Organizational Culture and Culture

Kohl's Culture

Kohl's has a central corporate culture. What this means is that head office sets the overall corporate culture. The reason for this is that the roles within the company do not change much from one store to another, and from one warehouse to another. Thus, geography matters little. Thus, it is possible to create a centralized corporate culture that can be transmitted from head office around the country. It remains the role of the different store managers to implement the corporate culture on the basis of what head office mandates, and there is limited physical oversight so in that sense there is some regional variation in terms of culture as implemented by different managers. But on the whole, the culture is set at the head office level and then implemented further down, within specific parameters.

A key element of Kohl's culture is the focus on the associates, who are the front-line workers in the company. The associates make up a large percentage of the workforce, and just as important they are the employees who directly interface with the customers. Because of this, it is important that the associates are treated well and can be put in a position to succeed when representing the company to the clients. In retail, of the associates are not engaged, this will directly reflect in sales, and quickly.

Transformation

One of the things worth noting about Kohl's culture is that around ten years ago it did experience a change. Management, recognizing that the organizational culture was perhaps somewhat outmoded, sought to transform the culture, and did so over a period of time. The impetus for this change came from the realization at the head office level that the company needed to transform its business model, but that to do so it would not be able to counteract the company veterans (McNulty, 2007). These veterans were culture carriers who reinforced the Kohl's culture. A large portion of the workforce comprised these veterans, making it difficult if not impossible to transform the organizational culture without their engagement.

Business Strategy

The business strategy at Kohl's would generally be considered to be passive. The reason for this is that the company has a large, stable business that needs little tending, but should just be focused on maintenance. Strong changes in any direction are uncommon, and would be seen as a shock to the system for Kohl's. Thus, organizational culture plays a role in strategy. The company's workers are taken care of, and when they are happy they end up as the direct representatives of the company to the customers. This has a positive impact on sales, but more important, this positive impact is reinforcing.

Benefits

In recognition of the need to attract and retain high quality talent in order to compete with other department stores, Kohl's offers a package that it feels is market-competitive. Kohl's offers "comprehensive health and insurance benefits," support for retirement planning, and career benefits such as support for progressive education, or guidance to help one's career path. The company does not provide granular details on the website because it offers different benefits to different levels within the organization, and each employee's benefit package is subject to discussion, but in general the company aims to offer a reasonable level of coverage for basic insurance, and career pathway guidance. It is not believed that Kohl's offers more than market level compensation in its package, nor is it believed the Kohl's offers less.

JC Penney

One of the issues with JC Penney is what state the organizational culture is in. To recap, JCP hired a CEO who sought to reform the company, do it quickly, and in the process not only alienated a large portion of the customer base but a large portion of the workforce as well. The result was plummeting sales and a general crisis, from which the company is still recovering. Part of the issue was that the old culture became complacent, where most employees -- and to be honest most customers -- had been there a long time. This meant that nobody felt the need to work hard, innovate, or be creative. So senior management decided to remedy this, but by that point the company had attracted and retained the same type of worker for many years. As a result, the workers had no desire for a new corporate culture, and management did basically nothing to get buy-in from the existing workers (Bhasin, 2013).

Further, the change in corporate culture occurred during a transitional period, when the company was cutting jobs. The CEO, Ron Johnson, had previously worked at Apple, but there was nothing similar with the culture at a Silicon Valley giant at JC Penney. People at Penney were worried for their jobs the minute cuts started coming -- they were not high-paid technical talent who would land on their feet. This was a reality that Johnson failed to realize, and JC Penney ended up creating a negative culture as the people started to see change as a threat rather than an opportunity.

Business Strategy

The business strategy for JC Penney at this time was relatively aggressive. The company had undergone a transition period where it aggressively changed tack. It changed its pricing policies, its purchasing and merchandising policies and sought to change the organizational culture. For JC Penney, this period was a challenge because it had traditionally held a passive business strategy. It had a large real estate empire, prime positioning in malls, and while advertising was basically letting the market come to it. The change when Johnson arrived meant the opposite -- Penney was no longer reactive but proactive, and making aggressive changes.

The issue is that such aggressive changes did not fit either with the employees or with a large part of the customer base. Both groups were conservative in the sense that they were unlikely to react positively to abrupt change. Johnson knew this, but was not worried, because he thought it was key to attract a younger clientele. The problem is that the older clientele who were alienated were by far more numerous than the younger people who were attracted with the new strategy. Ultimately, JC Penney has struggled ever since the changes that Ron Johnson put into place, and that is largely because of a misalignment between business strategy and the organizational culture- the people at JC Penney simply could not handle the rapid pace of change that was being asked of them.

Benefits

JC Penney's benefits program varies depending on position. Their basic philosophy with respect to what they offer their employees is as follows. The company values diversity and giving back, as it has recognized that a) the American workforce is diverse and b) that people prefer to be engaged in their communities and like to work for a company that will support that. The company also seeks to treat customers well, and to do that it believes that treating employees well is a natural starting point. This view did clash with management during the Johnson years, not so much because Johnson was especially bad to employees but because of the shocking transformation that the company underwent that challenged both the people working there and the customers. JC Penney lost something when it shed so many long-time customers and staff. Now, Johnson likely wanted to lose a few of the long-time staff and customers, in order to set the stage to attract a younger staff and clientele, but the reality is that JC Penney never really had a plan to replace any of that which they lost during those years. They just lost people, and this ended up having a negative impact on the organizational culture as well.

Analysis

When you look at the JC Penney and the Kohl's cultures together, a few thing become apparent. First, both companies faced the same strategic reality with respect to their strategic realities. The two companies were quite similar. Both are national department store chains, facing the same declining market. Both had businesses predicated on long-term customers and long-term employees. The reality is that they dealt with these situations quite a bit differently. Both companies were sure that changes were needed to adapt, and so both were fairly reactive in that sense, but the difference was that Kohl's saw the limitations to change, and maneuvered around them, whereas JC Penney crashed headlong into these barriers, to the cost of organizational culture let alone market position.

What this means is that Kohl's management knew that it needed to make changes, but in deference to a staff full of long-term veterans it knew that it needed to make these changes slowly. So Kohl's brought in mangers familiar with the company, and made changes gradually. Key is that no individual change was too big or too fast. So Kohl's saw this transformation as a gradual property. In essence, Kohl's has been able to make changes at a pace reasonable to sustain organizational culture while maintaining competitiveness in the marketplace.