Penney pinched

Falling sales and claims of sexist, insular management plague Plano-based J.C. Penney. Can a woman -- from Wal-Mart of all places -- turn the troubled chain around?

In 31 years, Kay Baker rose from a job as a teenage sales clerk at a J.C. Penney store in Oklahoma City to become one of the retail giant's top-ranking female executives. Her fall from Penney's corporate headquarters in Plano would take only days.

It was a swift end for the devoted employee of a company that prides itself on loyalty to its workers. Unfortunately for Baker and J.C. Penney's bottom line, loyalty at the company's executive offices flows more freely to Anglo men -- or to their wives and children.

That, at least, was Baker's contention as she battled a dismissal she says was based on a trumped-up charge that she fudged year-end sales figures to earn a bonus. The truth, Baker claimed in a lawsuit against her former employer, was that she was fired in retaliation for rebuffing the sexual advances of another J.C. Penney Co. Inc. executive.

Falling sales and claims of sexist, insular management plague Plano-based J.C. Penney. Can a woman -- from Wal-Mart of all places -- turn the troubled chain around?
Hadley Hooper
Falling sales and claims of sexist, insular management plague Plano-based J.C. Penney. Can a woman -- from Wal-Mart of all places -- turn the troubled chain around?
"These chaps were  simply demoted, but you were fired in summary dismissal. Can you make any sense out of this?" Baker's lawyer asked her. "They were men,"  she said.
Hadley Hooper
"These chaps were simply demoted, but you were fired in summary dismissal. Can you make any sense out of this?" Baker's lawyer asked her. "They were men," she said.

Baker would eventually win a half-million-dollar judgment against her former employer. While the outcome of her case was widely reported, the details of her testimony during a private arbitration hearing were not made public until now. Baker's testimony, bolstered by comments from other former female employees who spoke with the Dallas Observer, portrays J.C. Penney's leadership as an insular men's club rife with nepotism. These women suggest that the company's practices of promoting from within and protecting the boys in the executive offices have created a management team unable to deal with an unpredictable retail market.

That may partly explain profits at J.C. Penney's 1,150 department stores have stayed flat over the past three years. (The company, whose sales total $29 billion annually, also owns 2,900 Eckerd pharmacies.) It may also explain why the company is looking to a woman -- an outsider from rival Wal-Mart, of all places -- to lead a turnaround.


Kay Baker frequently wept as she testified in late April 1999, most often as she recounted the sacrifices she had made for her job. A brief marriage had ended in divorce, so the childless Baker devoted herself to any assignment her bosses gave her, doing whatever was necessary to advance her career, she recalled.

"I remember sitting at the corporate apartments right in the heart of Manhattan," the 50-year-old Baker tearfully told the arbitrator. "Now, I grew up in Oklahoma. So I'm sitting here...on my 35th birthday listening to gunshots in the street and crying. I'm going, 'What have I done with my life?' This is just not the plan I had -- you know, get married, have children, but now it's [just] me. And I had my little dog with me, Nimbus, and that was about it. But it was...'Kay, this is a good job for you...Very few people get a shot at it.'"

Baker's aspirations died in March 1996, when J.C. Penney Chairman and Chief Executive Officer Jim Oesterreicher fired her shortly after she was accused of falsifying sales figures. Oesterreicher, who days before had sent a company-wide memo praising her department, never talked to Baker about the allegation.

Baker claimed that Oesterreicher fired her quickly to appease Thomas Hutchens, who now is president and chief operating officer overseeing the retail chain's international stores. She had rejected his sexual advances for the past 15 years, and Hutchens wanted revenge, she said.

"They took all my identity that I had with the company, my credit cards, my access to the building," Baker recalled. "And I said, 'Well, you might as well get a security guard to walk me out.'" A top executive told her that wasn't necessary and ordered her simply to collect her things "and get out of the building."

The firing wounded Baker even more because she believed that the company's bosses had consistently ignored the misdeeds of incompetent or dishonest Anglo men whose failings were revealed long before her dismissal. At the hearing, Baker's lawyer recounted three alleged instances in which J.C. Penney management either promoted or protected male executives who faced much more serious charges of wrongdoing.

One man allegedly led a group of employees in a scheme to sell fraudulently discounted merchandise to one another. He was transferred from his executive post and remains a store manager.

Another authorized the purchase of women's suits -- hundreds more than the stores could sell -- and hid the unused inventory for years, costing the company millions. The executive, who has since retired, was not disciplined. Instead, he became J.C. Penney's liaison to manufacturers of NFL-licensed merchandise, a plum assignment that meant coveted box seats at games.

Baker's lawyer even charged that the executive who had preceded her in the job as director of the custom-decorating department stole millions from the company. When Oesterreicher's management team discovered the crimes, they demoted him and dispatched him to a store in Houston.

"These chaps were simply demoted, but you were fired in summary dismissal. Can you make any sense out of this?" Baker's lawyer asked her.

"They were men," she told him. "They had somebody that spoke up and said, this is wrong, this is not going to happen, and saved their jobs for them."

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