Performance Management
vtaong
wk3nordstroms_performance_goals.docx
Nordstrom’s Performance Goals
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 – 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 associate’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.
Write 2-3 page paper. In your paper answer the following:
1 Nordstrom creates an open atmosphere, in which every associate’s sales figures are made available to everyone else. Explain the positive impacts.
2 Twice a month, Nordstrom releases sales figures and rewards top-performing employees. In your opinion, is this the best type of reinforcement schedule for everyone, or would you take a different approach?
3 Give an 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?
Include a title page and 3-5 references. Only one reference may be from the internet (not Wikipedia). The other references must be from the Grantham University online library. Please adhere to the Publication Manual of the American Psychological Association (APA), (6th ed., 2nd printing) when writing and submitting assignments and papers.
Please use additional materials below as needed to include references.
Nordstrom's Momentum: Profits Increase 26.3%, Chain Set for Expansion
Listen
Select:
American Accent
Australian Accent
British Accent
If you are in the upscale fashion business watch out: Nordstrom Inc. is coming at you.
Merchandise upgrades and a push into the designer market at the Seattle-based chain are paying off. Margins are rising, and there's heady expansion in the works.
On the strength of regular-price selling and higher ticket prices, particularly in apparel, Nordstrom reported a 26.3 percent rise in net earnings to $135.7 million, or 52 cents per diluted share, for the third quarter ended Oct. 28. That compares with net profits of $107.5 million, or 39 cents per diluted share, in the corresponding period a year earlier.
Total sales for the quarter rose 12.4 percent to $1.9 billion, compared with $1.7 billion in the year-ago period, and comp-store sales rose 10.7 percent.
"Regular-priced selling across our women's department has really changed for the better," Pete Nordstrom, president of merchandising, said during a conference call. "This category has been the toughest one for us to improve."
The company said all major merchandise categories performed above the low-single- digit growth plan, and that results in intimate apparel, accessories, women's better and designer apparel exceeded the company's overall percent gain.
The Nordstrom Direct operation, including its Web site and catalogue, and the Rack chain achieved double-digit same-store growth. Gross profit as a percent of sales increased 156 basis points versus the prior year. Selling, general and administrative expenses as a percentage of sales decreased 17 basis points versus the prior year, and would have decreased further were it not for $6.5 million in compensation costs linked to the price of the company's stock, which appreciated 38.4 percent in the quarter.
Moreover, Nordstrom has been sailing along, year-to-date. Net earnings increased 23.5 percent to $445.7 million for the nine-month period, while sales increased 9.3 percent to $5.9 billion, and 7.2 percent on a comp basis.
On the expansion front, Nordstrom unveiled a flurry of openings well out in the future, at malls owned by General Growth Properties: in spring 2009, at Fashion Place in Murray, Utah.; in fall 2009, at the Kenwood Towne Centre in Cincinnati; in spring 2010, at the Galleria in St. Louis, and in spring 2011, at Christiana Mall in Wilmington, Del. Last month, Nordstrom opened a new store in the Westfield Topanga Mall in Canoga Park, Calif., a 213,000-square-foot unit with the company's "most comprehensive designer offering in the country, along with new design concepts, amenities and services," the retailer said.
In addition, Nordstrom has its eye on Manhattan where it wants to open a flagship. But real estate and construction costs are prohibitive and there are limited sites with sufficient space for Nordstrom to make a full presentation, making the search challenging.
The Seattle-based retailer plans five new stores in 2007 and seven for 2008, as well as six or seven remodels a year. By 2011, there will be a very small percentage of Nordstrom stores over 12 years old that are not either new or remodeled. Nordstrom's capital expenditures budget calls for $300 million to be spent this year, and $550 million next year, and another $2.25 billion from 2008 to 2011, with 80 percent earmarked for new stores, remodels and relocations.
Square footage will grow 4 to 5 percent, compounded annually, through 2011.
Based on recent strong performances, the company boosted its earnings outlook for the fiscal year ending Feb. 3 to diluted earnings per share in the range of $2.46 to $2.51, up from $2.31 to $2.39. The estimate includes a projected expense of 6 cents a diluted share for stock option compensation. For the fourth quarter, the company sees EPS in the range of 79 cents to 84 cents. Under the four-five-four retail calendar, the 2006 fourth quarter and fiscal year include an additional week, Nordstrom said. A midsingle-digit same-store sales increase for the year, and a low-single-digit gain for the fourth quarter are projected. Nordstrom's performance could be further lifted by a new merchandising planning system that goes live this quarter with all categories for spring 2007 merchandise planning and assorting by door.
The current fourth-quarter and full-year EPS consensus forecasts are 82 cents and $2.47, respectively.
The chain operates 99 full-line stores, 50 Nordstrom Racks, five Faonnable boutiques, one freestanding shoe store and two clearance stores. Nordstrom also operates 35 Faonnable boutiques in Europe, nordstrom.com and catalogue.
Pete Nordstrom credited Loretta Soffe, executive vice president and general merchandise manager for all women's, excluding designer, with leading the efforts.
The designer business, he added, is the category achieving the largest percentage growth over plan compared with other offerings. "We are excited about the future of our designer plans," he said. "Our customer has an appetite for this product."
About a quarter of Nordstrom full-line stores have been identified for merchandising with "a complete offering of designer," Nordstrom said, or one store in each major market where the retailer operates. "We have made a lot of progress. We have a long way to go." Designer is "a low-single-digit percent of Nordstrom's business currently. "We've got goals to where we want to go. It's hard for us to quantify what's possible there."
Across Nordstrom, "regular-priced selling and flow of new merchandise seems to be driving the business over anything else," Nordstrom added.
"We do strategy work with every merchandising category. Given the size of women's - roughly a third of our business - there is quite a bit of room for upside."
Beyond women's, Nordstrom said he sees the most opportunities to mine in cosmetics, then shoes. But he stressed," We don't see any end in our ability to execute better in all the categories where we currently do business."
Last quarter, he said the company saw much growth in accessories, particularly sunglasses, watches and handbags. He sees accessories continuing to drive the business in the fourth quarter, when jewelry "really takes on a lot of importance," along with cold-weather wear as it relates to luxury fabrications, cashmere specifically. "We are selling a lot of Ugg boots again, and handbags continue to be great."
~~~~~~~~
By David Moin
Copyright of WWD: Women's Wear Daily is the property of Penske Media Corporation. and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use.
References
MOIN, D. Nordstrom's Momentum: Profits Increase 26.3%, Chain Set for Expansion. (cover story). WWD: Women's Wear Daily. 192, 108, 1-12, Nov. 21, 2006. ISSN: 01495380.
AMA
(American Medical Assoc.)
Reference List
Moin D. Nordstrom's Momentum: Profits Increase 26.3%, Chain Set for Expansion. (cover story). WWD: Women's Wear Daily [serial online]. November 21, 2006;192(108):1-12. Available from: Business Source Complete, Ipswich, MA. Accessed July 14, 2015.
APA
(American Psychological Assoc.)
References
Moin, D. (2006). Nordstrom's Momentum: Profits Increase 26.3%, Chain Set for Expansion. (cover story). WWD: Women's Wear Daily, 192(108), 1-12.
Chicago/Turabian: Author-Date
Reference List
Moin, David. 2006. "Nordstrom's Momentum: Profits Increase 26.3%, Chain Set for Expansion. (cover story)." WWD: Women's Wear Daily 192, no. 108: 1-12. Business Source Complete, EBSCOhost (accessed July 14, 2015).
Chicago/Turabian: Humanities
Bibliography
Moin, David. "Nordstrom's Momentum: Profits Increase 26.3%, Chain Set for Expansion. (cover story)." WWD: Women's Wear Daily 192, no. 108 (November 21, 2006): 1-12. Business Source Complete, EBSCOhost (accessed July 14, 2015).
Harvard
References
Moin, D 2006, 'Nordstrom's Momentum: Profits Increase 26.3%, Chain Set for Expansion. (cover story)', WWD: Women's Wear Daily, 192, 108, pp. 1-12, Business Source Complete, EBSCOhost, viewed 14 July 2015.
Harvard: Australian
References
Moin, D 2006, 'Nordstrom's Momentum: Profits Increase 26.3%, Chain Set for Expansion. (cover story)', WWD: Women's Wear Daily, vol. 192, no. 108, pp. 1-12.
MLA
(Modern Language Assoc.)
Works Cited
Moin, David. "Nordstrom's Momentum: Profits Increase 26.3%, Chain Set For Expansion. (Cover Story)." WWD: Women's Wear Daily 192.108 (2006): 1-12. Business Source Complete. Web. 14 July 2015.
Vancouver/ICMJE
References
Moin D. Nordstrom's Momentum: Profits Increase 26.3%, Chain Set for Expansion. (cover story). WWD: Women's Wear Daily [serial on the Internet]. (2006, Nov 21), [cited July 14, 2015]; 192(108): 1-12. Available from: Business Source Complete.
Export to Bibliographic Management Software
