Bryan D. Brown

I managed to catch the plague, or what the man calling himself “doctor” at the walk-in clinic referred to as, “a cold virus with a slight lung infection”, and thus, I was pretty incapacitated this last week. This also means that I’ve spent lots and lots of time on the couch watching DVDs of The Office and Reno 911. I tried to watch some daytime television, but daytime television is just so awful - especially on the two channels we get with our cable-less television. If women hadn’t flooded the job market out of financial or independence needs, the intelligence-insulting daytime programming would have driven them to the workforce anyway. And this comes from a guy who used to watch pro-wrestling.

Despite the cocktail of antibiotics and cold medication, I still managed to catch this wonderful headline:

Circuit City to cut 3,400 jobs (Ventura County Star)

The laid-off workers, about 8 percent of the company’s total work force, would get a severance package and a chance to reapply for their former jobs, at lower pay, after a 10-week delay, the company said.

The L.A. Times has a wonderful quote from a Circuit City executive on the matter:

“It had nothing to do with their skills or whether they were a good worker or not,” Cimino said. “It was a function of their salary relative to the market.”

Circuit City has not released the salary figures for these “over-paid” employees, nor would it release figures for what they considered appropriate market rates. The L.A. Times article quotes Richard Weinhart of BMO Capital Markets figures for consumer electronics stores employees salaries at somewhere between $8 and $13 per hour. In Santa Barbara dollars, that range would hardly be a living wage.

So what kind of long-term result can Circuit City expect as a result of these layoffs? Again, the L.A. Times:

In a note to clients, Goldman Sachs analyst Matthew Fassler said that after Circuit City’s last major pay change in 2003, when it went from commission-based pay to flat hourly rates, Best Buy’s sales in stores open at least a year gained significantly while Circuit City’s fell.

Wouldn’t it make more sense to fire the corporate hierarchy that allowed salaries to exceed “acceptable market value”? Laying off your veteran sales staff for non-performance reasons doesn’t make much sense. What makes even less sense is that Circuit City eliminated commission for their sales staff in 2003 (and also laid off another 2000 employees in the process), which may very well have led to the company’s current problems. And without commission and the potential to make a higher hourly salary, what kind of sales force is Circuit City hoping to employ?

Begging yet another question, how do corporate executives who continue to make the same mistakes to the detriment of their company stay employed?