Abstract
The decision of whether to promote from within or look
elsewhere had always been an organizational dilemma. In 2004, JC Penney was
faced with this dilemma while appointing the successor for its chairman and CEO,
Allen Questrom. JC Penney surprised many by passing over Vanessa Castagna, who
was instrumental in turning around the company between 1999 and 2004, in favor
of an outsider.
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Issues:
» Recruitment/Hiring
» To promote from within or from outside
» Job satisfaction/dissatisfaction
» Employee reaction to job dissatisfaction
Introduction
After running successfully for close to 90 years, JC Penney Corporation, Inc. (JCP),
a chain of department stores in the US, got into trouble. By the late 1990s, the
retail scenario in the US had changed considerably. JCP had to contend with the
onslaught of giant retail chain Wal-Mart on the one side, and mall-based
competitors like Dillards on the other. The youth started avoiding JCP as they
considered its merchandise to be outdated and lacking in style.
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Between 1999 and 2004, a turnaround was orchestrated at JCP by chairman and CEO
Allen Questrom (Questrom) and COO, Vanessa Castagna (Castagna). Castagna joined
JCP in 1999 as the COO and Questrom joined as the Chairman and CEO in 2000. Both
of them were brought in from outside and were the first outsiders to join JCP in
their respective positions...
Questions for Discussion:
1. Do you think JCP was justified in appointing Mike Ullman, an outsider, as CEO
instead of Vanessa Castagna (Castagna) considering that Castagna was
instrumental in turning around JCP in the early 2000s?
2. What are the pros and cons of ‘bringing in an outsider’ and ‘promoting from
within’? Discuss the impact of such decisions on the morale of the employees.
The issue discussed in this short case study has been adapted from a sub section of the case study 'Remaking JC Penney's Organizational Culture' [HROB093]
(www.icmrindia.org/casestudies/catalogue/Human%20Resource%20and%20Organization%20Behavior/HROB093.htm)
