CRISIS COMMUNICATIONS

1. CRISIS COMMUNICATIONS Sarah Jarvis Briana Mosley Nigar Rasulova Kathleen Rodgers

2. Content • Literature Review • JC Penney Case Study • Research Methods • Results • Recommendations

3. Literature Review • ORGANIZATIONS DO NOT EXIST IN A VACUUM • Actions of competitors • Changing technology • Economic situation • Government restrictions • Needs of consumers • CONTINGENCY THEORY • Developed by Fred Fiedler • Argues there is no one best way to organize • Managers choose the correct strategy to adapt to change, then implement it effectively • Balance paying attention to external demands while listening to employees GAVEYOU es

4. JC Penney Case Study • Adapted its strategy to keep up with competitors and technology change: • Reorganized the company with a new CEO, Ron Johnson (former Apple and Target Executive) • External changes: • Store layouts turned into boutiques • Pricing strategy and merchandise selection (no coupons, limited selection) • Advertising campaign and spokesperson (Ellen DeGeneres) • Internal changes • New corporate culture (color-coding employees based on performance) • Internal communication • (monthly broadcasts, emails) • Major layoffs

5. Research Questions • What was JC Penny’s reasoning for reorganizing & bringing on a new CEO? • What changes did the new CEO implement in JC Penny stores? • How were these changes communicated? • Internally – employees • Externally – customers • Why did these changes fail? GAVEYOU es

6. Research Methods • In-person and correspondence interviews with JC Penney employees (entry-level, management) • Blogs, Forums and Social Media Analysis (Web page, Facebook, Twitter, Pinterest, YouTube) • Recent articles on JC Penney • Interviews with JC Penney Management • Advertising campaign

7. Interview with Mrs. Peggy Hardy (JC Penney 23-year veteran employee)

8. Customer Perceptions “You don’t need a new marketing plan, just bring back the basics” Jean T. “Customer Service is terrible and quality of the clothes has gotten bad!” K. Smith “Why the big change? If something is not broken, then don’t fix it. We want our old JCP back!” Sherry “No longer are there any incentives or sales to get me wanting to come to the store. Flat rates do nothing for me!” Jennifer “Survey your customers and respond to their feedback. The board of directors needs to wake up. New is less and the old is more!” Kathy “Get rid of the stores within the stores. More customer service and less hand held scanners. Bring back the old JCP and its trusted brands”! Marylou

9. Results • Internally: • Culture shock • Poor communication between management and employees • Employee frustration – lack of motivation • Lack of knowledge on how to adapt to change • Increased employee turnover • Lack of shared vision for the future of the company

10. Results (continued) • Externally: • Dramatic changes not communicated to JCP customers • Poor customer service, dissatisfied customers and decreased sales • Lost connection with “Veteran Customers” in an effort to reach the “20-something” audience through “boutique” store layouts and limited merchandise • Many customers did not accept the price-strategy due to the lack of motivation and knowledge about new JCP changes

11. Recommendations: IN RETROSPECT • Recognize environment and know your customers • Consult Management staff before and during change implementation • Gradual introduction of new policies • Align internal expectations • Consult and listen to customers during transition • Clearly communicate changes to employees and customers SAVE Bring this card to an associate at JCPenney. Scan it and save $20 or more on your purchase of $100 or higher. .com

12. Recommendations: MOVING FORWARD • Marriage of old and new • Keep “Stores” concept • Bring back sales • Reintroduce removed inventory • Reach both demographics • Regional differentiation and local empowerment • Internal employee initiatives • Let customers drive decisions for change spend AND save

13. Expectations for the future of JC Penney

14. Thank you!