Organizational Changes at JC Penny Chain of Stores - Case Study Example

Organizational Changes Student’s Name Institution Organizational Changes Introduction Organizational change refers to a process of reviewing and modification of a management structures, as well as, business processes within an organization. This change is a depiction dynamics that takes place within an organization with respect to the quality, shape and state of any organization over a given period of time (Burke, Lake, & Paine, 2009). In most cases, these changes are experienced after introduction of new aspects within an organization such as, an operating system. Today most CEO’s finds in the profound need to change in order to achieve or drive basic organizational change. Such leaders must orchestrate innovation themselves by establishing certain conditions that ignite ideas in order to drive their execution processes. A scenario from JC penny chain of stores in United States of America (USA) is a good recent example where the business has tried to on the prototype of their new store concept. This is a major step towards success after experiencing almost 20 % decline in their sales in the first quarter of 2012 (Farzad, September 27, 2013 ). In addition; the business had a layoff of 350 employees together with its president Michael Francis. The current CEO Ron has been fighting a lot trying to implement the companies’ new vision with an aim of transforming the organization. Traditionally the company depended mostly on coupons and discounts as drivers of sales. The new CEO came up with a new pricing scheme or a three –tired pricing strategy. This new scheme aimed at ensuring that the shopping process became simple and as a result attract new customers. Advertising, as well as, direct mailing inward bounded a new eye -infectious polish. The company also managed to do away with the word “sales” off its marketing in order to put more emphasis on consistently low prices. Change analysis The above mentioned changes were not an easy task and the CEO alone was not in the position of achieving them alone. These changes required massive resource allocation as well as cooperation from employees. In the course of the change, to make it look appealing to customers; the CEO introduced the idea of new unique boutiques located in each JC penny (Joann, April 8, 2013). Initially, this is the store within a store concept. It led to addition of services in the centre of the store, for example, a place where people got their nails done. The whole point here was to try and attract a new demography although it wasn’t showing fast enough. The other idea in the change was based on promotional pricing or high low pricing strategy. Again the idea in this case was to change and eventually increase on sales. Change resistance The most note able thing is that J C Penny attempts in transforming the brand promise failed especially to infuse the customer touch. The customer service, store environment marketing, and merchandise were not ready for the change. Moreover, the employees who were the key agents of change had not been brought to board fully. This led to the new strategy rolling out in starts and fits, and eventually failed to give back the excitement, as well as, the urgency that was required in order to make it work out with the employees or customers (Farzad, September 27, 2013 ). The company was in a position to pull through if some time was taken and dedicated to change the leadership of the company. The company had not sufficiently railed the employees on the new idea or organizational change. That is, the change came along as a nightmare to many employees something that was hard for them to adapt to easily. The employees had no idea or were not full conversant and had no clear understanding on the opportunities that were eventually laid a head of them. In this case, the management did not take time to deduce whether the employees were excited by the new opportunity and how they could have helped the company go through the process to success. The other form of resistance to change was based on the customers of the company’s products. They adopted the high low pricing model where the customers came in the store looked in the merchandise liked it, but the prices were not accommodating at all and they failed to buy. As a result, this merchandise remained in the store for a longer time than expected. This led to J C Penny wasting much of its real estate and capital what triggered them to selling their products at a much lower price. On the other hand, customer in most cases is used to shop for discounts. In the case of J C penny, they were not ready and did not want to dilute their boutiques with discount pricing (Joann, April 8, 2013). All these resistance aspects made it hard to carry out the low price strategy. The customer traffic in the company stores dropped meaning that the customers were against the organizational change that was being implemented. The customers were not ready for the change and had no more disposable income to spend and adapt to the new strategy. In such trying circumstances it became very hard to persuade vendors to carry out the store within a store idea. This lead to a shortage in the cash supply, again the issue of employees crept in where they got worried on getting paid their dues leaving a lone the anxiety on the dismissed overhanging brand reputation. Change effectiveness The strategy adopted by the CEO Ron Jonson from the start was not clear. The starters and those who were intended to execute it had no clear understanding of the whole scenario, For example, many of its customers were not aware that the “best price Friday ” sales was a whole weekend issue. This clearly shows a whole lot of misinformed customers. Therefore, a clear and compelling vision was required from the management to both the public and the employees of the company on the target goals of the company. After that they had a good chance of transforming the brand and the likely resistance that was evident would not have been rampant as indicated in the above analysis. The other thing to note is that employee’s future opportunity was an important thing to address. The sale decline had already crept in the company sales strategy, and there was no doubt that the entire organization was already in a panic state. There were financial pressures that hang around meaning that a lot was required to be able to make the whole organization community to adapt easily to the new opportunities. The resistance evident in this organizational change resulted form the fact that the management failed to ensure that the whole organization community was focused on the persuasive vision for the future of the organization and not simply running away from the blaze of the past (Caluwé, & Vermaak, 2003) In the long run, the change would be effective if the organization manages to come up within the urgency across the whole organization. The new CEO is working hard to ascertain himself as a leader. As a result, he will be able to get enough trust to be able to put across the urgency within the organization. After training employees on the new, as well as, exciting opportunity, the management of the organization has a duty to ensure that they feel the moving forward urgency. The employees should also be made to understand on the need for a fast and deliberate action that is needed d to help the organization succeed (Burke, 2002). Once all this enthusiasm is achieved over time, JC penny will be able to bring back its esteemed customers back to their stores. In respect to the organization change adapted by J C Penny it is clear that it is not an easy task to avoid or to have an organization change in the world today. Organizations that can be able to effectively embrace that change are in the likelihood of surviving in the world competitive market. Despite the fact that the adapted change in this case did not work out as expected it is still needed as a strong asset for JC penny once the few mistakes done earlier are rectified (Joann, April 8, 2013). The change will make it possible for the organization to get hold of a sustainable competitive benefit that is adjacent to its competitors through cost reduction. Difference in behaviour among the employees, as well as, culture influences the rate of change, acceptance, and implementation of the newly proposed opportunities in an organization. Conclusion This organizational change analysis is important as it helps one to get an understanding on the need for an effective communication as an important role in initiation of change within an organization. J C penny new opportunity organization change failed because the organizers did not prepare all the stakeholders well. The change being enforced in this case would have been favorable to all stakeholders in the context of business ethics and corporate social responsibility. Therefore, determining the risk involved in initiating change is crucial to enable an organization to come up with a strategy of managing the risks involved (Olson, & Eoyang, 2001). Moreover, change is also a key aspect in an organization, and acceptance to change helps in improving an organization operations. This implies that a manager is required to have a clear understanding on the culture, context, and environment while taking in certain actions and making decisions. References Burke, W. W. (2002). Organization change: Theory and practice. Thousand Oaks, Calif: Sage Publications. Burke, W. W., Lake, D. G., & Paine, J. W. (2009). Organization change: A comprehensive reader. San Francisco: Jossey-Bass. Caluwé, L. ., & Vermaak, H. (2003). Learning to change: A guide for organization change agents. Thousand Oaks, Calif: Sage Publications. Cummings, T. G., & Worley, C. G. (2005). Organization development and change. Mason, Ohio: Thomson/South-Western. Farzad, R. (September 27, 2013 ). J. C. Penney Is on the Brink. A journal for market and finance , 1. Olson, E. E., & Eoyang, G. H. (2001). Facilitating organization change: Lessons from complexity science. San Francisco, Calif: Jossey-Bass/Pfeiffer. Joann S. (April 8, 2013). Penney CEO Out, Old Boss Back In. the wall street journal , 1. Read More