Circuit City fired 3,400 of its highest-paid store employees in March, claiming that it needed to hire cheaper help in order to stop hemorrhaging money. It didn’t work. Only a few months later, analysts blamed the ill-advised job cuts for Circuit City’s poor sales.

From the Washington Post, May 2, 2007:

“I think even though sales were soft in March, this is clearly why April sales were worse. They were replaced with less knowledgeable associates,” said Tim Allen, an analyst with Jefferies & Co.

In particular, the televisions showing disappointing results are “intensive sales” requiring more informed employees, Allen said. “It’s a big-ticket purchase for somebody. And if they feel like they’re not getting the right advice or are being misled by someone who doesn’t know, it would be definitely frustrating. They will take their business elsewhere.”

Now Peter, one of the 3400 Circuit City fired, says he’s received a letter from Circuit City offering his job back. Peter writes:

I was one of the 3400 employees let go by Circuit City in March because leading my department to number one in the region for the month of December didn’t mean I was worth $11.35/hour. Whatever, I was quitting to get married and substitute teach in two months anyway, so it was fine with me. Anyway, today I received this letter that I thought was cute:

Dear [redacted],

This letter is a special invitation to rejoin the Circuit City team. We’re a new Circuit City with a lot to offer our customers…and you. If you’re interested – and I hope you are – we have a position waiting for you at any Circuit City superstore.

Over the past eight months, we have improved our customer service model, created new positions, and defined career paths for every store role. This means that at each stage of your career, you’ll know the steps that can get you to the next level. The new Circuit City delivers a superior experience for customers and associates, and that’s why we’re reaching out to former associates like you. You have the skills, talent, and experience required for this level of service, and we want you back.

Be a part of the new Circuit City, and join us just in time for the holidays – the most exciting time of the year. Because of your skills and experience, we’re excited to offer you a position comparable to your previous role at the most competitive rate possible. Simply present this letter to any manager at any Circuit City superstore. We will quickly complete the process and establish you as a regular – that is, not seasonal – associate.

Thank you and we hope to see you soon.

Sincerely, [signature] Andy Grosse – RVP

—–

Yeah, good luck with that, Circuit. If they’re so desperate for good customer service, maybe they should have found a better way to cut labor costs, like assess each store’s staff by merit vs payrate rather than just the latter and then impose a general store salary cap that allows for one or two better-paid salesmen to stay if it drives results. Naw, that’d make too much sense. This *is* Circuit City we’re talking about.

Yes, customer service is important. Especially when you’re selling new technology that people need help to understand, like HDTVs.

Have you shopped at Circuit City since the mass-firing? What did you think?

Circuit City’s Job Cuts Backfiring, Analysts Say [Washington Post]
(Photo:cmorran123)

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