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Nordstrom's Performance Goals: A Case Study

This case focuses on the issue of performance. As discussed in the text, clear and effective goals help improve employee performance, reduce role stress conflict and ambiguity, and improve the evaluation of employees' performance. The text also discusses the various elements that are involved in managing performance. These include defining performance, measuring it, providing feedback, rewarding poor performance, and correcting poor performance.

At Nordstrom, employee performance is directed towards a single goal â?" extraordinary service that produces extraordinary sales volumes. Every measure by which an employee is evaluated and rewarded is based on this goal. This is evident in Nordstrom's training programs and its reward and incentive structure. A central way in which Nordstrom tries to improve employees' performance is by fostering an open, competitive environment in which employees are a part of teams, but also pursue individual achievements. The company encourages creative tension among associates by making the performance information of every employee available to every other employee.

Case Study: Nordstrom: Performance Goals
The sales staff at Nordstrom is motivated to give extraordinary service, because extraordinary service produces extraordinary sales volumes and extraordinary profits. Like competitive athletes, these employees are highly focused, eye-on-the-prize individuals who pay full and careful attention to the individual customer.

Nordstrom regularly distributes videotaped interviews with top salespeople who share advice to fellow employees. Staff meetings become workshops in which associates compare, examine, and discuss sales techniques. Nordstrom also employs STEP (Sales Training Education Program), developed by the Washington region's personnel department which enables associates to share information with other salespeople and department managers.

Like competitive athletes, Nordstrom associates are a part of teams, but also pursue individual achievements. The company insists that all associates beam team players who work together while at the same time encouraging everyone to become a star performer.

Star performers among team players? Herein lies the creative paradox that energizes the Nordstrom culture. The company encourages creative tension among associates by making available information about the performance of all other associates. Any associate can know where they stand and how their performance compares with anyone else in the company. Twice a month, every associateâ??s sales-per-hour numbers are posted for all to see. In this open environment, rewards follow performance. There are cash prizes, trips, and awards given for outstanding sales-per-hour and sales-per-month performances. Associates earn rewards the old-fashioned way; they earn them.

In this kind of atmosphere, Nordstrom must manage inter-group competition well so that associates do not destroy each other in the competitive process. From its earliest days, Nordstrom has aimed to create creative, rather than destructive, tension. The competitive environment is also disciplined by goal-setting. Nordstrom is organized as an inverted pyramid, with sales associates at the top, the buyers in the middle and the managers at the bottom. What binds the three tiers together is goal-setting. Each member of each tier strives to meet personal, departmental, store, and regional goals. This leads to a disciplined, well ordered, and competitive structure within which performance expectations are clear, feedback lucent, and results understandable.

ANSWER THIS QUESTIONS USING CONCEPTS FROM THE MATERIAL:

1.Nordstrom creates an open atmosphere, in which every associate's sales figures are made available to everyone else. Explain the positive impacts.While this is intended to foster creative tension, how might it lead to unhealthy destruction?
2.Twice a month, Nordstrom releases sales figures and rewards top-performing employees. Is this the best type of reinforcement schedule, or would you take a different approach?
3.Give a thorough example of a reinforcement schedule you have experienced or seen. Explain the effort, the reinforcement schedule, and the motivation to succeed. Was the outcome positive motivation or were their negative impacts?

Solution Preview

1. The positive impacts in knowing where one stands in regards to everyone else is that good performers are spurred on to do better- either to continue to be number one or to work on improving their ranking. Those who are nearer the bottom, lack to fire to continue to perform, or are apathetic are likely to either take themselves out of the game or are readily identified and can be replaced by management. Overall, it encourages everyone to do better, in effect, to push the ball further down the court, as a team.

It might lead to unhealthy destruction if the sales people sabotage one another, or if this system created unhappiness and unhealthy competition- backstabbing, aggressively approaching customers,speaking ill of one another to customers, or hampering sales in some other fashion. It would be key to concentrate on the group working as a team and celebrating each other's victories as part of the total team's success.

2. The best reinforcement schedule is one in which people are ...

Solution Summary

This solution discusses Nordstrom's sales program, explaining the positive impacts and negative possibilities. It also discusses the reinforcement schedule, and discusses alternative schedules. It includes examples and a link.

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