JC Penney's Compensation System

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JC Penney has been in business for over 100 years, they have experienced highs and lows in organization performance. JC Penney has faced a dramatically changing retail environment from its competitors such as Target, Wal-Mart, and the GAP. JC Penney was viewed as lagging in merchandising strategies by its customers and analysts. Their compensation system was also viewed as traditional paternalistic in nature since it rewarded employees base on their length of service with the company. Promotions were made internally, created a more static organization culture. JC Penney’s pay structure contained many pay grades and were based on job evaluations. Their performance review system emphasized employee tenure and efforts. The executives responds…show more content…
Their biggest change was “career bands”. The career bands put jobs together based on job responsibilities. Career bands represented an approach that was based on benchmark jobs. The career bands identified career paths for employees to better link compensation of the jobs within JC Penney. Career bands provided employees to be rewarded for current performance and career growth. To support the new compensation system, the performance management system was developed. The system used performance goals that were tied to business strategies and objectives. So this system can work properly there were managerial training. The managerial training was key so managers could use the system effectively so they can tell the employees the importance of performance and its links to compensation. There was extensive communication for the implementation of the new compensation system. Department and store meetings were held to describe the new system. A letter for individual employees was prepared to inform them about their job and market pay…show more content…
JC Penney offers monetary compensation in form of wage by using the pay survey data to see if their employees are getting paid the market value base on their job responsibilities. Before JC Penney’s total rewards approach employees would be getting paid based on how long they have been working for JC Penney which would determine the wage of the employee. Another change reflects a total rewards approach by JC Penney offering benefits to its employees (chapter 11, page 406). JC Penney offers benefits to its employees by rewarding its employees for both current performance and continuing career growth. JC Penney rewards its employee’s base on their performance on the job and also for continuing growing with their
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