More on the questionable wisdom of absolute retention efforts, and the more worthy (at least in my mind) pursuit of becoming a best high performance place to work, courtesy today of Circuit City.
A lot has been written in recent days about the March 28 announcement by Circuit City that it cut 3,400 jobs, or 7% of its workforce, because these employees (primarily sales staff) were paid at above market rates for their roles. Plans are to replace them with lower paid employees (terminated employees can re-apply for their former jobs at lower pay, but must wait 10 weeks to do so).
Even giving Circuit City the benefit of the doubt and assuming that the company found themselves in a financial performance hole that they couldn't otherwise escape, isn't this the perfect illustration of the short-sightedness of reward practices that aren't designed and managed to promote both company and employee success?
Focusing on universal retention practices and providing rewards that aren't aligned with organizational priorities and performance requirements do not ultimately serve anyone's best interest, and could even be a root problem that leads to "Cutting Jobs as Corporate Strategy", as this week's Knowledge@Wharton newsletter deems Circuit City's actions. In the article, Wharton management professor Daniel Levinthal calls the decision to cut veteran salespeople a "massive de-skilling" of the company's salesforce, which certainly doesn't bode well for customer service in the near-term. Unless there is a strategy behind this move which ultimately leads the company away from direct (in the bricks and mortar sense) customer sales and service, you have to really wonder about the long term impact of the action.
And what about the impact on morale that often lingers in the wake of large lay-offs? Think about the communication behind any future employee pay increases - even, and perhaps particularly if, those increases are given to reward outstanding performance. Talk about your mixed message!
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Posted by: Divorces | January 07, 2008 at 01:37 PM