C H A P T E R 1 An Investment Perspective of Human Resource Management

Human Resources at Nordstrom How can a retailer gain a competitive advantage in a cut-throat marketplace? Middle- and high-end retailers generally locate in close proximity to each other and often carry similar—but not identical—merchandise. Consequently their sales and profit margins are usually in tandem. Nordstrom, however, has consis- tently produced above-industry-average profits and continues to be profitable when its competitors’ profits are falling or flat.

The key to Nordstrom’s success lies with the different way it manages its employees. Sales employees are known as “associates” and considered the orga- nization’s most valuable asset. The company’s success is rooted in its strategy of providing superlative customer service. Associates are encouraged to act as entrepreneurs and build strong personal relationships with customers, or “clients.” In fact, many clients shop only with a particular Nordstrom associate and call in advance to determine the associates’ schedules or to make appointments.

Nordstrom’s strategy involves a heavy investment in the organization’s sales force. Nordstrom provides associates with extensive training on merchandising and product lines and offers high compensation. Its commitment to its employ- ees is evident from the fact that the company’s organization chart is depicted inverse from that of a traditional retailer. Associates are at the highest level on the chart, followed by department and merchandise managers and, finally, executives. This depiction cements the organization’s philosophy that the customer is king. All efforts of senior-, middle-, and lower-level managers should support the efforts of the sales force.

L E A R N I N G O B J E C T I V E S

• Understand the sources of employee value

• Gain an appreciation of the importance of human capital and how it can be measured

• Understand how competitive advantage can be achieved through investment in employees

• Gain an appreciation of metrics, their measures, and their usefulness

• Understand the obstacles that prevent organizations from investing in their employeesUse Attached Document as main Reference to answer Question