A Stop and Go at J. Penney Company Things haven't been looking so good for J. C Penney Co. and its new CEO, Ron Johnson. Johnson arrived with much...
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A Stop and Go at J.C. Penney Company 

Things haven't been looking so good for J. C Penney Co. and its new CEO, Ron Johnson. Johnson  arrived with much acclaim from being the head of Apple's successful retail operations. At Penney's,  he immediately began one of retailing's most ambitious overhauls trying to position the company for  success in a very challenging and difficult industry. His plans included a "stores within a store"  concept, no sales or promotions and a three-tiered pricing plan. He suggested that "Penney needed a  little bit of "Apple's magic." From the start, analysts and experts questioned whether Penney's  customers, who were used to sales and coupons, would accept this new approach. Long story  short...customers didn't. For the full fiscal year of 2012, Penney had a loss of $985 million (compared  to a loss of $152 million in 2011). Now, you may be asking yourself, what does this story have to do  with human resources management? Well, a lot it turns out! When a company is struggling financially,  it is going to impact its people. 

And for J.C. Penney employees, that impact came in the form of a "traffic light" colour-coded  performance appraisal system. In a company-wide broadcast, supervisors were told that they should  categorize their employees by one of three colours: Green, their performance is okay; Yellow, they  need some coaching to improve performance; and Red, their performance is not up-to-par and they  need to leave. Many employees weren't even aware of the system and supervisors were given no  guidance one way or the other regarding whether to tell them about it, although company headquarters  choose not to disclose the light system to employees. 

Although the uncertainties over how to inform or even whether to inform employees about this  human resource (HR) initiative is troubling, communication and HR experts say there are other  problems with this green/yellow/red approach. One is that it's insensitive to "approach the livelihoods  of human beings" this way. The easy-to-understand simplistic nature of green, yellow and red colours  doesn't translate well to what will be a tremendously personal and difficult situation for many  employees, especially those with a "red" appraisal. Another problem is that labelling employees, can  create difficult interpersonal situations. The labels can become a source of humour and teasing, which  can deteriorate into hurt feelings and even feelings of being discriminated against. "No matter how  benign a colour-coding system may seem, it's never going to work." This doesn't mean that employees  don't evaluate employees. But companies should be open about it. Employees should know that  they're being rated, what the criteria are, and if they have a poor rating, what options they have for  improving. There should also be a fair process of appeal or protest if an employee feels the rating is  unfair. 

Epilogue: Ron Johnson stepped down as CEO of JC Penney in April 2013. 

Source: based on "Latest Layoffs at Penney Hit Back Office, District Workers," Reuters,  www.reuters.com, March 7, 2013. 

Supervision Today! Eighth Edition: Stephen P. Robbins David A. DeCenzo Robert Wolter

Page 3 


2. a. What would be the biggest motivational challenge for the Supervisors at J. C. Penney in  implementing the new appraisal method? (10%) 


b. Recommend a motivational approach and explain why it would be effective in implementing  the new appraisal method. (10%) 

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"which one of the motivational theories would apply to question 2A?"

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