Ron Johnson Has Changed His Mind About Paying Some JCPenney Employees Commission

Business Insider

JCPenney is bringing back commissioned pay for some of its workers, employees at the company tell us.

The company announced the change during a meeting with salon stylists Monday.

The salon receptionist position, meanwhile, is being eliminated. But stylists will start earning commission again, employees were told.

One stylist says that commission is coming back at a "lower rate." There won't be commission in retail — only services.

Last May, CEO Ron Johnson eliminated commission at JCPenney.  Previously, sales staff in six departments had received commission — such as jewelry and the salon. It was a point of contention for sales and service staff in stores and the salon.

"I spoke with one of my coworkers who works in shoes and he said that he lost $3,000 last year because of the no  commission," another JCPenney stylist explained to us. "But I made $4,000 more without  commission  because my hourly rate was very nice."

It's an interesting move to go back to commissioned pay for some employees, since Johnson has a beef with the tactic.

Here's what he had to say about commissioned pay in a 2011 column at the Harvard Business Review:

"There are lots of components to [the Apple Store] experience, but maybe the most important — and this is something that can translate to any retailer — is that the staff isn't focused on selling stuff, it's focused on building relationships and trying to make people's lives better. 

That may sound hokey, but it's true. The staff is exceptionally well trained, and they're not on commission, so it makes no difference to them if they sell you an expensive new computer or help you make your old one run better so you're happy with it. Their job is to figure out what you need and help you get it, even if it's a product Apple doesn't carry. 

Compare that with other retailers where the emphasis is on cross-selling and upselling and, basically, encouraging customers to buy more, even if they don't want or need it. That doesn't enrich their lives, and it doesn't deepen the retailer's relationship with them. It just makes their wallets lighter."

But, again, this move is happening in salons, so perhaps he views them differently after having experience with them for a year now.

"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," a JCPenney spokesperson told us at the time. "Therefore, our commission pay plans will move from a commission-based structure to a competitive hourly rate structure."

We have reached out to JCPenney for comment and will update the post when we hear back.

Were you affected by this? Send an email to kbhasin@ businessinsider.com .



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