Nordstorm Case Answer

1 What is the cause of the problems described in the case? How serious are these problems?

The causes of the problems are following:

Sale per hour ( SPH) ratio. The company used SPH to measure performance of employees. Employees with a higher SPH ratio could obtain higher commission and also have chances to get promotion. However, this index caused a situation that employees may prefer to work off the clock rather than reporting all actual working hours. Because employees found that reporting overtime working hours would result in a lower SPH, which could even make them loss jobs.

When company employed sale clerks, the company did not tell employees outright that employees should do all various extra things such as locating merchandises, writing thank-you notes and working on projects outside of working hours.

The lack of a clear distinction between “selling time” and “non-selling” work time exacerbated the pressures on employees. When employees reported more working time, they would have a relative lower SPH ratio. If employees did not record these extra working time into “ selling time”, they would gain more income and commission but they would faced tough more tough situation to meet their goals in the future because they would be set a higher SPH target. The fear of having low SPH ratio resulted in losses for the employees,such as monetary as well as recognition of extra working hours.

The company wanted to create a competitive working environment by using peer pressure to motivate employees. However, this strategy led to undesired behaviors such as stealing credit among employees. Also, when sale clerks did not meet their goals in the competition among employees, they would go to work on their days of without any compensation.

The decentralized system limited top management’s control over the application of sales force management systems. Because manager’s bonuses were tied to the achievement of budget goals, they had to put excessive demand and...