Circuit City Case Study

720 Words2 Pages
bulb-icon

Recommended: Case study of unfair dismissal

In 2007, Circuit City, an electronics retailer who took pride in providing excellent customer service, fired 3,400 employees nationwide (Seitel, 2011, p.217). The company needed to reduce expenses and decided the termination of loyal employees was the only option. The workers were laid-off simply because they were “being 'overpaid”” (Seitel, 2011, p.217). However, according to Seitel (2011) they were paid the average hourly wage of a retail sales associate (p.217). Circuit City’s poor communication with employees proved detrimental and led to the company filing for bankruptcy protection the following year (Seitel, 2011, p.218). First, Circuit City handled the communications of the layoffs poorly because the employees received no prior warning. …show more content…

Employees were fired, but then “encouraged to reapply after 10 weeks severance pay for any openings” (Seitel, 2011, p.217). Seitel (2011) stated Circuit City fired employees in order to hire new workers who would work for far less (p.217). Interestingly, Circuit City prided itself for their excellent customer service and knowledge of products; however, by getting rid of reliable and experienced employees and replacing them with new, inexperience workers your customer service consequently decreases. Also, the way a company treats it’s employees reflects how they treat their customers. Circuit City wanted to portray an image of treating their customers as important and valuable, yet their sales employees did not receive the same …show more content…

Seitel stated Circuit City’s management responded to the CFO’s departure by offering an additional cash in of $250,000 on top of his $1,000,000 a year (p.218). Management was more concerned about losing one high up employee, but did nothing to help preserve the jobs of 3,400 sales employees. Management should have been counseled to treat all employees with equality and dignity regardless of position. Interestingly, “The firings…are expected to reduce expenses for the electronics retailer by $110 million in fiscal year 2008” (Mui, 2007). In comparison, Circuit City’s CFO’s salary was $1 million. One top-level manager’s pay was almost equal to the total expenses that firing employees cut. This showed that lower level employees are dispensable and not as valuable to the company as a higher level employee

Show More
Related

  • Scandal Wells Fargo Scandal

    980 Words  | 2 Pages

    First of all, they will not be able to buy tangible properties such as house, car and etc. because of that their credit ratings got a huge hit. Moreover, only 5,300 of the employees that were fired from the Bank, 10% were Managers. What could have motivated them to engage in this sham? This is not an attempt to imply all were of malicious but certainly most them led the way. The aggressive sales goals pushed employees to break the rules. “On average one percent 1 percent of employees have not done the right thing, and we terminated them. I don’t want them here if they don’t represent the culture of the company,” says John Stumpf, the company’s longtime chief executive, in an interview with The Washington Post. It is obvious that simple employees and managers could not break the law if someone from the top did not allow them to do so. But the executive board of Wells Fargo claimed that they only fired 1 percent of below employees and some managers for fraudulent accounts, however they also might be involved in that business crime although to build a case against a company executive, prosecutors would have to show “they knew there was a plan to create false accounts to drive up sales,” said Brandon L. Garret, a professor at the University of Virginia School of Law. Even if it appears that the executive purposefully attempted to avoid knowing about the fraud, prosecutors may be able to build a case. Because they don’t have to participate if there is willful

    Read More

  • Case Study: General Electric

    1000 Words  | 2 Pages

    1. How was Lincoln able to grow and prosper for so long in such a difficult commodity industry that forced out other giants such as General Electric, Westinghouse and BOC? What is the source of Lincoln’s outstanding and enduring success?

    Read More

  • Food Workers At UNC Chapel Hill

    1239 Words  | 3 Pages

    They were also not getting paid or were underpaid for overtime. The lunch ladies were also not assigned set positions but ordered to fulfill odd jobs as necessary, another example of how the employees were getting underpaid for tasks on the

    Read More

  • Nickel and Dimed

    1137 Words  | 3 Pages

    ...usly shamed, embarrassed, and demeaned their employees. I think this kind of behavior is a way of separating employers from employees. It helps keep employees in line and also adds the benefit of making employers feel good about themselves at the expense of their employees. Demeaning actions prevent employees from organizing or protesting for higher wages or better conditions. It keeps them “in their place” and does not allow them to hope or strive for anything better. In spite of the dehumanization of employees by employers, there are silent rebellions committed by lower class employees such as jokes, gossip, doing other's work, and just in general helping each other out. These are silent protests, they do not change the status quo in any way, that would be too risky for these employees. It is survival and caring in a corporate world that does not care about them.

    Read More

  • New and Improved Rewards at Work

    1579 Words  | 4 Pages

    ...lley, W. H., Jennings, K. M., Wolters, R. S., & Mathis, R. L. (2012). Employment & Labor Relations. Mason, OH: Cengage Learning.

    Read More

  • Leveraged Buyout Essay

    1754 Words  | 4 Pages

    Leveraged buyouts may have turned huge profits for investors, but many of the lower class citizens detested these buyouts and the negative impacts on their lives. The job cuts and increased unemployment are both commonly seen after a leveraged buyout, because the new company experiences a lot of debt. Even though Kravis stated, “it is not [their] intention to dismember the company or have any mass firings of employees” , the management along with KKR still released many employees and sold off large parts of the company. Although it was done to help the company try to overcome the debt, people were not happy.

    Read More

  • History Of The Wells Fargo Scandal

    1835 Words  | 4 Pages

    Wells Fargo's management is accusing employees who have been terminated so far while holding themselves chaste. The bank's board consented to repeal

    Read More

  • In Dubious Battle Theme Of Greed

    1157 Words  | 3 Pages

    Getting the most profit possible is always one of the main focuses of any company. Even today there are many ways that companies cut costs that don’t benefit their employees. For example, many American companies outsource jobs to factories in other countries where the laws aren’t as strict and the labor is less expensive so they can make a greater profit. When it comes down to it, big business owners are always trying to make the most profit, which is why there are labor laws in place in America today. If it weren’t for break regulations and minimum wage laws employees could be easily taken advantage of.

    Read More

  • Downsizing in America

    1487 Words  | 3 Pages

    Downsizing, restructuring, rightsizing, even a term as obscure as census readjustment has been used to describe the plague that has been affecting corporate America for years and has left many of its hardest working employees without work. In the 1980’s, twenty-five percent of middle management was eliminated in the United States (Greenberg/Baron 582). In the 1990’s, one million managers of American corporations with salaries over $40,000 also lost their jobs (Greenberg/Baron 582). In total, Fortune 500 companies have eliminated 4.4 million positions since 1979 (Greenberg/Baron 627). Although this downsizing of companies can have many reasons behind it and cannot be avoided at times, there are simple measures a company can take to make the process easier on the laid-off employees and those who survive with the company.

    Read More

  • The Debate Over CEO Compensation

    1342 Words  | 3 Pages

    Sumo, V., & Weitzman, H. (2013). Are CEOs overpaid? The case against. Retrieved from Capital Ideas: http://www.chicagobooth.edu

    Read More

  • Dollar General Case Study

    1273 Words  | 3 Pages

    A1: Dollar General's main business strategy is to focus on being the leading distributors of consumable basics, with 30% of the merchandise at $1.00 or less. Dollar General believes in maintaining an assortment of consumable merchandise and making shopping for everyday items hassle free and simplistic.

    Read More

  • Gender Discrimination at Wal-Mart

    1391 Words  | 3 Pages

    In the case of Dukes vs. Wal-Mart Stores Inc. (Dukes), the court found that there was a lack of significant proof that Wal-Mart had a general policy of discrimination (Schipani, 2013). The plaintiffs needed commonality to establish uniformed disparity within the Wal-Mart organization, and statistical evidence was deemed unworthy of proving this commonality (Schipani, 2013). The numbers were astounding; seventy-two percent of the hourly workforce of Wal-Mart are women, yet only 10% are store managers, and a mere 4% of female Wal-Mart employees are district managers (Bernardin & Russell, 2013). The numbers seem to reflect a painfully obvious presence of discrimination, and with Wal-Mart’s market power within its industry, it can be frightening to evaluate the impact their practices have on the American employment culture.

    Read More

  • Margin Call Directed by J.C. Chandor

    1445 Words  | 3 Pages

    From the beginning, the film is filled with controversial decisions. First, the firm that is depicted in this film decides to lay off most of the employees in the firm leaving only 20% of the workers. However, the firm’s managers do not lay off the workers personally but hire another firm to do this. Without prior warning, the mass layoff takes place in a rather insensitive manner with employees expected to leave immediately. First, the decision by the company to lay off the people without warning is a questionable decision. Though they are offered a severance package, the employees are traumatized by the lay off. Having reported to work just like a normal day, none of the employees expect that they are going to lose their jobs on this particular day. Therefore, it is a surprise when the hired human resource team comes in and explains to the employees that they no long...

    Read More

  • Customer's Materialism And Consumerism

    842 Words  | 2 Pages

    ...ced in sales and therefore continued to earn rewards while those who did poorly were reprimanded and punished with further shortened schedules. The low morale reflected upon customers as they were angry with being forced to purchase worthless items and saw some of their favorite employees being maltreated and even fired. The greed of this company ran deep and its downward spiral is only just beginning to stop with the transition of ownership.

    Read More

  • Communicating To Investors

    1482 Words  | 3 Pages

    Since this is occurring the investors will have to be calmed down first, Really? -Christopher Thacker 4/9/10 3:47 PM then the employees who are also investors and last but not least the customers. The customers are basically the most important to the company and possibly will get their news along with the employees. The employees have a lot of power in the company, being that they are investors and also customers. Furthermore, they represent the company. This order may be the best strategy, since if done well the investors won’t leave but possibly invest a little more. Since they are so fickle and hold so much power they can either be pacified and/or encouraged to invest more. Being the “worse of the lot” they will get the most attention. The customers can become the “worse of the lot” if not handled properly. They do not really need the company for a paycheck like the employees. In fact the company needs the customers in order to have employees to even exist. So it’s possible they need to be addressed after the investors. It sort of goes by that saying “the sweaky wheel gets the oil” what could do the most damage needs to be repaired, fixed or in this instance addressed first. The employees needs the company, they are more likely to be co-operative. However, what a thing to do to your hardest workers who have been trying to benefit the company all along. So the most useful strategy I can think of is keep the investors pacified and investing money, keep the employees happy so they will continue to do a great job. Place a lot of emphasis and aggressively go after the customer who needs the best service, the best looking stores ...

    Read More

More about Circuit City Case Study

Open Document