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March 29, 2007

3,400 fired by an honest Circuit City

Circuit City announced that as a cost saving, profit increasing measure, they fired 3,400 workers. Laying off workers to save money is not a surprise, but Circuit City’s candor as to why, was.

The simply said these 3,400 employees made too much money relative to the local market rate for equivalent jobs. Said Circuit City spokesman Bill Cimino, “It had nothing to do with their skills or whether they were a good worker or not. It was a function of their alary relative to the market.”

Congratulations to Circuit City!

For so long, comparative salaries have been a tool used only to increase wages. My counterpart in another city, union, store, etc makes more than I do, so I deserve a raise. No basic understanding of the value you bring to a company, simply “I want more”. It is refreshing to see a company come out and say – we can hire equivalent workers for less money and guess what – we’re going to. It’s going to be fun to watch the reaction, but you certainly can’t fault their candor!


Comments

Yes, it will be interesting. I won't be shopping there again; I come across enough poor customer service not to want to break in a bunch of newbies in electronics sales. And, I bet the friends and family of the 3,400 will make other arrangements, too, because I bet they're aggravated.

I recommend Costco, because they have humane labor practices. I think that's a good thing. So, for example, if you've worked there for a while and have developed some skills and knowledge during your tenure and received commensurate raises, you probably won't get fired just for that reason. I know lots of people at Costco love working there and stay for many years as a result. I hardly ever get the thousand-yard stare when I ask one of the workers where I can find some (fill in the blank).

Posted by: Johnson at April 4, 2007 06:31 PM

Training and retaining workers requires an investment which some suppliers do not care to make. Their failure to make the investment will lead to their failure - sooner or later - to retain customers, market share and profitability.

Some management only cares about the short term profits because their own career goals are short term as well with any particular company. They take what they can get in the way of bonuses and quick returns on stock options and move on. It is the customers and employees that lose as well as the stockholders in the long term.

Knowledge, experience and quality of service DO still count for something. It is NOT just about the lower prices (and higher mark ups) that Chinese and other off-shore manufacturers can bring.

Posted by: Garibaldi at April 4, 2007 08:28 PM

These points are valid and Cicuit City may very well have made a mistake. However, there is a point where an employee, any employee does not justify their salary, relative to options the company has to hire someone else. Cicuit City just felt they had reached that point.

Posted by: Scott Harris at April 4, 2007 08:50 PM

Lou Dobbs has another explanation for it: the destruction of the American middle class.

For example, many companies - including some local ones - believe their long term interests will be better served by employing people in foreign lands. (Click on the link.) Instead of immigrants slipping across the border to grab jobs that American companies are offering for lower wages, American companies are shipping the jobs overseas to them for lower wages to make immigration unnecessary.

Posted by: Garibaldi at April 4, 2007 09:02 PM

No argument here - employers can do pretty much whatever they feel like doing. I hope Americans wake up to the fact that in their working lives they are considered as disposable as a widget, and will act on their own self-interest (at the expense of employers, if it comes down to it). The old "let's pull together to make this thing work" only really benefits the employer.

I appreciate the media, including this blog, keeping us informed of the labor decisions employers are making. I hope all the employers who freely exercise the right to fire loyal, hardworking employees will pipe up loudly and often. Those employers are like potholes -- the better I can see them, the better I can manuever around them.

Posted by: Johnson at April 5, 2007 09:07 PM
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