This paper examines the organizational behavior and cultural transformation of the JCPenney Company across its century-long history, with particular focus on the reforms implemented by CEO Myron Ullman beginning in 2004. Drawing on theories from organizational behavior, change management, social learning theory, and paternalistic leadership research, the paper traces how JCPenney evolved from a rigid, authoritarian management culture to one that emphasized employee engagement, innovation, and teamwork. The study uses qualitative methods, including financial records, media sources, and academic literature, to demonstrate how deliberate behavioral changes at the individual and managerial level produced measurable improvements in employee engagement and sales performance. Recommendations are offered for ongoing cultural monitoring in the face of evolving retail market conditions.
Organizational behavior is the study of how the actions of individuals, groups, and structures influence the behavior of an organization. Organizational culture refers to the characteristics that define an organization and make it unique — including communication styles, management styles, interaction styles, policies and procedures, and the manner of dress within the organization. Organizational culture influences organizational behavior in many ways, and organizational behavior in turn produces outcomes that lead to the success or failure of the business. This research explores the organizational behavior of the JCPenney Company.
Many studies on organizational behavior focus on business failures in relation to organizational behavior. This research takes a different approach, examining a company that has been in operation for over 100 years. It explores organizational behavior within JCPenney and how the company has leveraged its organizational behavior to achieve longevity. Companies that have survived for a century are rare, and much can be learned from studying how their organizational behavior has helped them remain in business for so long.
The JCPenney Company was founded in 1902 by James Cash Penney and William Henry McManus (History of Business). It began as a dry goods store in the booming mining town of Kemmerer, Wyoming, under the name The Golden Rule. By 1912 there were 34 Golden Rule stores. The following year, JC Penney took majority ownership of the chain and changed its name to JCPenney. By 1917 there were over 175 stores (History of Business). The chain continued to expand rapidly, as store managers were allowed to open new stores and retain a quarter of the profits once their store became profitable. This simple expansion concept helped make JCPenney one of the biggest retailers in the country by 1970. The original store in Kemmerer was still operational as of 2007 (History of Business).
The greatest period of expansion for JCPenney was during the 1950s and 1960s, during the post-war boom. As America moved to the suburbs, JCPenney established itself as an anchor store in shopping malls across the country (History of Business).
This research addresses the question of how JCPenney has adjusted its organizational behavior to respond to changes in society, making it one of the longest-lived retail chains in the United States. It focuses on how Myron Ullman's departure from an authoritarian style of leadership transformed the company into one that engaged its employees — and how that transformation had a measurable impact on profitability.
JCPenney began as a single store located strategically where certain goods were in demand. Today, JCPenney stores are located primarily in suburban shopping malls, but that was not always the case. At one time, most JCPenney stores were located in downtown areas of large urban centers (History of Business). The most recent trend in retail has been toward opening standalone stores, a trend JCPenney has been gradually following. JCPenney is now also an Internet retailer (History of Business). These adjustments to changing retail trends have required significant institutional changes within the corporation. Over the past hundred years the company has had to adjust and re-adjust its corporate strategy and organizational behavior to survive ever-changing times.
JCPenney has long maintained one of the largest catalog businesses in the retail industry, with Sears as its only real competition in that space for many years. JCPenney.com is now one of the largest apparel and home furnishings websites on the Internet, with nearly one billion dollars in annual sales (History of Business). JCPenney currently faces stiff competition from big-box retailers such as Walmart and Target, which has forced the company into developing private brands such as St. John's Bay, Worthington, and Arizona Jean Company (History of Business).
This shift has meant changing markets once again — from a general retail audience to a niche market focused on product differentiation through select proprietary brands. With so many other major retailers taking similar actions, the future of the mid-tier retailer has come into question. This latest move in response to big-box competition represents a change in both organizational behavior and strategy. This research explores the effects of this change on JCPenney's ability to remain competitive in a new and evolving market.
This latest development is perhaps one of the most drastic adjustments in JCPenney's entire history. Previous changes focused on the physical location of stores — from downtown areas to suburban malls and more recently to standalone stores — while the product offerings and range of merchandise remained relatively constant. The current market shift is forcing JCPenney to change not only where and how it does business, but also to rebrand its entire product lineup. In addition to sweeping changes in the brands and products it offers, JCPenney has also redesigned its company logo (Damas and Schendel, 2012). However, it takes more than marketing to achieve success in an environment of increasing competition. This research explores how these changes in organizational behavior will affect the company's ability to remain competitive.
The purpose of this study is to examine JCPenney's organizational behavior in response to societal changes over time. It will help researchers understand how organizational behavior at JCPenney is related to its ability to respond successfully to changes in the retail industry. By understanding how organizational changes have affected JCPenney's sustainability through sweeping societal shifts — including two world wars — researchers can gain perspective on how other retailers might adjust their own organizational behavior to achieve greater longevity.
A key objective of the study is to examine the current changes and re-branding strategy of JCPenney and to offer predictions about how these changes will affect the company's future success. JCPenney is not the only retailer undergoing dramatic changes, and examining the similarities and differences between JCPenney's strategy and those of its competitors provides perspective on broader transformations occurring across the retail industry.
This research draws on historical information about organizational behavior and strategy. Only limited information is available to the public — in particular, internal documents explaining the rationale for strategic decisions — as much of that material is proprietary. Therefore, the research method entails collecting information from a variety of sources, including internal documents where available, financial statements, media sources, journal articles, and other academic sources.
The availability and type of information place several limitations on the ability of the study to draw firm conclusions regarding organizational behavior. Much of the analysis will be inferential, as organizational behavior was not always a formally tracked concern in the past. However, it is expected that organizational behavior can be deduced from the available information. This research is a qualitative study and is subject to the limitations inherent in qualitative work, including the potential for researcher bias in gathering and interpreting information. The researcher will remain mindful of this throughout the process.
This research also attempts to apply current organizational behavior theories to the company. These theories provide a framework for examination. It is important to note that organizational behavior differs from strategy in that it is associated with individual behavior rather than the aggregate patterns that constitute organizational strategy. Accordingly, the actions of specific individuals are considered wherever such information is available.
Organizational behavioral theory has only recently been recognized as a discipline in its own right. Historically, it has been closely tied to organizational culture. Culture refers to the collective actions of the company, whereas organizational behavior refers to the behaviors of individuals that result in organizational culture and organizational strategy. Theories in organizational behavior are closely linked to psychology and sociology: understanding group and individual behavior helps improve organizational performance by shaping individual behaviors (Mullins, 2005). A close relationship therefore exists between organizational behavior and management theory.
Organizational behavior is also affected by culture. The culture of an organization sets the "climate" within it, which has a significant effect on the behavior of individuals (Chaneta). This can be seen in the early history of JCPenney. Although JC Penney may not have framed it in these terms, the company's growth depended on the organizational culture he instilled in his managers. In the early days, growth relied on individual managers opening their own stores and retaining one-quarter of profits once the store became profitable. This incentive plan was embedded in JCPenney's overall strategy and corporate culture, establishing an environment in which certain individuals — particularly those in management — were heavily rewarded for their success. This created behaviors that drove success among the management team, even if those behaviors did not always extend to the broader workforce. Crucially, the managers themselves had to instill a similarly success-driven culture in their own employees, passing the motivational dynamic down through the organization.
Buchanan (2004) identifies several key components of organizational behavior: personality, communication, perception, and motivation. All of these factors determine how an individual perceives themselves in the work setting and how they behave on the job. Work design also plays a key role. JCPenney, as a retail store, maintained a customer-focused culture from the very beginning of the organization, which allowed it to build and retain a clientele that sometimes spanned generations. Shopping at JCPenney became a time-honored family tradition.
Organizational behavior encompasses many theories drawn from psychology and sociology, including personality traits such as self-esteem and self-efficacy, perception and attribution theories, learning and reinforcement theories, reward schedules, behavior modification, goal-setting theories, and motivation theories. All of these contribute to behavior within an organization. One research approach would be to take a single theory and apply it to a specific organization. However, JCPenney is a large company, and insufficient information is available about individual employees to conduct such a targeted study. Therefore, broader factors must be examined to gain perspective on organizational behavior within the company.
One of the key difficulties in organizational behavior theory is similar to challenges found in psychology and sociology research: it is difficult to achieve predictive research validity. Trends can be identified in retrospect, but the complexity of human behavior makes exact predictions difficult to formulate. Much research in organizational behavior therefore remains theoretical (Miner, 2002). Changing the mindset of employees is necessary to create a culture that allows a company to grow and adapt to changing economic conditions. Cultural change begins with daily activities that are repeated over time, originating with management and flowing downward through the organization.
"How Ullman reshaped culture and boosted engagement"
"Paternalism, social learning, and change theory applied"
"Lessons for retailers and ongoing monitoring strategies"
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