Remaking JC Penney's Organizational Culture

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Case Details:

Case Code : HROB093
Case Length : 19 Pages
Period : 2004-2007
Pub Date : 2007
Teaching Note : Available
Organization : J.C. Penney, Inc.
Industry : Retailing
Countries : USA

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Excerpts Contd...

Training and Development at JCP

Symbolic changes apart, JCP also kick-started a process to groom leaders and provide ongoing training to all the employees. The management felt that to project JCP as a great place to work in, the employees had to feel that they could build a career in the company. In an industry where many companies were reluctant to invest in training due to the high turnover of the employees, JCP viewed such investments as a panacea for the problem. "We've been investing heavily in executive education and leadership training for our managers, strategic skills for our top people … we're very committed to being a great place to work, and we think the first thing [to] be a great place to work is [to be] a great place to investment your career. So we also think that'll have an advantage of changing, you know, lowering our turnover to the lowest in our industry," Ullman said...

JCP Fires New COO

On December 28, 2006, JCP announced that it had fired its COO, Catherine West (West). No reason was cited for the action. West was looking after store operations, property development, and logistics. JCP was in no hurry to fill up the vacancy and said that the areas previously reporting to West would report directly to Ullman. A company spokesperson said that JCP would revert to its earlier structure of three executives reporting directly to Ullman...

The Results

The efforts to change the culture at JCP started bearing fruits within two years. The various initiatives seemed to be having a positive impact on the employees and their job satisfaction. JCP's second 'Associate Engagement Survey' (AES) in 2006 revealed that 73 percent of JCP's employees were "engaged" as compared to 67 percent in the 2005 AES. Analysts noted that such high numbers were good, especially for a retail chain...

Reactions to the Culture Change Initiatives

Ullman was credited with having brought about a revolutionary change in JCP's culture. Experts said the culture of an organization was top-driven and the top management's commitment was vital in such culture change initiatives. They noted that companies that insisted on employees dressing in a particular way were giving the impression that appearance was more important than achievement. And a very formal culture squashed creativity and innovation. The symbolic changes brought about by Ullman and his team was appreciated...

Outlook

Leonard N. Stern School's Wiesenfeld noted that the focus of companies that wanted to transform their culture was changing. She said, "Today's emphasis on culture change is shifting from stemming the bleeding of the last five years to paying attention to broad cultural adaptations that will deliver a competitive advantage."...

Exhibits

Exhibit I: Ten-Year Chart of JC Penney
Exhibit II: JCP's Winning Together Principles
Exhibit III: High Profile Executive's Exit in 2006
Exhibit IV: Three Year Financial Summary of JCP