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Pete Aldin

Just on the misreading of the title. This is a little tangential but it reminded me of the biggest asshole I ever met who was also my boss of 10.25 years. He was a certifiable sociopath and until I understood THAT, I could never understand why he would read a book like yours or like many others that came across his desk that condemned his behaviour and yet pass the book on to others and say "You MUST read this. It's very good" - without making the personal connection. I now wish I had just once given the book back to him and said "No, Richard, you need to read this again. It's your biography. But you still have time to rewrite the ending!"

Maureen Rogers

One of the reasons I've liked shopping at Circuit City was the relatively high likelihood of finding someone who actually knew what he or she was talking about. Apparently that's over. I can just imagine how wonderful the morale must be among the lay-off survivors, who everyone will conclude are useless, let alone among the lay-offees who'll be coming back after 10 weeks at lower pay.

That Bain report sounds interesting - as does your dissertation. I spent 25 years in high tech companies where I was often there for the death spiral. When times got tough, most of these places made a practice of quarterly lay-offs that did nothing so much as accelerate the downward momentum of the company. These places may have been goners anyway, but having all the employees sweat out regular lay-offs didn't help any. We always used to dredge up the old punchline about the plane crash on the Canadian border: where do you bury the survivors?

Bob Sutton

Robert,

Thanks so much for adding more context and for adding the research about the fact that layoffs --although they look good on spreadsheet -- are actually unrelated or negatively related to subsequent financial performance (especially those focused on cost-cutting alone, with no change in strategy). Note that my dissertation was on organizational death and I did some of my early research on layoffs. In fact, I published my first "book," really a collection of articles, with Kim Cameron and David Whetten, called Organizational Decline. Also, check out this Bain study that questions the value of layoffs.

http://www.bain.com/bainweb/publications/written_by_bain_detail.asp?id=6759&menu_url=written%5Fby%5Fbain%2Easp

robert edward cenek

A major piece missing from the recent coverage of the layoffs at Circuit City is that this is not the first time that they have completed a “wage management initiative” – an interesting choice of doublespeak directly taken from their March 28, 2007 press release.

In fact, the electronics retailer unveiled and implemented a similar cost cutting move at least once before, as reported in the February 6, 2003 edition of The Wall Street Journal. The firm announced then that 3,900 commissioned sales staff were being retro-recruited and replaced with less expensive newbies. Lackluster financial performance – and a need for a revamped sales strategy – were provided as official explanations.

Circuit City’s most recent staffing lobotomy signals the presence of more systemic and chronic performance issues that layoffs alone will not cure. The firm’s press release underscores their need to reduce SG&A expenses, and to eliminate non-value added work, laudatory goals, but it has seemingly “made the same mistake twice,” and may be caught in a downward, inescapable vortex.

Other bloggers, and the popular press, including the New York Times, have thoroughly detailed the employee relations fall-out that can be expected, which are certainly obvious and need no further chronicling. What has not received enough attention however, is the long trail of research, such as that undertaken by Kim Cameron of the University of Michigan, and Wayne Cascio of the University of Colorado, that convincingly calls into question the long term effectiveness of workforce management strategies that rely heavily or exclusively on labor cost reduction as a transformational strategy. The odds for improved business performance increase significantly only when cost reduction and improvement touch all elements of the business, not just the workforce. Maybe Circuit City will employ that thinking going forward.

robert edward cenek, RODP
www.cenekreport.com
Uncommon Commentary on the World of Work

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