Culture Change Part of Penney’s Plan to Succeed
By George Anderson
Mike Ullman, CEO of J.C. Penney, walked into an extremely formal corporate culture when he joined the department store chain. Employees called managers and executives Mr. or Ms., formal business attire was required and displays of individuality in cubicles were strictly limited.
Mr. Ullman came to the conclusion early on that the code of conduct within the company was leading to high employee turnover rates while discouraging talented individuals from outside the company from joining.
“In retailing today, you have to realize that there is too much property and too much merchandise,” he told The Wall Street Journal. “What there isn’t enough of is talent.”
Losing talent through turnover also hurt company performance. Penney estimates that every employee who leaves costs the company about a third of his or her wages. In 2005, the company estimates, the cost for such departures was $400 million.
Batia Wiesenfeld, professor of management at New York University’s Leonard N. Stern School of Business, said companies such as Penney are looking to adapt corporate cultures as a means to “deliver a competitive advantage.”
In an effort to change the culture at Penney, Mr. Ullman brought in Michael Theilmann, a former executive with Yum Brands Inc., to run the company’s human resources.
One of Mr. Theilmann’s first acts was to launch an internal communications program at corporate headquarters trumpeting the advantages of communicating on a first-name basis with slogans such as, “First names create a friendly place to shop and work.”
The “Just Call Me Mike” program, as it was dubbed, featured photos of headquarters employees, including Messrs. Ullman and Theilmann.
The company also went to business casual attire at headquarters with jeans acceptable for office wear on Fridays. Penney also lifted its restrictions on decorating cubicles.
Mr. Ullman, while cognizant of the company’s history, is adamant that it can not be allowed to bar forward progress.
“The business isn’t just about store managers anymore — it’s more complicated than it used to be, and I need to motivate employees from the entry level to the officers,” he said. “If I had a choice to honor the past and lose, or move forward and win, I pick winning.”
Moderator’s Comment: What role does corporate culture play in company performance? Will the changes instituted at
Penney help it achieve the goal of reducing turnover of existing employees while attracting new talent from outside the company? –
George Anderson – Moderator