NEW YORK — While chapter one in the J.C. Penney turnaround story was about getting the merchandising, operations and numbers right, chapter two is going to be all about the people.

To that end, J.C. Penney chief executive officer Myron E. Ullman 3rd said he’s taking steps to ensure that employee ownership becomes a cornerstone of the retailer’s five-year growth plan.

“Implicit in that is having people focused on the initiatives that drive growth, such as better assortments, easier shopping environment, more excitement in the stores and attracting new customers through increased emotional articulation, through lifestyle merchandising. We believe that we can unite people in terms of feeling great, while moving ahead of the pack,” Ullman told WWD.

When Ullman first took the helm of the company in December, one of the things he did was spend time visiting J.C. Penney stores and getting input from various levels during town hall-style meetings, said a source close to the company. The source said Ullman, after developing his ownership plan with his senior management team, made sure everyone inside the organization knew about the strategy before the company disclosed it to the public.

In line with the employee-ownership strategy was last week’s announcement that Michael Theilmann was appointed executive vice president, chief human resources and administration officer. Theilmann, 41, joins J.C. Penney from Yum Brands Inc., where he served most recently as senior vice president, human resources and chief people officer of its international business. He replaces Gary Davis, 62, who will retire after 41 years with the retailer.

“For the last nine years, the business was downtrending, [and] the people component wasn’t part of the turnaround. There were so many other critical elements that needed to be addressed,” the ceo said.

The people-focused strategy is being honed by Ullman’s past retailing experience as well as the observations made while serving as a board member at Starbucks.

The ceo recalled his days running a bankrupt R.H. Macy in the early 1990s. Macy’s was taken over in 1994 by Federated Department Stores, which at the time was led by Allen Questrom, Ullman’s predecessor at J.C. Penney. “While everyone feels that [Macy’s] didn’t fail, I’m not sure they felt great doing it. The Macy’s experience gives you a sense of accomplishment at the end, but it was painful while going through it,” Ullman explained.

This story first appeared in the May 17, 2005 issue of WWD. Subscribe Today.

As a Starbucks board member, Ullman values the emotional connection between associates and their customers. It can bolster a company’s profitability. “It’s about having your associates engaged from when they get up in the morning, and to think about ways to service the customer,” he said.

Theilmann, who starts his new post on June 1, plans to do his share of store tours as he determines how best to meet his mandate of creating a “people culture” at the retailer.

While at Yum, Theilmann had the opportunity to create an ownership culture based on performance as Yum was preparing for its spin off from Pepsico between 1997 and 1998.

“We wanted to get employees to think like shareholders. I call it having skin in the game,” Theilmann explained.

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