Organizational Learning and Change PDF

Running head: ORGANISATIONAL LEARNING AND CHANGE
Organizational learning and change
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ORGANISATIONAL LEARNING AND CHANGE
Contents
Introduction.................................................................................................................................................2
Organisational change and structure..........................................................................................................2
Research and Literature review...................................................................................................................6
Change interventions..................................................................................................................................8
Ethical/Biblical Principles...........................................................................................................................11
Conclusion.................................................................................................................................................11
References.................................................................................................................................................12
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ORGANISATIONAL LEARNING AND CHANGE
Introduction
In this report change intervention for JC Penny which is a retail chain company has been
discussed with illustration of their current issue that requires to be changed. The organisational
issue is discussed along with identification of JC Penny’s internal and external analysis followed
by recommendation of change interventions. Also use of theory has been made for better
illustration of change and effectiveness of understanding.
Organisational change and structure
According to Naikal & Chandra (2013) JC Penny Company is a US departmental store chain
with over 800 located stores across forty nine states of US and Puerto Rico. Along with offerings
traditional merchandise items JC Penny outlets also house leased departments like Sephora,
Seattle’s Best Coffee, salons, auto centres, optical centres, portrait studios and jewellery repair.
JC Penny stores are largely situated in suburban shopping areas and earlier in 1966 these were
mostly concentrated across downtown areas. As shopping malls became demanding in later years
of 20th century so following this trend JC Penny relocated many of their stores to developed areas
which were popular shopping areas. Recently too JC Penny has successfully been able to follow
the trend of consumer inclination and opened some freestanding outlets including some very nest
to their rivals. Some of JC Penny stores are situated in power centres. Moreover JC Penny has
also been successful to adapt to rising internet trend since 1998 and many of their catalogues and
distributions have been streamlined and even some of their stores are undergoing renovation to
improve store layout to modern retailing demands.
As stated by Chernyak-Hai & Tziner (2014) the 111 year older retail chain had some complex
organisational culture issues that led it to verge of failures and currently the chain has been
struggling to survive. Soon after the period of recession between 2009-11, JC Penny stores
struggled to come out of economic downturn and heavy phase of decline in their sales, which
during this period were low from almost as 18 bn USD to 17 bn USD. That meant that JC Penny
stores made a sale of around 150 USD per sq ft of store which had been definitely lower in
context to department stores sales if not the lowest. Contrastingly, during same period rivals of
JC Penny like Macy’s and Kohl’s made sales of nearly 220-230 USD per sq ft. There was
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terribly wrong within JC Penny over a long time and due to their poor organisational culture they
had lost their identity and focus to bring in fresh change.
As opined by Puia & Ofori-Dankwa (2013) before year 2009 JC Penny had over 1000 stores
located mostly in popular shopping areas across US and they mostly targeted middle income
people as major customers of their department outlets particularly in men and women apparel,
kid’s items, home items and was very well known. JC Penny also had strong private label brands
that credited most of their sales and their previous management worked hard to maintain costs
and lessen supply chain. But after great recession it lost its identity as with less disposable
income in hand and other alternative options for people clearly many switched to low priced
Walmart, discounters like TJ Maxx, Kohl’s, Macy’s. Also there were several speciality stores
available like The GAP and Gymboree which gave fewer reasons for customers to visit JC Penny
for their shopping needs. Obviously that resulted to sharp decline in sales that were more
aggravated with fault in their culture and failure to adapt to change.
Internal analysis
Strengths: JC Penny has over 800 stores across US which makes its leading in retail industry in
context to market share. It also has been oldest chain with 111 years old existence that gives a
strong financial position to penetrate in new markets. According to Canadean Company report
(2016) JC Penny have strong network of suppliers that makes them capable to handle supply
chain bottlenecks and have strong dealer community where they facilitate JC Penny’s products to
get more sales and revenues. They have good track of integration through M&A with
complimentary companies like they have integrated with several tech firms to streamline
operations and support reliable supply systems.
Weakness: JC Penny has high employee attrition rate compared to others in industry and have to
make considerable huge investments in contrast to rivals for training and development of new
employees. Also they have been facing issues to deal with discounter stores that are new entrants
and have lost significant shares to niche segments. Also JC Penny has not been successful in
incorporating strong work culture (Canadean Company report2016). Moreover JC Penny has
poor product demand forecast that has resulted to high rate of missed opportunities in contrast to
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rivals and in most cases JC Penny has ended in maintaining high inventory for both in-house and
in channel.
Opportunities: JC Penny has stable free cash flows which offer opportunities of investment in
new product segments, new technology integration so it should attempt to venture into different
product category. Also new technology offers opportunity to JC Penny to explore differentiated
pricing approaches in new market segments that will support them in maintaining loyal customer
base with better services and value driven propositions (Canadean Company report 2016). Also
new customer trends and change in behaviors gives JC Penny opportunities to tap into new
market by building new revenue streams and diversifying into new segments.
Threats: According to Canadean Company report (2016) JC Penny faces threat from counterfeit
and low quality products that are imitated specifically in emerging and low income markets.
Also crisis of skilled workforce in global market is a steady threat in growth objectives of JC
Penny along with increase in raw material prices which can affect their profit margins. Moreover
new technological advances of rivals and market disruptors can result to serious threats for JC
Penny from mid to long term future. Also rise of power of local suppliers can create threat as
rivals may pay better margins to local distributors to capture shares due to intense competitive
pressures. The intense competitive pressure has affected profit margins and overall sales of JC
Penny which can be threatening over long period impacts.
External analysis
Political: as retail industry depends on minimum wage regulations and retail being biggest job
provider in US so any change in federal regulated minimum wage laws can negatively impact
profit margins of JC Penny. In 2017 governors of NYC and California voted in approval for rise
in wage laws for two states over next 6 years which can rise to 15 USD wage/hr by 2022. These
congress laws will impact profits of JC Penny specifically in these states. Also retail industry has
turned more political and is taking stand on social issues which is making retailers like JC Penny
encounter unstable political climate in US as they have identified that social identity behind
brand is vital (Newstex 2018). Example, political volatility and order of government like travel
bans by Trump administration may affect negatively as government regulations and policy are
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directly affecting profits by impacting economic climate of US. Also there is more political
climate pressure as Asian economies are growing rapidly than US. Though JC Penny has no
strong political alliances but political pressures due to regulation and policy changes can
negatively affect its operations and business policies.
Economic: according to News Bites US (2017) as retail is major industry of employment in US
so increase in online stores has led to over 22 prominent retailers in US to shut down their
physical outlets in 2017. Even JC Penny is struggling for survival amid rising impact of e-
commerce and on-the-go ease shopping trend. In 2017 they closed nearly 138 stores in attempt to
restructure their business to meet customer demands. Also policy changes like tax cuts and
infrastructure spending can improve consumer expenses but trade restrictions can result to rise in
cost of goods thus lowering consumer spending and resulting to more job slashes. JC Penny is
struggling to maintain their physical stores along with overcapacity of workforce and consumer’s
interest for online shopping is forcing them to cut jobs to maintain costs.
Social forces: according to Newstex (2014) consumer’s preference for e-commerce shopping
platforms is declining sales and profits of JC Penny and these social change shifts have driven to
closing of many of their physical stores. Also culture and inadaptability of workforce in JC
Penny to leverage to new changes is challenging to be maintained in competitive pressures. Also
the situation is complex due to high attrition rate so to overcome human capital loss JC Penny
needs urgent change intervention approaches. Even, economic downturn and job cuts have
resulted to rise in turnover and JC Penny must immediately act to cope with this crisis to operate
and survive in future.
Technological: as more consumers have shifted to online shopping so JC Penny needs to make
considerable technological developments to engage more consumers through their online
platforms. More futuristic advances in artificial intelligence and IoT in retail has resulted to more
pressure over JC Penny to integrate their online websites and stores to overcome competition
with better and unique technological developments that can benefit stores with decentralized
technologies.
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Environmental: according to M2 Presswire (2018) energy and waste management have been
focus of optimization process at JC Penny which has helped them reduce environmental
footprints. Also to engage their suppliers in environment sustainability procedure they need to
increase significance of developing their standards by targeting audit, support and training of
suppliers. Besides, they have aimed to lower water consumption by 5% in US operations and
recycle 85% of annual domestic waste by 2020 as efforts towards environment. Moreover there
is need for more association with energy efficacious transport carriers to lower their freight
related emissions.
Legal: JC Penny has been facing constant pressures under highly regulated department store
industry and some of these includes coping with labor laws which regulate rights of employees.
Also, JC Penny needs to check laws that govern immigration as immigrant employees have been
a vital factor among US employment concerns.
Research and Literature review
As stated by Suwaryo, Daryanto & Maulana (2015) organisational culture is collective behaviour
of workforce and their response to organisational values, beliefs and visions. Culture shapes
assumptions and behaviour patterns by influencing the manner they learn, feel, think or assume
in conformity with organisation. So in condition of diverse and conflicting culture that coexist it
is important that these are guided by effective actions and interpretations to lead to adequate
responses to situations. Culture and change in organisation has direct relationship as these can
either promote or hinder change implementations. Culture can promote change as it is strong and
influences firms people as well as support of culture towards change can foster innovation in
firms, so both change and culture are interrelated. Moreover culture supports development of
people, facilitates team collaboration, hence applying culture in change interventions is
rewarding to contributions as culture includes brainpower and not physical power. As such
radical and continued change can be promoted with assistance of culture as it influences both
process and staffs and has strong implication on implementation and sustainability of change as
culture exerts control over employee’s responses so change can be easily executed with strong
culture (Essawi 2012). Moreover along with benefits culture also can create complexity to
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change as strong culture can hinder creation and maintenance of support for change due to strong
uniformity and loyalty driven with culture. Strong culture can drive behaviour that can act as
barrier to response of firms towards changes. Also involvement of culture in change can drive
assumptions that all firms encounter similar opportunities and setbacks due to lack of empirical
evidences thus resulting to barrier.
Fig: McKinsey 7 S model of change
Source: iEduNote (2018)
According to Singh (2013) in order to support change in organisational culture, McKinsey’s
model and evaluation of 7’S aspects i.e. strategy, structure, systems, shared values, style, staff
and skills can help to execute necessary change as JC Penny had been facing issues of cultural
difficulties that had made employees resist to adapt changes and hence has led to chaos and loss
of company’s traditional identity. Also since few years JC Penny has lacked focus on its vision
and one of the prime issues is shift from culture of transparency to one of capacity to revive
profits which has resulted to no protocol or corporate process with JC Penny. More often
directions are offered for product changes that have resulted to employee’s confusion and chaos
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and this lack of culture has driven troubles to change to new needs of business. More often
employees at JC Penny are not allowed enough space to ask questions or get aware of
happenings in stores which has proved fatal to culture of open communication thus driving high
employee frustration and attrition rate due to poor corporate culture.
This can be overcome by adapting McKinsey’s model of change where JC Penny needs to assess
their strategic approach to understand their purpose, leverage advantage over rivals, become
flexible in process to adapt changes without damaging culture. They also need to improve their
structure and should be open, fair and transparent so that information and effectiveness to drive
change can be nurtured in culture. Moreover JC Penny needs to evaluate their process to manage
effectively by learning about business systems, track and evaluate outcomes to initiate change
process, so they need to understand employee engagement, team management and HR practices
to streamline change of culture and effectiveness in employees. Also, JC Penny should include
values and enable culture to manage change as it is a powerful tool that associates values and
culture to changes and makes employees more agreeable to adapt (Kalaiselvan & Naachimuthu,
2016). Further JC Penny needs to interpret their management and leadership styles to idealise
change with better embracement of culture and employee engagement in decisions pertaining to
change which will drive collaboration and effectiveness. The most important is JC Penny needs
to understand their staff and evaluate the shortages in skills, adaptability etc to fill the gap of
culture as well as frame adequate policies that can help to collect their feedback and develop
skills to perceive changes. The understanding of 7S will give an idea what needs to be initiated to
plan change without disrupting regular operations by helping JC Penny identify their weakness
and highlight areas that needs attention to implement change.
Change interventions
Recommendatio
n
Description Comment Role Contribution Change
level
Streamlining Inspiring and
motivating
employees
Streamlining
process and
policies to
Board of
Directors,
Chief
Determining
strategic
directions,
Executive
managemen
t level
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ORGANISATIONAL LEARNING AND CHANGE
through
vision and
mission and
policy
changes
drive change
and support
better culture
that is in
direction and
in alignment
to goals
executives
, Senior
Managers
approach,
performance
metrics, change
in overall
policies to drive
better open
culture to
embrace change
and adaptability
in employees in
context to
business needs
Changing
workplace
practices
Forming new
operational
rules and
better
workplace
practices to
improve
culture and
balance work
process of
employees to
develop
accountabilit
y and
reporting to
changes
Develop and
communicate
change in
work
practices to
drive better
culture,
employee
accountabilit
y
Team
managers,
Change can be
initiated by
communicating
change needs
and benefits
attained by
describing to
employees
results and
setting goals to
develop clarity
and awareness
of
responsibilities.
Managers can
talk with
employees to
discuss issues
and work
Middle
managemen
t level
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ORGANISATIONAL LEARNING AND CHANGE
together on
solutions to
drive change
Increasing
professionalism
and observing
work ethics or
company values
Ensuring a
sense of
completeness
is developed
in employees
so that they
work
together to
drive
organisationa
l culture and
change and
also
influence
behaviour of
others by
demonstratin
g
responsibility
and
effectiveness
at work
Developing
awareness
towards
organisationa
l values and
work ethics
so that
employees
work
together and
mutually
influence
behaviour to
filter
appropriate
response that
drives
change with
better culture
supervisor
s
Driving
awareness and
motivation in
employees by
telling them
what to do and
making them
aware of
outcomes both
positive and
negative and
consequences
for
underperforming
.
Secondly
appraising those
group of
employees who
perform well
and encourage
to perform better
Regular
employee
level
.
The implications of change in case of JC Penny will be development of clear strategic vision
amongst the employees with clearly defined values, strategic directions that will help to
demonstrate commitment of management from top down thus motivating employee’s confidence
and needed consent to drive change and stick to planned interventions. Another implication will
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be attainment of cultural change with better communication and actions from management level
that will lead employees with role model to motivate at highest level for better adaptability. The
effectiveness of change in culture in employees of JC Penny after change intervention process
can be seen through their support towards better culture and organisational changes. With better
culture in employees they will remain more committed to their roles and will strive harder to
perform which can be seen with high level of customer satisfaction and dedicated customer
relationship as reflected by employees. A strong and inclusive culture will help employee to
become brand ambassadors of JC Penny to achieve better outcomes and growth for company.
Ethical/Biblical Principles
As change is evident and continuous so to develop ethical sensitivity in employees towards
changing a culture it is important that a rational and sense of embracing organisational values is
nurtured in employees of JC Penny through sustained awareness and learning to initiate effective
change implementation. Also the management should be ethical in their practises to not force
change on employees rather discuss with them on current issues, change prospects and better
solutions so that change is adapted with agreement and not in breech to regulations of policies.
Conclusion
Hence from the discussion it can be concluded that as employees are core assets of organisations
so developing a strong culture through learning and awareness is significant to drive any kind of
change without complexity and resistance. Also to best utilise culture as enabler of change the
involvement of employees in all dimensions of change process can be encouraged so that culture
of a firm can be turned as promoter of change and not a barrier for enhanced outcomes of change
interventions.
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References
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