JCPenney’s People Strategy

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<p>By:Ankita Grover Mehak Kukkar Shankar Mohan</p> <p>The</p> <p>associates are the first customers we sell. If it doesn't ring to them, its impossible to communicate and inspire the</p> <p>Background in Kemmerer, Set up in 1902 by James Cash Penney</p> <p>Wyoming Traced back to The Golden Rule, a dry fruits and clothing store By 1902 TGR had 312 stores in 26 states In 1924 , was incorporated as the JCPenney Company Crossed the US$ 1 Billion revenue mark in 1951 and US$ 2 Billion mark in 1964 Targeted the middle income customers facing aggressive competition from both the discounters and higher end department stores</p> <p>Operational Problems JCP followed a decentralized merchandising policy</p> <p>as part of its expansion plans Little idea what each store stocked leading to stretched out lead times Changing retail scenario in 1990 made the merchandise outdated and lacking in style Led to plummeting financials and share prices</p> <p>Turnaround orchestrated by Questrom and Castagna in 1999</p> <p>Remedies</p> <p> Centralized the Buying system and slashed the number of items displayed in the stores Sale of JCPs Direct Marketing Services Efforts undertaken to project a fashionable image of the company Other Pull strategies Sale of Eckerd drugstore chain for US$ 4.52 billion in cash</p> <p>Need for Change in The need for change in culture was felt Culturein 2004 Organisation culture was very formal</p> <p>by Ulleman</p> <p> Employees wore formals, casuals not accepted Employees dissuaded from decorating/customizing their cubicles Office police Promotion from within given priority Freshers were intimidated by the formal culture</p> <p>Initiatives Taken at JCP Appointment of Theilmann as the executive Vice president,</p> <p>chief human resources and administration officer Long term plan to make JCPenney a great place to work Focus on involving employees make an emotional connection with the customers Attract and retain the best talent in the retail industry Small changes called Quick Hits Poster Campaign called Just call me Mike Dress Code relaxed to business casuals Office Police team was disbanded</p> <p>Allowed to decorate their cubicles</p> <p> Replaced the art works with the photos of the employees New security ID badges Launch of the Winning together principles Associate engagement survey In 2005, threw their first Christmas party Leadership conference for the store managers</p> <p>Training and DevelopmentCorporate coaching initiatives Identified high potential employees called Hypos Retail academy where Ullman and Theilmann acted as faculty members Rigorous training sessions Opted for a new brand positioning strategy Every day matters Multiplier effect as trainees inn the academy went on to train their respective staff</p> <p>Multiplier effect with Coaching</p> <p>ResultsJCPs second AES in 2006 revealed that 73% of its employees were engaged in comparison to 67% in 2005</p> <p>Was able to attract graduates from best professional colleges Operating profit for the fiscal year 2005 was US$1.6 Billion, a 22.5 % increase over prev. year Opened 18 new stores</p> <p>Three year financial summary of JCPUS$ MILLIONSRETAIL SALES,NET (US$ MILLIONS COMPARABLE DEPARTMENT STORE SALES (US$ MILLIONS) GROSS MARGIN (US$ MILLIONS) OPERATING INCOME (US$ MILLIONS) INCOME FROM CONTINUING OPERATIONS (US$ MILLIONS) DILUTED EPS FROM CONTINUING OPERATIONS (US$ MILLIONS) NUMBER OF JCP STORES GROSS SELLING SPACE(SQ FT IN MILLIONS)</p> <p>2 2005 2 006 004 1990 18781 18083 3.7 7825 1922 1134 4.88 1033 2.9 7191 1631 977 3.83 1019 6 4.9 6792 1275 657 2.2 1017</p> <p>2 003 17513 0.8 6276 786 360 1.2 1020</p> <p>103.1 101.4 101.3 101.1</p> <p>Reactions to the culture change initiativesNot a gimmick but symbolic of its effort to position itself as an employer of choice Need for change was paramount due to the shortage of talent in the retail industry Focus on job satisfaction Happy employees make happy customers Ullman listened to his employees Repeated engagement with the lower level employees Sustaining the involvement Culture not driven by the top management but by the</p> <p>JCPs Winning Together Principles</p>