Nordstrom's Plan Of Action
Monday, January 16, 2006Nordstrom's Plan Of Action
PAUL KANGAS:If you look at the management of fashion retailer Nordstrom, it`s obvious the company takes diversity seriously. More than 30 percent of the company`s managers are people of color; more than 71 percent are women. Those numbers are even higher when looking at the chain`s total employment. As Diane Eastabrook reports from the company`s headquarters in Seattle, Nordstrom takes pride in that.
DIANE EASTABROOK, NIGHTLY BUSINESS REPORT CORRESPONDENT: Nordstrom is the department store chain known for its elegance, its attentive service -- So what I`m using on you is the long-wear gel liner.
EASTABROOK: ... and its shoes. Can I measure both feet for you?
EASTABROOK: But the Seattle-based retailer could be known for something else, as well: its commitment to diversity.
BLAKE NORDSTROM, PRESIDENT, NORDSTROM: As our country evolves, it`s a pretty diverse community out there, and so it`s important that we`re reflective of that.
EASTABROOK: Nordstrom launched its diversity program nearly 20 years ago when it began rapidly expanding outside of Washington to 26 other states. The retailer assesses every new market it enters and sets hiring benchmarks that reflect regional demographics. Today, 40 percent of Nordstrom`s 50,000 employees are minorities; 30 percent of its managers are women and people of color.
DELENA SUNDAY, EXEC. V.P., DIVERSITY AFFAIRS, NORDSTROM: We`re in the service industry and we want to service anybody. We want to service everyone. So in order to do that, we have to have, you know, someone for everyone. So when our customers shop with us, they need to see people who reflect themselves, whether that`s ethnicity, age, whatever.
EASTABROOK: The kinds of shoppers Nordstrom seeks to attract are reflected in its catalogs. It also reaches shoppers through advertisements in magazines such as "Latina," "Black Enterprise" and "Essence." Nordstrom also uses its clout as a retailer to back up its commitment to diversity. The company does business with nearly 6,000 minority-owned suppliers and vendors. Clothing from Asian designer Misook to African American designer Tracey Reese to Hispanic jewelry designer Liz Palacios appear in many Nordstrom stores. The company thinks it has benefited from those relationships as much as its suppliers have.
NORDSTROM: We`ve been able to have fresh product that maybe you can`t find somewhere else and so as merchants we`re always looking for new things.
EASTABROOK: Nordstrom`s commitment to diversity extends beyond what customers see in its more than 100 stores. The company often acts as a mentor of sorts to its many suppliers, helping them to expand and improve their businesses. Alliance Relocation, a division of the Affluence Group, is a prime example. Before it began doing business with Nordstrom seven years ago, Alliance helped other companies coordinate employee relocations by simply contracting with local moving companies. But Nordstrom wanted something more. It insisted Alliance also help relocated employees sell their homes and buy new ones. Herb Stokes, CEO of the Affluence Group, says Nordstrom`s faith in his company helped to transform it.
HERB STOKES, CEO, THE AFFLUENCE GROUP: Not many corporations would give us an opportunity to participate in that real estate component, because there is a lot of expertise required and a lot of financial investment and we couldn`t do that. Nordstrom, however, felt that we could if given the opportunity.
EASTABROOK: Nordstrom`s commitment to diversity seems almost ironic, considering it is headquartered in a city whose population is more than 70 percent white. Still, the company says its commitment is part of its heritage. Founder John W. Nordstrom was a poor Swedish immigrant who arrived in the U.S. in 1887. He opened his first shoe store in Seattle in 1901. Blake Nordstrom says, in a sense, the diversity program carries on his great grandfather`s business philosophy.
NORDSTROM: Taking care of every single person, giving them the courtesy and respect they deserve, that`s a key component of how this company was founded.
EASTABROOK: Experts say while diversity programs are very common in retailing, Nordstrom`s is a cut above the rest.
MARY ANN ODEGAARD, MANAGEMENT PROFESSOR, UNIV. OF WASHINGTON: And they practice what they say, which I think differentiates them some from some other companies that have a policy, but it isn`t necessarily embraced by everybody.
EASTABROOK: Nordstrom says it is always looking for ways to improve its diversity program, either in its stores or in its catalogs or through its suppliers.
SUNDAY: It`s not anything you ever reach the finish line. You never say, "oh, my gosh, you know, now we can take a deep breath," because our customers will continue to change. Their needs will continue to change, and we have to evolve with that. So we just continue to try to get better.
EASTABROOK: And that, says Nordstrom, has always been the key to its success. Diane Eastabrook, NIGHTLY BUSINESS REPORT, Seattle.
GHARIB: Continuing now our discussion on diversity, we`re back again with Bernard Anderson of the Wharton School and David Thomas of the Harvard Business School. Dr. Anderson, let me begin with you this time about how can minorities move into the executive suite. What`s your best advice?
ANDERSON: My best advice is for boards of directors, senior executives, to seek out and as a matter of a specific goal, attract minorities and women into some of the senior positions. That is something that is rarely done in American industry today. Let me be clear. What I mean is seeking out minorities and women, preparing them, tutoring them, mentoring them, doing what is necessary to see that they rise to the highest levels of the corporation.
GHARIB: Let`s hear what Dr. Thomas has to say. What thoughts do you have on minority advancement in the executive suite?
THOMAS: Well, I wholeheartedly agree with what Dr. Anderson has said. I would add that the thinking about bringing minority executives into the executive suite has to start fairly early in the young executive`s career. My observation is that many of the minority senior managers, by the time they get to be considered for executive level, have missed key developmental experiences and opportunities that then don`t allow them to clear that bar. And so I think addressing that development very early in career is critical.
GHARIB: And let me ask you, Dr. Thomas, do you think that affirmative action has been a success or a failure?
THOMAS: I think that affirmative action has been a success in terms of creating access at the entry levels of organizations at lower levels in the professional ranks. I don`t think affirmative action has had a great influence on the movement of minorities into the executive level. And in part, that`s because of the focus on numbers, not also on position and access in companies.
GHARIB: Let me ask both of you. We`ve been talking a lot about diversity. Is there anything missing from the current debate and discussion on diversity in America? What should people be focusing on? Dr. Anderson?
ANDERSON: I think what`s missing is to connect affirmative action and diversity. Diversity is a major goal. It is part of the conversation. We hear very little today about affirmative action. But let me tell you, you can`t get to diversity without affirmative action. And so I will use that much maligned word, affirmative action, to say that businesses need to have policies and practices in place that seek out minorities and women.
GHARIB: Dr. Thomas, what do you think is missing in the debate and discussion?
THOMAS: What I think is missing in the debate and discussion is really how you connect, how we lead organizations to the desire to have diversity in an organization. And if those two things aren`t connected, I think we wind up with a numbers game that gets played at the bottom of the corporation and at the periphery of it and not at the core and not at the top.
GHARIB: All right. Just to wrap it up, it is, after all, Martin Luther King Day and much of Dr. King`s legacy has centered on racial inequality in America. Give us a progress report on where we stand on that today. What more still needs to be done? And Dr. Anderson and Dr. Thomas, real quickly, just in a few words.
ANDERSON: I think a great deal of progress has been made in expanding the doors of opportunity since Dr. King was on the scene. However, let me emphasize we still have a long way to go.
GHARIB: Dr. Thomas, last word.
THOMAS: I think that we need to focus more on class and education. There is a group of the African-American community who are essentially being put on a path to be locked out of the economy in the 21st century and it will be a major, cataclysmic problem I think for this nation, if we don`t begin to connect that and businesses begin to see that as being in their interests.
GHARIB: Gentlemen, thank you so much. We appreciate your time and your insights.
ANDERSON: Thank you.
THOMAS: Thank you.
GHARIB: And we`ve been speaking with Bernard Anderson, professor of management of the Wharton School of the University of Pennsylvania and David Thomas, the professor of business administration at the Harvard Business School.
