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In addition to laying off over 2,000 employees and closing over 30 underperforming stores, JC Penney has also announced that it will reinstate commission pay for sales associates working in furniture, fine jewelry and window coverings. This change in pay structure will impact over 3,000 JC Penney sales associates.

Historically, Penney has paid associates minimum wage plus a percentage of sales in furniture, window coverings, jewelry, shoes, salon, and men’s suits.  Shoes, salon, and men’s suits will continue to remain non-commission.  In May of 2012, the commission structure was removed from all departments as part of Ron Johnson’s plan to level the playing field and bring over best practices from Apple and Target.  Mr. Johnson believed that removing the commission structure would incentivize employees to focus on the shopper experience.  The intent was that sales associates would focus less on upselling and more on problem-solving.

Macy’s, a competitor of JC Penney, provides some type of commission to all of its full-time associates.  Nordstrom, Dillard’s, and Sears offer commission to some of their employees.  Kohl’s, on the other hand, doesn’t offer commission in any category.

Discussion Question:

Should JC Penney use sales commissions in some departments?  Why or why not?


Source: Tom Ryan, Retail Wire, January 20, 2014