Circuit City Fires 3,400 "Overpaid" Employees

Circuit City is firing 3,400 employees (8% of Circuit City's total work force) and bringing in lower-cost workers to fill their roles. The company says that the move is aimed to help realign its cost and expense structure. The move comes after Circuit City announced in February that it was closing 62 stores in Canada along with seven underperforming stores in the United States. Employees will be given four weeks' worth of severance pay and will have the option of reapplying for their positions at a lower pay grade after a 10-week hiatus. Circuit City also plans to outsource its IT infrastructure operations to IBM in order to reduce costs by roughly 16%. This separate move will affect an additional 130 employees - 50 of which will become IBM employees while the other 80 will be fired.

"These actions represent the execution phase of the work initiated this winter to accelerate Circuit City's transformation. We expect to deliver improvements in our selling, general and administrative expense rate while maintaining appropriate investments to drive our key strategic initiatives such as digital home services, multi-channel and home entertainment. Unfortunately, a number of Associates are directly impacted by the actions, but we are making Circuit City stronger for the long term," said Philip J. Schoonover, chairman, president and chief executive officer for Circuit City.

News source: DailyTech

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I would like to see ANY CORPORATE CEO spend one week as a customer service lead! Just one week! How many of their stupid policies would they change? Then you can tell he me my $15- an hour after 11 years is too much!!!!!

I've heard horror stories regarding CCity return and warranty policies -- that is probably one reason there that they are loosing money. The warranties are written more to benefit CCity than the customer.

This "laying-off" of 3K + employees because they make too much money -- I've never heard of this happening and I haven't read any place in my previous Employment Law classes that a company could lay off people because they have maxed out at their grade.

I'm inclined to agree with socrfan that many goals of some of these companies is simply GREED! And yes Skwerl, these CEO's have the experience and earn their pay -- sometimes too much pay. Why do you need a salary of 33 million a year to guide a company when the consumers who purchase from your stores don't even know what the CEO looks like. The only face we see to many of these large retail stores are the front-line employees -- they could also be identified as first responders. Retail employees are the ones who make people want to return to the store. Retail stores aren't the only culprits -- grocery stores -- some of them treat their employees like so unfairly. I worked for the Giant grocery store chain for about 6 months and then resigned. The unions suck because what union would agree to no benefits for any new employees for 3 years. This tells me they want to hire high school - college students who have little to no financial responsibility and are still on Mom and Dad's insurance. Thank God that for the moment I work for a company that cares about its employees. The only company that I know that pays you a portion of your salary when you are on FMLA.

The Cleveland Plain Dealer newspaper stated that Circuit City's CEO is making $975,000 a year. Maybe he'd like to help those laid off people pay their bills when they don't have an income. I wonder if this iceburg knows what it's like to work for a living?? The trouble with American business is spelled G-R-E-E-D. For a company having financial problesms, much of that $975.000 could be better spent elsewhere and keep people working.

Do you think CEOs just walk into those positions? You can't attract a good CEO and pay them poorly. Business is business no matter where it takes place. If YOU were the CEO of Cricuit City, would YOU take a pay cut to keep a handful fo employees working? Let's say you cut his calary by $200,000. That's about five employees it would save. Where else will all the money come from to keep the staff? Cutting the wages of an executive is a drop in the bucket. Cut execs pay and they will go elsewhere. Replace them with lower-paid, less qualified people and see how far that gets your company. That's called being penny-wise and dollar dumb.
So exactly what does the CEO's earnings have to do with keeping thousands of jobs? Nothing. My guess is that it was stated in the paper to elicit class envy. Again, look at the big picture and start crunching some of these numbers.

Whoah, whoah, WHOAH, guys! I feel really bad for the people who get canned at Circuit City, but step back for a minute and look at the big picture. The fact of the matter is that I'm pretty sure there are plenty of Circuit City executives that are having a really hard time sleeping over this decision. Although corporations are faceless as a whole, the majorioty of the individual executives are often people with consciences and actually do want to do what's right for their employees.
Circuit City is in trouble financially. Look how many stores they closed, and that's all the evidence you need. When it comes down to it, the company has to make a decision- close some stores, kill a lot of jobs, or close all stores and kill all jobs. Again, I really don't think these decisions came easy to those involved. There's no reason to demonize a company for things like this when the going gets rough. These jobs are not being tossed aside so the company can increase its margin (THAT would be slimy, and it DOES happen!). This is happening so the company can stay in business.
Think of it on a smaller scale- what if you owned a computer store, and business was down, but you had three salespeople doing nothing for $15 an hour each? You'd probably try to wait it out and figure out some way to get more business, but at some point, if things are still going poorly, you'd probably lay off a couple of those folks so that you could have the $1,500 (wages plus benefits, plus witholding matching) a week to buy inventory, pay bills, or promote your store.
When these things happen, it's always sad and easy to empathize with the victims of downsizing, but before crucifying the company, consider why the decision was made.

This really isn't specific to Circuit City. In the span of a year I saw this same thing happen to a few friends that worked at a K-Mart for 10+ years, they were fired and college students were hired in their place for less. Less then a year later, another friend was fired from a Days Inn that worked there for 15+ years also for being payed "too much". It's unfortunately a sad reality in the US that many employers will do this to even the most dedicated long term employee.

shame shame on Circuit City, I always liked Best Buy better but after this, I'm not spending one more cent there ever, I hope that company goes down quickly and dies a very slow and painful death.... I can't believe they have treated their senior employees that way, its disgusting of them to do so...

I work at Circuit City and let me tell you how they did it was messed up and morale at the store's is definately lower now. they basically called all the people who were affected into a store meeting at like 8 in the morning and told them basically they gone. they then escorted them out of the store to make sure they didn't steal anything. As people before have said these are people who have been in the company for like over 10 years and some over 15 years. Alot of these people were with the company when it was commission based, hence their high hourly rate, because the company gave them that rate to compensate for losing commission, and then they earned further rate increases because they were the best at what they did.

so basically you have a situation at CC now where they have got rid of all the people who were skilled and actually knew what they were talking about and the one who trained the people there.

and to further add insult to injury, they sent a company wide email that basically said they had openings now and were going to be doing some hiring in April and anybody we referred would net us a giftcard.....the people who are left are not happy about any of this, because all the people who were let go were our friends and they definately deserved better.

Byocott the SOB's and do not shop there so they can really feel how much money they will be saving.' Hell jsut bring over sea's workers here and ill bet they really could make a profit...****ies me off

Circuit City should be honest with their employees prior to hiring that regular pay increases are not to be expected and it is really a go-nowhere job. That isn't to necessarily dissuade employees but push them to get better jobs than working at an electronics store :/.

Glad I quit Circuit ****ty before this crap happened, I also would have been fired due to my so called high payrate. Im not surprised they did this the Company was terrible, as were the employees .

I'm in middle management at Target and I'm glad that our company is still profitable. We have a pay-by-job system in place to counteract this sort of thing. If you are in a certain position and your max rate is $17 per hour and you reach it then you are done getting raises. The only way to get any sort of raise is to get over a 90% on your review which is next to impossible in most stores. It sucks when one maxes out but it does keep the cost of running the store down. We do still have some bloated salaries, particularly those employees that have been with the company for over 10 years.

I for one, will not be shopping @ C.C , notn that I ever did buy much from them anyways, but any corp that does this to their employees deserves to be boycotted by customers and potential customers.

I feel sorry for those affected, it's the CEO's that should be taking the pay cut, eliminate middle management and cut the CEO's salary by 40%.

I hope Circuit City goes bankrupt. This is just ridiculous. 3,400 people lost their jobs all because they were being "paid too much"? Personally, I think the people sitting in the high chair are being paid too much.

aint that the truth! ... it's those greedy executives that are being payed to much! ... damn shame though it seems the higher you go the easier it gets and the more you get paid ... dont make sence to me... if you work hard physically/mentally you should be paid atleast something decent.... which i can bet those "high up exec's" aint working hard (if at all lol) all there doing is working to shaft the employee's while shinning up there image for the shareholders etc etc etc.

+1 (for your comment)

Section 31 said,
I hope Circuit City goes bankrupt. This is just ridiculous. 3,400 people lost their jobs all because they were being "paid too much"? Personally, I think the people sitting in the high chair are being paid too much. :rolleyes:

So you would rather have EVERYONE at Circuit City lose their jobs? Why don't you give it some thought and figure out how much it would cost to keep all those underperforming stores open and how much it would cost to save all those jobs. Compare that to what the execs make. Stop making ignorant statements without thinking.

ThaCrip said,
aint that the truth! ... it's those greedy executives that are being payed to much! ... damn shame though it seems the higher you go the easier it gets and the more you get paid ... dont make sence to me... if you work hard physically/mentally you should be paid atleast something decent.... which i can bet those "high up exec's" aint working hard (if at all lol) all there doing is working to shaft the employee's while shinning up there image for the shareholders etc etc etc.

+1 (for your comment)

You think people in those executive roles didn't work hard to get there? Think they don't still work hard? They have stockholders to report to, and everyone's jobs depend on them. No pressure, right? I suppose people that work hard to get someplace high and deal with copmplex problems shouldn't be paid any more than anyone else. Come into the real world and put yourself into their shoes before making baseless, classist remarks.

My brother worked for CC up until the layoffs yesterday. The previous poster was right about the salary caps. My brother made 13 an hour and the cap was 12 so they fired him and 7 others. He managed to get 6,000 in severance once its all said and done.

I really hate the "pretty" speeches the CEO gives when they pull crap like this. No matter what they say, we all know they did this to look good for the shareholders and so upper management can take home more money. They don't care about the people who actually build the company and do the work as long as they are getting paid more and more money they can cut jobs and reduce wages and not think twice.

But remember, you get what you pay for. If you've had employees with your corporation for years and they really know what they are doing they are going to represent the company better, treat the customers better, and move more product. (Hence you are getting a better return for that higher wage you're paying) However, if you fire them and hire new people that means you have to spend the time and money to train them and since they are new they know less about the corporation and products and won't sell as much. But hey you're saving a couple bucks and taking more home yourself so its a good thing, right?

Another reason why I quit working for Circuit after 1 week 2 years ago. Their management is as fake as Pamela Anderson's breasts and they force you to attack customers and offer their stupid credit cards. I only shopped there 2 times in my life and I won't be expecting to shop there any time soon.

Having said that, I've been a Best Buy employee for over 2 1/2 years and I must say, that is the retailer to work for. They give very generous discounts to their employees as well as a wealth of other benefits that may please many. At least Best Buy is making the effort to hire people and pay them adequately for their job and at least in my store, they don't hound customers around literally forcing them to grab onto a credit brochure.

Having said that, its nice to see Circuit City digging their future grave with this move.

Wow, in my area it's completely switched around. I hear nothing but horror stories about working for Best Buy whereas I did enjoy the management at my Circuit City store quite a bit. CC does need to get its act together on employee discounts, but that was the only thing that I heard was better at the Best Buy around here. In fact, before I left the store I worked at got a huge influx of Best Buy people who were ****ed off and wanted to work elsewhere, and they loved it at Circuit City.

It all depends what region of the country we're talking about. In certain areas, Circuit City does better but in most areas, Best Buy is the one that makes the most revenue. Hell, here in New Jersey, Best Buy is planning to open a few more stores in the next year while CompUSA and Circuit City are either closing most stores down or literally rehiring everyone to do cheap labor.

But think about it. When someone gets a job, they have the ambition to work for a raise but what will this move by CC do to job seekers? That if you get hired don't be expecting a raise but you have to work as hard as you can?


Good luck with that, Circuit.

L3thal said,
But think about it. When someone gets a job, they have the ambition to work for a raise but what will this move by CC do to job seekers? That if you get hired don't be expecting a raise but you have to work as hard as you can?

or people won't want a raise cause they'll get fired because they will be considered overpaid

"congratulation johnson, you had a great year. You deserve a 10% raise."

"No thanks, I don't want to get fired for being overpaid"

Imnotrichey said,

or people won't want a raise cause they'll get fired because they will be considered overpaid

"congratulation johnson, you had a great year. You deserve a 10% raise."

"No thanks, I don't want to get fired for being overpaid"


lol that's pretty much the inside joke now. nobody wants a raise.

I had heard that a bunch of people who used to work commission-based were given compensation (through increased hourly wage, double the normal hire) for losing commissions and basically started earning tons of cash even if they didn't do squat.

In turn it promoted laziness since they were already earning the cash even without having to sell anything.

Guess they should have brought in the Bob's and seen who was worth their money rather than making such a grand decision, but I guess it's easier and cheaper.

Wow I just cant believe it. This really makes me hate corporate owned businesses even more. I never went thru that but I have had my bad share of experience too. Eventually there is going to be laws for this kinda of stuff.

Here's what happened: For any position, there's a wage cap... So let's just say $15 an hour (I have no clue what it really is, and it depends on your position in the store). Every 6 months you are given a performance review, and as long as you did well enough, you earned a raise (depending on how well you did). The thing is, people were given raises over their wage caps if they'd been there for too long. So we're talking about people that have been there probably close to 10 or more years. In fact when I was still working there we had one warehouse guy who'd been there for almost 20 years, and another sales associate who'd been there for longer than I knew, but he was definitely over the cap.

I'm not saying this is right, and I'm not defending CC in any way; I mean, I got out of there for a reason. But when they say over-paid, it's true. It's not just some arbitrary amount they made up and said anybody over that is over-paid.

I've worked at places where a given position has a salary cap. When a person reaches it, the response at review time is simple: "You've reached the salary cap, so no matter how good your review, you cannot get a raise." This leads to the people happy with their jobs staying, and those upset by a lack of a further raise going elsewhere on their own. This is Circuit City's own fault for calling it a salary cap and then ignoring it.

is this legal? can they fire you in america for being "over-paid"?

if so, thats bull sh**. i'm sure your not allowed to do this in Canada.

lylesback2 said,
is this legal? can they fire you in america for being "over-paid"?

if so, thats bull sh**. i'm sure your not allowed to do this in Canada.

I don't think it's allowed either.
I never saw a Circuit City in Canada, perhaps they are referring to The Source CC?

zivan56 said,

I don't think it's allowed either.
I never saw a Circuit City in Canada, perhaps they are referring to The Source CC?

yea they are referring to, although the source is a joke as it is. Circuit City bought the name, not the store, InterTan still makes the products. (same products radio shack had but different packaging.)

I'm not, nor do I know anyone who is a Circuit City employee, but this is more than enough cause for me to boycot the store, at which I shop fairly frequently.

I hope all Circuit City employees (and those of other retailers) will organize a large national boycott. The anti-worker sentiment in America is disgusting. It's time we start firing the real over-paid workers in America: corporate executives and other capitalist pigs.

I would agree that there in definitely an anti-worker sentiment in America that is very unsettling... but you'd be hard pressed to find many alternative products & alternative stores if you boycotted all the companies that crapped on their employees.

CCity employee - overpaid compared to the market place, laid off, can re-apply for job at market value.
XYZ employee - underpaid, laid off, has to find entirely new line of work, as XYZ & their competitors are now outsourcing those positions overseas.

I'm definitely not trying to be a Circuit City apologist, because it is indeed a crap move, but looking at recent trends in other areas, CCity doesn't come off as bad imho.

YaddaMe,

This is something we've been seeing in the US for the past 3-4 decades -- corporate loyalty to their employees -- it nolonger exists. The story I saw this morning on GMA was that of a man who had been employed by CCity for 20 years -- 20 years -- yes he should be making 18 an hour and not 10-13. We are talking about adults with families and homes not 17-21 year old kids that still live at home with their parents and have little to no financial responsibility. That is one of the main reasons also that employees are always on the look out for a better position then what they have now because you never know when you're going to be looking for another job -- so in essence even if you are employed -- you NEVER stop looking.

This is indeed the first time I've ever heard of a company laying off people because they are making too much. We were not frequent shoppers at CCity and now I'm going to be an even less frequent shopper -- we only purchase DVDs and music from them anyway -- I can order those online from Amazon.

If they wanted to cut salaries -- how about starting at the stop and work your way down. CCity is practicing what is termed "top-down management" -- where the decisions are handed down from the top.

Even though I'm not affiliated with these companies in any way. This makes me even more proud of Costco and the way their management handles treats employees. I'm sure some (maybe not a high percentage) would of gladly taken 13-15 bucks an hour rather than getting fired.

But I just don't understand how these guys pay got up to 18 dollars an hour. The only thing worse than these stores (circuit city, compusa, best buy etc) customer service is their return policy.

edit: ugh, i dont want my typing to turn into ads for those bad business companies!

There are people that were fired that made less than 11 dollars an hour! There were poeple who had been with the company for 15 years making less than 15 dollars and hour. There were people in hourly management positions making 17 dollars an hour and having been there over 11 years. Please tell me what incentive someone has to treat the customers well and do a good job. Good luck finding anyone with any knowledge now. They got rid of anyone who had been there for any length of time. Don't be fooled. The big wigs are still bringing in the big bucks. They screwed the people who were dedicaded, hard workers. There weren't many left.

Employees will be given four weeks’ worth of severance pay and will have the option of reapplying for their positions at a lower pay grade after a 10-week hiatus.

What??? If their goal is to reduce costs and if an overpaid employee is willing to work for less then why not just cut his pay and be done with it? It sounds like they are trying to cut some fat in the process.

pixels said,
I'm assuming that you can't just lower somebody's pay... Otherwise that would have been the smarter move.

You can lower someone's pay. (Wife is CFO and in charge of her office's HR) But if you do that... the person generally will quit or do worse work... they tend to get disenfranchised... aka "why should I put in ANY effort for this money", vs the new employee is happy to get the new job. (theoretically)

As for me, I stopped going to CCity years ago, the sales people were frickin sharks.

jameswjrose said,
You can lower someone's pay. (Wife is CFO and in charge of her office's HR) But if you do that... the person generally will quit or do worse work... they tend to get disenfranchised... aka "why should I put in ANY effort for this money", vs the new employee is happy to get the new job. (theoretically)

As for me, I stopped going to CCity years ago, the sales people were frickin sharks.


Well, then that makes sense as well, though it sucks for the employees.

And they're not going to be sharks anymore... CC is no longer commission-based. In my experience, as I worked there for about 2 and a half years, now that they're not commission-based, they're a hell of a lot better at sales than they were before.

A similar thing is also happening to me. Tomorrow is my last day working for Microsoft as a Senior Technician supporting a team of desktop support engineers.

We're supporting UK users and actually based in the UK (a first for Microsoft), but eventually Microsoft figured we were costing them too much. The fact our customer satisfaction ratings have been the highest ever didn't even come into their decision.

JobCentre, here I come.

Lt-David... I would read into employment law in the UK if I were you. If they are making you redundant now, they are not allowed to re-hire for your position for a length of time. If they do, you have grounds to take legal action against them. Even though they are an American company, their UK branches are covered under UK employment laws. Don't let them get away with it.

The work around for that is eliminate the position, create a new position and new title with 99.9 the same tasks.

There's a loophole for everything

TCLN Ryster said,
Lt-David... I would read into employment law in the UK if I were you. If they are making you redundant now, they are not allowed to re-hire for your position for a length of time. If they do, you have grounds to take legal action against them. Even though they are an American company, their UK branches are covered under UK employment laws. Don't let them get away with it.

I'm not sure he's even talking about the same things. Sounds like he's just being laid off.

I don't know about America, but in the UK the practise of firing someone and then re-hiring a cheaper person to that position is illegal. By law, there is something like a 6 month minimum period that an employer has to wait before they are allowed to re-hire for a position that was made redundant.

TCLN Ryster said,
I don't know about America, but in the UK the practise of firing someone and then re-hiring a cheaper person to that position is illegal. By law, there is something like a 6 month minimum period that an employer has to wait before they are allowed to re-hire for a position that was made redundant.

Nope does not work that way here, and a lot of states are "at will" states. Meaning if you are about to quit you are expected to give 2 weeks notice, but if they want to fire you at anytime for any reason they can.

Just another big business doing what they do best, stepping over the little guys to please shareholders and increase CEOs pay checks so they can buy another Ferrari or maybe make sure that Little Sarah gets the new Benz she has been wanting for her 16th Birthday. This is the way big business works in America though, and since the big boys have the money to snuggle up with the lawmakers that's the way it will stay.

Sorry to hear that. The UK's employment laws are obviously alot more geared to protect the Employees than they are in the USA.

TCLN Ryster said,
Sorry to hear that. The UK's employment laws are obviously alot more geared to protect the Employees than they are in the USA.

Exact opposite here which is why companies like Enron could run wild for so long before finally being punished and taken down more of the little guys with them. Big business has the money and the power to lobby the lawmakers, and congressmen. A couple of lobster dinners here, a suprise package with an all inclusive vacation there, and like magic you can do whatever you want.

TCLN Ryster said,
Just another big business doing what they do best, stepping over the little guys to please shareholders and increase CEOs pay checks so they can buy another Ferrari or maybe make sure that Little Sarah gets the new Benz she has been wanting for her 16th Birthday. This is the way big business works in America though, and since the big boys have the money to snuggle up with the lawmakers that's the way it will stay.

Can we get Eddie Giffith to make a visit to every CEO and have him drive their car?

>>>>
Nope does not work that way here, and a lot of states are "at will" states. Meaning if you are about to quit you are expected to give 2 weeks notice, but if they want to fire you at anytime for any reason they can.
>>>>

At will means that you or the employer may termintate at any given time. Of course employers WANT you to give two weeks, but you are in no way obligated to do so.

I'm also from the UK and I can tell you, from personal experience, that the law here is also shxx. I represented someone at an Industrial Tribunal where they paid him off because they didn't like him (technically in the UK I believe it's your job that's made redundant - not you. My friends job was filled by someone else and the company were still running his machine and taking international orders even during the tribunal (which was 9 months after his job was made redundant)). We tore them to shreds in the hearing (had them contradicting each other, blatantly lying and refusing to answer questions). However, what they didn't know was that the tribunal has force of law behind it. It is a bit more informal that a court - but that is what it is, a court. The management were forced to answer the questions we put. Some of them were literally [i]shaking and sweating profusely. Like a court - they were not allowed to hear the testimony of any witness before they testified. Whether their own legal council had made this clear to them or not, I don't know. But they tripped themselves up, lied, cheated (made up documents - and I know that for a fact because the documents were supposedly an annual appraisal showing how badly this worker had done and went back 5 years. I worked for the same employer for 7 years (I'd left the previous year) and I'd never seen or even heard of these appraisals). I could not believe it when the tribunal found in favour of the employer. Another company had done the same thing, got away with it - and this had set a legal precedent The UK has the weakest employee rights in the whole of the EU. I do believe, however, that an employer would have difficulty doing what happened to those poor guys at circuit city - firing people en masse. However, what has happened here is that they sell the business to someone else (conveniently that 'someone else' is also owned by the same people who own the entity being sold) and then the 'new' owners fire the staff. There are so many loopholes - the law is a fuxxing joke. MPs (US equivalents of Senator or Congressmen) are usually rich people with shares in companies and a vested interest in those companies making the biggest possible profit (after their political career is finished they usually sit on boards of directors of these self same companies, doing little more than collecting their pay cheque for lending their name to the company's board of directors). However, I'm afraid this is just human nature - greed. Not all business people are like this, of course, but the majority are.

A "computer tech" ?

Im from the UK and i dont know anything about circuit city but i thought they were a Electronics Retailer?

Yes, but they have their own Computer Services brand, called Firedog. It actually covers computer and home entertainment services.

And pyehac, unless she's been there for a LONG time and is making over the cap for her position, she's fine.

yeah this always sucks... happened to me too. I worked there for a while and was given due pay increases after hard work but once i got to a certain point they told me well yeah, you're costing too much now so you're fired and we'll hire someone new and start them at the lower pay that you used to get.