JCPenney Has Color-Coded Employees To Prepare For Future Firings

JCPenney has split up its associates into categories based on their performance and abilities, according to sources inside the company.

The move has employees worried.

Sources told us that on a broadcast to supervisors and managers in January, JCPenney VP and transformational talent leader Michelle Steitz said they were to categorize their associates into one of three categories:

• Red — Remove from company

• Yellow — Coach up or out

• Green — Go forward

They were also told to "be prepared to make decisions" in the months ahead, according to a JCPenney executive.

"Not only were we supposed to do this with our team members, but as a Store Leader I had to categorize my entire team," explained a JCPenney store manager.

Many associates don't know that they've been graded and placed into these color categories — multiple JCPenney associates we corresponded with were still in the dark about the red/yellow/green system.

However, stores were instructed to let them know if they weren't performing up to par.

"Some associates might have been told, there was no direction to stores," the exec told us. "Stores were told to let the associates know that they needed to improve."

CEO Ron Johnson and his team have been trying to trim costs and turn things around at the struggling retailer, which just completed a horrifyingly bad 2012. Workers are afraid that more job cuts are on the way, on top of the 19,000 workers eliminated since Johnson started at the company.

"Is that really the best way to be 'America's Favorite Place To Work?'" asked the exec. "So now stores are beating up their associates fearing that they may be a red or yellow themselves."

We've reached out to JCPenney for comment.

Work at JCPenney? Contact me at kbhasin@businessinsider.com.