Much popular and scholarly attention has been focused on the hypothesis that strong cultures, defined as “a set of norms and values that are widely shared and strongly held throughout the organization,” enhance firm performance. This hypothesis is based on the intuitively powerful idea that organizations benefit from having highly motivated employees dedicated to common goals.
In particular, the performance benefits of a strong corporate culture are thought to derive from three consequences of having widely shared and strongly held norms and values: enhanced coordination and control within the firm, improved goal alignment between the firm and its members, and increased employee effort. In support of this argument, we have chosen Nordstrom, Inc to evaluate their corporate culture. Our five-member team researched publicly accessible web sites, and used references available through the University of Phoenix library. We found creditable resources to support our hypothesis that strong cultures enhance firm performance.
In conclusion, we believe Nordstrom is a great example of a company with strong corporate values, which are shared by its employees. They go to the extreme with their customer service and employees are rewarded for it. In doing so they have built a loyal following of customers, and have expanded their business across the United States. Assessing Corporate Culture – Nordstrom, Inc. Nordstrom began as a shoe store in Seattle, Washington in 1901. Today, they are one of the largest independently owned fashion specialty stores in the nation. The founder, John W.
Nordstrom, believed in a simple philosophy: Listen to the customer, provide them with what they want, appreciate the fact they came to your store, and do everything within your power to ensure that they are satisfied when they leave. For over 100 years, the employees have built upon this philosophy and continue to define our reputation one customer at a time. The ongoing commitment to customer service sets Nordstrom apart from other retailers – and it’s the people that bring the Nordstrom experience to life. Taking care of the customer at Nordstrom is the number one priority.
It is all about people. The people have the freedom to make spot decisions – big or small – in order to grow their business and make the customer happy. Much of what one does here cannot be taught in a training room. The company has only one rule – “Use good judgment in all situations. ” Nordstrom’s reputation is important to them. They believe the best way to do business is to follow the golden rule – to treat others the way you would like to be treated yourself. Every day, they apply that approach to building relationships with customers, fellow employees, and people within our community.
They take great care to nurture the relationships through service, honesty, integrity and trust. In many ways, it’s not so different than building a relationship with a good friend. In fact, that’s one of the rewards of a Nordstrom career – the incredible number of friendships forged with customers and fellow employees over the years (http://careers. nordstrom. com). At Nordstrom’s, the workplace is designed in order to help make the customer feel welcomed. Many of the stores have spacious floor plans, and pleasant decorations. The work environment is that of a happy and thriving business.
Employees feel that their work environment is conducive to high sales and great place to be. This shows that Nordstrom’s puts their customers first, and then their employees, and that says a lot about their “People First” attitude. Nordstrom realizes by training its employees thoroughly and giving them the power to make decisions it lets the employee be more creative, and to take more pride in their work, thus making them harder and smarter workers. The managers are encouraged to take the lead and get on the sales floor and not just sit behind a desk.
They are in charge of doing all their own hiring, firing, scheduling, and promoting so they feel a sense of ownership in the company. The company also regularly distributes videotaped interviews with top salespeople who offer tips and advice (Spector, 1996). Nordstrom salespeople are motivated in a variety of ways. There are contests every month, which push the employees to work harder and even compete with other employees. Nordstrom’s sees a little inner office competitiveness as healthy. Employees are rewarded for high sales with cash, trips, and prizes.
They believe that employees deserve to be rewarded when they go the extra mile, and that makes the employees feel powerful, and needed. At Nordstrom, the best salespeople achieve the status of pacesetter. Pacesetters meet or surpass the sales-volume goal for their specific department for the one-year period from December 16 through December 15 of the following year. Every year, Nordstrom raises the pacesetters goal, in order to make sure that employees keep striving to do better, and do not settle when they feel like they have reached the top (Spector, 1996).
By giving salespeople and managers at all levels a wide range of operational and bottom-line responsibility (such as controlling costs), without shackling them with lots of bureaucratic guidelines, which get in the way of serving the customer, Nordstrom allows its people to operate like entrepreneurial shopkeepers rather than blocks in a retailing monolith. “We can move on a dime and effect things quickly,” said Martha S. Wikstrom, president of Nordstrom’s Full Line store group, “Bureaucracies are too cumbersome to get anything accomplished”(Anonymous, 1994).
The most obvious example is the return policy, which is virtually an unconditional, money-back guarantee. If customers are not completely satisfied with their purchase, for whatever reason, the store takes it back, no questions asked. Retired co-chairman Bruce Nordstrom tells salespeople, “If a customer came into the store with a pair of five-year-old shoes and complained that the shoes were worn out and wanted her money back, you have the right to use your best judgment to give my money away. As a matter of fact, I order you to give my money away” (Spector, 1996).
Nordstrom also gives salespeople the freedom to sell an item at a lower price, if necessary to match the competition. They feel if you tell people they cannot meet the competitor’s price, you are telling them to take care of me, not the customer. The system also fosters an intense drive among department heads to grow “their” business and emboldens them to confront their peer managers in Buying and Merchandising as forcefully as would an entrepreneur running a small independent business. Buyers are typically the prima donnas of retailing.
Not at Nordstrom. There, they are part of a scrappy, high-performing team. Nordstrom provides a long running success story that practices constructive conflict (Pascale, 1994). Beginning in the early seventies, expanding first down the west coast into California and then across the continent, Nordstrom has demolished entrenched competitors like Macy’s, Saks, and Bloomingdale’s. All were well-established chains with a national presence, enormous buying clout, and a strong consumer franchise (Anonymous, 1994).
Its success shows that an entire motivated employee workforce is as formidable a competitive weapon in the service sector as in manufacturing. And above all, Nordstrom is an organization that is designed to produce and carefully orchestrate constructive conflict. Its organizational structure is unusual: To manage its operations and thirty thousand employees, Nordstrom has five co-chairman and three presidents. Nordstrom teaches its employees to take the power into their own hands and do whatever is necessary to please the customer. Nordstrom is informally organized as what as known as an “inverted pyramid.
” The customers occupy the top position. They are followed in descending order by sales and support people; department managers; store managers, buyers, merchandise managers, regional managers, general managers; divisional presidents, the chairman and the board of directors (Spector, 1996). The inverted pyramid was born in the early 1970s, when Nordstrom made its initial public offering of stock. A stock analyst asked the company for its organizational chart. To his surprise, none existed. Somebody suggested that “we take a pyramid and flip it upside down,” recalled John Nordstrom.
What sets Nordstrom apart is that, from department manager to co-chairman, all tiers of the inverted pyramid work to support the sales staff, not the other way around. “The only thing we have going for us is the way we take care of our customers,” explained Ray Johnson, retired co-chairman, “and the people who take care of the customers are on the floor” (Spector, 1996). Nordstrom managers continually reinforce the message that they have confidence in the ability of their people to make good choices. They believe so many things are common sense, and if you give people leeway and credit, most of the time they are going to do the right thing.
And if they do the wrong thing, say you are sorry, and start all over again. People will work hard when they are given the freedom to do the job the way they think it should be done, when they treat customers the way they like to be treated. When you take away incentive and start giving rules, creativity is killed. Nordstrom’s philosophy does not force the customer to abide by a lot of corporate regulations. The idea is for them to adapt to the customers, to make the system work for them; not the other way around. The customer is the one who drives the business.
A shared vision of the future galvanizes Nordstrom’s workforce. From senior executive to stock clerk, the staff shares a deep-seated belief that they are the future of mass retailing. One of the ways that Nordstrom puts these concepts into practice is through its system of the “personal shopper. ” The germination of this idea was the observation by Nordstrom’s founder that the department store customer is usually inconvenienced by the way department stores organize themselves: For example, wishing to buy a suit, the shopper visits a department that sells only suits.
A wait in line at the register is necessary to handle that transaction. Then, if matching articles to the suit are wanted, each item must be hunted down in a time-consuming search through different departments in the store. Each purchase entails capturing hard-to-find sales clerks and the inevitable wait in the cashier line. Nordstrom maintains its vitality through an ongoing “Breakthrough Project. ” This process of constantly reinventing its relationship with the customer is driven by its one omnipresent motto: “Respond to Unreasonable Customer Requests!
” The motto leads employees to perform daily acts of “heroics” (as Nordies call them). Of course, the majority of Nordstrom’s responses to “unreasonable customer requests” entail no more than going a little out of the salesperson’s way to provide extra service. Occasionally, though, the heroics include hand delivering items purchased by phone to the airport for a customer going on a last-minute business trip, or changing a customer’s flat tire, or paying a customer’s parking ticket when a line at the gift wrapping counter delayed the customers departure until the parking meter ran out.
“Responding to Unreasonable Customer Requests” is an ongoing source of breakdowns–it constantly puts the extremes and excesses to which some customers push the system, for example, returning shoplifted goods for cash refunds, against economic realities (Anonymous, 1994). Some legitimate heroic stories sound apocryphal. Perhaps the most famous one – which the national press frequently cites – is the tale of the salesperson that gladly took back a set of automobile tires and gave the customer a refund. Nordstrom has never sold tires, but the story is true.
In 1975, Nordstrom acquired three stores in Alaska from the Northern Commercial Company, which did sell tires. So, when the customer – who had purchased the tires from Northern Commercial – brought them back to Nordstrom, the return was accepted. Nevertheless, the hyperbole reinforces the point and nurtures the mythology (Mikkleson, 2003). With a reputation for extraordinary service, and a sales force eager to go the extra mile, there is a built in tension at Nordstrom between service excellence and excess. As management sees it that is just the tension they want.
Nordstrom sustains a relentless high-performance environment. Management feels that the sales force commitment to move mountains to give customers what they want is the surest way to stay in touch with the mood of the consumer. In addition, it’s a foolproof way to expose any organizational orthodoxy and bureaucracy that stands in the way of doing that. Management does not approve of every act of “heroics. ” But they regard the opportunity to decide whether a good thing is being taken too far as a provocative stimulus to remain outward looking.
It is important to note that when “Respond to Unreasonable Requests” is regarded as a breakthrough project, its stimulative properties can be appreciated. This is not just statement of “strategic intent”–it’s much more concrete, operational, and self-renewing. Nordstrom employees appear to understand this guideline as if were the most important rule in a form of play rather than a threatening commandment. Most Nordstrom employees seem to be sincerely having fun pleasing the customer. One of Nordstrom’s benchmarking qualities that set them apart from other companies is that they never make you stand in line to pay.
The clerk who waits on the customer takes your credit card and returns with a slip to sign and a bag for your stuff (Gitomer, 2003). Values are the bedrock of any corporate culture. As the essence of a company’s philosophy for achieving success, values provide a sense of common direction for all employees and guidelines for their day-to-day behavior. These formulas for success determine (and occasionally arise from) the types of corporate heroes, and the myths, rituals, and ceremonies of the culture.
In fact, we think that often companies succeed because their employees can identify, embrace, and act on the values of the organization. We have looked at the past triumphs and present necessities of corporate culture. And in the process we argue for a reinvestment in the shared values, heroes, rites, and rituals that have made Nordstrom Inc. a success story around the world. But there is an even more compelling reason to begin fostering strong cultures in all types of organizations–the future.