Circuit City Says - We Fired You, Care to Come Back For Less Money?
November 26, 2007
Companies run into tough spots all the time. Sometimes, the result is layoffs. Staffing goes down, but often times it goes back up as the business cycle picks up. So goes the business world. It's ugly, but it's capitalism.
Sometimes though, a company badly bumbles the whole rightsizing thing. Remember the whole Circuit
City reorganization thing from earlier this year? To refresh you, that's the one where the retailer laid off 3,400 experienced employees due to expense concerns, but said they would be eligible for rehire after a couple of months at a lower rate of pay. Ugh.
Guess what time it is 8 months later? Time to make the rehire offers at a lower rate of pay. From the Wall St. Journal coverage:
"A spokesman for the consumer-electronics retailer said that workers discharged in March are among former employees who have received letters inviting them to apply for positions either created by new store openings or routine turnover.
Circuit City has been criticized by employee advocates and some Wall Street analysts for cutting some of its highest paid, and in some cases, most experienced, employees in the layoffs this year.
Company spokesman Bill Cimino said Circuit City has overhauled job responsibilities for all of its roughly 43,000 employees this year to try to improve customer service, making it difficult to compare current openings with former jobs.
Current job openings are largely for two types of employees: "product specialists," who concentrate on sales, and members of the "product flow team," who accept product deliveries and arrange merchandise displays. Before Circuit City's restructuring this year, associates were responsible for both selling and stocking the retail floor. The new structure also gives workers more opportunities for advancement, he said."
Even after 8 months, it's still hard to get my head around this one. Rehires of laid-off employees happens all the time, and it's a good source of talent when business picks back up. But rehires of laid-off employees at a lower rate of pay? How can that end well? I can't imagined a more disgruntled group of employees than those who are rehired at the lower rate of pay.
Unfortunately automatic pay increases for years of service can price workers out of their position. While it has been unheard of in the US for wages to lower given the pressure from off shore workers with drastically lower wages it likely will become more common. (obviously in retail there can't be direct replacement with off shore workers, but the downward pressure on wages is there). Anyone who is still unemployed after eight months will likely be interested in returning even at a lower rate, however disgruntled they will be.
Posted by: John | November 26, 2007 at 10:16 AM
I agree with John. Even though the circumstances are unfortunate, if the previous employee has not been able to find a better job in 8 months, they would probably welcome the opportunity to come back to something they know - even at a lower wage. And ultimately it will look better on their resume to be hired back by the company that laid them off.
It doesn't say much for our workforce opportunities in some parts of the country!
Posted by: Dawn | November 27, 2007 at 08:27 AM
While people may return to those jobs (if they are still out of work now), most people would have a deep-down distrust, if not hatred, of the management at the company. Sure, they'll take the job since it is something, but I'd be surprised if they stayed long, or went out of their way on customer service or anything else like they otherwise may have. And to some degree, who could blame them? The company has already snubbed them once.
Posted by: Kev | November 27, 2007 at 11:35 AM
It also doesn't say much for considering the impact on their morale -- and, in turn, how it impacts customers' experience. You need look no further than the airlines to see how crews' morale has sagged.
The customer experience is everything. Economics don't matter if customers are turned off by an unmotivated salesforce. (FWIW, I've shopped several Circuit City stores recently, as well as at some competitors -- and let me tell you, the difference shows. The shopping experience at their "blue" competitors is head-and-shoulders above them.)
Management that didn't even foresee the pitfalls of automatic pay raises in an increasingly competitive marketplace is not very savvy. Compounding that with this come-back-for-less approach is downright stupid.
If this is the new norm, then we truly need a new generation of leaders capable of more creative, innovative responses to marketplace pressures than this brainless approach. Short-term gratification (i.e., focusing only on the bottom line) will give way to long-term frustration... or worse.
Posted by: Mike | November 27, 2007 at 11:38 AM
Personally, after being fired would not accept a job for lesser pay from the employer who fired me!
It is hard enough being fired. If they former employer wants to hire you back, they should at least give you the common courtesy of bringing you back at least at the wage you were working at before the separation. If the company "asks" you back. I would bargain for more money, not less. If they don't want to hire you back at the wage you were making, then they company is not worth your time...
Posted by: Not in my lifetime! | November 27, 2007 at 12:28 PM
I wonder if they reinstated their previous service date for benefits, or do they start over have to work a year for vacation time etc. (I bet I can guess)
It would be interesting to see the shrink numbers if many of these "demoted" employees do return.
Posted by: evil.HRISGuy | November 27, 2007 at 12:41 PM
One of these days I'm going to write a book called "From Great to Crap." Circuit City will be a case study. It's humbling for us writer people to realize that CC was one of Jim Collins good to great examples not that long ago. Supposedly the thing they did best was concentrate on the profit-per-store metric.
As for this "we-just-want-you-back" strategy, my guess is that anyone who was let go all those months ago who's good at selling consumer electronics in a retail environment is happily ensconced at their local Best Buy.
Posted by: Wally Bock | November 27, 2007 at 03:40 PM
Employees happy at Best Buy? You may want to ask the older IT workers who sued them for age discrimination and all the younger workers who have been layed off and find they can't get unemployment because they signed a waiver of unemployment when they started part-time as a student.
Posted by: John | November 27, 2007 at 04:33 PM
Of course, no executives were asked to make this "adjustment."
I'd like to see illegal immigrants as executives running Short Curcuit City. They'd do a better job for a fraction of the cost and we as consumers would benefit.
No more CC for me.
Posted by: Mike A | November 28, 2007 at 12:21 PM
I don't think the recall program will be anything close to being successful. From what I have seen and heard the majority of the former employees want to and remain "former", with little desire to go back to CC. How could you blame them?
It would be interesting to see how this all plays out. Wonder if we will truly know?
In any event, CC made a decision that has long range implications not only for the terminated employees but its public image as well. And that is the real gist of all this. CC's competition is laughing all the way to the bank. The sales show it.
Posted by: RaymondThe HR Guy | November 28, 2007 at 02:40 PM
First, it was the customer service (or lack of) at Home Depot and now the term/rehire at less pay issue at Circuit City. These retail establishments seem to be getting much worse at running their internal organizations.
Is it the quality of their middle and senior management or other factors creating this downward spiral for some of our most popular retailers? It is most likely the quality of their leadership. I remember Home Depot wanting to bring me on board as an HR Manager for about $40k. What a joke! No wonder they are doing so poorly. These companies need to get with the program and start figuring out what needs to be done to make it a win/win situation for all. If they piss off the customers and the employees too much, who will be left to justify their existence?
The next thing you know, instead of allowing day workers to hang out in the parking lots of Home Depot, they might just go out into the parking lots themselves to hire them onboard instead.
Posted by: Alan | November 28, 2007 at 03:56 PM
Do you want save your money while purchasing electronics stuff then must be visit at Circuit-City store through Couponalbum.com....!
Posted by: Nikki | December 08, 2007 at 04:02 AM
Sounds like Circuit City is just staying in step with its overall company culture. This type of mindset ignores the relationship between external customers, internal customers, and profitability. To offer ex-employees a job at less money than they previously made is not only insulting; it is a sign of desperation. And no, I am not an ex-employee. I am an ex-customer.
Posted by: Franc | December 10, 2007 at 11:08 AM
I was one of those laid off and now invited back. When I read that letter, I wanted to laugh and then scream. How can they have the nerve to ask us back after betraying it's most loyal and experienced workers? I just can't do it. I would feel no loyalty toward them. I just would not enjoy being there anymore. If it was life or death, I would consider it, because it is a job that I know and did for 10 years, but I am much happier without them.
Posted by: chrisb | December 10, 2007 at 01:09 PM
For me it was simple. I got layed off as a part-time cashier (it was a second job) making $13.25 an hour. The part time job I have now pays $9 an hour. I haven't gotten the official offer yet, but, they're talking $11.75-$12.00 It isn't a hard choice for me. If I had to trust them for my full-time income I would NEVER trust them to do anything but what profits them the most. -T
Posted by: T.G. | December 10, 2007 at 06:19 PM
Check out a company's annual report. Executives are making huge sums with exit clauses built in, bonuses, etc. etc.
The stock market can be a great place to make money, but today there seems to be a lot of people paying the wealth of a few. It is not as lucrative as it used to be, but when shareholders aren't making something, then what gets cut are the wages of the working class, their benefits, and any other perks.
I would like to see more companies going back to being privately held and getting more realistic with the real people who help to make a company successful - the workers.
Schedule of Material Differences in Form of Employment Contract between the Company and Certain Executive Officers
Party
Job Title
Annual Salary
Amount Annual Bonus %
of Base Salary
George D. Clark, Jr.
Executive Vice President & President – Retail Stores $ 525,000 80 %
Fiona P. Dias
Executive Vice President & Chief Marketing Officer $ 475,000 80 %
Douglas T. Moore*
Executive Vice President & Chief Merchandising Officer $ 500,000 80 %
--------------------------------------------------------------------------------
* In sections 9.3(c), (d) and (f) of the agreement (Change-in-Control Severance Benefits), the agreement with Mr. Moore provides for a two year/two times provision for the lump-sum severance amount; the lump-sum perquisites amount; and the continuation of health, welfare and benefit plan participation. The agreements with Mr. Clark and Ms. Dias provide for three years/three times in these sections.
Exhibit 10.33
Schedule of Compensation for Named Executive Officers
Name
Job Title
Annual
Base
Salary Target Bonus %
of Base Salary
W. Alan McCollough
Chairman
Retired Chief Executive Officer*
$ 975,000 100 %
Philip J. Schoonover
President and Chief Executive Officer $ 900,000 100 %
Michael E. Foss
Executive Vice President and Chief Financial Officer $ 575,000 80 %
George D. Clark, Jr.
Executive Vice President; President – Retail Stores $ 525,000 80 %
Fiona P. Dias
Executive Vice President; Chief Marketing Officer $ 475,000 80 %
Douglas T. Moore
Executive Vice President; Chief Merchandising Officer $ 500,000 80 %
--------------------------------------------------------------------------------
* Mr. McCollough retired as Chief Executive Officer effective February 28, 2006.
For fiscal year 2007, the Compensation and Personnel Committee of the Company’s
http://newsroom.circuitcity.com/secfiling.cfm?filingID=1193125-06-112478
Posted by: not important | December 14, 2007 at 10:29 AM
yeah, well try working for Cardinal Glass, they did the same thing to me. But when you need a job what can you do?
Posted by: B Scott | December 18, 2007 at 08:42 PM
actually this did happen to me, I was hired at a Circuit City, then was "let go" then about 7 months later was rehired. But all the time throughout the months, I would go in and they would tell me "we're going to interview you soon"
Posted by: Mike | August 01, 2008 at 10:27 PM
I recently just quit Circuit City because of the poor treatment. Anybody who works for slave-drivers for $8 p/h is a complete fool. I'm a seventeen year old "kid" but know a dead-end job when I see one. Circuit City will be BlockBuster within the next 2 years.
Posted by: Kyle | August 07, 2008 at 07:55 PM
Circuit City is going to stop selling electronics and rent videos?
Wow!
Posted by: Rainman | August 11, 2008 at 08:15 PM