NOrdstorm Case Analysis Essay
NOrdstorm Case Analysis
“Our staff is genuinely interested in seeing that all your needs are meet. They are professionals-will help you with everything from gift suggestions to wardrobe planning. They will even accompany you from department to department until you find exactly what you’re looking for” , a quote from Nordstrom directory as a benchmark for service exceptions.
How is Nordstrom able to claim this unexceptional goal within retail industry? The answer lies with the great achievement of motivation produced within Nordstrom culture. The case in question is prepared by Richard D. Freedman and Jill Vohr, Stern School of Business, New york University. This case analysis is based on the experiences and background of retail giant, Nordstrom. The store started its operations with humble beginning of providing excellent customer service to constituents.
Nordstrom operates almost 100 stores in 10 states. It’s a growing company with great working culture. There are approximately 35000 employees working within Nordstrom family. The focus of Nordstrom’s management is to create an ambitious and motivated team that provides customer service like no one else offers, service above and beyond the call of duty. All employees are made to feel like members of a family sharing in “the Nordstrom way”. Company has been able to create an environment where promotions are only from within the company, where employees keep a journal of customers to send thank you letters and upcoming promotions.
Employees perform all operations relevant to their jobs, even unpacking items, shelving and storage responsibilities. The astonishing thing is that all these tasks are performed on off the clock. Nordstrom has been able to create an environment where employees are pushing themselves to limits. Doing chores during their lunch time or after the clock has been a Nordstrom culture for a while. Even though this practice had created some controversy with few employees and unions are trying to pursue Nordstrom to abolish these motivational techniques to have employees work off the clock to achieve better status and money. There have been various lawsuits involving Nordstrom employees and management.
This analysis can provide us some insight on how Nordstrom has been able to use motivational theories to purse employees to be part of this huge enterprise. Motivation is a force that come from within a person that can help create a willful direction towards achieving some specific goals, where achievement is not due solely to ability or to environmental factors. Performance of a certain individual can be accounted using: Performance = f (Ability x Motivation)
Nordstrom had created a place of business where they pick the best sales people from the given population and provide them motivation in form of promotion, excellent sales commissions and social stature of working for a prestigious retailer like Nordstrom. Nordstrom has been able to use content theories of motivation to produce current company’s culture. Using content from Hierarchy of Needs Theory by Maslow’s, Nordstrom can motivate people according to their desire to satisfy specific needs. Using physiological needs like money, Nordstrom had created an excellent base pay structure along with the opportunity to create more opportunities for sales people in form of high commissions.
Nordstrom’s pay structure is more rewarding than its competitors. Using physiological paradigm as a motivation force, Nordstrom is an industry leader for harvesting the best talent within sale force. Second level of Maslow’s theory is Safety needs. Nordstrom had created a culture that resembles to an individual family boutique operating within its own means and create its own identity. Nordstrom managers are free to hire and the only rule exist is to help the customer by any way possible as long as it’s legal.
This attitude towards management had created a safety net at work place thus helping Nordstrom employees achieve better motivation. Maslow’s theory also promotes social and belongingness needs. Nordstrom has a culture of creating a family within a certain store thus helping with social and belongingness needs of employees. Self Esteem is also considered an important factor of motivation used by Nordstrom. Employees of Nordstrom gladly introduce themselves to others due to the fact that Nordstrom has a certain place in society and this approach helps create more motivation for employees to be more productive.
Maslow’s theory also embraces self-actualization for creating employee motivation. Nordstrom is one of the few companies that can help employees design their own business cards and schedules. The focus is to create entrepreneurial spirit among employees because Nordstrom want performance to come from ambition and motivation and not from corporate headquarters. ERG theory by Clayton Alderfed explains three categories, existence (E), relatedness needs (R) and growth needs (G).
This theory can be considered one of the pillars within methodologies used by Nordstrom. Employees are motivated using growth, relatedness needs and existence needs. Using this theory as an approach for design business model, Nordstrom helped employees look for their basic goals and use Nordstrom as a vehicle to accomplish those goals.
Theory of achievement, affiliation and power by David McCelland can explain the motivational force Nordstrom is using to achieve ambitious goals of sales and motivation. By creating goals to be achieve every month, quarter and year, Nordstrom can help employees create a schedule for themselves to achieve those goals. Nordstrom had created unofficial standard of excellence that can help set goals for employees. Need for affiliation is also used during the course of employment with Nordstrom.
Managers acknowledge the best employees and considered as a pacemaker to others so others can follow their example of excellent customer services and sales. Need of power if another factor involved in creating motivated employees. Nordstrom use strict policy with promotions within the company, this process helps provide power to the ambitious and motivated employees in form of management and team leader positions.
Even though traditional research had not supported claims by two-factor theory or dual-factor theory by Frederick Herzberg; Nordstrom has been able to use the concept of motivators like achievement, recognition, responsibility, growth and challenging work and hygiene factors like pay, working conditions , technical supervision, status , interpersonal relationship with peers and security. Nordstrom had implemented this idea to create a self-realization environment where employees create goals and motivation comes from within. Nordstrom’s focus on use of expectancy theory is another motivational factor for creating motivation. Expectancy is the subjective probability that a given amount of effort will lead to a particular level of performance. Using instrumentality and valence as an outcome, Nordstrom can increase motivational force.
Another factor that Nordstrom is so successful in creating employee motivation is use of equity theory. Equity theory suggests that motivation is based on person’s assessment of the ratio of outcomes he/she receive (e.g., pay, status etc). Nordstrom had implemented these theories to create a model that help employees do things with motivation from within and increase productivity and motivation. Goal setting has been a key motivator for people working within Nordstrom. Even though, many controversial lawsuits and complaints by employees and union had surfaced in last few years, Nordstrom is still promoting its culture.
Nordstrom had set aside more than $15 million for paying employee for times that has not been paid in past due to the fact it was not on clock. Nordstrom still embrace job enlargement and job enrichment policies. Job enlargement is a process of making a job more motivating by adding tasks that are similar in complexity relative to the current task. For example, Nordstrom employees work with a customer in any department to satisfy that customer’s needs. Job enrichment is a process of creating more job motivation by increasing responsibilities. For example, Nordstrom designate employees to take responsibility and act as a concierge and interact with customers using letters and photos and scrap book etc. Using these theories, Nordstrom, had increase employee motivation instead of creating a hostile work environment.
I personally think that Nordstrom can alter few methods to treat with how employee time is compensated. Motivation theories applied at Nordstrom are brilliant and using those theories, Nordstrom had created a culture where employees are working hard to achieve success and reach the goals set by employees and not corporate headquarters. Some of the complaints mentioned in case seem legit but the role of motivation is a two way stream. Nordstrom should deal with these complaints in a manner where it can help employees gain more confidence and motivation. For example, Nordstrom should change the way feedback mechanism handled.
Throughout the whole case, I saw a lack of feedback method that can help employees get better and increase motivation. Feedback plays and important role within company’s motivational efforts. Feedback process can clarify the goals and expectations of certain employees who seem to be abused by this culture. Nordstrom should also focus on including the time for extra circular activities to enhance sales on actual paid time. This would help employees use pay as a motivational factor to increase productivity as defined as Maslow’s, ERG and dual factor theories.