Hello,

I left CC after 5 years of service last February. I saw the effects of the 2003 mass exadus in 2003 and the tremendous kick to moral.
In some instances it was the best thing for CC, primarily because CC got rid of associates who would "only sell" and were not productive in other parts of the system. With the hourly associates CC got more productivity, but lost sales ability.

From an inside perspective this lay-off in addition to the "cut in labor hours" will hurt CC for the next few years.

1. 2 - 3 years ago about 1/3 of the sales, floor and customer service labor hours were cut. It was to be a "temporary" model. Everyday store struggle to help customers. Management and staff are frustrated, but get no releaf from corporate. Daily - customers are walking out not getting helped OR if helped are helped in a "rush" and not given good cust service.

2. With this lay-off - it will affect sales, moral and store appearance. Most of the sales and customer service associates had been with the company for years - on average 10 - 15. So yes, what does this say to the people left behind? Don't plan on a career here - unless you want to get into management. Some people (like myself) did/do not want to do that and/or have no desire. So what happens? CC hires a young person, trains them and keeps them on for 6 months to a year. If they stay 4 years then where do they go. If they like the industry they leave and go somewhere that will pay them better.

I am dissapointed in the higher-ups at CC. In 2001 when I started it was a good company. Great benefits; 401k, stock options, good health insurance, holiday pay. I made some lifelong friends and picked up a few pieces wisdom. I hope that CC learns in order to take care of the customers you must have enough staffing in addition to trained/experienced employees.

Lastly - one benefit of losing these senior associates is that they brought in "repeat" business. Customers who asked for these associates by name. Those customers were loyal CC shoppers - but maybe not anymore.

Thanks for reading -

My experience with Circuit City was that it was always a mess, it's cd section was totally unorganized, the lines were long because only one or two cash registers were working and it's inventory was less than what I found at Best Buy. As a result I would rarely shop there. I actually once left the store without buying because the lines were too long.

I guess they should have fixed the obvious problems first.

Silly policy. Weed out all the top performers - who contributed most to their recent successes, if any - and retain all the weakest sales people. Now there's a management plan straight from Dilbert's pointy-haired manager! If I had any stock I'd be selling.

Yes, but in the military, Generals are sometimes fired as opposed to CEO's who get a bigger bonus and a golden parachute.

Age discrimination by any other name would probably smell about the same.

I congratulate you on your measured and rational reply.
When we read of an event like this, it seems like everyone's first impulse is to blame the greedy corporation. The question people should ask is, do you really think CC (or anyone) would be successful if they advertised, "We'll sell you a great computer at $100 more than our competition. But we're good guys and we pay our employees a decent wage, so you should support us." Would many people pay the extra $100? Would you?

Personally, my own experience with Circuit City has been that it's the lower-paid sales people who are the ones who are overpaid. At least when I shopped there, they had very little product knowledge and even less in the way of people skills.

In his column today on the NY Times business page, David Leonhardt has a lot to say about this. One point is that a worker in their early 60s makes on average 50% more than one in their early 30s, but they may not be 50% more productive for some positions.
It may be a rational business decision to fire the high paid workers but its not good for society as a whole if every company does it. He sees it as part of an overall trends of business moving from safety net programs like pensions and health care.

Is this another thread being pulled in the unravelling of the social fabric?

It's sad to live in a world like this.
There is enough knowledge in the world to solve most of our problems.
Perhaps the emphisis should be on the quality of life, not on 'profit' or the next 'quarter'.
Personaly, I would (and have) pay more for a product from a store where the employees know the product and are compensated fairly for doing a good job.
Supporting a local store (i.e. hardware store) may cost me a few more dollars today, but I go to church with the employees, their salary helps pay taxes for my town's school system. So 1) do unto others as you would have them do unto you, and 2) I'd rather my dollars stay in my community, than to go elsewhere.
Yes not everyone would agree, and if the dollar is the only item one is concerned about, well there is nothing new about that... life was never promised to me to be 'fair'.

It comes down to living and acting upon what you believe in. That may not always be the lowest cost alternative, but each person has to make a choice as to what is the correct moral choice for them.

For example, it IS cost effective today, in this quarter, to just dump used oil into the sewer. And doing so could increase profits at the local garage. But is that a correct moral choice?

I'll go for good service, from a firm that I know employees and managers on a first name basis, and has a fair and equitable reputation in my community BEFORE I'll shop at Wall Mart, (or now C.C.).

Sorry but C.C. has lost a customer, and I will do my best to explain my point of view to my friends etc instead of just keeping this choice to myself.

There has to be a better way, and we all know there is. Question is, do we have the courage to find it, and then follow that type of ethic's code?

And yet Costco is more profitable than Sam's Club while paying more, with better benefits. It's very easy for management to miss the link between cost - number of front-line employees multiplied by their compensation - and revenue from more, and better-satisfied customers, fewer returns, short lines, well-run operations...

Circuit City may well illustrate my Texan brother-in-law's expression, "Just as I was training my horse to get along without any feed he up and died on me!"

When we moved to the SE Houston area, there was Circuit City. Within 6 months, a Best Buy had opened up virtually across the street, and we shopped less and less at Circuit City. One year after that a Fry's Electronics opened, and we now hardly ever shop at either CC or BB.

Has anyone studied the performance of some of these companies in relation to the amount of rebate business they do? I'm just noticing that CompUSA and Circuit City are both having problems and they are both big rebate advertisers. I personally don't shop at either place any more, because I don't like rebates. So, I'll buy at OfficeMax or Best Buy or somewhere else that I can get what I want without the hassle of rebates. Maybe these outfits should rethink rebates....

Being in Human Resources, I knew that CC was in big trouble when they made the announcement last week. They made two major mistakes: 1) firing all the experienced, knowledgable employees. Companies that do that WILL fail; read any good business book such as Jim Collins' "Good To Great". (Interesting enough, CC is mentioned in the book as "great" company, but that is before 2000... after that they violated all the rules and went downhill). 2) In firing all the experienced employees, the also fired most or all the older over-40 ones. That is illegal. They may try to cover it up ("they may reapply after 10 weeks") but that is nonsense. The legal battle is going to cost CC more than they save in actual dollars, and the loss in sales, bad press and general ill-will generated will kill them. When the announcement was made, I'm sure every employment law attorney was rushing over to their local CC. What hallucinogen was upper management on?

My philosophy is that it's worth spending a few extra bucks to support businesses that support American workers. It's not always easy and there are fewer options every year, but I do what I can. This means buying American where possible and refusing to shop at stores that take advantage of their employees. I have not been in a Walmart in years, and now I'll drive 50 extra miles to get to a Best Buy rather then shop at the local Circuit City.

The push since the 1980s is to drive the cost of labor down. Since prices for the goods we most need are not following this downward trend, and are in fact rising, the result is a shrinking middle class. This is unhealthy and dangerous for our democracy. If we don't do something to stop this we will find ourselves living in a feudal society. Go back and read Charles Dickens to see where this can lead.

What some of the commentators imply when they say they don't shop there and Brad Weiner says outright is the crux of Circuit City's problem -- bad management, period. The hourly sales and current salary structure could probably work, if there weren't other problems. The management is tackling the wrong problem.

Joel nailed it. Their prices are NOT competitive unless you figure in the rebates. That is, the money you might get back but will pay sales tax on...

Here, they are in the same mall with Best Buy, which has a better selection and generally similar prices from what I can tell.

To John's question, I reply that yes, I will pay extra to deal with a company that treats its customers and employees with respect. I may be an MBA student right now, but I've never, ever bought into the idea that profit is the only thing that matters. What companies everywhere need to remember is that the company is like someone sitting on a three-legged stool, the three legs being owners, employees, and customers. When one leg is shortened, the company gets out of balance. When that same leg gets shorter and shorter, the company eventually falls to the ground.

As an example of the importance of customer service:

I recently went to buy a new car, specifically a minivan. Not an insignificant purchase these days! After doing my initial research, I went to visit three dealers to get some cargo area measurements that are never published ("80 cubic feet" means nothing to me -- that could mean 1x1x80 or 4x4x5; I need to know whether or not I can fit a 4x8 sheet of plywood in the back). I made it clear at each of the first two dealerships that I was not there that day to buy, but to gather further information. The first salesman had no trouble with that, accommodated my needs, answered a few questions, and pointed out some things I hadn't thought of. The second salesman took me back to a vehicle to do the measurements, but it was obvious that he wanted to get rid of me as soon as he could. At the third dealership, not a single salesperson ever approached me. Granted, they were having a big sale, but in 30 minutes you would at the least expect someone to notice a potential customer looking lost and ask if he had been helped, with a promise to come back as soon as he was finished with his current customer. You can probably figure out which dealership I went back to, even though their cars are the most expensive (now if their van hadn't met my needs, I would have gone elsewhere, but it did and I opted to reward the customer-oriented attitude).

In this high-tech world that we live in, it seems very odd to me that a large company cannot build a simple computer program to compare sales generated to hourly rate. (I've shopped at CC. Every employee logs into a computer to prepare your ticket for any item larger than a CD or DVD.)

When doing so, they will probably find that some of their higher paid employees aren't worth their increased wages. They will also find that some of their lower paid employees are underperforming.

Lay off the ones at the bottom and you a) retain your best workers, 2) have a shot at maintaining morale--heck, you've probably just fired the slackers that everyone bitched about, anyway, and 3) also have proof positive that you weren't discriminating based on age.

My friends sister-in-law was one of the "cuts". The reason given was that she was being paid ~$0.50 more than the average for her position. They also had her doing things above and beyond the job description for her title, hence the additional money. I guess that was cheaper than giving her a promotion. The question is who decides the salaries of these people, the employees or their management? Why is it the employee's problem that the are above scale? Look at who put them there to begin with and you will find where the problem is.

I completely agree about the rebate situation too. I will not willingly shop for a product at a store that uses rebates. I shop at BestBuy, Frys or Office Depot because of the instant rebates. I can't remember the last time I was even in a CC, OfficeMax or Staples.

In retail, the front line is what brings the money in. Yes, there's a huge balancing act, low prices attract customers and reduce margin, and payroll is perhaps the most controllable expense. But as several have already commented, having great prices doesn't necessarily make up for an inadequate, unhappy, poorly trained store staff!

I think they would have been better off keeping the experienced people (perhaps replacing some of the least productive with motivated, trainable new hires)and cutting payroll at the top, where the fewest cuts have the greatest impact on bottom line. Top executives's salaries should involve profit- (and loss-) sharing. Combine that with middle and upper management consolidation/downsizing, eliminating poorly-performing stores in regions also served by better-performing stores, and closing any stores that have a consistent record of losing money.

I'm not a CC shopper, but I can't imagine how the changes they're choosing could possibly be the best solution to their problems!

Gee, Mark. You'd better keep up. Office Max is my store of choice as they don't have mail-in (-out?) rebates.

I was one of the people that got laid off last march. I worked in a bay area (California) CC from 2001 till march 2007. The reason why Circuit City did so poorly last year had nothing to do with the prices. Both BB and CC price match and compete with each other's prices. There's no reason why you should pay more at one or the other. It's just a matter of preference as to where you want to shop. BB has better locations; usually closer from major highways, and almost always near a CC. CC has older locations near old plazas and malls. But, that aside; the real reason why CC failed last year was because of the management. CC started hiring managers from outside their company instead of promoting more qualified associates from within. This caused the higher paid associates to not really care anymore about their jobs, and could care less about how much they sold. At one point my colleagues and I would sell just enough to keep the new store manager hired out Target to leave us the hell alone. Then the lay offs happened. Then, to everyone's surprise another lay off happened in may; which not too many people know about. This lay off consisted of firing 40% of their management, and promoting the rest of the high paid people to "SUPERVISORS" with NO extra pay. I went in to my old store recently and talked to the main Car Audio guy. I noticed a lot of new, younger faces. He walked outside with me and we talked. He said that every other installer quit, along with some "SUPERVISORS" because the new store manager is asking them to do some ridiculous things around the store. Apparently he cares more about stalking the shelves rather than talking to customers, and he wrote everyone up in the shop because there was car audio product boxes on the floor on a busy day. To those of you that don't know what this means. It means that the installers cared more about getting more cars in and out of the shop and not have customers wait too long, than how neat the FLOOR OF A CAR AUDIO SHOP LOOKS!!! Do you see where I'm going with this. Now, 95% of the good employees are gone because their either afraid to get promoted, being laid off for making too much money; or, they are just frustrated by these dimwitted managers.