A Student of History

March 29, 2007

Circuit City: People Don’t Matter

Filed under: The world today — John Maass @ 9:42 am

This seems like something out of the 1880s or 1890s, but it is as they say “ripped from today’s headlines”:

“Circuit City fired 3,400 employees in stores across the country yesterday, saying they were making too much money and would be replaced by new hires willing to work for less.” 

This means that the company wanted to cut the higher paid people to save money, and hire new, inexperienced people instead. Timothy Allen, an analyst with Jefferies & Co., surmises that “I have a feeling the people they’re letting go have probably been there longer, have more experience, more product knowledge.”

At first glace I could not quite believe that–not because I don’t think big corporations are in the habit of doing things like this, but because this admission is so brazen.  It actually gets a bit worse, because as the Washington Post article describes, “the company said the dismissals had nothing to do with performance but were part of a larger effort to improve the bottom line.”  So, work hard and do well, but even so–you get the axe when management thinks that the profits are too small.  Lest we think that the Postis twisting the facts here to make for a tear-jerker of a human interest story, the facts are spelled out by Jim Babb, a Circuit City spokesman, who said on the record “we deeply regret the negative impact that was had on these folks. It was no fault of theirs.”

That must be some comfort to the thousands laid off, that it wasn’t their fault and that the bottom line has to come first.  I mean, everybody knows that, right?

Now, CC did give the fired folks severance pay and told them that after 10 weeks they were free to apply for any openings.   So, does this mean they get a 10 week vacation, with pay?  Somehow I doubt it.  What about their benefits?  And if the whole idea is to save money, these people who do manage to get rehired will of course be making less money–so why not just cut their pay rather than fire them and cause such a huge disruption in their lives?

Perhaps we could exonerate CC a bit if we could know that the way they handled this “downsizing” of people who had done no wrong (remember, CC says it was not their fault).  Actually , we do, and it does not make the corporation look good.  The Post reports that “Employees reached by a reporter said they were notified yesterday morning and told to leave immediately.”  Thus no notice, no way to plan, no way to try to figure out how to pay for stuff…

The writer also managed to speak with a fired (former) employee.

Steven Rash, 24, said he was one of 11 workers fired at a Circuit City in Asheville, N.C. The store manager broke the news during a meeting at 8:15 a.m. and escorted them out of the store. Rash said he has worked for the retailer for seven years and was one of the most junior members of the affected group.  He said he earned $11.59 an hour and worked from 15 to 20 hours a week. He received four weeks of severance pay. 

After seven years of part-time work, he gets four weeks of severance pay.  He only worked 15-20 hours per week, but the company decided he was too expensive to keep!

The CEO of the company, of course, received a salary of $716,346, along with a $704,700 bonus last year. He also has long-term compensation of $3 million in stock awards and $340,000 in underlying options.  I do not see in the article where he took a hit in any way in order to help “the bottom line.”  Last month, the retailer shut down distribution centers in Columbus, Ohio, and Louisville, and closed 55 international stores; it plans to shut down seven more in the United States.  So if the company is doing so poorly, why did CEO Philip J. Schoonover get a bonus?  I thought bonuses were for the people who did well…

Thus, the store workers get fired even though it has nothing to do with performance, but Philip J. Schoonover gets a bonus even though the company he manages is doing shitty? 

CC has forgotten that even though they exist for profit, we all live in a society, not an economy.  Is CC’s way of thinking really what America is all about now?  I hope not but it reminds me of the Guilded Age quite a bit.

Leave a Comment »

No comments yet.

RSS feed for comments on this post. TrackBack URI

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

Create a free website or blog at WordPress.com.

%d bloggers like this: