Rich Fiscus
21 Nov 2007 15:16
Electronics superstore chain Circuit City is hoping to convince some of the workers they fired earlier this year because they were "overpaid" to return to work at locations around the country. Letters were sent to many of these former employees to fill positions opened by normal employee turnover and new store openings.
In March of this year Circuit City made the move to get rid of 3,400 employees. They determined that these employees were paid too well for their positions and could be replaced with lower paid personnel. The workers were given no advance notice of the decision, although they did receive a severance package. At that time analysts were sceptical of the move's merit. "It's definitely going to have some cost-savings, but I think the bigger impact could be seen in weaker, poor service," said Timothy Allen, an analyst with Jefferies & Co. "I have a feeling the people they're letting go have probably been there longer, have more experience, more product knowledge."
As the number two U.S. electronics retailer, Circuit City has struggled to keep costs down to remain competitive and profitable at the same time. The firings were intended to cut costs within the company by $100 million this year, and $140 million annually starting next year. So far company executives haven't commented on the letters, which were first reported by the Wall Street Journal.
Sources:
Reuters
Washington Post