Penney Eliminates Commissions
In its ongoing effort to reinvent the traditional department store model, J.C. Penney is eliminating commission sales for groups of sales associates. The change will affect sales staff in fine jewelry, shoes, window coverings, men’s suits, and some in its salon department.
The affected workers will be put on hourly wages with the changes taking effect this month.
Penney said in a statement released to news sources that the switch "enables our teams to be even more effective in winning the hearts and minds of our customers."
The statement added, "Our new business model requires that we move away from a commission-based environment so that every team member is motivated by meeting the needs of our customers. Therefore, our commission pay plans will move from a commission-based structure to a competitive hourly rate structure."
The move is just the latest in a series of changes at Penney under its new CEO Ron Johnson, who formerly ran Apple’s stores and was a top executive at Target. In a bid to wean customers off coupons, Penney lowered its overall starting prices as part of its "Fair and Square" pricing policy. In the last month, Penney announced it was laying-off 1,000 employees at its home office and a Pittsburgh call center. The prior week, it indicated that it would let go an undisclosed number of store staff at its 1,100 locations, many of whom were in supervisory positions.
According to the Dallas Morning News, commissioned workers were promised that their hourly pay rate would be increased significantly under a new pay scale based on last year’s averages. But several associates told the newspaper that they expected less pay overall given that they were told they would be given fewer hours and will no longer be full-time workers. According to the report, that means some will not be eligible for health insurance.
Penney spokeswoman Daphne Avila told the Dallas Morning News that the "pay changes" would result in no associates losing benefits eligibility in 2012, even if they start to average less than 35 hours a week.
- Penney To End Commissions For Some In Favor Of Hourly Wages – Dow Jones/Wall Street Journal
- J.C. Penney ending commission pay in stores – The Dallas Morning News
- J.C. Penney Eliminates Sales Commissions – JCK News Daily
Discussion Questions: Do you agree that non-commissioned associates are better “motivated by meeting the needs” of customers than those paid strictly by the hour? What do you think of this change in light of all the others made at J.C. Penney?