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msert Design Layout References Mailings Review View Help Be careful-files from the Internet can contain viruses. Unless you need to edit, it's safe to stay in Protected View Enable Editing CHAPTER 11 SUPPLEMENTAL CASE Compensation Changes at JC Penney Having been in business for over 100 years, JC Penney has experienced highs and lows in organizational performance. In the past decade the firm has faced a dramatically changing retail environment from competitors such as Target, Wal-Mart, the Gap, and others. As a result, Penney was increasingly viewed by customers and analysts of the retail industry as laging in its merchandising strategies. Even the compensation system at C Penney was viewed as traditional and paternalistic in nature because it emphasized rewarding employees primarily for their length of service. Also, most promotions were made internally, which created a more static organizational culture. The traditional pay structure at the firm contained many pay grades and was based on job evaluations to establish those grades. Its performance review system emphasired employee tenure and effort to a greater degree than performance results To respond to the competitive environment, the firm's executives decided that C Penney had to become more dynamic and able to change more quickly. One of the changes identified was that a new compensation system was needed. The restructured compensation system that was developed and implemented focused heavily on market value, using pay survey data that specifically matched job responsibilities. The greatest change was the development of career bands. These career bands grouped jobs together based on survey data and job responsibilities and resulted in fewer grades with wider ranges. The career bands represented a broadbanding approach that was based on benchmark jobs for which market pricing data were available. Jobs for which market data could not be found were analyzed using a job evaluation system Use of the career bands was designed to ident fy career paths for employees throughout the company and to better compensation to all of the jobs By having career bands greater et was proved foreovees to be rewarded for both current performance and continuing career growth To Suport this w ondensation system revised performance management system was developed. This system used performance toals and measures are closely tied to business strategies and objectives important to implementing the new performance management system was er altra This train was needed so that the managers could use the newsitemaectively and to describe to mp ovees the importance of performance and takto compensation implementation of the new compensation systeme red extensive communication Newsletters were prepared for all snagers explaining the new compensation in the departmental and store meetings were held with mange and employees to describe the system Type here to search

Answer 1

1. How do the JC Penney changes reflect a total rewards approach?

JC Penney’s changes reflect a total reward approach because it focuses on linking compensation and performance and talent management. The “career bands” tie into the talent management component of a total reward system. By having career bands, greater flexibility was provided for employees to be rewarded for both current performance and continuing career growth.

2. Discuss why JC Penney’s shift to a more performance-oriented compensation system had to be linked to market pricing.

JC Penney’s shift to a more performance-oriented compensation system had to be linked to market pricing because it is facing a dramatically changing retail environment from competitors such as Target, Wal-Mart, the Gap, and others. JC Penney’s had to pay competitive salaries to keep good people. Also, the market pricing matches with the firm’s executive’s decision that JC Penney had to become more dynamic and able to change more quickly. Market pricing and a performance-oriented compensation system matches the new business strategy better than a traditional job evaluation pricing system.

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