Circuit City replacing 3,400 employees who earn too much
Circuit City replacing 3,400 employees who earn too much
By DAVID SCHEPP
THE JOURNAL NEWS
(Original publication: March 29, 2007)
Circuit City Stores Inc. cut 3,400 sales employees and plans to replace them with newly hired employees who will earn lower, "current market" wages.
The move, announced yesterday, is part of a number of actions the electronics retailer is taking to cut costs to stay viable in a marketplace where more cost-efficient retailers have begun selling items, such as flat-screen televisions, that Circuit City specializes in.
Employees who lost their jobs yesterday "were paid well above the market-based salary range for their role," Circuit City said in announcing the cuts.
Circuit City employs about 50 full- and part-time associates at each location, "including sales support personnel, such as customer service associates, product specialists and stockpersons; three sales managers; an operations manager; and a store director," according to a regulatory filing.
The company operates more than 650 retail outlets in the United States, including four lower Hudson Valley locations in White Plains, Yonkers, West Nyack and Cortlandt, where 13 workers were fired, according to Circuit City spokesman Bill Cimino.
In the seven-county Hudson Valley region, retail salespeople earn a median salary of $21,450 a year. But Cimino said the criteria Circuit City used for determining the cuts also looked at wages for similar jobs within the market.
Cimino said that if any of those workers wanted to reapply for those jobs at the new lower wage they would be eligible to do so, "but after a period of time." Employees have been given severance and wouldn't be eligible to reapply for about two months, he said. The severance amounts were dependent upon several factors including length of time employed, Cimino said.
In addition to the 3,400 sales employees, Circuit City said it eliminated 130 corporate associates, 50 of whom will transition to jobs at IBM Corp. but will remain on-site. The job reassignments are part of a $775 million pact that Circuit City estimates will trim more than 16 percent from its costs during the length of the seven-year contract.
From a managerial perspective, the firings are understandable given they appear part of a larger restructuring that also includes strategies to overhaul the company's distribution, marketing and finances, said Joseph M. Pastore Jr., professor emeritus of Pace University's Lubin School of Business in Pleasantville.
The scale of the firings, about 8 percent of Circuit City's total work force of 42,000, may have adverse consequences in the short run, Pastore said. "But if the turnaround succeeds, the broader impact on morale and investor confidence can be very positive."
Circuit City shares climbed 1.9 percent yesterday to $19.23 a share.
Without a collective-bargaining agreement to protect them, Circuit City, like any employer, is well within its rights to fire employees for virtually any reason, said Randolph McLaughlin, law professor at Pace Law School in White Plains.
In New York state, as with many other states, employees work "at-will," McLaughlin said. "So you can be discharged for a good reason, bad reason or no reason at all."
Exceptions include those employees who are part of a protected class, such as minorities, women or disabled employees, he said.
The phenomenon of firing workers who earn too much is going to become more commonplace as U.S. corporations balance budgets and reduce costs, McLaughlin said.
Without the ability to take its business overseas - as is the case, for example, with manufacturing jobs - Circuit City had to cut its costs in other ways, he said.
Still, he said, the move may be shortsighted if the company hasn't accounted for the toll of reduced morale. Sometimes, he said, "corporations have a meat-cleaver approach to these things."
Reach David Schepp at 845-578-2437.
Copyright © 2006 The Journal News, a Gannett Co. Inc. newspaper serving Westchester, Rockland and
Putnam Counties in New York.
By DAVID SCHEPP
THE JOURNAL NEWS
(Original publication: March 29, 2007)
Circuit City Stores Inc. cut 3,400 sales employees and plans to replace them with newly hired employees who will earn lower, "current market" wages.
The move, announced yesterday, is part of a number of actions the electronics retailer is taking to cut costs to stay viable in a marketplace where more cost-efficient retailers have begun selling items, such as flat-screen televisions, that Circuit City specializes in.
Employees who lost their jobs yesterday "were paid well above the market-based salary range for their role," Circuit City said in announcing the cuts.
Circuit City employs about 50 full- and part-time associates at each location, "including sales support personnel, such as customer service associates, product specialists and stockpersons; three sales managers; an operations manager; and a store director," according to a regulatory filing.
The company operates more than 650 retail outlets in the United States, including four lower Hudson Valley locations in White Plains, Yonkers, West Nyack and Cortlandt, where 13 workers were fired, according to Circuit City spokesman Bill Cimino.
In the seven-county Hudson Valley region, retail salespeople earn a median salary of $21,450 a year. But Cimino said the criteria Circuit City used for determining the cuts also looked at wages for similar jobs within the market.
Cimino said that if any of those workers wanted to reapply for those jobs at the new lower wage they would be eligible to do so, "but after a period of time." Employees have been given severance and wouldn't be eligible to reapply for about two months, he said. The severance amounts were dependent upon several factors including length of time employed, Cimino said.
In addition to the 3,400 sales employees, Circuit City said it eliminated 130 corporate associates, 50 of whom will transition to jobs at IBM Corp. but will remain on-site. The job reassignments are part of a $775 million pact that Circuit City estimates will trim more than 16 percent from its costs during the length of the seven-year contract.
From a managerial perspective, the firings are understandable given they appear part of a larger restructuring that also includes strategies to overhaul the company's distribution, marketing and finances, said Joseph M. Pastore Jr., professor emeritus of Pace University's Lubin School of Business in Pleasantville.
The scale of the firings, about 8 percent of Circuit City's total work force of 42,000, may have adverse consequences in the short run, Pastore said. "But if the turnaround succeeds, the broader impact on morale and investor confidence can be very positive."
Circuit City shares climbed 1.9 percent yesterday to $19.23 a share.
Without a collective-bargaining agreement to protect them, Circuit City, like any employer, is well within its rights to fire employees for virtually any reason, said Randolph McLaughlin, law professor at Pace Law School in White Plains.
In New York state, as with many other states, employees work "at-will," McLaughlin said. "So you can be discharged for a good reason, bad reason or no reason at all."
Exceptions include those employees who are part of a protected class, such as minorities, women or disabled employees, he said.
The phenomenon of firing workers who earn too much is going to become more commonplace as U.S. corporations balance budgets and reduce costs, McLaughlin said.
Without the ability to take its business overseas - as is the case, for example, with manufacturing jobs - Circuit City had to cut its costs in other ways, he said.
Still, he said, the move may be shortsighted if the company hasn't accounted for the toll of reduced morale. Sometimes, he said, "corporations have a meat-cleaver approach to these things."
Reach David Schepp at 845-578-2437.
Copyright © 2006 The Journal News, a Gannett Co. Inc. newspaper serving Westchester, Rockland and
Putnam Counties in New York.
posted by Walking Contradiction at 4/05/2007 10:49:00 PM
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