Sales per Hour per Fairness

In the article about Nordstrom’s, it was revealed that managers would judge salespeople primarily by the number of sales they made per hour (SHP).  Because of this many employees did their non-sales duties off the clock so as to not bring down their average.  This allowed Nordstrom’s to get away with not paying employees for significant hours of work.  The salespeople always had an option to report their hours, but they knew that it would oftentimes be better for them to not.  Salespeople with lower than required SHP’s would get their hours reduced and could sometimes even be fired.  This created a competitive culture among salespeople where they would try to “shark” (steal) each others sales and would do anything they could to make more sales than their fellow employees.  Also, in their attempts to make sales they would go the extra mile for the customer.  Some would drive to other Nordstrom’s to find an item that their store did not  have and then drive it over to the customer’s house.  Others would go as far as to go the parking lot to change customer’s tires!

This led to Nordstrom’s being revered for their high quality customer service.  It seems that this customer service was a direct result of their competitive sales system.  If this is the case, than might Nordstrom’s actually be doing the right thing?  They have found a way to cut costs and provide a better product at the same time.  Furthermore, by showing that they care more for customers, they are making inroads into increasing brand loyalty and efficacy among consumers.  Nordstrom’s may have looked at the situation and decided that it was far more valuable to please customers than to try and please employees.  This actually makes sense.  The case said that Nordstrom’s was widely known in the retail sales world as a high paying employer.  Because of this, they probably thought that they could always draw more potential salespeople (whereas drawing more customers is not such a sure thing).

Also, Nordstrom’s probably think that by making there structure so competitive, they will eventually weed out all of the employees who are not willing to come in and work weekends and work for free.  Again, their relatively high wages give them an advantage here.  If employees think there is a good incentive to work hard, they probably will (especially those more ambitious employees).  Also, the managers probably aren’t too sensitive to people who whine about these practices as they probably went through it themselves (since Nordstrom’s only promotes within the company).

All that being said.  It is still probably not totally ethical.  Nordstrom’s should set up a structure that rewards employees for all their work, not just a specific part of it.  It would not be too difficult for Nordstrom’s to figure out a way to count the time that employees spend doing non-sale activities.  They could file those differently and employees would still have incentive to work hard.  Another approach they could take would be to take the SHP not for single employees, but for the whole sales team.  If all of the sales people could work in concert to contribute to total sales (with some out front selling and others taking care of everything behind the scenes) they could have a less cutthroat environment.  Even if they only worked with two-person teams they could probably accomplish this.

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