Reply 6

  1. Read the two discussion posts below and respond by extending the discussion by adding new insights, different examples from your experience, or from other sources.
  2. Apply critical thinking. Agreement, quoting other learners, or repeating the case content will not be counted.
  3. The response to each post should 100 words each.

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#1: J.C Penney is not unique in the forces of change that are affecting their company. Many of the brick and mortar establishments are experiencing similar changes and how they deal with them will determine their fate. JC Penney is experiencing outside forces of change from technological advancements, customer changes and social / political pressures. First technology has forever changed the shopping habits of customers. Most people shop from the comforts of their own homes and JC Penney is trying to change their business model to reflect this change. CEO Johnson decided to make wholesale changes to the company by laying off employees and making leadership changes across the entire organization. The changes were not well received by employees and/or customers. The resistance to these changes resulted in the drop of revenue and ultimately the firing of CEO Johnson. Inside forces affecting the decisions were job dissatisfaction, turnover, leadership conflict and structural reorganization. The massive changes implemented caused employees to become scared for their jobs. Ultimately, employees started looking for more secure employment. The leadership change caused conflict from the top to the bottom of the organization. JC Penney was in need of change, but the changes implemented by CEO Johnson caused more disruption to the company and lead to more debt. New CEO Ellison used Lewin’s three-step change model of unfreezing, changing and refreezing. He started the unfreezing step by traveling throughout the company and conducting town hall meetings with the employees. This allowed him to know first hand what the motivation for change was within the company and its vendors. He started the change by creating promotional opportunities for employees and involving them with implementation decisions. He re-invested in their private label clothing that was successful with its customer base. For the refreezing step I would say his changes are working well considering the condition of the company when he took it over. The employees have obviously bought into his changes because JC Penney has increased its sales and is getting a larger share of the mall traffic. Without employees buying into the changes, the company would have likely been dissolved via bankruptcy proceedings.

#2: J.C. Penney’s forces for change that were especially relevant were Inside Forces, particularly Management’s behavior. While Ron Johnson’s actions were villainized throughout the company and the financial media at the time, he did exactly what he was hired to do and it was the Board of Directors that hired him to do this. Unfortunately the disconnect between Management and the employees created a style clash, instability and an environment inconducive to attracting customers. Of course there were HR concerns that were borne from this rift and with the massive layoffs the employees that stayed inevitably were less productive and absenteeism was likely at its peak during this time as the remaining employees were likely spending a lot of time looking for other jobs before they were let go as well. The Outside Forces that also contributed to the change were mostly centered around Technological Advancements which ultimately led to the declining foot traffic in malls where Penney’s has always been an anchor tenant. One could argue that there were Demographic Characteristics that changed, but when Johnson got rid of the traditional brands the company sold, sales plummeted (Kinicki, 354). The need for an omni-channel environment to supplement the brick-and-mortar model of the traditional department store was absolutely critical to Penney’s future existence. Ellison was in the c-suite when I worked for Home Depot and every employee knew who he was down to the pallet jack operators in the oldest stores. When Ellison took the reins at Penney’s, I was fortunate enough to be working for a company where I got to hear from him what he addressed to stakeholders, analysts and employees about the changes he would be implementing and subsequently covered most of their analyst days and shareholder meetings since. The way he implemented the Change model began with visiting the stores and meeting with staff. He was known to do this in Home Depot as well. By unfreezing the staff from their disconnect with management the motivation for change was apparent. He then implemented the Changing process by implementing an omni-channel approach and reviewing the inventory the story carried, doing extensive customer research and polling and bringing back the items and promotions that resonated with the loyal base of remaining Penney’s customers, while also gaining a new base. He refroze this by passing to the Board of Directors a stock-based compensation approach and getting the board to approve a stock-based remuneration plan so the would focus on creating and sustaining shareholder value through the implemented changes so that they would focus on supporting the company to gain market share and thus raise their stock price. While the stock price is down at the moment, they hit a 52-week high at nearly $6 a share in July of last year which is head and shoulders above what the stock was trading at in 2013.