USA TODAY - Circuit City Stores' decision to lay off 3,400 employees in
order to hire lower-paid replacements is raising questions about the
impact of severe cost-cutting on employee morale. . . Laying off workers
who earn higher pay raises the risk of deflating the morale of employees
who are left behind, says Penelope Trunk, author of Brazen Careerist:
The New Rules for Success. "People left behind are probably thinking
they don't have a future there," Trunk says.
Those hourly workers who are laid off will get severance packages and
can apply for open positions after 10 weeks. . .
The layoffs could have broad impact:
- Other employers could follow Circuit City's lead. . . Seven percent of
companies plan to trim staff levels during the second quarter of 2007,
according to a survey by Manpower. . .
- After layoffs, companies must deal with a demoralized workforce by
reassuring them that the decision is in the best interest of the company
and those left behind. . .
- Employees left behind or rehired later at lower wages could struggle
with productivity, which is common in the wake of corporate
Circuit City, which like other electronics retailers faces stiff
competition, reported a loss for its most recent quarter ended Nov. 30,
and its stock price has fallen 39% from its 52-week high. Its share
price rose Wednesday to $19.23, up 1.9%
LA TIMES - In a note to clients, Goldman Sachs analyst Matthew Fassler
said that after Circuit City's last major pay change in 2003, when it
went from commission-based pay to flat hourly rates, Best Buy's sales in
stores open at least a year gained significantly while Circuit City's