jcpenney’s people strategy
TRANSCRIPT
By:-Ankita GroverMehak KukkarShankar Mohan
“The associates are the first customers we sell. If it doesn't ring to them, it’s impossible to communicate and inspire the customer.”
Background Set up in 1902 by James Cash Penney in Kemmerer, 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
Operational Problems JCP followed a decentralized merchandising policy 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Changing retail scenario in 1990 made the merchandise outdated and lacking in style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
Remedies Turnaround orchestrated by Questrom and Castagna in 1999
Centralized the Buying system and slashed the number of items displayed in the stores
Sale of JCP’s 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
Need for Change in Culture The need for change in culture was felt by
Ulleman in 2004
Organisation culture was very formal
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
Initiatives Taken at JCP Appointment of Theilmann as the executive Vice president, 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
Allowed to decorate their cubicles
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
Training and Development
Corporate 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
Multiplier effect with Coaching
Results
JCP’s second AES in 2006 revealed that 73% of its employees were “engaged” in comparison to 67% in 2005
Was able to attract graduates from best professional colleges
Operating profit for the fiscal year 2005 was US$1.6 Billion, a 22.5 % increase over prev. year
Opened 18 new stores
Three year financial summary of JCP
US$ MILLIONS 2006
2005 2004
2003
RETAIL SALES,NET (US$ MILLIONS 19903
18781 18086
17513
COMPARABLE DEPARTMENT STORE SALES (US$ MILLIONS)
3.7 2.9 4.9 0.8
GROSS MARGIN (US$ MILLIONS) 7825 7191 6792 6276
OPERATING INCOME (US$ MILLIONS) 1922 1631 1275 786
INCOME FROM CONTINUING OPERATIONS (US$ MILLIONS)
1134 977 657 360
DILUTED EPS FROM CONTINUING OPERATIONS (US$ MILLIONS)
4.88 3.83 2.2 1.2
NUMBER OF JCP STORES 1033 1019 1017 1020
GROSS SELLING SPACE(SQ FT IN MILLIONS)
103.1 101.4 101.3 101.1
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 system
JCP’s Winning Together Principles