Introduction
J.C. Penney was a fast-developing and wealthy company that prioritized providing superior customer service to retain as many customers as possible. J.C. Penney appealed to an extensive client base. However, these customers preferred shopping at J.C. Penney owing to couponing and other distinctive elements that set it apart from Sears and other competitors. It was a significant aspect that contributed to the company’s profitability and was one of the reasons J.C. Penney was so profitable. In the case study by Harbin &Humphrey (2015), customers observed a price change after Ackman eliminated seasonal sales and replaced them with low prices throughout the year. Consequently, reducing discount promotions had the reverse impact of what was planned since it drove away loyal consumers rather than attracting new ones (Harbin &Humphrey, 2015). The new dress code implemented by Ron Johnson allowed employees to dress more informally and encouraged sales associates to wear clothing that made them feel most comfortable.
Customers were not pleased with the prospect of handing their credit cards to sales staff, who did not appear to be dressed professionally and instead resembled the shoppers in the store. It contrasted with the company’s policy, which encouraged employees to be themselves and show their particular sense of style. As a result, a seemingly slight change, such as the attire requirement for sales workers, resulted in a considerable shift in the perception of loyal customers, which likely contributed to the company’s deterioration and, as a result, led to the resignation of new CEO Ron Johnson. Following the failure of Ron Johnson’s vision and strategy, the new CEO, Ulman, faced the challenge of attempting to incorporate and revert to the strategy that had been in place before Ron Johnson’s tenure.
One essential assumption, in this case, is that William Ackman and the shareholders had much faith in Ron Johnson’s job. They expected Ron Johnson to completely alter J.C. Penney into a more competitive company capable of increasing revenues and keeping up with new trends (Harbin &Humphrey, 2015). Ron Johnson assumed that J.C. Penney customers would welcome the end of couponing and be ready for a new transition. It was a blunder that eventually contributed to the company’s downfall. He incorrectly assumed that the core clients were tired of coupons, while coupons were a major draw for them.
Autocratic Leadership Style
The autocratic leadership style entails exercising ultimate authority and control over all management-level decisions without regard for the ideas and feelings of other team members. These leaders’ decisions are based on their lines of thought (Al Khajeh, 2018). They do not seek the advice of other people. It was the type of leadership style that Ron Johnson used; he did not consider the opinions of the other senior employees regarding their ability to run the organization. Ron lacked knowledge of the demographics of the company’s target clients. He devised a new, unsuitable plan for the organization; he fired employees who had previously been the company’s customers. In addition, he fired the corporation’s senior executives because they complained about being overworked. He eliminated the company’s regular promotions, coupons, and discounts without first engaging the staff. As a result, the company lost senior consumers who earned middle-class salaries rather than high-end customers like Johnson.
Transformative Leadership Style
Adopting a transformative leadership strategy may be the most successful way for J.C. Penney to make critical company-wide reforms. Employees at J.C. Penney will work together to solve the company’s difficulties, guided by their energetic and caring CEO. Leaders help their teams and inspire their colleagues to enhance their performance, which increases team spirit (SondaitÄ— & KeidonaitÄ—, 2020). The leadership strategy most likely prevented the termination of the employees in question. The approach would have helped Johnson better understand the retail industry’s market niche because of the employee’s years of expertise. With the help of the employees, they would have been able to understand the retail market better and assist him with corporate management advice.
The transformative leadership style develops a transparent and open workplace environment that welcomes the interchange of fresh ideas and perspectives. The leader collaborates with team members to achieve goals relevant to their jobs (SondaitÄ— & KeidonaitÄ—, 2020). The manager uses the transformative strategy by creating an environment that stimulates the interchange of ideas and the creation of new goods. Without exception, the management process necessitates an open exchange of information. The role of the leader is to exert influence over his team members. The leader creates a compassionate environment for employees by acting responsibly toward them and motivating them.
Effective Leadership Approaches, Challenges in Implementing and Recommendations
Leadership is a vital element of effective business management, and a single leader who makes poor decisions can significantly negatively impact the organization as a whole. The story of Ron Johnson’s leadership position at J.C. Penney illustrates how an outsider leader who disregards the company’s culture and principles may drive a respected and well-known firm to collapse. The board expected Ron to be able to improve profits and the company’s value, but the results that Ron Johnson produced were precisely contrary to what was expected.
Johnson’s decision to alter J.C. Penney’s mission and how its customers viewed the company may have been the correct one, especially in light of the Board’s determination to restructure the business (Al Khajeh, 2018). However, a comprehensive analysis of the organization’s guiding principles, its strengths and limitations, the expectations of its workforce, and its management methods could be the first step toward resolving the business’s problems. Imagine for a moment if, before implementing the changes, Johnson spent some time learning about the organization. If this were to occur, the company’s leaders would be in a better position to create a strategy to save J.C. Penney’s corporate culture and improve the company’s overall performance.
Johnson had no opportunity of understanding what was anticipated from the CEO of J.C. Penney and what processes required improvement in the first place because there was a lack of contact between Johnson and the employees of J.C. Penney. For instance, if the CEO took time to learn how the business operates and the rationale for the necessity of the staff being eliminated, the decision to eliminate thousands of positions might be reconsidered. Suppose Johnson had tried collaborating with and listening to the people who already worked at J.C. Penney. In that case, it is pretty implausible that external demand for a separate management team would have arisen.
Conclusion
It is challenging to be the CEO of a firm with strong beliefs and culture when one has never worked for the company and is unfamiliar with its internal processes. J.C. Penney’s path to prosperity depends on the company’s ability to strike a balance between keeping to its essential ideals and embracing creative techniques to raise the company’s level of competition. A more observant CEO would begin by studying the firm and considering the perspectives of all senior employees who have been with the company for a long time. J.C. Penney’s efforts to acquire a different, younger audience may be replaced with initiatives to increase existing customers’ loyalty. It would help J.C. Penney keep its current employees while attracting new ones. Johnson’s leadership was unsuccessful due to the corporate culture’s ignorance and desire to restructure a firm that had grown hurriedly over time.
References
Al Khajeh, E. H. (2018). Impact of leadership styles on organizational performance. Journal of Human Resources Management Research, 1–10.
Harbin, J. & Humphrey, P.. (2015). J. C. Penney and Ron Johnson: A case of failed leadership: Lessons to be learned. 21. 75-81.
Sondaitė, J., & Keidonaitė, G. (2020). Experience of transformative leadership: SUBORDINATE’S PERSPECTIVE. Business: Theory and Practice, 21(1), 373–378.