Circuit City, the second-largest retail electronics chain in America, has announced that they are firing 3,400 of their highest-paid workers and replacing them with cheaper labor.
In the understatement of the year, the story quotes analyst Colin McGranahan saying:
Firing 3,400 of arguably the most successful sales people in the company could prove terrible for morale.
Gee. Ya think?
The amazing thing about this particular decision is that Circuit City pays its salespeople on a commission basis. In other words, the salespeople who make the most are the ones who bring in the most sales. Those are the kinds of people a well-run business tends not to, you know, fire.
Investing site The Motley Fool noticed that too:
Do you really know what you're doing? You just handed over 3,401 pink slips at the store level. Yes, I said 3,401. You're canning 3,400 store associates, but you're also handing morale its walking papers.
Perhaps the most baffling thing about the move is that it makes Circuit City even less distinguishable from its major rival, Best Buy. Have you been in a Best Buy store lately? Trying to find a knowledgeable salesperson there is like trying to find a unicorn. Circuit City could compete with that by hiring smart people and treating them well, but it looks like they'd rather save a few pennies instead. The phrase "penny wise and pound foolish" comes to mind...
