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?


The disparities between the sexes at J.C. Penney eventually cost Kay Baker her job.

In her last post with the company, Baker was responsible for marketing the company's furniture and home products by taking the sales pitch into customers' homes. Before Oesterreicher fired her, auditors alleged that she had deceitfully included three days' worth of sales figures in her division's year-end totals to trigger bigger bonuses for her and her staff. Baker, who earned more than $210,000 a year in salary and other bonuses, would have reaped $890 personally with the alleged book-cooking.

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.

During three years of subsequent litigation, the company's lawyers succeeded in booting Baker's claims from state and federal courts. J.C. Penney insisted that Baker abide by an agreement she and all other company employees signed in 1995 consenting to arbitrate workplace disputes. Even so, the Penney side fared poorly in the private arbitration.

Arbitrator Steve Rusuck wrote in his decision that he was "not convinced that [Baker] knew or believed that by moving or leveling sales figures, she was knowingly or willfully committing acts that were contrary to company policy." He also said he was "concerned that [J.C. Penney] took such draconian measures against a 31-year employee, especially since there was no evidence that such harsh disciplinary action had ever been taken against any other J.C. Penney employee."

Maloney contends that Baker was owed much more than what the arbitrator awarded. He argues in an appeal to the American Arbitration Association that Rusuck mistakenly denied Baker's defamation claims, which allege that the company essentially called her a thief in public. The national association rarely overturns an arbitrator's decision.

Maloney argued at the hearing that had Baker's rise continued at the pace set during her career, she would have become a top executive serving on the board and eligible for much richer stock benefits and compensation.

Her climb up the corporate ladder had indeed been steady.

At the age of 15, Baker sought her first job at a small J.C. Penney store in Oklahoma City, where her parents had moved after her birth in Guthrie. "My mom always bought my dad's clothes at Penney's, and I shopped a lot there, and so I...decided to go ahead and put my application in just [so] I could get work in the fall when I turned 16," she testified. She was hired immediately to work in the stock room. When she turned 16, the store managers put her on the sales floor.

As a college student, earning a home economics degree from Oklahoma State University, she continued working at the J.C. Penney store in her hometown during summers. The second weekend after she graduated from college, she returned to J.C. Penney as a management trainee assigned to women's accessories and wigs in the Oklahoma City store. By the mid-'80s, she had moved to the district offices in Tulsa, then on to Dallas and New York.

In the early-'90s, Baker directed the corporation's special events and public relations. She would travel with W.R. Howell, then chairman, when he made appearances in Washington, D.C., at J.C. Penney Golf Classic events, and at overseas meetings with international dignitaries. She also helped organize a corporate publicity campaign called, ironically, "The Spirit of the American Woman."

Baker testified that her bold ideas for the campaign prevailed with then-chairman Howell over the objections of Oesterreicher, who was chief operating officer. She suggested having J.C. Penney sponsor Lynn St. James, a female Formula I race car driver.

"She represented the spirit of the American woman in a male-dominated [field]," Baker said. "I went through the thing on why we should do this and consumer perception and this will be a good thing to do.

"And Mr. Oesterreicher looked at me and shook his head, and he looked at Mr. Howell and he says, 'We don't sell cars or motor oil. What are we doing this for?'

"And Mr. Howell looked at him and he said, 'It has nothing to do with what we're selling -- it has do with who we are, that we believe in people and we support people.'"

Baker obviously relished the memory of her triumph over Oesterreicher. Howell, she said, later received letters from women who wrote that they hadn't shopped at J.C. Penney for 20 years but had been prompted to do so because of the company's "belief in women" and its support of St. James.

By August 1995, management asked Baker to rebuild the custom-decorating department, which had been losing money. The department fell under the supervision of Tom Hutchens, then-president of merchandising. His was the ultimate voice in what products J.C. Penney would market nationwide.

"[It] was the very first time in my entire career I reported to Tom Hutchens, and six months later I was fired," Baker told the arbitrator.

In her testimony, Baker offered details about the harassment that she claimed began began 10 years earlier, when she first met Hutchens in New York. Hutchens, who was married, asked her out for a drink, Baker said. She declined.

The proposals continued through the early '90s, she said. "We were at the same university [executive] program. I was the only woman there," she said. "He calls me late in the [night]: 'Why don't you come down to the room and have a drink?' Well, I just really felt uncomfortable about doing that. Thanks but no thanks."

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