Circuit City President Philip Schoonover responded to 3rd quarter losses of $207.3 million by unveiling a retention program that will reward each top executive with $1 million. This is the same management team that axed 3,400 experienced salespeople leading to 2nd quarter losses of $62.8 million. Circuit City has already lost three (3) top executives this year, and Schoonover warns that the future earnings will be imperiled unless his management team remains intact.
Those eligible for the incentive awards at Circuit City include Bruce H. Besanko, executive vice president and chief financial officer; George D. Clark Jr., executive vice president of multichannel sales; Reginald D. Hedgebeth, general counsel; and Eric A. Jonas Jr., senior vice president of human resources, the filing said.
The awards are effective as of Jan. 1. Awards also were approved for employees at the vice president, director and store director levels.
If executives stay until Jan. 1, 2009, they would get 50 percent of the cash bonus, an additional 33 percent the following year and the remaining 17 percent in the final year.
Chairman and chief executive Philip J. Schoonover, who is not participating in the retention plan, would be eligible for a stock award valued at more than $2.9 million if he stays with the company until January 2011, the company said.
Maybe instead of chucking buckets of cash at executives whose top sales are their own inflated senses of self worth, Circuit City should offer salespeople who can move HDTVs something lavish, like $15 an hour.
Circuit City Giving Its Leaders Big Retention Awards [Washington Post]
Circuit City Posts Third-Quarter Loss [NYT]
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@mac-phisto: Then the electronics store would be just like the grocery store. The ONLY People that sell you anything in a grocery store is usually the folks at the deli and at the meat counter. All they do is cut it up and wrap it for you.
The thought that any retailer will ever give the lowest prices and retain and pay the best sales people is poor thinking. Once they get knowledgeable enough they move on or move up.
Consumers get what they asks for: lower prices at the gas pump? Self Service… and full service prices. At one time self service was less, but full service has died ( for the most part).
Did you hear about the guy who ran his own premium price full service store but then Walmart came to town and everyone scurried for the low price no help service, he had to close his store because everyone loved it- but didnt want to pay the higher price. But the only place to work in retail in town was Walmart, so he works there- and since he’s paid like a Walmart employee – guess the only place he can afford to buy his groceries? Walmart.
I feel sorry for people that are happy to see to any retailer close. People are going to lose their jobs- and with less competition you will eventually be going to the only place in town when you want to go to a store- and that store can dictate prices, and they will be higher and the service?… self service…and no one will know the difference…just like today’s gas stations.
as much as I hate best buy: DIE CIRCUIT CITY!
I cite, as I always do, the Japanese mantra of ‘fire the leaders first.’
Ever wonder how so many Japanese businesses with bad PR disasters manage to survive with few problems? Yeah, it is because they fire the assholes at the top who make the poor decisions – they don’t terminate the people who properly carry out their orders, no matter how badly designed those orders were.
Ssu-ma Ch’ien wrote that Sun Tzu said:
“If words of command are not clear and distinct, if orders are not thoroughly understood, the general is to blame. But if his orders ARE clear, and the soldiers nevertheless disobey, then it is the fault of their officers.”
The words are no less true now than they were when (and if) they were said two and a half millenia ago, as is the meaning and intent behind them.
@RvLeshrac: Great, now how do we talk American Execs into committing Seppuku?
@goller321:
If only… it would save us from the horror of having them simply move to another company.
The real question is WHY DO BOARDS KEEP HIRING THEM?!
@ChipMark: i would say the big difference between your examples is margin. gas stations often sell gas for pennies more than it costs to have it delivered. electronics are much different. new tvs are selling $300 or more above cost. those $100 monster cables stock at around $15. that $30 hands-free device costs about $1. the $5 pack of batteries to run them all cost the store about $0.10.
the margin on off-brand is often much higher (even if the price is much lower).
that gas station owner probably could have survived if he had a convenience store, raised his in-store prices on popular sellers & dropped his gas prices even with wal-mart (even with the service). people are willing to pay a lot more for convenience.
@RvLeshrac: perhaps when they start teaching sun-tzu to the mbas at the university of chicago school of business instead of the corporate thimblerig, the world will be a better place.
Stage 1 – Reduce functionality of Retail operation.
Stage 2 – ?
Stage 3 – Profit
I work at Circuit City Part-Time to supplement my income.
I can tell you the main problem is management on the store level and the corporate level.
I work at another Company full-time where management makes decisions that actually improve customer service and employee moral as they are connected.
First, the ancient computer software they uses at the registers is the number one problem. If anyone has ever seen it, it resembles DOS and is over 15 years old. You need to remember over 200 number codes to navigate the screen. Since training is horrible you never know where to go. If you don’t know how to access a certain part of the screen you have to find a supervisor, who usually has a line of questions from other employees with similar issues. Because of the long wait there are usually angry customers taking up the supervisor’s time, which only compounds the issue.
If they upgraded the software, it would speed things up, which in turn add to more sales, since over a hundred customer’s walk out everyday due to excessive wait.
Second is the poor training. They claim they want to train you, but than they say they are too busy and put you on the floor right away. I cannot think of anyone that has ever been fully training. The only way to learn is by trial and error. Any employees that were there long enough to learn anything were fired because they make too much money. Where I work full-time you can’t work until you finished 100% training.
Third, if you make a constructive comment that may make the employee and customer’s experience better, you are looked at like a traitor and belittled for thinking outside the box. This culture has to come straight from the top.
Fourth firing all the experienced workers whose only fault was accepting a wage that was fairly offered to them by the company resulted in lower moral and less experienced reps. I’ve never worked at a place where they would fire someone for making too much. Remember it was Circuit City that offered them that salary in the first place.
All in all, it is management on the Store level and Corporate level that is ruining Circuit City.