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Circuit City Rewards Execs As Stock Tanks

kdawson posted more than 6 years ago | from the corporate-cranial-rectal-inversion dept.

The Almighty Buck 354

jamie tipped us to Dean Baker's Beat the Press blog, where Baker comments on a followup to Circuit City's firing of all its highest-paid salespeople last March (Slashdot discussion here). Circuit City's stock has cratered in the meanwhile, and their response has been to offer $1 million retention bonuses to executive VPs. Baker points out that each one of these bonuses represents 35 years' salary for one of the fired salespeople.

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354 comments

Excellent move! (4, Funny)

Anonymous Coward | more than 6 years ago | (#21794408)

Just think how much they could save if they fired all the salespeople?

Better yet (3, Insightful)

WindBourne (631190) | more than 6 years ago | (#21794546)

they should consider closing their stores, while outsourcing what little remains. Why those VPs would save all sorts of money.

Re:Better yet (5, Interesting)

Anonymous Coward | more than 6 years ago | (#21794660)

The alternative is to reward great employees with fat options, and then have shareholders complain that employees are benefiting at their expense!

Take a look at Apple, where shareholders are suing despite its stock outperforming the industry by a huge margin, because they're worried that company employees might have received awards for their efforts.

---
Save a whale - harpoon a bind-torture-kill NeoCon

Re:Excellent move! (4, Interesting)

Duhavid (677874) | more than 6 years ago | (#21794590)

Think of how much *more* money they could save if they fired
all the Executives, the ones who make the decisions that are
obviously quite poor! It runs to millions!

they did last winter! -- all the experienced ones. (1)

swschrad (312009) | more than 6 years ago | (#21794804)

seems the weasels at Circus City didn't want the folks who could answer questions and fit you with the right product, they wanted quick, cheap, and expendable.

so Circus City also became expendable. Haven't gone there, don't intend to go there, the weasels are crowbarring the last loose dollars for their pockets before it goes under.

Re:Excellent move! (-1, Troll)

Anonymous Coward | more than 6 years ago | (#21795012)

Yeah, laugh it up, faggot. How much you gonna laugh when I knife-rape your wife? Bitch.

Re:Excellent move! (2, Insightful)

couchslug (175151) | more than 6 years ago | (#21795122)

From the POV of personal profit, there is no reason not to loot and destroy a company if there are no negative consequences.

Let's see here ... (5, Insightful)

ScrewMaster (602015) | more than 6 years ago | (#21794410)

Lay off all the people that were actually making money for the company, and pay big bucks to keep the people who brought the company to the point where it had to lay people off.

Brilliant!

Re:Let's see here ... (4, Insightful)

xs650 (741277) | more than 6 years ago | (#21794428)

It's the Golden Rule in action. Those who have the gold rule.

Re:Let's see here ... (5, Insightful)

timeOday (582209) | more than 6 years ago | (#21794456)

If the company does poorly, you pay big bucks to bring in new hotshot execs. If the company does well, you pay them well to reward their results. It's quite a racket!

The big problem I see in all this is that US executives have a huge upside (Goldman Sachs CEO got a $68 million dollar bonus this year), but with no downside (Merrill Lynch fired its failed CEO with a $160 million golden parachute). If you want to argue execs deserve huge pay because so much money is at stake, then they should also stand to leave the company hundreds of millions poorer than they came into it, if they underperform. If they don't want to be personally liable for their huge losses, neither should they stand to take so much of the potential winnings (as they do now).

Re:Let's see here ... (5, Insightful)

ScrewMaster (602015) | more than 6 years ago | (#21794496)

Much of the fault lies in the fact that the relationship between the CEO and Board of Directors is no longer adversarial in large corporations. This has the effect of removing any check on an errant CEO's actions. Personally, I think a good first step toward fixing that would be to make it illegal for a CEO to serve on the board of another company.

Re:Let's see here ... (1)

OECD (639690) | more than 6 years ago | (#21794762)

Personally, I think a good first step toward fixing that would be to make it illegal for a CEO to serve on the board of another company.

Bingo. Classic conflict of interest. There's too much back-rubbing going on.

Re:Let's see here ... (1)

great throwdini (118430) | more than 6 years ago | (#21794574)

US executives have a huge upside (Goldman Sachs CEO got a $68 million dollar bonus this year), but with no downside.

Given that Lloyd Blankfein's firm has sidestepped the losses plaguing its rivals [cnn.com], that strikes me as a terribly odd example to fire upon. You may also note from the CNNMoney article that it's not all wine and roses for Wall Street execs this year. Yes, top execs are by and large paid a lot, but they do take their lumps (relatively speaking) when the situation demands it.

Goldman Sachs is paying $17B in bonuses this year (0)

Anonymous Coward | more than 6 years ago | (#21794778)

Most of that figure is going to their regular employees. As a shareholder of the company, I'd even be happy if he were awarded even a larger bonus, based on the performance of the company this year.

Re:Let's see here ... (1)

radish (98371) | more than 6 years ago | (#21794808)

Say what you like about the others, but Blankfein (of GS) earned his money this year given that they made record profits vs most of their competitors losses.

Re:Let's see here ... (2, Informative)

rasputin465 (1032646) | more than 6 years ago | (#21794902)

If you want to argue execs deserve huge pay because so much money is at stake, then they should also stand to leave the company hundreds of millions poorer than they came into it, if they underperform.

This is the whole purpose behind corporations; they were originally given the rights and privileges of a human being in order to alleviate much of the risk to the execs. If the company goes bankrupt, the people associated with the corporation (particularly, the execs) get off scott-free. The movie The Corporation [thecorporation.com] gives a pretty good (albeit somewhat biased) overview of the history, legal structure of corps.

Re:Let's see here ... (2, Interesting)

EastCoastSurfer (310758) | more than 6 years ago | (#21794982)

The big problem I see in all this is that US executives have a huge upside (Goldman Sachs CEO got a $68 million dollar bonus this year), but with no downside (Merrill Lynch fired its failed CEO with a $160 million golden parachute).

First off Goldman Sachs is a terrible example you used. Their performance is phenomenal and their shareholders and clients are happy to pay out these bonuses. The funny part is that $68M isn't even that much for them. They had one of their investment guys making almost $~80M and he quit b/c he wanted more (he was bringing in multi-billions of profit to the company each year).

CxOs have a huge downside. Most get one shot and that's it. If you fail you'll most likely not have another chance, unless you start your own company. That's why they work their contracts in that manner.

Re:Let's see here ... (5, Interesting)

xouumalperxe (815707) | more than 6 years ago | (#21795154)

The big problem I see in all this is that US executives have a huge upside (Goldman Sachs CEO got a $68 million dollar bonus this year), but with no downside (Merrill Lynch fired its failed CEO with a $160 million golden parachute)

I used to think the same, but was explained recently how the "injustice" of the gold parachute thing is actually a misconception, and that it actually makes perfect business sense.

Let's use Merrill Lynch, which you brought up, as example. According to Wikipedia [wikipedia.org], they reported a net income of $7.49 Billion in 2006 (all further numbers are derived from simple arithmetic or taken from this same article). That's about $625M a month. Or $146M every week. Keep that number in mind.

Now, imagine you're in the board for a big high-stakes company (banking, insurance, that sort of stuff). If you have an incompetent CEO (hey, if Merrill Lynch had one, almost anyone is liable to get one at some point). You want to get rid of him, but, since being CEO for this sort of company is an intrinsically high-paying job, he obviously resists getting the boot. Assuming you don't have anything strong enough to outright fire the CEO, how much money can he make your company lose between now and you actually getting him sacked? That's the monetary value of getting him to leave of his own free will right now.

Stanley O'Neal got about $161M in stock options and retirement benefits as "severance pay". Based on my earlier math, that's just over 1 week of net income, which is, simply put, peanuts, seeing as he reportedly lost Merrill Lynch some $2.24 Billion (over 3 months' worth of net income) in how he was handling the sub prime crisis. How much would the company stand to lose by keeping him on-board any longer?

Re:Let's see here ... (0)

Anonymous Coward | more than 6 years ago | (#21794524)

"Lay off all the people that were actually making money for the company, and pay big bucks to keep the people who brought the company to the point where it had to lay people off.

Brilliant!"


If the sales people were actually making money for the company, none of this would be happening. They should follow your advice so I can make this comment:

"Give bonuses to all of the salespeople making money for the company, then lay them all off when too many losses are incurred and Circuit City closes all its stores! Brilliant!"

I could have gotten a +3 Insightful from your knee-jerk idea!

Re:Let's see here ... (1)

desertfool (21262) | more than 6 years ago | (#21794538)

It is the new American way. In the company I work for we have VP's and CxO's traveling the world to visit the 5000 people who replaced the 300 who kept IT running very well and very inexpensively. They never visited us.

Now, they get all get bonuses for saving millions, while they don't count the millions in downtime as the systems no longer can run at 99.999% availability. Next big lost shipment should earn them a new boat/car/house.....

Re:Let's see here ... (2, Insightful)

smilindog2000 (907665) | more than 6 years ago | (#21794600)

I hear you. It's not the "new" American way, though. It's been that way since I entered the work force full time in '86. The problems at Circuit City are that stupid people got into positions of power (kinda like some governments close to home lately). This kind of thing is more common than bombs exploding in Baghdad. I'm surprised it made it onto the main Slashdot page.

Talk about waste in the face of change... (5, Interesting)

palegray.net (1195047) | more than 6 years ago | (#21794582)

Years ago, I used to work for CompUSA corporate in Atlanta, GA. When they got bought out by the holding company that recently liquidated the company (took years longer than I thought it would), CompUSA fired all their corporate, education, and government sales staff. Oddly enough, I kept my job along with a few others in the southeast, albeit with more responsibilities and better pay. The vast majority of folks working for them weren't so lucky. They got their pink slips on a Monday morning, if I recall correctly, with no advance warning.

Essentially, it's like you put it: let's lay off everybody in the company who had anything to do with generating sales out of three huge markets, and who cares about the personal relationships they had built with customers (especially with respect to public sector folks)? Oh, I forgot to mention... lots of people were offered a "chance" to keep their job if they felt like relocating to Dallas, TX where CompUSA was building a multimillion dollar call center to centralize all their corp/gov/edu sales operations. What a bargain, right?

On the many occasions I visited that new call center on business, I got the distinct impression that things were, well, about as fucked up as a football bat. They had it all; an entire hotel rented out for six months housing only CompUSA employees, a new SAP rollout that kept mysteriously screwing up orders large and small (while sucking up untold amounts of contractor labor and prompting Microsoft execs to hold fun-filled meetings about revoking CompUSA's large account reseller status), midlevel managers running around trying to figure out whether their charges were coming or going.

Let's be fair in Circuit City's case, though... the old expressions goes: Never attribute to malice that which can be adequately explained by stupidity.

Re:Let's see here ... (1)

PC-T Services (1206926) | more than 6 years ago | (#21794648)

I was actually the very first IQ Crew tech and started the program in florida before it went nationwide as Firedog. Before that I worked for circuit city for roughly 3 years, I cannot imagine a worse managed company. The people at the ground level are mostly great, honest, fun loving kids. Even some of the store level managers. But when you get higher than that the company is riddled with bad people, lazy managers, and people only looking out for themselves. Though I will say this, it's nice to see that they are actually advertising their in-home computer service these days. Thats a world of difference from when I was there, being the only person responsible for advertising the service, and complete the service when it came :( Luckily I jumped off that ship well before they fired everyone, I opened my own company www.PCTServicesWestPalm.com/> and I couldn't be happier.

Re:Let's see here ... (1)

rsmoody (791160) | more than 6 years ago | (#21794822)

I was the first tech at my local CC also. And, boy do the higher ups just screw shit up. I hate, absolutely fracking HATE selling computers. You can take any add from CC and I will guarantee that nearly every computer in that add is either completely sold out, or you will have like 3 or 4 of them. So, you try to sell something, and all you keep saying to the customer is "no, we are out of that one, no, we don't have any of that one either". As always, the adds are disclamored to death with "Closeout, no rain checks." It gets REALLY old!!! I stay out of computers with all the effort I can muster. I only work part time now in seasonal sales and I stay in the cameras. At least they have the damn things to sell to the people!

Your Sig. (0)

Anonymous Coward | more than 6 years ago | (#21794754)

Once you can honestly say, "I don't know", then it becomes possible to get at the truth - R. Heinlein

I will bet that Heinlein never met the neo-cons; reagan and W. If so, then he wold have disavowed that statement.

Re:Your Sig. (0, Offtopic)

ScrewMaster (602015) | more than 6 years ago | (#21794918)

No, I think he'd have just nodded and said to himself, "I was right again."

When have you known George Bush or any of his cronies to ever honestly say "I don't know"? When have you known them to honestly say anything? Heinlein's observation is even more true today, given that we have a rising tide of people who cannot admit when they are wrong, and indeed do not want to know. Consequently, they are among our most ignorant, and go to extreme lengths to maintain that ignorance. Those are exactly the sort of people to whom Heinlein was referring.

Let's see here ...Enemy of my enemy is my friend. (-1, Flamebait)

Anonymous Coward | more than 6 years ago | (#21795058)

Well considering it hits two of Slashdot's pet peeves. Salespeople and making money, I don't see the stupidity in the move. Now slashdot's position however...

Re:Let's see here ... (1)

G Fab (1142219) | more than 6 years ago | (#21795130)

I understand where you're coming from. In fact, I'm good friends with a lawyer who has some sort of involvement with some sort of litigation relating to that, and idle conversations have really got me ticked at Circuit City for being so cruel to those who built the chain...

but when I shopped at Circuit City a few years ago, it sucked. Inattentive salepeople who didn't know crap except that I need to buy crap I don't need. I went there a month ago, and same story.

I don't think the firings had a major effect on quality of the shopping experience.

And people out there: you cannot rely on loyalty. Make yourself more valuable with education or investing in your own ideas or something like that. If it's cheaper to fire you than to keep you, you may very well be fired, even if that's a violation of basic ethics. Shareholders are god to these corporations. Your happiness does not appear anywhere on quarterly profit reports. If you have 23 years experience in retail, unless you are some sort of amazing salesperson, that's not enough to protect your family's livelihood. Go to school or start a business. Or something. Have loyalty to yourself, and expect your employer to have the same.

Sinking ship? (4, Funny)

cgenman (325138) | more than 6 years ago | (#21794424)

And people wonder why they cannot rely upon employee loyalty these days. Personally, I'm investing all of my money in pitchforks and fire insurance.

Re:Sinking ship? (1)

TubeSteak (669689) | more than 6 years ago | (#21794492)

Maybe Executive/Management contracts need a "Sinking Ship" clause that essentially prevents them from bailing out on a company that is in/going into bankruptcy (reorganization or dissolution) proceedings.

I'm sure some corporate lawyers could draft it up & it'd be cheaper than retention bonuses.

Re:Sinking ship? (1)

cmowire (254489) | more than 6 years ago | (#21794586)

The problem is that a person forced into continued employment in those sorts of situations is just going to spend the whole day reading pointy-haired-boss.slashdot.org instead of doing what they are supposed to be doing.

If this is a good thing or a bad thing is left as an exercise to the reader. :P

Circuit City has SALES people? (0)

Anonymous Coward | more than 6 years ago | (#21794430)

I occasionally go in there and buy something, if it is on sale, but no one has ever SOLD me anything.

Not Quite as Bad as it Sounds (5, Insightful)

Jah-Wren Ryel (80510) | more than 6 years ago | (#21794436)

Retention bonuses are common in situations involving sick companies.

The idea behind them is that without the institutional knowledge that these people have, the company would die even quicker. Few people, including upper management want to stick around on a sinking ship, so in order to keep potentially valuable people from moving to a healthier company, they offer retention bonuses.

Obviously the hard part is sorting the wheat from chaff and only giving the bonuses to the useful people, at least the marginally useful. Seems to be that they just hand them out to everyone in upper management "just to be safe" which in the end may not be all that safe...

Re:Not Quite as Bad as it Sounds (1, Insightful)

ucblockhead (63650) | more than 6 years ago | (#21794512)

It's much more likely that the guys that are being retained are golfing buddies with members of the board.

I do find your comment mightily amusing, though. Gotta retain the execs who fired all the low-level employees with institutional knowledge of how to help customers because you've got to keep the institutional knowledge of how to run the company into the ground with idiotic, self-destructive bean counter decisions.

Seems kind of like amputating an arm to cure the cancer but leaving the tumor in so as not to lose too much mass.

Re:Not Quite as Bad as it Sounds (1)

Jah-Wren Ryel (80510) | more than 6 years ago | (#21794834)

I do find your comment mightily amusing
Good thing yer a know it all. Else the first hit in a google search for "Retention bonus" [google.com] might have made you laugh yer ass off.

Retention bonuses prove effective for companies in transition [findarticles.com]

Re:Not Quite as Bad as it Sounds (1)

EastCoastSurfer (310758) | more than 6 years ago | (#21794960)

No no. It's much more fun to show class envy than worry about facts here on /.

Re:Not Quite as Bad as it Sounds (1)

ucblockhead (63650) | more than 6 years ago | (#21795136)

Class warfare? Hardly. There are plenty of companies that are actually run well, and the people who run them deserve every sent of their incomes.

It's not class warfare. It's a belief that morons should not be enriched because of their connections. In a free market, executives would pay for their failures from their pocketbooks. Unfortunately, the good ol' boy's network too often subverts that free market, allowing idiots to fail upwards.

Re:Not Quite as Bad as it Sounds (-1, Flamebait)

Anonymous Coward | more than 6 years ago | (#21795140)

Gee, yeah, I wonder why the "lower classes" would envy a group of people who fuck over everybody underneath them so they can keep as much of the wealth as humanly possible? You're actually going to try and argue that these retention bonuses were handed out to the "most capable" people who are going to help save the company? Yeah, keep pissing on us and telling us it's raining. They'll do whatever the fuck they possibly can to loot the company to the ground, declare bankruptcy, fire everybody with no benefits whatsoever, and whistle their way to their personal jets back to their mansions to be waited upon by their servants. We've seen it with Enron. We've seen it with Tyco. We've seen it with Worldcom. The only goddamned constant in this world is jackasses in power exercising their unmitigated greed at the expense of others.

What we need is a good old French Revolution around here. Burning fucktards like you could really go a long way toward solving our energy problems.

Re:Not Quite as Bad as it Sounds (1, Interesting)

ucblockhead (63650) | more than 6 years ago | (#21795104)

You're still missing the amusing part: the lack of "retention bonuses" given to the people that actually make the sales and actually bring in the money. Sure, this "pay the execs more to captain the Titanic" approach is a popular approach among the failed executive set...it gives them the excuses they need.

Circuit City's problems were caused by its executives. Retaining the incompetents only shows they aren't likely to turn around, which is likely why their stock is tanking.

Re:Not Quite as Bad as it Sounds (4, Insightful)

arotenbe (1203922) | more than 6 years ago | (#21794562)

The idea behind them is that without the institutional knowledge that these people have, the company would die even quicker.
Right, but... aren't the people with the "institutional knowledge" the same ones who are steering the company into the ground? As you point out, it is very difficult to sort the good executives from the parasites. Once they are in, though, you can't get rid of either type without losing money. If you keep the bad management, you are obviously going to keep losing money. If you fire them, they get a golden parachute and you still have to pay the replacement. If you have a management system where the executives control their own bonuses, you have a no-win situation... except for the executives.

Re:Not Quite as Bad as it Sounds (1)

akintayo (17599) | more than 6 years ago | (#21794818)

I think the company has already hit the ground. They only retain the executives to ensure the corporate assets are sold and the company has been 'wrapped up'. After which the executives will be laid off. So the money is to have these people stick around through the end, rather than quit now.

Re:Not Quite as Bad as it Sounds (2, Insightful)

CrazyDuke (529195) | more than 6 years ago | (#21794628)

Back to reality, it's much more likely the execs are trying to pump as much cash into themselves as they can before the company goes backrupt.

Re:Not Quite as Bad as it Sounds (2, Insightful)

radish (98371) | more than 6 years ago | (#21794824)

Indeed. It's an unpopular opinion around here, but the truth is it's easy and cheap to hire sales droids and difficult and expensive to hire good management. Firms get sick for lots of reasons, it's not always just because the managers suck. The opinion here is obviously that as badly off as the company is, it'd be much worse if all the VPs left (which they would, if they're good enough to get a job elsewhere).

Re:Not Quite as Bad as it Sounds (1)

wwahammy (765566) | more than 6 years ago | (#21794896)

Firms get sick for one reason: the managers who are responsible for preparing for the future didn't do so. As ridiculous as it sounds, management is paid to predict the future. Is it unreasonable to hold upper management to a nearly impossible standard? If they're getting paid 7,8 or 9 digits, have the power to create or end thousands of careers and the potential to create or lose billions of dollars of shareholder value then it's totally reasonable to do.

35 years salary? (4, Informative)

nacturation (646836) | more than 6 years ago | (#21794448)

... firing of all its highest-paid salespeople ... offer $1 million retention bonuses to executive VPs. Baker points out that each one of these bonuses represents 35 years' salary for one of the fired salespeople.
So their highest paid salespeople made just under $30K a year? If highest-paid == best producing, they can easily command a lot more than that elsewhere.
 

Re:35 years salary? (0)

Anonymous Coward | more than 6 years ago | (#21794458)

That's ridiculous. You might as well be delivering pizzas. At least you get tips.

Re:35 years salary? (2, Informative)

iamhassi (659463) | more than 6 years ago | (#21794640)

"So their highest paid salespeople made just under $30K a year?"

$30k/yr is about $15/hr, which sounds like high pay for someone that works at circuit city and isn't upper management.

Re:35 years salary? (1)

nomadic (141991) | more than 6 years ago | (#21794964)

So their highest paid salespeople made just under $30K a year? If highest-paid == best producing, they can easily command a lot more than that elsewhere.

For big box retail? Isn't that pretty much the ceiling? I've been fortunate enough never to work retail, so I don't know, but I didn't think they got meaningful commissions (if any), and the hourly rate never got that high.

company feedback (-1, Offtopic)

Anonymous Coward | more than 6 years ago | (#21794466)

found a site that has employee experiences [dwarfurl.com]

Re:company feedback (0)

Anonymous Coward | more than 6 years ago | (#21794602)

Fucking spammer. Burn in hell.

To others: That's one of those stupid "MyMiniCity" spam games.

Re:company feedback (-1, Offtopic)

Anonymous Coward | more than 6 years ago | (#21794674)

Myminicity is a very cool game and everyone should check it out by clicking on that link and clicking on this one too [dwarfurl.com].

And this surprises WHY? (3, Insightful)

Chas (5144) | more than 6 years ago | (#21794474)

It's typical corporate "head up ass" syndrome.

CC is on it's way out/down, so the execs are going to raid the coffers before everything tanks.

End of the corporate raider era, part II (2, Insightful)

Anonymous Coward | more than 6 years ago | (#21794478)

This is the last year for corporations to cash in bush-style on corporate raiding. Watch Wall Street with michael douglas and charlie sheen is still the best movie on this strategy. Hell I never made any money in corporations... might try it 9 years from now myself.

"Greed is good" - Mod Parent Up (3, Interesting)

ObiWonKanblomi (320618) | more than 6 years ago | (#21794976)

It's too bad you are modded up for this. I just saw Wall Street for the first time a week ago and thought of corporate raiders.

In case you may not know, there is an upcoming sequel coming out next year. I believe the title is "Money Never Sleeps", taking place in the present day and Gordon coming out of prison to take a piece of the hedge fund market. Michael Douglass is returning as Mr.Gecko.

Interestingly enough, it's amazing that a lot of people who are brokers look up to the fictional Gecko... Here's a quote from a NY Times article:

Speaking by telephone from Bermuda, Mr. Douglas said he wouldn't mind if he never had "one more drunken Wall Street broker come up to me and say, 'You're the man!' "

Pretty sick, eh?

Management Must Stop the Bleeding (1)

BlabberMouth (672282) | more than 6 years ago | (#21794486)

Circuit City had a number of sales employees who were paid far in excess of industry standards, and not based on commission. Circuit City shouldn't be expected to pay its employees far in excess of industry standards. Many of those salespeople were hired back at lower pay. The bonuses now being paid to executives is a completely separate issue. As noted in the post, Circuit City is struggling. After two of their top executives left, the board decided that drastic measures were necessary to keep the rest in place.

Re:Management Must Stop the Bleeding (5, Insightful)

jo42 (227475) | more than 6 years ago | (#21794566)

Why the frak would you want to keep, and reward, the people that butt fucked the company into the ground in the first place?

1) You reward success.
2) You punish failure.
3) Profit.

Now you owe me $1M Euros in management consulting fees.

Re:Management Must Stop the Bleeding (2, Funny)

happyemoticon (543015) | more than 6 years ago | (#21795016)

I think that's the kind of common sense that MBA programs spend two years beating out of people.

retention bonuses for laid off workers (1)

heroine (1220) | more than 6 years ago | (#21794692)

Too bad the laid off workers didn't get retention bonuses to keep them from leaving.

Re:Management Must Stop the Bleeding (1)

happyemoticon (543015) | more than 6 years ago | (#21795004)

I feel you're leaving something out when you just make a blanket statement like, "Circuit City shouldn't be expected to pay its employees far in excess of industry standards."

If I reflect on that statement in isolation, it is clearly false, because there are businesses that do pay top dollar for their employees that make a killing, and if they lowered their pay, they wouldn't make as much money. For example, I heard a rather convincing argument recently that even though Costco pays more for its employees than Sam's Club, they potentially end up spending more for their employees when you factor in hiring costs and inventory shrink.

It may be that without an experienced, motivated sales staff to push inventory, they can't get the right people the right consumer electronics for their money. Electronics is fucking confusing to most people, speaking as someone who made quite a bit of money as a teenager setting up people's stereos for them. Or, it may be that the sales staff has little to do with CC's lack of success, and that it is more because of the general economic malaise. But in my non-MBA opinion, even if other companies are making the same profit paying their employees dick, it is daft to assume that applying the same strategy to your company would result in more profit, as it naively ignores the fact that both companies could be making the same profit for entirely different reasons. And it does appear that CC's execs tried to fix something that wasn't broken, and now they're in the shitter.

Management is the source of the bleeding (2, Insightful)

HangingChad (677530) | more than 6 years ago | (#21795032)

Sounds more like a case of the problem dictating the solution to me.

Broken Logic (3, Interesting)

MobileTatsu-NJG (946591) | more than 6 years ago | (#21794488)

"Baker points out that each one of these bonuses represents 35 years' salary for one of the fired salespeople."

Right. There's a small little detail, though: The execs make the decisions that make the difference between making and losing millions of dollars. The sales people, even if they were paid 1 million dollars, would not generate anywhere near that much income to save the company. If Circuit City's business model is broken, then it makes sense they try to keep the decision makers from leaving the sinking ship. If anything, to devise and carry out a new strategy. What they're doing actually makes some sense, even though that little blippet was intended to make them sound idiotic.

But, that's just me responding to sensationalist bullshit. I personally think they should use those retention bonuses to hire new execs, preferably those with a proven track record in this sort of business. Hypocricial? Nah. Still non-sensical? Yeah, maybe.

Re:Broken Logic (1)

ScrewMaster (602015) | more than 6 years ago | (#21794540)

even though that little blippet was intended to make them sound idiotic.

Which does not, when all is said and done, make them any less idiotic. We live in an age where corporations like Circuit City can purchase their stock at ridiculously low cost from Chinese manufacturers, and they still can't make their businesses work.

Broken, and the market shows it... (1)

NotQuiteReal (608241) | more than 6 years ago | (#21794592)

Circuit City stock [yahoo.com] is in the dumps.

Heh, you could say the whole company is on clearance - getting ready to make way for the new model...

Re:Broken Logic (1)

GregPK (991973) | more than 6 years ago | (#21794618)

Actually, as a dedicated vendor salesperson selling printers. I alone only working about 12 hours a week sold roughly 3 million a year worth of printers, ink, and paper. Company burned me, so I convinced over half those customers to go to another company and I've probably cost them at least triple that in lost revenue since.

I'm only slightly vengful... In an Ebeneezer scrooge mixed with the memory of an elephant sort of way.

If they looked within thier own ranks I'm sure they could find some young people to bring in new ideas and methods to help boost the company.

I think they'd be better off bringing back commissions. Since that ended the service I've had there sucks.

Your numbers are screwed and so is your logic (1)

Travoltus (110240) | more than 6 years ago | (#21794782)

Hire the right sales people, and they can turn the company around with astounding jumps in sales. Without these people, management can do absolutely nothing but what they are doing now - sucking the company dry as it sinks.

Circuit City's stocks have taken a dive since this boneheaded maneuver, which you are saying is not idiotic, was carried out. Darwin says they failed the natural selection test by doing this.

I say let all those execs go and hire someone who will oversee a return to a base+commission based sales system.

Re:Your numbers are screwed and so is your logic (0, Flamebait)

radish (98371) | more than 6 years ago | (#21794842)

IMHO sales people make no difference whatsoever in traditional big box stores. When I have to shop at somewhere like Best Buy or CC I go wherever the sales people are least likely to actually talk to me as I just want to pickup what I want and get out. I do the vast majority of my shopping at Amazon and Newegg, who don't have any sales people - but they do have a LOT of very good managers.

I say fire all the sales people, stock the shelves and install self checkout machines. All you need is security.

Re:Your numbers are screwed and so is your logic (2, Insightful)

happyemoticon (543015) | more than 6 years ago | (#21795112)

And for every one of you in America, there's about fifty otherwise perfectly functional people who haven't the foggiest idea how to set up a home theater system, and cannot be educated by anyone as to how. They simply need a sales person or a nerd to tell them what to buy, and a lot of them feel downright embarrassed about asking a teenager to do it for them.

Re:Your numbers are screwed and so is your logic (1)

MobileTatsu-NJG (946591) | more than 6 years ago | (#21795018)

"Hire the right sales people, and they can turn the company around with astounding jumps in sales."

We're talking about a store that sells DVDs and video games, not a used car lot.

Last Time (2, Interesting)

Divebus (860563) | more than 6 years ago | (#21794514)

That's the last time I buy something from Circuit City. If that's where my money is going, then (1) I KNEW there was more margin in that sale and (2) I'll buy from the same sales people when they move to a different place.

all industries (4, Insightful)

phrostie (121428) | more than 6 years ago | (#21794548)

there is a growing trend where all Ex's are being paid more and more and the pay for the people who do the work is stagnating.
many of these Executives never do anything to justify the increases.

it's all industries though, not any one.

IMHO the funds are to blame (2, Insightful)

whoever57 (658626) | more than 6 years ago | (#21794556)

Investment funds have huge ownership of shares -- it is the fund managers who should be looking out for the interests of their investors and putting an end to this BS. IMHO, their lack of action makes them complicit. It's the guys at Fidelity and others that we should get mad at.

Professionals vs. Forums (1)

nick_davison (217681) | more than 6 years ago | (#21794790)

IANAL. Slashdot could likely use IANASB too. I Am Not A Stock Broker. Nor are many of the others on Slashdot.

Fidelity, on the other hand, pays people huge amounts of money to be very, very good at that kind of thing.

One possibility is that rewarding execs to keep them from deserting a sinking ship, slowing the speed at which it sinks is a completely crazy idea and that only the geniuses on internet forums can spot this obvious issue whilst fund managers, whose lives and careers hang by the balance of their decisions, are completely blind to it.

Another possibility is that, whilst it's easy to get indignant about "the little people" and hate "the fat cats," the fact that the professionals, whose livelihoods depend on judging accurately, keep on supporting this system anyway implies that, just maybe, it kind of works.

Part of the reason capitalism tends to work is that, unlike say communism, it doesn't rely on how things "should be." Instead, those who react to how things are more accurately (whether intentionally or not) tend to rise to the surface as they make money, whilst those who don't tend to sink as they lose it. It's not perfect - it's a fairly dynamic equilibrium and luck will sometimes play a part along with lag - but it tends to even out over time.

Fidelity is all about money. If they believed an extra 10,000 floor workers and 1,000 less execs would make the company more profitable, you can believe they'd force that change in a heartbeat. That they've allowed the opposite implies that, as shareholders, they've established that that's what will make them more money.

Now, granted, it may make them more money by distorting numbers just long enough for them to cash out.

Still, overall, investment firms like to make money and they keep using the strategies that work for that. That they tend to want to avoid mass senior exoduses, even in failing companies, implies the raw numbers, emotion aside, support that approach.

I'm not saying it's ethically right or wrong. Capitalism has nothing to do with ethics unless they mean you can make more money. But, as a business approach, it's a safe bet that the professionals who do this for a living and learn to act without emotion are far better at accurately judging what makes the most money* than people on forums going off gut senses of righteousness.

* or loses the least - It may well be they've realized Circuit City is in a dying segment as Walmart forces its way in and are simply ensuring it sinks as painlessly as possible.

Much as I hate to say it, Microsoft is damn good at making business decisions overall. Most of our beloved causes tend to be pretty terrible at it. It doesn't make Microsoft good "ethically" but, as a financial entity, it makes them a far better bet. That we tend to hate them implies we go with our emotions and ethics, that they succeed anyway implies they make the right business decisions and shows a lot about our judgments. This, looking at Fidelity and others, is much the same thing.

Re:Professionals vs. Forums (1)

Clover_Kicker (20761) | more than 6 years ago | (#21794890)

How much did the dispassionate professionals at Fidelity lose to the dot bomb?

There's a lot of superstition and voodoo in the financial market.

Take the time to find another store. (4, Insightful)

Kludge (13653) | more than 6 years ago | (#21794572)

Here's a suggestion: Don't shop Circuit City even if it is convenient. Find a nice mom & pop electronics store. They're harder to find, but worth the effort.

Re:Take the time to find another store. (1)

Bob9113 (14996) | more than 6 years ago | (#21794718)

Here's a suggestion: Don't shop Circuit City even if it is convenient. Find a nice mom & pop electronics store. They're harder to find, but worth the effort.

So torn. Mod "Insightful" or respond? Alas, my apologies to your karma (though given your ID, I'm guessing that was not an issue long ago). But I digress.

I wholeheartedly concur. Mom & Pops have a shorter feedback loop from the customer to the decision maker, so they are more customer oriented. They generally pay their employees better. They are, virtually by definition, run by independent entrepreneurs who believe in The American Dream, which is effectively nonexistent in giant corporations.

And, perhaps most importantly, psychopaths [hare.org] don't get all the money and promotions at Mom & Pops. At a Mom & Pop, being a psychopath is almost always bad for business. At major corporations, it is rapidly becoming (or maybe always was) the only effective means of advancement. It troubles me every time I buy from a major corporation and think of the deeply disturbed people to whom I am giving my hard earned money.

Or maybe I'm just jealous of those with the good sense to lack a conscience.

Re:Take the time to find another store. (2, Insightful)

Detritus (11846) | more than 6 years ago | (#21795090)

Mom & Pops often have problems with relatives. There are plenty of psychopaths that are never fired because they are a relative/spouse of the owner.

not worth it at all (1)

DreadSpoon (653424) | more than 6 years ago | (#21794850)

A small Mom & Pop shop is not at all worth the effort. Their prices are higher and the service is no better. I walk into a Circuit City, grab what I need, pay, and leave. There isn't any room for a smaller store to improve that process any, unless they offer lower prices or a larger selection, which they don't. In fact, all three of the local computer stores I can think of can fit their entire stock in a single aisle at Best Buy, and most of that stock is either over-priced "gamer" crap (who pays $350 for a PC motherboard, seriously?) or dubious off-brand cheap crap not worth the savings (yay, let's buy a fuzzy, dim, off-brand LCD TV for 1/2 the price of a super crisp and bright Samsung TV, because 1/2 the price for 1/3 the quality makes it a good buy).

The only thing the local computer store closest to me ("Computerz-N-Us") offers that Circuit City doesn't is a couple of overly chatty nerds who don't really know anything more than any big-chain sales people, but they feel like trying to make you think they do by telling you how awesome their self-built home PC is or about the VB programming they used to do in high school, as if you actually give a fuck.

Circuit City, Best Buy, and all the other big electronics stores are three times as long of a drive for me to get to. They're not more convenient in any sense other than that visiting those stores actually results in me finding what I'm looking for.

it's an upside DOWn kingdumb (-1, Offtopic)

Anonymous Coward | more than 6 years ago | (#21794598)

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Fired "Salesmen" (1)

BoRegardless (721219) | more than 6 years ago | (#21794614)

Gosh I used to hate Circuit City "salesmen" as they were abrasively aggressive...that is until they found I wanted a stack of disks instead of a $2k wide screen TV, whereupon they literally wheeled off to the next marke through the metal detectors.

Re:Fired "Salesmen" (0)

Anonymous Coward | more than 6 years ago | (#21794768)

They literally wheeled off? Were they on segways?

The CEO of IBM made about 45 million this year (1)

gelfling (6534) | more than 6 years ago | (#21794650)

The stock is negative 30% since 2000. Ok it's up a bit from the bottom this year so we'll give him that. In the meantime Sam Palmisano I'm sure is wishing for his entire Unites States workforce to quit and then die, for Christmas.

Just goes to prove once again... (1)

dr_strang (32799) | more than 6 years ago | (#21794746)

...that Circuit City is a prime example of everything that is wrong with technology retailers.

Responsibility? (5, Interesting)

Lost Penguin (636359) | more than 6 years ago | (#21794784)

I think a bankrupt company like CompUSA should be able to recover funds from the executives whose decisions tanked the company.
Instead of bonuses, they would pay for the damages they caused.

but it's the poor that are a drain on this country (0)

Anonymous Coward | more than 6 years ago | (#21794838)

the rich are just earning the money they deserve, right?

Only one negative that I see (1)

baomike (143457) | more than 6 years ago | (#21794852)

I am not a stock holder nor an employee. While I have some sympathy for the current staff,
the only negative I can see to CC driving itself into the ground, is I might have to got to
Best Buy. While not my preference it can be done.

Good to Great (4, Insightful)

rpillala (583965) | more than 6 years ago | (#21794878)

In his book Good to Great, Jim Collins cites Circuit City as an example of a company that made the transition to greatness, bypassing its comparison company Silo. For each GTG company, Collins identified the company's core purpose, which in his theory must be identified as the one thing that company can do better than anyone in the world. Circuit City's concept was the creation of a large number of stores that provided a consistent experience for the customer. I can say from my own experience at Circuit City stores that they seem to have gotten that part right. I always get bad or no service. Does everyone? I don't know. I'm from India and nonwhite - my sister gets the same treatment with the added derision afforded to girls in that setting. Things like customer service can be hit or miss depending on where we travel. Now, maybe the same people who led the company to "greatness" aren't there anymore. It seems more likely to me that Collins' metric of return on money invested is the wrong way to measure greatness in a company.

Re:Good to Great (2, Insightful)

ucblockhead (63650) | more than 6 years ago | (#21795078)

I'm a white man and get shitty service there too. Not as bad as at CompUSA, but significantly worse than at Fry's. (And if you've ever been to Fry's, you know how damn low that bar is.)

There is one simple way to create good customer service: Treat your employees well. Look at any company known for good customer service, and you'll find reasonably happy employees. This is understandable, because people who hate their jobs are likely to take that anger out on whoever they deal with day to day. (Your customers.) They are also likely to not particularly value their jobs and thus won't go the extra mile.

!Free Market? (0)

Anonymous Coward | more than 6 years ago | (#21794952)

It's their business, they can run it how they like.

Here's the problem (2, Funny)

ScrewMaster (602015) | more than 6 years ago | (#21795038)

Circuit City Rewards Execs As Stock Tanks

Well, I'm not sure what a stock tank is (I presume it's where you keep your liquid stocks) but maybe if they'd tried rewarding their execs as people rather than as storage facilities, they might've had better luck.
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