I don’t think we can allow Circuit City to die without reflecting on how the long-time electronics retailer’s decision to screw its workers ended up screwing the retailer in the end.
If you want to run a successful company you have to treat your workers like human beings.
That’s just the way it is folks. You can live in your fantasy that profits will flow in no matter how you treat your employees, but in the end that mentality will come back to bite you on the…
Ask me no more questions, tell me now more lies…
Sorry, couldn’t help myself.
Circuit City’s decision to fire its veteran workers and replace them with lower wage employees will now go down in the annals of management as clearly a dumb idea.
When U.S. manufacturers want to cut labor costs they often close up shop and head for a Third World country to find cheap labor. But when retailers want to cut costs they don’t have that option because they need stores in American towns if they want to sell to Americans.
Circuit City has found a unique way around this conundrum. On Wednesday officials at the struggling electronics retailer announced they would fire 3,400 of their highest-paid clerks and replace them with workers who will take less money, essentially hoping to find their own bargain-basement work force right here in the good old USA.
It’s all part of a plan to save money and cut costs for the big-box chain, which also reduced sales growth expectations this week.
It led to crummy customer service and it was bad PR, not to mention bad karma.
No matter how Circuit City tried to spin these events, the company just looked bad.
The retailer may have made this decision out of desperation, which is what many companies, governments, etc., seem to be doing right about now…laying off workers, furloughing workers, cutting back wages, all in a desperate move to prop up profits.
Alas, desperate moves lead to desperate organizations that end up destroying the best of what they have.
In Circuit City’s case it was their seasoned workers.
Circuit City will not go gently into that good night.
March 9th, 2009 at 11:52 am
I can imagine some of the meetings that occurred:
Ex1: I say we cut all of the highest paid employees at all of our stores.
Ex2: Aren’t they the employees who can provide the best customer service and who most often drive the most sales.
Ex1: That may be true, but we can save millions, perhaps billions, by letting them go.
Ex2: That would affect our performance bonuses, wouldn’t it?
Ex1: They would go up.
Ex2: But wouldn’t we be undercutting our future sales for the current savings?
Ex1: I’ve got that covered. We’ll rehire for all the positions we eliminate. We’ll offer the former employees their old jobs for less money. They’ll just be thankful to have jobs.
Ex2: What if they don’t come back?
Ex1: We hire high school and college kids–all new hires.
Ex2: Won’t they know less? Won’t service suffer?
Ex1: Are you kidding? My kids had their own laptops by the time they were three. Today’s students know much more about current technology than our existing workforce. Even if some come in without enough knowledge, they’ll pick it up on the job in a few days.
Ex2: They are quick learners today, with all those Twits, FaceSpace, and MyBook.
Ex1: Now you’re catching on.
Ex2: Do you think we could do this again in the future.
Ex1: Sure, I plan on building a sixth home in a couple of years.
Ex2: This is win-win. The company saves boatload of money, and we earn big bonuses!
Ex1: Exactly!
March 9th, 2009 at 11:57 am
Priceless HikingStick!
March 10th, 2009 at 3:24 am
You have it right Hikingstick. However I must also point out that what CC did was no differnet to what was occurring during the time that all the tech start ups did during the booming 90’s. I saw companies like Fore Systems, basically an architectural company, hire recent college graduates at salaries of $80 thousand dollars. They had a plan of making every old company high tech and provide new companies with the technological advantage. This was a time when company web sites were brand new. They provided the customer with tech savvy kids that created and ran anything from the old bullentin format to internal e mail connections. And just when these well paid young people developed a following, Fore would give them a choice, work for us for $25000 or we will find a new graduate who will take your place and further our advancement.
I hired one of these techies after he said no. He became a salesman for me at ironically $25 grand plus commission. He still works for that company and makes more now. I run into him several times a month because the school district I work for makes purchaes from his company.
Recently we had a few minutes for a conversation. With his third child on the way, and he still is not up to $80 grand a year he once made, he told me he could not be happier.
I thought that was ironic. Then again, his employer never gave him an ultimatum. I moved on to what was more lucrative at the time. although i feel betrayed by what the afformentioned company did, I must admit that I’d rather be paid less and enjoy what I am doing than make a fortune and not know exactly where you stand.
March 10th, 2009 at 5:47 pm
Classic example of American short term thinking. When does it ever really pay off? Financially, we are always trying to staunch the flood rather without looking for another way to think. That’s why I love what Obama is doing–he’s combining short term and long term thinking….
March 11th, 2009 at 10:21 am
Circuit City is not the only one cutting seasoned workers, especially those who are productive, proven and near the top of the food chain. I speak for myself with approximately 38 years in the construction industry, projects were very productive,profitable and finished on time or before. I was one of three in a company of 200 with this kind of track record. However, age/salary; if proven had a lot to do with it. Economy was not a consideration, since no one saw the writing on the wall, but several months after my departure, half the remaining employees were sacked. I understand several large projects have not faired well do to budget overruns and completion times. This company who prided themselves on quality and expertise scarficed older qualified individuals for younger,lower paid inexperienced candidates to accomplish the same task. I think the saying “What goes around comes around” Applies not only for Circuit City but for others. I’m sure there are other quips that too apply.