If this is not a great system for you, move on, that it is for others. You don’t have to work nor take responsibility in any system as the one detailed in the case above, do you? To me, this case is not about the labor charges and pay backs brought against Nordstrom (this assumption is not to say that Nordstrom was exempted from responsibility); this case is more about the flawed policies, practices, and measurement systems that were in place, so I think this dilemma is pretty interesting.  Plus, I found many other interesting flaws in the organizational structure of Nordstrom to be the following:

  • Background: Nordstrom first started as a shoe store in 1901, it was run by members of the Nordstrom family. A century later, by the end of 1989, Nordstrom became the nation’s leading specialty retailer of apparel, shoes, and accessories capturing the National retail Merchants Association’s Gold Medal, the most prestigious award in the industry. 1989 was almost a historic year for the company; however it was until the end of that year when Nordstrom reported its first decline for that fiscal year. Up to that point they had enjoyed nearly 20 years of annual double digit growth.   
  • Philosophy: offer the customer the best in service, selection, quality, and value.
  • Policies, Practices, and Measurement Systems: Nordstrom adopted a commission system “SPH” that promoted in nothing but fighting, competition, and the worst didn’t promote a teamwork spirit amongst salespeople whatsoever. Yet, systems weren’t transparent; there was a lot inferred to the processes but not much specifically said as employees had to perform extra duties on their own time that they should have been compensated for. So the reward system itself led Nordstrom employees to file several class action suits against the company because they violated federal and state labor laws by treating their workforce unfairly.
  • Competition: is natural in a healthy system, however in this case was somewhat hidden and manipulated from top down. If you didn’t meet the SPH figure, you didn’t receive commissions, you could be working miserable hours, and in the worse scenario you could end up losing your job. All of that led to what we call an unhealthy atmosphere of competition where employees would steal each other’s time and commissions, so these unethical behaviors were certainly deemed illegal by the labor laws.
  • Sales force: young, college-educated people looking to pursue a career in retailing to whom Nordstrom gave them and other store managers a lot of independence and power over inventory, scheduling, compensation, and promotions (decentralization), so by doing so Nordstrom lost the power to control its workforce.   
  • Nordstrom spirit: They wanted their salespeople to have an entrepreneurial spirit so they saw their jobs as their own business so they went above and beyond for the company, therefore there seems to be a level of truth in this for me. What part of that level of service should be from internal motivation?
  • Motivation: at Nordstrom it was driven by making money and keeping one’s job. However, as I mentioned earlier, more than a time clock dilemma it is all about motivation and finding a job that fits your level of motivation.                   
  • No trust:  Unhealthy systems led managers to manipulate their salespeople into performing duties off the clock without being compensated for as required by individual employment contract or by law yet continued to promote or permit these activities to continue.
  • Organizational citizenship behavior dissonance: it was fear of losing their jobs that urged salespeople to provide great customer service, go that extra mile for the company, work off the clock, deliver merchandise to customer’s location, write thank you notes, attend company meetings, etc. so they weren’t performing those tasks because they wanted Nordstrom to succeed, they did so because they wanted to keep their jobs.

In summary, if Nordstrom would have admitted that there was some flaws in its system it would have saved tons of money in resolving the problems by working to affect change. However in the end Nordstrom pays back fairly well to employees, and still claims they have no desire to change the way their corporate operates.

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In the case above I certainly found the most interesting dynamics within the organizational structure to be the following:

  • Job Redesign: in order for SMC to be competitive and stay in business, it was essential to adjust the organization’s structure and systems to achieve its goals as it was SMC’s new CEO Carl Burke’s original idea: to reorganize the company “either by demoting or firing people” although it was a bit premature because he never tried to change behavior by changing the performance evaluation processes and the pay structure. Therefore, an organization development (OD) is fundamental for every company to increase individual and organizational wellbeing and effectiveness by defining and organizing work relationships and roles, that is between individual skills and the demands of the job, as well as establishing clear patterns of organization, communication, and ways of getting things done.
  • Motivation:  Under former SMC’s CEO Barry Tompkins’s management the company was more number-oriented company rather than people-oriented company, as a result employees focused more on the technical side of the things rather than people’s behavior, therefore the systems were highly efficient but not necessarily effective, and so that led employees to grow complacency and we know what complacency can do to a company right, in this case it generated lack of growth (normative commitment) and lack of innovation (no challenge), such behaviors that undoubtedly set an organization up to fail, since employees never go above and beyond the call of duty (citizenship behavior).  
  • Accountability: CEO, VPs, managers, and everybody else down the line needed to be held accountable for their job at SMC. Carl Burke showed an autocratic style dissonance as he did not mandate that everyone come to work. Carl was as much a specimen as anyone else which was part of the problem.   
  • Trust: Intelligence of each VP questionable. Carl’s fundamental attribution error. Carl hired an external consultant to solve the company’s problems (you should hire consultants to help teach you things you don’t know how to do rather than asking them to solve your problems, that creates dependency). Carl redesigned the organizational structure so that VPs no longer shared information.  

In the end, the independent consultant Laura Wells did come up with great and interesting conclusions, however Carl still won’t make the call to implement a team work spirit, open communication, or decentralized decision making (organic structure).

WSJ: Get Healthy: or Else

February 22, 2010

This article tells the story of Scotts Miracle-Grow Co, a company whose headquarters are located in Marysville, Ohio, the land of all-you-can-eat buffets and that its number one priority was to incorporate new and strict health-care programs in the organization due to the high insurance premiums the company was facing at that time. According to Scotts’ CEO, obesity and smoking became a big issues for his organization back in the days, as they were decreasing the revenues of the organization as the health-care costs increased in a double-digit rate, therefore it was primordial to act on it by implementing health programs within the company that would encourage employees to adopt healthier habits. Fortunately, Scotts’ CEO’s idea did work according to plan although it was not easy, it took him quite bit of time to go tobacco free company, build a couple of gyms for employees, and what is best, to change such suicidal behaviors on the workforce  that were no longer supported by his company, he stated. Personally, I don’t agree with the way he set up those issues at Scotts Co. Okay, I got the point of this article to where it is important to promote healthy lifestyles and all that on the employees; however I think he should not have pointed out specifically at obesity and smoking issues to be the causes of high insurance premiums whatsoever, I just thought that was not right and therefore it could be considered discrimination. We know that the majority of work-related accidents/injuries get to happen because of the lack of providing quality safety training, and not because of obese and smoker people as it was stated in this article. In fact, I have worked with chubby people and they are just fun to work with, they do their job, they show up to work, they work safe and so they rarely get hurt as opposed to skinny and apparently healthy employees who get hurt more often, miss work days, and they don’t toil. So, I believe this article needs to be rephrased.

Chapter 5 readings

February 22, 2010

U.S. News and World Report: Jesica’s Story

Undoubtedly this is a touchy article that has made think about the nightmare the Santillan family underwent back in July, 28, 2003 as far as the senseless loss of their daughter Jesica Santillan’s life was concern, a young girl who was given the wrong organs that did not match her blood type. This article clearly describes how a failed system took the life of Jesica Santillan to death due to the complacent and flawed system in which this prestigious hospital nationwide operated along with other professional organizations in the country. This was without doubt a concerning issue that involved innumerable medical and social organizations across the country before, during, and after that tragedy happened as they needed to carefully double checked their internal systems to make sure they were operating in accordance to their lineaments.

The scary story of Jesica Santillan’s death really has left much to be desired not only to the medical field but also to the entire society when it came to ethic, accountability, professionalism customer service, etc. I know that nothing compares to the value of human lives as they are irreplaceable, however if we translated these kind of malpractices into our organizations that would be failure, and we would not simply exist in the business world. Therefore, in order to succeed in this competitive and changing business environment, companies really need to constantly monitor and evaluate their internal systems and processes by making audits to themselves so that they not only comply by what the protocol dictates, but also to go above and beyond it to never grow complacency, as this latter was certainly what caused the tragedy in the Santillan’s family. If the doctor would have checked Jesica’s chart even just for a minute, none of this would have happened. So, this was a great reading that tells me what complacency can do to our lives even in the smallest of the tasks.

This is a great article that contrasts the quiet coaching styles of the Indianapolis Colts’ head coach Tony Dungy and the Chicago Bears’ head coach Lovie Smith with the others NFL coaches. The former believe they can get the most out of their players by motivating, directing, and treating them calmly and with respect whereas the latter think screaming at players is the best way of motivating them. Personally, I am on the quiet coaching style side, since it is certainly the best manager role one can adopt nowadays. Things have changed in the work place, and we are all aware of that. Getting yelled or screamed at produces nothing but a demeaning, belittling, and unpleasant work environment where numbers could still be achieved, the work could still be done, however the trust will fall through the cracks, and as a consequence we will be living in a La La Land (those who read Bret’s post’s title: LA LA LAND will know what I am talking about) if managers think they are still meeting the customers needs. So we, the people of integrity and value, don’t want to work for screamers or being treated that way but rather we would love to work in an atmosphere of trust where one can express the ideas, thoughts and talents without fear of being ridiculed or getting yelled at in front of the co-workers. In summary, fostering a quiet manager style doesn’t necessarily mean we are being weak whatsoever, conversely it will help us lead our workforce through motivation, respect, so that they work effectively to get the most out of them.

As I read this case above, I was just amazed at how effective SWA has implemented its strategy and operating style from the beginning of its operation back in June 18, 1971 flying with only three Boeing 737 aircraft at Love Field in Dallas, Texas, and now has over 200 of them, the only type of aircraft it flies, as competition of course was challenging to SWA with major airlines companies such as USAir, United, Continental, American, etc. back in the mid-1980’s, however when these latter made a number of marketing and service mistakes that made them retreated from challenge, SW saw and seized opportunity to expand its business as much as it became the leading airline in passenger boardings in 1993, and I would say to the present as it is one of the best domestic airlines nowadays due to the low fare and the simple frequent flights it operates with.  

As we notice, Stanford Graduate School of Business did a tremendous job and thorough case study on analyzing SWA organizational structure from top management to lower levels in the company, pointing out the most important strength that characterizes the success of SWA which undoubtedly rests with people since it was built around people working together with a common goal to deliver great customer service, and to have fun as well, that is better known as SW spirit. So we clearly see that for SWA its people really are the most valuable assets, since they have cultivated for decades a system “highly people-oriented company” that accounts for its success by developing not only an affective commitment on its workforce that leads to a greater job satisfaction, but also by promising its commitment to work-family balance. This is how SWA gets to meet their external customers’ needs by treating its employees as internal customers as well as they meet high standards from within.  This case clearly shows how a company can prosper just by imitating SW’s competitive advantage as it is very easy to do so; however according to the case every company that tries has failed. Why? Because I believe that a competitive advantage in a technology field is without doubt imitable, whereas people’s strengths are much more ambiguous and difficult to imitate as we can’t identify what makes people special. I am big on bullet points, therefore I broke down the main ideas I took away from this fascinating case study of SWA to better understand it, so see below what I summarized:

  1. Leadership at SWA: Herb Kelleher, CEO: inspires a citizenship behavior in the organization as people enjoy what they do; people enjoy their boss, aggressive, underdog spirit, listens to employees, fixes their problems, hands on, promotes party to have fun, and gets his job done!
  2. Operating strategy at SWA: 737s aircraft the only type it operates therefore it simplifies the job by saving on maintenance and training costs; keeps simple frequent flyer system, low fares, low costs, frequent flights, no meal service, no assigned seating, etc.
  3. Competitive advantage at SWA: it is its people; highly people-oriented process, employees are treated as internal customers which boost customer service, etc.
  4. People department at SWA: employees are their own bosses which enables them to make educated decisions in pro of the customers well being to keep them happy, increase revenues, support the growth,  preserve the values and maintain the special culture of SWA.
  5. Recruiting at SWA: they take the position that attitude can’t be changed,  therefore if you don’t have a good attitude they don’t want you, they look for extroverts, great personalities, service attitude, problem solvers, very few MBAs, etc.
  6. Training at SWA: they train their people from within, so they don’t sponsor schooling or tuition reimbursement program, they also bring burnt-out  high seniority people in and ask them questions to improve the work processes.
  7. The work force at SWA: the company is 89 percent unionized, 80 to 90 percent of the employees own stock in the company, young and diverse work force, the turnover is low.
  8. The spirit of SWA: spirit of growth, help one another, family, service, hard work, fun, commitment, trust, etc.
  9. The competitive threat of SWA: Continental, United, and many other airline companies try to rip southwest business model but they have failed at it since they have a scant culture and attitude toward their people’s needs and wants, and why not toward the customer service from within.  

In summary, I took away a whole lot of great real life situations from this case, and what is best, an example of an outstanding organization that is leading the airline businesses effectively nowadays.

This article along with the previous one: To a United Pilot… are highly related to one another as they both describe the importance of gaining an organizational commitment of our workers which is key that is going to lead them to invest that extra mile on the job, as a result they are going to have not only a greater level of job satisfaction, but also they are going to increase the company’s overall financial performance. Therefore, as the author said: “truly engaging them can have an almost magical effect on the bottom line”, and why not in our customer relationships. Thus, we are seeing more and more organizations nowadays trying to combine these two attitudes: job satisfaction and organizational commitment among their employees as “the companies lure new recruits by pledging their devotion to work-family balance”, the author pointed out. However, personally I believe this process of combining these two attitudes is going to still take a while to start seeing some changes in the workplace, since we spend most of our time at work and just don’t see this happen in the real life whereas our bosses are turning into a real big number guys where all that matters is results, and at some point that is understandable since they have to keep costs down, consequently they are sacrificing the most capable and valuable strength that is people. For this reason, up until we adopt a more people-oriented organizational system from within, until then we are going to experience a commitment of our employees such that they are going to be happier and more engaged. Great article by the way!

This is a great article that clearly expresses the importance of providing an excellence customer service as competing fairly and in accordance with the highest standards in all of the customer relationships, as customer service is undoubtedly a core value for all organizations nowadays, because without customers businesses wouldn’t simply exist in the market. However, how can a large company be able to providing that high quality service in today’s dynamic and changing business environment that meets its customer needs? Well, any type of organization is built around people, the strength of any type of organization is its people working together with a common purpose, and the most valuable assets for any type of organization are loyal and capable people, therefore for an organization to be known for its excellent customer service, each employee must meet high standards from within. This is exactly what Capt. Flanagan did at United Airlines Corporation; an outstanding example of a loyal and capable employee that always surpassed the flight attendants expectations as representing his own standards more than the company was back in 2007. To boost customer service, Capt. Flanagan would snap some pictures out of the fliers pets and then he would show them to the owners; he would raffle unopened bottles of wine, he would write some thank you notes on the back of his business cards to frequent fliers, and so on and so forth, so he would always do a lot of things like those trying to lighten the mood of the flight, and to also preserving customer relationships. What great article!

This is a great post by Bob Sutton, where he basically explains that intelligence, a personality attribute, is something that comes from what we do over the time, and not something that we  were born with. Indeed, the more we believe that intelligence is a malleable characteristic and not a fixed one, the smarter we become by working harder on our goals, on our studies, on our jobs as we hone our intellectual skills which they really are getting us to successful paths. In today’s society still exist a poor mentality, intellectually speaking, in which some people think they are better than other people just because of the way they look, the place they come from, and so on and so forth. That is very selfish and egocentric thought. Therefore, we must never get caught up into the stereotype thing which brings nothing positive but negative and incompetent points of view coming from people who have not realized yet the greatness of diversity. We have to keep in mind that we need to bring into the organization that spirit of willingness to learn, being a team player motivating our employees, encouraging and challenging them and ourselves with new projects, tasks, and goals on a daily basis, because we do not need to be smarter, just different, and difference is really an asset to the organization.

I loved this post by Dweck, where she explains clearly and precisely her arguments about personality and its theories; change, self-beliefs, and interventions, such fundamental elements that certainly we need a strong focus on the study of personality to really try to understand why our employees behave differently from others based on cultural differences, of course, and in which personality plays out such essential role for the organizations as it is a form of individual difference and our area of discussion herein. I also agree with the author’s words when she points out that beliefs lie at the heart of personality and adaptive functioning and that they give us unique insight into how personality and functioning can be changed. Personality, by definition is a relatively stable set of characteristics that influence an individual’s behavior, consequently we have to learn how to deal with those characteristics in the workplace such as; core self-evaluations, locus of control, self-efficacy, self-esteem, self-monitoring and positive/negative affect because these characteristics affect the individual performance at work, so the more knowledge we have about them the better we are going to work together as an organization.    Therefore, organizations must realize that people are valued and that everyone has different personality that we must respect as well, so is in here where the challenge begins, that is: managing the personality and its beliefs lies in attempting to combat all kinds of prejudices and discrimination since they both are detrimental and they bring nothing but less productivity to the organization. In summary, our role as managers is to identify those personality characteristics and their influences on behaviors so that we can integrate them into the organizational system to establish healthier human relationships from our bosses to our subordinates.