Circuit City's fired workers taking sales out the door?
When Circuit City Stores (NYSE: CC) shocked the retail world a few months ago by stating it would effectively fire 3,400 higher-paid employees and replace them with lower-paid employees, most of us were slightly aghast. After all, this kind of brutal honesty was not what the industry was used to. It also exposed Circuit City management as incompetent spendthrifts. Cutting costs is one thing, but messing with long-term employees in a fashion like this can completely destroy employee morale and make nobody want to be employed by your organization.
Now, capitalistic economies survive by openness and competition, and Circuit City was free to make this decision. There is no law against it. At the same time, one large misstep (like many smaller ones) can completely ruin a company. I'm not sure that is happening to Circuit City yet, but there are some signs this may be happening. In standard and deplorable fashion, Circuit City CEO Philip Schoonover is taking home huge compensation amounts while the company he leads sucks the marrow from its own existence. Since this ground has been covered many times, I'll move on.
Circuit City's admission that it saw the first quarterly sales drop in over three years should be a huge wake-up call to its management and especially the board. If the board is supposed to be the guiding light behind large company decisions, this one is on life support. Did the effect of all those firings in recent months help Circuit City see a huge sales drop in its more recent quarter? If those two factors can ever be correlated, then it will show what many of us are already thinking -- human talent, although thought to be expendable, can make or break you.
Now, capitalistic economies survive by openness and competition, and Circuit City was free to make this decision. There is no law against it. At the same time, one large misstep (like many smaller ones) can completely ruin a company. I'm not sure that is happening to Circuit City yet, but there are some signs this may be happening. In standard and deplorable fashion, Circuit City CEO Philip Schoonover is taking home huge compensation amounts while the company he leads sucks the marrow from its own existence. Since this ground has been covered many times, I'll move on.
Circuit City's admission that it saw the first quarterly sales drop in over three years should be a huge wake-up call to its management and especially the board. If the board is supposed to be the guiding light behind large company decisions, this one is on life support. Did the effect of all those firings in recent months help Circuit City see a huge sales drop in its more recent quarter? If those two factors can ever be correlated, then it will show what many of us are already thinking -- human talent, although thought to be expendable, can make or break you.











Reader Comments (Page 1 of 1)
8-24-2007 @ 3:20PM
Lisa Kristiansen said...
Pfizer, Inc. did the same thing. They got rid of the expensive tenured employees and replaced them with 22 year olds with fake boobs. 2500 of us were let go on Decemer 18th, 2007. Yes, you read correctly, 7 days before Christmas.
6-22-2007 @ 10:04PM
DJ Jones said...
Perhaps Circuit City (and by default Chase) would earn more profit if the majority of their employees actually knew details about the products they are selling, focused more on the details of their transactions, and paid attention to customers that walk in their stores versus socializing with each other. I have been to many Circuit City locations across America and this is a common, recurring theme. I no longer shop there and prefer Best Buy or even online shopping sites because they seem to get the fact that without customers, you don't have a business.
6-22-2007 @ 6:25PM
Rosemarie said...
12/18/07 has not come yet, si I guess Pfizer is firing into the future, wow.
6-22-2007 @ 6:32PM
Art said...
There is no product or any sale that will make me buy from Circuit City again. I hope others feel as i do that treating people in this way should not be accepted as just doing business.
6-22-2007 @ 6:57PM
TOMMY said...
IT ACTUALLY TICKLES ME TO FINALLY SEE CIRCUIT CITY LOSING MONEY SINCE THEY AREN'T A FAMILY FRIENDLY COMPANY ANYWAYS. I MEAN COME ON WHEN YOU GET FIRED FOR TAKING A COUPLE OF DAYS OFF FOR THE ARRIVAL OF A NEW BUNDLE OF JOY AND THEY WERE AWARE OF IT.THAT'S WHY BEST BUY ROCKS ANYWAYS. CIRCUIT CITY PROMOTES THEIR SALES OFF OF BEST BUY ANYWAYS.
6-22-2007 @ 6:54PM
mcarpe1169 said...
I was a circuit city employee for almost ten years and worked every position in the store ..when i got laid off recently i really was shocked..as a full time sales specialist i was the back bone of the company pushing the merchandise out the door and dealing with customers who were having to deal with incompentent managers.i was a manager traine 4 differnt times and each time they came up with a excuse why i wasnt management material and i could do every job in the store and trained all of the new mnanagers coming in and when i asked upper management why this was the case they didnt have a response or tried tp make up a excuse.as the years went by all of the so called managers came and went and guess who was still there me. i belived in the brand and lost a lot of time with my friends and family beacuse of the holiday rushes and extended hours... and did i mention i was driving an hour each way every day....as far as im concerned i will never shop at another circuit city again and a lot of my customers called me and asked me if i was still there i have to tell them what happend and then i direct to to another competitor since thats where most of the 3400 associates went.
6-22-2007 @ 6:54PM
VB1der said...
I'm with you Art. A company that does that to their employees won't have any problem messing over the consumer. I bought my very first TV from Circuit City on Brook Road in 1970. I don't think there will be any more.
6-22-2007 @ 7:01PM
Sue said...
It will be a slow day you know where before I ever set foot in Circut City again. I have spent thousands of dollars on stereo, computer and other electronic equipment just in the last year or so with them.
6-22-2007 @ 7:07PM
Rose said...
Never really went out of my way to shop at Circuit City. When I did, not alot impressed me. I will not be shopping from them for anything ever again. When a company lets long time trusted employees go for the price of a dollar, they are not concerned with customer service. Nah, don't think I need to even read the Sunday fliers!
6-23-2007 @ 7:50AM
will said...
Welcome to the new Global World of business. In a time when the buttom line in what pushes every business descision, we may want to stop and think once again what got us to where we are today. Loyalty is a word not used when we search for the bottom line. It is no ones fault, it is what drives business on a World scale. We would like to think that what we are doing is best for the business. No one sets out to shoot their self in the foot. Still loyatly is what the consumer demands from the business provider, the business provider demands from the manufactor, and the share holders demand from the Directors. It was the one thing that CC had they could hang their hats on. It was the one golden thread that ran threw their company. In their hast to meet the bottom line they did no more or less than any global company would do. Still we must stop and think once again, how much does loyalty mean to us in a Global World. How much are we looking for the bottom line and at what cost to us all? I am sure the Directors were looking at the big picture, but at what cost? Let us not be to hard on the Directors, after all they were just trying to make money for their share holders. How ever it turns out, we know that things have changed forever in the way we do business.We may still demand loyalty in the future as long as it does not effect the bottom line.
6-25-2007 @ 4:32PM
jb said...
This is nothing new, I came onboard Circuit city 2002 when they were still commissioned. After about two months they sat everyone down individually and if you made too much to bring you over to salary they let you go. I was there for three years and made $1.00 more per hour...Customers complain about CC not being customer focused and not having knowledgable sales associates... well that's what you get when you fire the people who thought CC is a career and hire lil highschoolers who need pocket change... CC will be gone in the next couple years!!!
6-26-2007 @ 5:19PM
Mike said...
I thought the lack of competence was only at my local store! I went to the store on Sunrise Blvd in Sunrise, Florida (Ft. Lauderdale) and they couldn't even tell me where they had 9 volt batteries. They're complete dopes there. Good Luck Circuit Schitty!
6-28-2007 @ 12:52PM
fran said...
It's the old story the big corporations are running this country. Low wages/outsourcing, big profits.
It has destroyed the middle class.
6-29-2007 @ 2:59PM
Johnnymoney said...
I too as a customer will never again buy at Circuit City after the firing its best employees, no matter what products or what price is promoted.
Wal-Mart will be at an advantage to sell a huge amount of large screen VIZIO LCD Flat Panel TV's. The quality issue alone will be an asset for Wal-Mart over the "Best Buy" sales of its inferior product line of China made INSIGNIA brand of flat panel TV's and the customer dissatifaction for those who purchased at that retailer.
Circuit City does offer some quality products, but so do other major retailers who treat their employees as quality. Circuit City Management is highly questionable, and have caused many losses to small investors. Who in their right mind would purchase shares of stock of Circuit City? Yes, fools are born everyday, but rarely laugh all the way to the bank!
Samsung looks like a "good buy" as they are going to flood the market in late 2008 with 52 inch LCD TV under costs of $1,000 at major retailers.
Apple Iphones are for the corporate employees and the product will encourage other retailer price drops, no matter what the US Supreme court tells retailers to sell at manufacturer prices. Circuit City will eventually file for bankruptcy protections for lack of customers.
The latest Court rulings protect Microsoft products from price reductions except the "black market" prices. Please no more Circuit City in America!
7-30-2007 @ 12:47AM
sf said...
I worked for circuit city for 10 years,they told me my position as sales manager had been eliminated,I was one of 5 sales managers and 3 of us were told our positions were eliminated on the same day.They replaced us with lesser paid and inexperienced supervisors,I call the stupidvisors,enough said.I will never shop or recommend circuit city to anyone to shop or be employed by this sinking fast company ever again.I cashed out all of my stock that I had been purchasing for 10 years with the company at a considerable loss and I recommend if you own stock in this company cut your losses because it's at$16 now and will go much lower with the way things are being run now....GO TO BEST BUY,I did I just bought a computer there last week,and about their latest effort firedog what a joke I call it your fired dog.sf
7-06-2007 @ 8:56PM
adrienne montesanti said...
Went to Costco, Circuit city and then Best Buy. Wanted a LCD or Plasma TV. Warranty almost mandatory to be able to have repairs, plus the cost of the extended warranty made me walk out. Sales personnel seem to have an agenda of their own instead of waiting on customers. Went to best buy, waited 10 minutes for a sales person. Bought great Plasma TV for less money, cheaper, almost identical warranty for longer time, and they said they would come and take it back or repair it in my home if anything failed as per the warranty. CC said I would have to mail a 40 some inch LCD directly back to Sony. Like my Plasma Panasonic better and felt good about the sale. Will go back later for another, even bigger Plasma at Best Buy. Have been ignored in CC many times when trying to buy in the past, although in the "old days," CC was a great place to shop, especially when they didn't have the competition of other retailers in Richmond, the home of CC.
7-09-2007 @ 4:47PM
Priddy said...
Im losing my job with circuit city due to out sourcing. Worked at cc warehouse nine years my knees are in bad shape from the concrete floors. I have been a trusted loyal employee. Nine years ago the company cared about the employees,not anymore. We are the muscle behind these companies the little men and women that make it all happen.IM going out with my head high.