The Other Nordstrom : Workplace: The retailer is fabled for employees who go to extraordinary lengths to meet customer needs. But some employees say that behind the smiling faces is a sales force under pressure to work many extra hours without pay.
Like many Nordstrom salespeople, Michelle Darby joined the retail chain after falling in love with its tradition of service, a legendary system in which individual “sales associates” operate almost as entrepreneurs, splashing lavish attention on customers and sometimes earning big commissions.
Darby, a 42-year-old career woman who has worked for the past 10 months in one of Nordstrom’s Southern California stores, says she has been nervous ever since. Nervous about having her hours cut or being fired for failing to meet her sales quota. Nervous about finding the time to live up to management’s demands that she please customers at any cost. So nervous that she recently bought her mother an expensive coat--using her mother’s Nordstrom credit card--to make sure that she’d make her biweekly quota.
“Through the eyes of a customer, Nordstrom is wonderful,” Darby said ruefully, asking that her real name not be used. “But all that glitters is not gold.”
Darby is one of several hundred Nordstrom workers and former employees whose recent gripes about life on the other side of the cash register have stained one of America’s most praised corporate cultures.
Their complaints clash jarringly with Nordstrom’s hard-earned reputation as a store where salespeople will virtually run through walls for a customer and maintain a sincere smile, no matter how many teeth they lose.
The prime allegation, which grew out of a Seattle union dispute, involves huge numbers of unpaid hours of labor. But the controversy also raises broader questions about the pressure that commission selling puts on workers in the already highly pressurized retail sales industry. Some people simply aren’t cut out to work in Nordstrom’s “passionately happy,” “no-problem” system, said one fiercely loyal employee, acknowledging that the company has a “sink-or-swim atmosphere.”
Nordstrom, a Seattle-based chain of 50 stores that enjoys the fastest sales growth of any retail chain in Southern California, introduced the concept of department store commission selling in the mid-1960s. Other big-city retailers have been trying to catch up ever since, introducing elements of incentive selling such as having groups of workers in a department share commissions or offering commissions only in certain stores.
In some cases, this has been a sour experience. Nordstrom’s competitors have often found that commission selling increased their costs and their employee turnover. Nordstrom, meanwhile, boasts that it has the only retail system in the country in which employees are both extremely entrepreneurial and intensely loyal to the company.
Thus, it came as a shock two months ago when a union that represents Nordstrom workers in the Seattle area began claiming that the company has a secret policy of encouraging its salespeople to go “off the clock"--to work without pay--when they perform their vaunted customer-service activities such as tracking down hard-to-find garments over the phone, making home deliveries or writing personal thank-you notes. Similar complaints were heard from some of Nordstrom’s non-union employees in California.
Nordstrom executives deny the charge and say the accusations come from a disgruntled, tiny minority of its 30,000 employees. A company vice president said meetings recently were held with all department and store managers in Southern California to reaffirm the policy of paying for all hours worked. However, other sources said the off-the-clock problem has existed for years. A 1985 memo from a corporate vice president to all regional managers reminded them, “We are responsible to see that our managers and staff are aware that our people are to be paid.”
The union contends that the typical Nordstrom salesperson, whose base hourly pay is about $9--standard for high-quality department stores--is cheated out of thousands of dollars a year. It says it has collected 360 claims from employees and former employees in Washington and California for $1.8 million in unpaid wages and has mailed claim forms to hundreds of other workers. A San Francisco attorney working with the union says he expects to file a massive class-action lawsuit on behalf of California workers that could ultimately involve $300 million in back wages and civil penalties.
In Seattle, the National Labor Relations Board has issued a complaint against Nordstrom for failing to turn over wage-related data to the United Food & Commercial Workers Union, which represents 2,000 Seattle-area Nordstrom employees. In addition, the Washington Department of Labor and Industries is scheduled this week to release results of an investigation into alleged violations of state labor laws by the company.
Interviews with a dozen current and former Nordstrom employees in California illustrate the contradictory pressures that workers can experience in a system that tries to give equal emphasis to service, profitability and middle-managerial autonomy.
Most of those interviewed said no manager ever formally told them to go off the clock, an order that would flatly violate state and federal fair labor standards laws. Rather, they said, it becomes clear to most Nordstrom salespeople soon after they are hired that the store’s commission-selling program effectively penalizes any salesperson who insists on getting paid for every hour worked.
The reason is that Nordstrom carefully evaluates salespeople on their sales-per-hour ratio. Each employee is given a target “SPH” ratio--a quota--based on his or her base hourly wage and store department. The actual SPH for the past two weeks--sales minus merchandise returned by customers, divided by hours worked--appears on each paycheck stub.
If the actual SPH is higher than the target SPH, the employee is paid a 6.75% to 10% commission on net sales, depending on the department. If the SPH is below the target, the employee is paid the base hourly wage. Failure to meet the target SPH often results in decreased hours or, in some cases, termination. Meeting or surpassing the target SPH means more working hours--including better hours when the shopping is heavier--and a better chance of promotion to a department manager job.
Stories of some Nordstrom workers making $40,000 to $60,000 or more a year thanks to hefty commissions are widespread. But critics of the system say rank-and-file salespeople are often torn in this environment.
To chalk up the most impressive SPH ratio, salespeople must be on the floor selling. But to carry out the Nordstrom credo of being a “team player” or a “Nordie,” they also must be available to run themselves ragged meeting each customer’s needs, which can take considerable time. Time also must be spent in routine merchandise stocking, store display activities or attending numerous sales staff meetings. These hours, if formally recorded, lower the SPH.
“Initially your feeling is, ‘I’ve got to punch in for every minute I’m there,’ ” said Joel Kirk, who worked as a salesman and a men’s clothing manager for several years in Northern California before leaving Nordstrom last summer to return to college. “Then you find you’re at the bottom on SPH, or near it. Then someone nudges you. It’s there but it’s not said. It’s an underlying factor that everyone eventually realizes.
“There is pressure on (department) managers to get people with the biggest SPH into the most hours. You’re not told that if you don’t (go off the clock) you’ll get your hours cut. It becomes an inferred thing. The more you sell per hour, the more hours you get,” said Kirk, who spoke on the condition that his real name not be used.
As a result, critics of the system say, people making blue-collar wages and governed by hourly wage laws find themselves having to make time-management decisions usually reserved for white-collar “professionals” who are paid much higher weekly salaries and, in exchange, are expected to work some uncompensated hours.
“Nordstrom says to salespeople, ‘This is your own business, treat it like your own business,’ but it’s not said outright that you’re going to have to do all these extra things,” said Kirk, who emphasized that he has no hard feelings against the company. “They don’t sit you down and say the calling (of past customers for new business) is important, the (thank-you) cards are important, taking things to the (customer’s) house is important, running things out to a local tailor when Nordstrom’s tailor is backed up is important.”
To honor those who thrive, Nordstrom awards its top sellers annual membership in the company’s Pace Setters Club, entitling them to 33% discounts on merchandise. The posting of SPH figures creates peer pressure that is regarded by retail analysts as a strong motivator.
However, dissident salespeople complain bitterly about being surrounded by obsessive “Stepford Wives” personalities, people who act as though they are a member of a cult. They complain about being pressured by managers to buy all their work clothes at Nordstrom and about being unable to take routine 10-minute breaks.
They also complain about intense competition between individual salespeople. Often cited is the court case in King County, Wash., where a jury last fall awarded $180,000 to a former Nordstrom saleswoman who claimed that she was wrongfully dismissed because co-workers wrote anonymous letters claiming that she stole from them by falsely crediting herself with their commissions.
“The system fosters a lot of pettiness and jealousy,” said a saleswoman who recently quit. “It’s fear that provides great customer service.”
“They really don’t want you to have a life. They want you to live for them,” said Kim Channing, another ex-saleswoman who worked at a Nordstrom store in Northern California for two years before quitting to work for Macy’s. She has submitted a claim of $7,000 as part of the pending class-action lawsuit.
Louis Damato, who worked at a Southern California Nordstrom for eight years, beginning after his high school graduation, said he was quickly caught up in the enthusiastic corporate cheerleading that is so pervasive within Nordstrom and so often used by management to inspire salespeople to work hard.
“I gave up all my friends from high school and started spending all my time with Nordstrom people. They become your real support group,” he said. “If you do something against them, it’s like doing something against the entire family.”
Damato reflects the ambivalence of many disgruntled workers who continue to shop at Nordstrom even as ex-employees and, in some ways, continue to admire the clean, beautiful working environment of the stores.
Damato quit last year, feeling burned out. “It’s a great company, but it’s kind of a sham in the sense that you end up with a real empty feeling at the end,” he said. “You’re willing to do anything for these people . . . but you seem to lose focus of the monetary fact--who are you selling for ? For yourself or them?”
A week after Damato was interviewed, he telephoned and pleaded that his real name not be used in this story. It was not. The reason: Nordstrom had called and offered him a temporary job and he was taking it.
The misgivings being aired by Damato and others are troubling to people such as Betsy Sanders, vice president and general manager of Nordstrom’s Southern California stores, which employ 11,000 people.
In an interview, Sanders said staunchly that “philosophically and in practice, our people are not abused and mispaid” but added that she is not shrugging off the allegations because “what we’re talking about here is the essence of what Nordstrom is and what we do. It’s why I’ve been here as long as I have. It has to do with the subject of people. The company is our employees.”
Nordstrom officials say store and department managers--all of them former salespeople thanks to the store’s promote-from-within rule--are continually told that employees are not supposed to work off the clock, but these managers operate with a great deal of flexibility. As far as what salespeople are told, “there’s very little that we say to them in orientation about what they have to be or have to do. They’re entrepreneurial by nature,” Sanders said.
California law on hourly wage earners does not take this entrepreneurial nature into account. Jose Millan, a deputy state labor commissioner, said an employer who knows that an employee is voluntarily working off the clock is still obligated to pay her.
Jennifer Levy, a saleswoman who became an executive secretary at Nordstrom, is angered by the complaints of unpaid hours because she is certain that they are “stretched” and represent excuses by employees who can’t cut the mustard. “People who don’t make it, they get bitter only because they see people succeeding while they’re not and they don’t always understand the reason,” she said.
Sanders compared working at Nordstrom to going to college at Stanford--intense, competitive and populated by aggressive, self-motivated people, the equivalent of A students in the sales world.
“It’s no place for a C-minus person to be happy,” she said.
In Seattle newspaper advertisements and memos to employees, Nordstrom has accused the United Food & Commercial Workers Union of raising the off-the-clock issue to give it muscle in ongoing negotiations for a new contract. The union insists that it has broader goals.
“Nordstrom says the union is attacking the chemistry of the company,” said Joe Peterson, president of Local 1001 of the commercial workers union. “That’s exactly what we’re doing.”