The Penney Idea

Wednesday's (6/22) newspaper carried a story that reinforced the premise of my last post (Something is Missing), that as a society we have lost the sense of morality and ethics as guiding principles. The story described the disparity in income between corporate CEO's and the rest of us. This disparity has increased manyfold over the years. The average CEO compensation today is over $10 million, contrasted with an earlier generation where it was only (!) $1 million. A former CEO of what is now Dean Foods was quoted as being dismayed at the wealth of company heads compared to the workers.

Clearly, the CEO of a corporation deserves significantly greater compensation than line workers, based on his greater responsibilities. The article raised the question of how much is enough and what is the justification for today's astronomical CEO compensations. I think the answer is that as a society we have lost sight of what is ethical and moral, right and just, replacing them with whatever the traffic will bear.

For the last 24 years of my employment, I worked for the JCPenney Company Catalog Division, designing and building control systems for their distribution centers. One time I visited the JCP headquarters in the Penney Building in New York City. During a break, I was taken on a tour of the executive offices on the 47th floor. I was shown the board room with its 36-foot mahogany table made from a single piece of wood. I saw some offices of senior management that were large enough to hold a 9-hole golf course. Didn't get to see the CEO's office, occupied at the time by William Howell. But I did see the original office of James Cash Penney, still preserved as it was when he retired. It was small, furnished in ladderback chairs, a small two-person couch and a simple blond wood desk smaller than mine back in Milwaukee. He had a window behind the desk; mine was bigger. There was a nice area rug on the floor, doubtless from Penney's. My office was carpeted. Don't misunderstand, I was just a first-line department manager.

As a matter of history, James Cash Penney founded his first store in the small town of Kemmerer, Wyoming, in 1902. He called it the "Golden Rule Store," from the Biblical golden rule of "Do unto others as you would have them do unto you." The store prospered because, in that near frontier, his was the first and only general store that didn't charge whatever the traffic would bear, but rather just a fair price for his merchandise. He and his store prospered.

In 1913, the JCPenney Company was founded and adopted at its first convention, something called "The Penney Idea." It went like this:

1 "To serve the public, as nearly as we can, to its complete satisfaction."
2 "To expect for the service we render a fair renumeration and not all the profit the traffic will bear."
3 "To do all in our power to pack the customer's dollar full of value, quality, and satisfaction."
4 "To continue to train ourselves and our associates so that the service we give will be more and more intelligently performed."
5 "To improve constantly the human factor in our business."
6 "To reward men and women in our organization though participation in what the business produces."
7 "To test our every policy, method, and act in this wise: 'Does it square with what is right and just?'"

This "Idea" was and is still posted on the walls of many offices--mine included--in the form of a nice plastic plaque. Unfortunately, as is the case with most retail businesses, those enshrined principles of Mr. Penney are not very well applied today. In fact, among Penney associates, those black plastic plaques are generally considered a wry joke.

We're back to the idea of whatever the traffic will bear, with no consideration of "what is right and just." The same principle apples to CEO and other senior management compensations, which by an honest appraisal are often simply obscene. The reason for this is the "golden principle" of our society today, which is to get as much as one can, whatever it takes, with no consideration of the morality and ethics, even to the extent of accumulating wealth far in excess of any concievable need or use. Money and possessions have become a badge of honor or, even more sadly, a symbol of ascendency over others.

Old JC must be spinning in his grave.