Circuit City, firing employees for success

Circuit City's firing 3400 middle managers because they pay them too much and hiring lower paid people to fill the positions?

That's a real incentive to be competent/excel in your job/career isn't it?

I’ve been a paid worker, union worker, management and a consultant; don’t think I’d want to have anything to do with this type of company. They’ve certainly lost me as a customer. If they treat their employees that made them successful this way, a customer doesn’t have a chance.

Quote from article

“Read through Circuit City's statement about the layoffs, and one can almost detect a sense of glee at its job cuts.”

http://news.yahoo.com/s/usatoday/20070403/cm_usatoday/circuitcitysharshlayoffsgiveglimpseofanewworld

Later, Don

[Rick Lee]

If they don't lay them off, they could go out of business which means everyone loses their job. I don't think any company enjoys lay-offs. I've been through it before and it sucks whether you make the cut or not.

[TSNAPCRACKLEPOP]

my first union job ended like that, cheaper to hire new than remploy me on college vacations.

soon, they just sold the stores and closed them , and ended ALL jobs. busted the union, Retail Clerks International, here in K.C.

[Jims5543]

They decided years ago to do away with commisions for the sales people. I saw a sharp decline in customer service after that. The sales people were there for an hourly check not for commision and it showed.

I stop shopping there shortly after that. Their helpful salesman were the reason I would go there to shop.

[Rick Lee]

Well, I've had pretty good luck at CC, but it's been about a year. The car stereo guy was super and his eyes really lit up when I told him it was for a 993. They treated me right!

I worked at a restaurant in college that just locked the doors one day and never told anyone they were out of a job.

[Joeaksa]

How about laying off the less productive workers first?

As well do not agree with their stopping the commissions either. I used to be a commission sales rep and when this is done to someone it cuts their drive to sell, which cuts the sales for the company.

[Superman]

Corporations pander to the investors. The "glee" someone mentioned is management's expectation that stock prices will soar. This is precisely the kind of management decision that excites the Market. Layoffs increase stock prices. Twenty years ago when the IBM CEO was lauded as a hero (conver of Time Magazine, for instance) for laying off 30,000 workers, I wondered why he was not shamed as a failure. The need to lay off 30,000 workers suggests managerial failure to me.

The job of a CEO is simple, in a way. Any finance professor in the nation will tell you that a CEO's job is to maximize the selling price of a share of common stock. It's a simple as that. So, part of a CEO's vision is toward operations but a substantial part is focused on the financial markets. Operations be damned. Last night, I was reflecting on the double-market game the oil companies get to play. They get to play around with the company's stock price.....and they get to engage in oil futures. They have inventory. Prices change. When the market price for oil rises sharply as it has done lately, the oil companies can be positioned to be the biggest winner in the oil investment game. In addition to the stock price game. Fun. Lucky them.

Getting back to CC: There is no down side to this decision to cause an additional 3400 Americans to be unemployed. It is a corporate "success."

Last thing I bought there was a digital camera; it had the features I wanted and was on sale. Went to the CC, the camera wasn't on display, asked a sale guy, gave me a look, ya know the look. Anyway, they did find it, asked the guy about the display thing, his answer, we don't put a lot of things on display anymore.

Back on topic. It's customer service and after sale service that keeps me going to the same business. Poor service, I'm gone. You start cutting the employees off at the knees; you get poor service, everything in any business. I mean why bother to do a good job, take pride in your work, etc. The boss is just going to screw you anyway. Unfortunately, loyalty seems to be a one way street in the work place anymore

I'm curious too about what kind of comps the big guys at CC get. Some I've read about over the past few years are just obscene. Especially when it seems the company is going in the toilet and the big guys still get obscene salaries.

Maybe I just don’t get it, I’ve never been paid for being a failure like they seem to be.

Later, Don

[jluetjen]

I doubt I'd call Circuit City a "success" lately. They've been closing lots of stores. I suspect that in another few years they'll be a shadow of their former selves -- if the company still exists independantly. Much of it I suspect is due to competitive pressures -- companies like Best Buy seem to offer a better buying experience. If Circuit City really was good at what they are doing, they wouldn't be losing this business.

Much of CC's problems I suspect are also structural as electronics continue to get cheaper and cheaper, which means that the buying decision becomes less involved for the shopper. The end result of this is more people buy their HDTV's from stores like Costco and Walmart. Consumers just don't want or need to pay for the sales support when they can walk into a Costco, point at one of 3 or 4 models that they have on the shelf and walk out with a great HDTV for less money.

As far as lay-off's and reorgs go, the older I get the more I appreciate that companies -- like trees -- don't grow to the sky (as a former Controller in my previous company once observed). They all platau, tail-off and eventually die (or get absorbed into a newer company. It's part of life. There are very few which seem to defy this rule for long. It's best that everyone remember that no jobs are forever. And when the going gets tough, I've found that two rules apply:

1) You better be worth more to the company then they are paying you, or YOU WILL BE CUT.

2) Look around you. You better be performing better then at least half of your co-workers, or you are at major risk of being cut.

I'm sorry if it sounds harsh, but that's life.

[legion]

A good friend of mine manages the local CC. As usual, the media is grossly mistating the story. Here are the facts:

A few years ago, CC moved from commission to hourly for its sales staff. The hourly wage for empoyees who made the transition was deteremined by dividing their commission for their top three sales months by the hours they worked those months. A LOT of people were getting $35 an hour or more. Those who were earning more than $20 an hour were told they had two years to find a job in management or they would be fired. Well, two years have passed and 3,500 people did not find those jobs. This was no surprise, everyone knew this was coming, management IS NOT being fired. The press is distorting the facts to create an "angle" for the story that does not exist.

[Moneyguy1]

So...Who created the problem? Sounds like management if I read you right. Someone was twisting the corporate arm to create the formula they used?

Perhaps some of the "experts" are correct in their gloom and doom forecasts for ALL retail type stores.....

[legion]

I don't know whether changing from commission to wages was a good idea or not. It's kind of irrelevant to the discussion of fairness. CC will succeed or fail as a result. However, this change was clearly communicated and employees were given ample time to make adjustments if they wanted to keep their compensation.

[VaSteve]

Originally posted by Superman
Corporations pander to the investors.




The job of a CEO is simple, in a way. Any finance professor in the nation will tell you that a CEO's job is to maximize the selling price of a share of common stock. It's a simple as that.

Pander?

Maximizing shareholder return (whether it be a sole proprietor or 150,000 shareholders) is the name of the game.

Really.


Providing jobs? That's all motherhood and apple pie kinda nonsense.


Regarding laying of 30,000 people.... sure that's bad, but really only a managerial failure if he hired them in the first place.

CC kinda sucks.... Best Buy has been eating their lunch for years. Nobody wants to buy a $300 TV on commission. F that.

[Superman]

Originally posted by VaSteve
Pander?

Maximizing shareholder return (whether it be a sole proprietor or 150,000 shareholders) is the name of the game.

Really.


Providing jobs? That's all motherhood and apple pie kinda nonsense.

Right. And so, the goal of this nation's economic system is shareholder wealth. It is all for the investors. Benefits to the public are spinoffs, not the main goal. And when those two groups, interests collide? Bummer for those wage earners, eh?

[rouxroux]

In our market, CC has the most rude sales staff (including mgrs. who do not wish to help either...)...go across the street to Best Buy and it's a whole different story. I refuse to buy anything @ CC if there is another option.

[legion]

Originally posted by Superman
Right. And so, the goal of this nation's economic system is shareholder wealth. It is all for the investors. Benefits to the public are spinoffs, not the main goal. And when those two groups, interests collide? Bummer for those wage earners, eh?

You fail to see that investors will withhold their capital if companies are NOT run to their benefit. If you don't like this system, learn how to grow your own food. You will have to if you try to force investors to play by your rules instead of their own.

[Rick Lee]

Yes, bummer. Supe, when's the last time you bought stock because you wanted the company to plant trees and provide jobs? Sane people invest money to maximize returns and for no other reason.

[legion]

Funny how when people tell us to work for each other's benefit instead of ourselves, those are the people that usually tend to end up benefiting the most. I'd rather be working with people who have nothing but selfish motivations that for people who claim not to.

[VaSteve]

Originally posted by Superman
Right. And so, the goal of this nation's economic system is shareholder wealth. It is all for the investors. Benefits to the public are spinoffs, not the main goal. And when those two groups, interests collide? Bummer for those wage earners, eh?

Again, O liberal , the goal is to maximize shareholder wealth. Ask the sole proprietor if he goes into business for "the good of society?" He does it to put food on his table.

Benefits in terms of people having jobs and stuff, is motherhood and apple pie like I said. The public is tool in the machine...sorry but it's so. Most people don't recognize this, but that's the way it works.

If these were *truly* "wage earners" and not previously commissioned employees whose time ran out...maybe feel a little bad. But if they were commissioned previously, they know how it works. I don't know a single sales person ever that wouldn't try to maximize their own personal shareholder wealth. If these were 3500 middle managers, this didn't come as a surprise either. Could one of these guys consider the loss of their own job as a 'management failure'?

[rhjames]

well isn't that a wonderful thought......


Circuit City failed to do one thing:

take into account how the story would play in everyday America.


Had they realized that most folks would view this move as pretty crappy (real story or not), it's the perception of firing well paid people to be replaced by newbies just to lower their payroll and improve their bottom line.


I haven't shopped at CC in years, nor will I in the future.

It's MY CHOICE as to where I shop, regardless of how they treat their employees. This just adds to the previous bad impression I've had for years about CC.



regards---rhjames