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J.C. Penney Co. – Start With People

Guest Blog by Lior Arussy

The Wall Street Journal recently reported on the low employee morale inherited by J.C. Penney’s returning CEO, Myron “Mike” Ullman, after the chain slashed its workforce by tens of thousands over the past year. Retail is not just a business of merchandising and discounts, as it has been portrayed by the media in the last week since the department-store chain ousted its former chief executive Ron Johnson.  Retail is a people business as well, which Mr. Johnson clearly did not understand.

Creating a new retail platform, as was attempted with the “JCP” branding platform, requires the organization to lean on its brand ambassadors.  If the transformation from J.C. Penney to JCP was executed as I’ve seen so many in the past, regardless of executive’s intentions, it probably sounded to employees as “Everything you have done so far was wrong, this is the new right.”  Or perhaps, “Even our name is old an outdated, so we’re changing it.” Even without thousands of layoffs, a poorly planned and executed transformation will quickly create low employee morale. Now imagine the thousands and thousands of employees who face customers every day. What expression do you think they have on their face? How keen are they to help their customers? What is their attitude towards confused customers who are looking for a discount?

J.C. Penney must focus on its people first.  Every day, its 116,000 employees are making decisions that will amount to its brand equity.  Every organization’s brand equity is equal to the sum total of their employees’ decisions both in front of the customer and behind the scenes on behalf of the customer. If employees are enthusiastic, passionate and caring, customers will make purchases.  People do not buy from cynical uncaring employees. (Check out www.cyncismkills.com.)

The human factor is the most elusive and challenging in every corporate strategy.  The good news is, if you unlock your workforce’s energy, they will not only meet, but exceed, your customer’s expectations. Here are my best, most heartfelt ideas for Mr. Ullman:

  1. Start thinking in terms of employee engagement. Measure your workforce’s state of mind, the true pulse of the organization. Involve your employees in valuable discussions and lean on them to help strategize and design your next moves.
  2. Create a cause to which people can connect. Stop designing transformations around stockholders and stakeholders. Instead, focus on fulfilling your customer’s needs and positively impacting their lives.
  3. Give employees a reason to have pride in the brand. Yes, brand pride is key to your future success. Connect your people to J.C. Penney’s heritage and develop a clear program to disseminate that emotional bond throughout the organization and beyond.
  4. Embrace empowerment. Equip every manager with the tools and authority to engage their employees.
  5. Innovate and then innovate some more. Establish small teams across all levels of the organization and provide them a forum for generating new ideas and leading initiatives to delight customers.
  6. Give employees the power to delight. Provide employees the opportunity to deliver great experiences that will increase loyalty and customer profitability.
  7. Celebrate the customer heroes. Establish a sustainable culture that is committed to recognizing and rewarding its customer heroes.
  8. Repeatedly connect back to the cause. Make sure employees can see the progress made on the goals to reach the organization’s vision and fulfill its higher cause.

As we all know, history often repeats itself. The now defunct Circuit City fired its top sales people because they were too costly and just two years later filed for bankruptcy. Any company strategy that does not embrace fully the role of the organization’s employees, fails to understand a very simple truth.  In the moment of truth, when a customer and employee connect, the brand is created. How the employee chooses to engage the customer at that moment of truth, will determine if the corporate strategy will succeed or fail.

Apple’s retail success was highly dependent on the spirit of its employees. There was no evidence that a similar spirit was developed at the JCP brand.  Whatever spirit the J.C. Penney workforce had a year ago has been most likely destroyed a strategy that undermined them and not only by the job cuts. Although it’s easy to rely heavily on merchandising, store design and slick advertising, take heed that employee morale is a force that cannot be ignored.

The opportunity that Mr. Ullman is inheriting is quite significant; if he can take the 116,000 J.C. Penney employees and inspire them to be brand ambassadors, he will create a tsunami of positive brand loyalty and profits.  The good news is that with the right approach, morale can be turned and cynicism can be transformed to passion. I wish Mr. Ullman good luck on his journey.

Lior Arussy is CEO of Strativity

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