Chapter 5
Compensate According to Results
Competition is a key element of our culture. If done right, a commission incentive system encourages better service and team play.
—Blake Nordstrom
All the nurturing in the world can go only so far. Monetary compensation must be part of the equation. Nordstrom believes in paying people according to their achievements so that they can earn as much as their talents and efforts can generate.
Everett, Elmer, and Lloyd Nordstrom, who bought the business from their father, John W., in the late 1920s, knew that the best way to attract and retain motivated self-starters was to pay them according to their ability. Beginning in the early 1950s, when Nordstrom was selling only shoes, total employee compensation has been based on commissions on net sales.
Commission sales and bonuses “gave them added incentive to work harder, and by working harder, they were often able to build a loyal customer following,” Elmer Nordstrom wrote in A Winning Team, the privately published family history.
Commission sales are a prime reason why Nordstrom salespeople embrace the empowerment that the company affords them. Two-thirds of employees have a variable pay component to their total compensation. That means they have the opportunity to increase their pay when they achieve results against defined targets or milestones. This philosophy of pay for performance motivates front-line people to challenge themselves and their teams to greater achievements.
The standard commission ...
