Nordstrom is famous for an employee handbook that fits on a card. The version the company shared with Business Insider in 2014 opens with a welcome and a goal: “Our number one goal is to provide outstanding customer service.” Then come the rules. “Rule #1: Use best judgment in all situations. There will be no additional rules.” The wording varies from one telling to the next. In 2001 the Nordstroms quoted it to the Seattle Times as “Our only rule: Use good judgment in all situations.” The card was not the whole system: in 2014 a CBS MoneyWatch columnist found a Nordstrom policy guide of 7,344 words, which pointed to other policies employees had to follow.
The company’s favorite proof that this works involves tires. In 1975 Nordstrom bought three Alaska stores from the Northern Commercial Company, which had sold everything from linens to automotive supplies. Nordstrom sold clothes and shoes. Years later, by the company’s account, a customer rolled a pair of tires into the Fairbanks store, having driven more than 50 miles to return them. The associate called a tire company to ask what they were worth, paid him that amount and took the tires. Nordstrom now hangs tires in some stores and break rooms as a reminder.
By 1990 the Seattle Times could write that Nordstrom’s “philosophy of providing its clerks with appealing sales incentives and wide autonomy has made it a favorite of management gurus.” Its salespeople, on commission, delivered purchases to customers’ homes and wrote them thank-you notes.
The union that represented about 1,800 of its clerks and office workers, in six Seattle-area stores, started asking who paid for those extras. In November 1989 its president charged that managers pressured clerks to deliver merchandise, set up displays and attend meetings on their own time, and that clerks went along because their performance was judged on sales per hour.
On February 15, 1990, Washington’s Department of Labor and Industries ruled that Nordstrom had broken state wage law by not paying some employees for work done away from the store or after they had clocked out. It found a “pattern”: store meetings, carrying merchandise to customers, writing thank-you notes. It ordered the company to correct its practices and pay back-wage claims.
Nordstrom’s reply, in a memo sent out with paychecks, was that such work belonged in regular hours. If employees did it on their own time, that was their choice, and their commissions already paid for it. The company said it would pay anyone who turned in time slips for the hours. Employees said they were pressured not to.
The Wall Street Journal put the complaints on its front page, and the stock dropped. A Seattle TV station’s call-in poll drew almost 13,000 calls, and 56% said the allegations would keep them from shopping at Nordstrom. Co-chairman Jim Nordstrom admitted the company’s response had been wrong. It had expected what people saw in its stores, “superior service, happy, well-paid employees,” to speak for itself. “We were wrong.”
In 1993 Nordstrom settled a class-action suit over employees’ claims that they had been forced to work off the clock. It denied any wrongdoing, and paid more than $22 million in settlement and legal expenses. It kept the rule. Its Code of Conduct & Ethics for 2025 runs 30 pages, and the section on values says: “For us, it starts with One Rule: Use Good Judgment in All Situations.”