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Circuit City and the American Dream
An anonymous reader writes "Circuit City said yesterday that it had fired 3,400 of its highest-paid sales staff — 8% of its employees — and will replace them with lower-paid workers. Sign On San Diego called this 'a risky strategy to cut costs that goes beyond the layoffs, buyouts and hiring freezes commonly used by struggling companies.' The fired workers have a chance to apply for lower-paying positions after a 10-week wait, the company said. Quoting a Circuit City spokesman: 'This is no reflection on job performance... We deeply regret the negative impact. Retail is extremely competitive, and if we're going to thrive and operate a successful company... we just have to control costs.' So: work hard, become the best in your field, and get fired so they can offer you a new job 10 weeks later at a lower salary."
I think the real problem is related to a previous ./ submission about allowing manufacturers to set the retail price of goods. Depending on your point of view it's either:
a) Retail is an obsolete business model since the internet offers more convenience for lower prices
or
b) Retail needs protection from the internet in order to preserve jobs
Circuit City is, IMO, doing the only thing they can to try to compete with Amazon, NewEgg, etc. They need to cut costs to keep _some_ people employed or given more time they're all unemployed. It isn't like NewEgg will pick up the slack and need 3400 more people even if every person who shops at Circuit City suddenly started to buy from them.
There comes a time where you have to decide whether it's better to save $5 for yourself, or spend it so that somebody else has a job.
Made $8.52M in fiscal 2006.
Maybe it's time to find a cheaper replacement.
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How can you have any pudding if you don't eat your meat?
>> or they need the stock boost that comes from
>> indiscriminately firing workers - Wall Street loves that.
CC is down 71c so far today.
wall street knows a dumb move when it sees one.
During my time in college I worked for both Circuit City and Best Buy in the same town. Overall I think CC treated their employees better. Everyone wants to boycott CC for screwing their employees over but they're missing a few important bits of information on how things work there. I'll see if I can shed some light. When CC went from commission to non-commissoned sales they gave their old employees one HELL of a deal. They tallied up everything the employee had made in the previous year (including comissions) and made that their new hourly wage. We had people at our store making $19 dollars an hour because of this. $19 an hour........selling digital cameras. Compare this to the $9.50 an hour that someone who came in after the commission/non-commision switch, and you can easily see that there were a lot of SERIOUSLY overpaid sales staff. These people weren't necessarily the best salesman they were just the ones that had happened to have been around at the right time. So this is not a killer of the american dream. This is not a case of canning people who have worked their way up the sales ladder. This is merely cutting some bloat, getting the labor prices back down to reasonable levels. Having been an employee (one of the $9.50 ones) I can say: good for them! Some of the $19 an hour people were WORSE salesman than I was. Now they can possibly get to a situation where people get raises based on merit as opposed to not being able to afford to give ANYONE raises because you have emplyoees being paid twice what they're worth.
The bottom 90% is losing ground. http://www.nytimes.com/2007/03/29/business/29tax.h tml?ei=5065&en=f30aed8087a73065&ex=1175745600&part ner=MYWAY&pagewanted=print
What I tend to think about is the early history of the USA. Basically, you had bunch of monarchies in Europe with the attitude that "what's good for the king is good for the country". Then, some rather enlightened people in what was to become the USA looked at the situation and concluded that if you let the leaders act in their own best interest then they take just about everything for themselves and leave everyone else with very little.
Actually it wasn't in the US that these enlightened people came from. "As a movement", The Age of Enlightment "occurred solely in Germany, France, Britain, and Spain, but its influence spread beyond". From there it influenced the USA's Founding Fathers. The founding father of capitalism Thomas Paine, who served under Washington, was a big advocate, having written several tracts supporting democracy during the Revolution. He was the one who wrote "These are the times that try men's souls." And the 18th century's Age of Enlightenment was preceded by the 17th century's Age of Reason which also took place in Europe.
The way I see it, the key realizatoin was that, unless leaders are subjected to oversight and compelled to act in the best interest of everyone, leaders will instead act in their own best interest to the detriment of everyone else. At the time, these ideas were applied to the leaders of governments.
Unfortunately these ideas are no longer applied, to politicians or to others.
FalconShould there be a Law?
George III wasn't an absolute monarch. England had the Magna Carta, a Parliament that wasn't a rubber stamp, and a well developed legal system well before the American colonies existed. When the American colonists rebelled, they were demanding the rights they felt they were entitled to as Englishmen, having lived under representative governments their entire lives.
Checks on royal authority and the existence of a broad middle class helped the British monarchs keep their heads while absolute monarchs on the continent were literally losing theirs.
shouldn't you have the OTHER people follow his lead, rather than fire him?
The incentives of the middle manager can be perverse sometimes. The too-smart-for-his-own-good salesman may attract the attention of higher-ups and become a potential threat to the middle manager. The middle manager reacts by eliminating a perceived threat (i.e someone who performs better and is more productive than they are) before it is too late for them to act. The middle manager typically wants to improve overall performance by raising the productivity of each worker an equally incremental amount not by having rising stars in sales steal his thunder when it comes time for promotions.