors and motivators of the company. In Fig. 2 below it shows
motivator and hygiene factors for Nordstrom employees.
It would be simple if
all employees were happy
with the needs being met by
the company, and the way
they
were
treated
(as
described by equity theory),
but each person’s outcomes
within the company are
different. The expectancy
within the company is high, meaning the effort put in by an individual will create a better
performance, being able to reach the leader board and have highest sales. However the
instrumentality, employees has a very high uncertainty. This means that even if they have high
performance that lead to outcomes, the outcomes are hard to predict. Some employee’s
performance leads to adequate pay and promotion. Others may perform but not receive the
outcomes they are expecting. Again looking at the example of employee Patty Bemis, she had been
performing highly but only making $18,000 a year. The value of each outcome or valence will
determine if the employee will be further motivated within the company or not suited for the job.
Employees with specific trait will have better outcomes.
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In Nordstrom’s case the top management team has a decision that must ultimately me
made: should there be changes made to the managerial/worker policies? This question can be
partially answered by the analysis of the leadership, culture, and motivation present in the
organization. The classical model may be the ideal model to base any decision on, but bounded
rationality and the uncertainty of outcomes does not allow for this model to be used. The
administrative model, being descriptive, offers a way for managers to change policies in their
stores. A fair example of satisficing in the Nordstrom case would be not changing, as the current
style has yielded a large degree of success. The political model is also a model that may be applied
to this decision making process. The Nordstrom executives could convene to discuss possible
changes to policy. Again, this model takes bounded rationality into account.
This decision is characterized by uncertainty as the goals to be achieved are known and
the causes, at least a few possible causes, can be identified. The problem has been identified as the
stores having high turnover rates and producing some employees who are unhappy with company
policy. The cause of this problem lies somewhere in the leadership, cultural, or motivational
environment. Luckily for the decision makers, many of the same practices affect more than one of
those areas.
To go about developing a list of alternatives, it would be wise to gather more information
than is presented in the case to get a clearer picture of what causes the disgruntled employees.
Three cases do not provide sufficient cause to justify a change. They could consider a more
centralized structure in order to exercise more control over the managerial practices in each store.
With as many locations as Nordstrom has, it is very possible that one store’s practices differ greatly
from another’s; stricter management policies could serve as remedy to this. They could also
include alternatives that offer more extrinsic rewards so as to increase motivation. The option not
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to change any policies should be included. These are just a few examples, and more than one
possibility can be exercised at once if a combination of multiple changes suits the company best.
Choosing the best alternative could prove difficult because of bounded rationality. The
situation may be too uncertain to warrant any changes because negative consequences can happen.
The decision makers should avoid seeing what they want to see in order to make a well-informed
decision. Only after careful analysis of as many factors as possible, an alternative should be
implemented that satisfies the problem as much as possible without creating new problems. For
example, if in an effort to create more equality, they began to offer shared commission, the
“pacesetters” would be less likely to work as hard. They could remedy this by offering a higher
cut of the shared commission to the pacesetters. It should also be considered that the Nordstrom
community often observes the upsides of employment without accurately assessing the downsides,
so it is just a job that requires certain personality types. The implementation of policy change
should come a little at a time to avoid shock within the individual stores who may have to change
more than others. A grace period should be granted for implementation.
After full implementation, there should be a set trial period where management and
executives gather feedback and evaluate changes. If the change in the three environments is
generally positive, then it should be considered a success. If the changes are negative, the decision
makers should not try to justify their decision, and be content with returning to previous business
styles.
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Recognition of
Problem
Diagnosis and
Analysis
• High Turnover
• Unhappy Employees
• Free Reign Management
• Decentralized Structure
• Unfair employee policies
Development of
Alternatives
• More centralized structure
• Creation of universal policies to be honored by all stores
• No policy changes
Selection of
Alternative
• More centralized structure
• Creation of universal policies to be honored by all stores
• Do not be swayed by seeing what you want to see
Implementation
of Alternative
Feedback and
Evaluation
• Do not force change quickly
• Allow a grace period
• Provide reasoning for changes
• Implement trial period for the new centralized structure
• Watch for generally positive or negative trends
• Do not try to justify if negative; revoke changes if necessary