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JC Penney case study

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on 22 November 2014

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Transcript of JC Penney case study

JC Penney Case Study
Daud Ibad
Sofia Chatzimichailoglou
Melinda Balogh
Joana Aviziute
Rebecca Parrondo
Change Management
Training & Development
Conclusions & Recommendations
How did JCP fare against competitors?
Future Trends
JC Penney Changes
Appointment of Ullman as CEO and Theilmann as HR Chief
Disbandment of “office police”
Maintained the HCSC principles
Introducing a fixed monetary value on employee turnover

Introduced the “Just call me Mike!” campaign (new ID badges)
Relaxation of dress codes
Afternoon off Fridays
Allowing cubicle decors

Implement WTP to "engage" all levels of management

Opted for a new brand positioning, “Every day Matters”
Conducted leadership conference to facilitate aspiring employees
Creation of “Retail Academy” also to facilitate potential employee
Various reactions to the changes implemented, including positive and resistant ones were identified on both surveys measuring employee/job satisfaction (1st Associate Engagement Survey (AES)(2005) & 2nd Associate Engagement Survey (AES) (2006))




"Change management is the process of continually renewing an organization's direction, structure, and capabilities to serve the ever-changing needs of external and internal customers." (Moran and Brightman, 2001: 111)
JC Penney Business Case for Change

Aguinis, H, and Kraiger, K., 2009. Benefits of training and development for individuals and teams, organizations, and society.
Annual Review of Psychology
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Akella, D. 2010. Learning together: Kolb's experiential theory and its application.
Journal of Management and Organization
, 16(1), pp. 100-112.
Alfes, K., Truss, C. & Gill, J., 2010. The HR manager as change agent: Evidence from the public sector.
Journal of Change Management
. 10(1), pp. 109-127.
Anderson, L. A. and Anderson, D., 2002.
Beyond change management: Advanced strategies for today's transformational leaders
, San Francisco: Jossey-Bass/Pfeiffer.
Bright, D. & Crockett, A., 2012. Training combined with coaching can make a significant difference in job performance and satisfaction.
Coaching: An International Journal of Theory, Research & Practice
, 5(1), 4-21.
Buckley, R., and Caple, J., 2009.
The theory & practice of training
. London: Kogan Page.
Caldwell, R., 2001. Champions, adapters, consultants and synergists: The new change agents in HRM.
Human Resource Management Journal
, 11(3), pp. 39–52.
Carter, E., 2008. Successful Change Requires More Than Change Management.
Journal For Quality & Participation
, 31(1), pp. 20-23.
Grieg, F.W., 1997. Enterprise training.
International Journal of Manpower
, 18(1), pp. 185-205.
J. C. Penney Company, Inc., 2014. Form 10-K 2014 [online]. Available at: https://www.sec.gov/Archives/edgar/data/1166126/000116612614000017/jcp-0201201410k.htm
Leskiw, S. L. and Singh, P., 2007. Leadership development: learning from best practices.
Leadership & Organization Development Journal
, 28(5), pp. 444-464.
Moran, J. W. and Brightman, B. K., 2001. Leading organizational change.
Career Development International
, 6(2), pp. 111-119.
Ogilvy, H. & Ellam-Dyson, V., 2012. Line management involvement in coaching: Help or hindrance? A content analysis study.
International Coaching Psychology Review
. 7(1), 39-54.
O'Riordan, D., 1993. Retail gross margins: Some international comparisons.
International Journal of Retail & Distribution Management
. 21(4), pp. 33.
Pace, A., 2012. Retail engagement rut,
, (66)5, pp. 24.
Sussman, D., 2006. Industry overview: Retail training,
, 60(4), pp. 52-56.
Ulrich, D., 1998. A new mandate for human resources.
Harvard Business Review
, 76(1), pp. 124–134.

"Gross margin is a measure of profitability of a retail company at the most fundamental level of buying and selling merchandise and measures a company’s ability to effectively manage the total costs of sourcing and allocating merchandise against the corresponding retail pricing. Gross margins not only cover marketing, selling and other operating expenses, but also must include a profit element to reinvest back into the business" (JCPenney, 2014 p. 27).
Gross Margin defined

Difference between average buying and average selling prices inclusive of price discounting schemes
Captures internal/external resources used to create the retail service, the relationship to consumer spending, and is a measure of retail efficiency
O'Riordan, 1993
*Data used in 2014 figures are from most recent 10-Q reports
*Data used in 2014 figures are from most recent 10-Q reports
*2014 stock price as of 19.11.14
Paul Hatlee
Margarita Sukyte
Richard Bridgewater
Asta Brandes
Zoe Liang
Presented By:
Andrew Novero
Lewin's Change Management Model (1951)
Carter, 2008
Mainly Three Types of Change in Organisations (Anderson and Anderson, 2002)
Transformational (JC Penney)
Forces for Change

There are both external and internal forces that result in pressure for change which include but not limited to:

• Competitive Market Forces
• Technology
• Labour market
• Strategy/Leadership
• Organization structure

(Torrington et al., 2008)

HR'S Role in Change
HR Faced Several Challenges
The existing culture embedded over 100yrs and tied to the companies values
It's association with the JC Penney 'Police Force'
Long serving members of staff with a certain way of doing things
Turning The Titanic
How did HR overcome these challenges?
Change at the top 'Mike Thielman'
Listening to employees
Looking outside for Best Practice
'Small Steps' towards a 'Cultural Revolution'
What would the academics say?
Caldwell (2001)
- HR as change agents
1) Transformational
2) Incremental
3) HR Vision
4) HR Expertise
Alfes et al (2010) -
The role of Strategic HRM
HR as a change driver

(1997/1998) -
HR Driving Change
1) Strategic
2) Administrative
Wining Together Principles

Sets common organizational goals

8 Values shaping new culture
Goals achieved through Internal Training
Recognize People, Technology and Team Effort
Associates Performance and Recognition
Inclusive and Integrated for all Employees
Use of External Training Consultants

The need for new and fresh ideas when an organization undergoes a fundamental change
Occupational levels are high
"the need to introduce new ideas and unfreeze many existing attitudes...meant that external training consultants were needed to get the learning process started, particularly at senior levels of management"

(Grieg, 1997)
All of these internal/external change agents/triggers had impact on the company:

Despite a number of previous attempts to change the company JCP had to go through yet another transformational change following the appointment of a new CEO in 2004 – Myron Ullman.
The new CEO had a strong vision and was committed to change the company. Ullman realized that change was necessary to face the cut through aggressive competition from the discounters and higher-end department stores. As result of this He had to bring about a new strategy called “Long Term Plan” with the focus of taking JCP to the industry leadership level (JCP Case Study, 2008)
He devised long term strategy that would enable the retail chain to become a very successful and a profitable company. The company made successive financial gains as a direct result of its commitment and drive to various organizational and culture change initiatives.
Ullman’s believed the overall success of organization’s strategy was also dependent on its employees and culture of the organization. So his priority was to align the company’s culture and strategy. The culture had to be changed from hierarchy one to more organic/matrix type structure in order for the strategy to be implemented successfully.

When Ullman joined the company he found that the organizational culture at JCP was very formal and rigid. He realized that the current mood and rigid culture were not conductive to attaining the ambitious plan set by the company.

The choice of structure in the case study is supported by the strong evidence in some literature for example Burns & Stalker (1961) found that the components of organic structure or rather their component features would be effective when organizations -operated in a “turbulent” environments off rapidly changing fierce competition uncertain customer demand all of which are relevant to the case study.
Defined Leadership Training Selection Process

Selection processes based on transparent, thorough, and objective criteria for high performing employees (HPE)

To ensure the right selection decisions and the proper use of company resources

Example: PECO Energy Company in Philadelphia, Pennsylvania, USA

Leadership development for all organizational members

Develop a customized leadership development program for HPE for specific roles based on a succession plan, and a broad leadership development program for all other employees

(Leskiw & Singh, 2007)
Teamwork and Innovation
Customer and Shareholder focus
Retail Academy
- Similar to graduate school
- Hypos (High-potential employees) trained in retailing,
strategy & team development by top level managers
- Hypos then coach employees who work under them
- only accessible to top 500
Critique on coaching framework
In-house training only
1. Learn the company's point of view
2. cost-effective
Professional coaching or authoritative
Can be incentive to motivate employees want to get in "elite circle"
A clear, objective selection process for high performing employees and also offering two leadership tracks. One for HPEs based on a succession plan and specific future needs and a broad leadership development program for all other employees seeking opportunities for training.

(Leskiw S. &Singh P.,2007)
1. High performance managers = good trainers?

2. Selection process fit with the "new" company culture ?
(limited to 500 out of 151,000 =0.33% Fair and justice in selection process?)
"in terms of design, organizations should apply theory-based learning principles such as encouraging trainees to organize the training content, making sure trainees expend effort in the acquisition of new skills, and providing trainees with an opportunity to make errors together with explicit instructions to encourage them to learn from these errors enhances the benefits of training."

(Aguinis and Kraiger, 2009)
3. Non-hypos feel their input not valued (team-building?)
IT Training
Transfer from cash register to web-enabled computers
Every Day Matters
New brand positioning.

"Deeper, Emotionally-Driven Relationships" with customers.
Culture change training & coaching
2006/2007 JCP training and development initiatives: Off to a great start

- Leadership development
- Training opportunities for all staff
- Create opportunities for staff to build careers in an industry where this is not a given

(Aragon- Sanchez 2003 positively links training and organizational effectiveness and profitability)
Introduction T&D Initiatives
Training and Development reflections:

Effectiveness of programmes and initiatives remains inconclusive.

Causality between training and development initiatives and AES results, attraction rates of top talent, profit is insufficiently evidenced.

Training evaluation an ongoing challenge (Aguinis and Kraiger, 2009)
T&D Conclusion
4. Coaching process imposed by elite managers, how to manage the feedback from bottom-up
Introduction - Business Case for Change
Change Management
Training & Development
Conclusions and Recommendations
Full transcript