Mismanagement is alive and well in corporate America

It’s nice to see that mismanagement, at the most senior levels, is alive and thriving in corporate America.  First we have HP laying off 25,000 people including employees who are bringing in a lot of business and then we have JC Penny executives who said they “underestimated the value that customers placed on coupons.”  The sad result of this mismanagement is that the senior people responsible are still going to collect their big paychecks while people lower on the ladder are going to be asked to make sacrifices.

HP is about to lay off a massive number of workers, sources tell us, with one business unit, HP Services, to be particularly hard hit.   CEO Meg Whitman and crew have laid the blame on employee costs such as their salaries. Employees say the problem is one management blunder after another.

“Around March 13, HP had an all-hands employee global webcast where Meg Whitman made a few statements that revealed a complete lack of strategy, and total focus on Band Aid fixes to staunch investor concerns and HP’s reputation,” one source told us. “The one statement that caught my attention was ‘When you have a 10% increase in costs and zero revenue growth, that is no way to stay in business. Services are HP’s biggest problem and we must immediately address it.'” Employees say that the reason HP ES has had no growth is because it’s had no leadership.

HP Services is not growing because there continues to be no investment in: a) talent ; b) new offerings; and c) HP Services is in a constant state of restructuring,” a source told us.

Then there is J.C. Penney which announced abysmal results for the first three months of this year, with sales plummeting 18.9 percent at stores open at least a year. Net losses for the period were $55 million. Executives blamed the results on the departure of deal-hunting shoppers after the company changed its pricing strategy in early February to abandon coupons.

“We did not realize how deep some of the customers were into this,” noted COO Michael Kramer about couponing. “We’ve got to wean them off this and educate our consumers.”   Did not realize how deep consumers are into couponing ?

Amber Bustanoby, a self-described “frugal mom” who writes another Coupon Connections blog, says people like her will never abandon coupons because the slips help them make ends meet. “I don’t think it’s a drug,” she said. “For me as a mom, I want to do the best I can with the resources I’m given. We live on one income in a two income world.” Bustanoby, whose family makes about $50,000 a year, says J.C. Penney’s prices didn’t drop enough to get her back into its stores. Bustanoby, like Kirlew, has appeared on TLC’s reality show “Extreme Couponing.”

History lies on the side of coupons. Macy’s once tried and failed to reduce coupons after it acquired May Department Stores in 2005, leading to consumer backlash, weak sales and a declining stock price. In 2007, CEO Terry Lundgren reinstated coupons. At an investors’ conference in April, Karen Hoguet, Macy’s chief financial officer, reminded attendees of the lesson. “People love these coupons. They love thinking they got us,” she said. “From the customer perspective, it’s been very important.”

The lingering effects of a recession, meanwhile, have made coupons even more appealing to consumers. A 2011 survey from market researcher Nielsen highlighted the resurgence of coupons, which have come “back in vogue” with a tepid economy, it said. Sixty-six percent of the Americans questioned use coupons, according to the survey of Internet users. New sites like Groupon are also making it easier for companies to deliver deals.

So how could the executives at JC Penny not understand and know their customers ?  Well first let’s remember that the CEO, who ran Apple’s stores, was successful not because of the strategy of Apple stores but because everyone wants Apple products.   Can you think of a good reason to shop JC Penny or any products that they sell that you either can’t purchase online or at another retailer.  I mean who gives someone a gift in a JC Penny box?

HP has been in a downspin because they have no long term business and brand strategy and have been ambushed by companies like Apple and Vizio.   JC Penny is not doing well because at their core they still have not given people a reason to come to their stores and shop while retailers like Target continue to attract a lot of business.

Yes mismanagement is alive an well in corporate America and what is so sad about this is that even when these executives fail they are still going to get enough money to ensure they never have to work again while someone who holds a pink slip asks “what did I do wrong?”

 

 

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