Adventures in My Mind
 |
 |
 |
 |
Mar 29, 2007
Circuit Stupidity
SignOnSanDiego.com -- Circuit City fires 3,400, will hire lower-paid workers
In one of the ballsiest moves EVER, Circuit City announced that it has fired 3,500 of its hourly employees.
Why?
Apparently they are getting paid too much. Que? Retail sales associates who average $10 - $12 an hour are too expensive?
Never fear, though. The generous folks at Circuit City will allow any fired workers to reapply for their jobs, at reduced pay, after a 10 week waiting period. How nice.
The pain, however, doesn't seem to have been spread throughout the orgnization. CEO Phil Schoonover will not be forfeiting any of his $1.9 million pay, $97,000 in expenses, and additional $6.4 million in stock options, thereby showing how tough things are allover. A paltry sum, indeed, compared to that bastard over at Best Buy who pulled in $3.9 mills just in compensation!
There is only one reason for a company to cut large amounts of employees: expense. Labor costs are always the number one cost for any business and downsizing happens all the time. Even euphimistic terms like hiring freezes, buyouts, and early retirements are about reducing the cost of labor on an organization.
Companies just have too many employees sometimes. Very few, however, say that they have too many expensive employees, especially in the pay range that Cicuit City is targeting.
Where's the PR? Where's the spin? Where's the "We're sorry, but ..." Where's the f*****g loyalty? Afterall, these people are so "highly paid" because they've been there the longest and conceivably account for most of the sales, which obviously translates to profits.
Do you think that maybe somebody somewhere in the organization said, "We can't just come out and say that we're firing people because we pay them too much? They'll crucify us!" If someone did, they didn't speak loudly enough.
I mean, just do the math. If every one of those employees and only 2 of their friends or family never shop at Circuity City again, that is 10,500 lost customers. I don't know what the lifetime value of a Circuit City customer is, but I bet that they do. And I don't see how they could've ignored that number multipled by 10,500!
And what of the affect on those not fired? Do these people have any incentive to look at Circuit City as a long-term employment choice? What incentive do they have for doing their jobs well? This move, I hope, could be disasterous for Circuit City.
The last time they schtuped their workforce, by going to hourly instead of commission, they suffered a sales lull they've not fully recovered from yet.
If only Schoonover got paid more. He probably would've come up with a better strategy.
0 Comments | Link to this post posted by Teddy 11:50 AM
