We Have a Winner!
The inaugural Stupidus Maximus Award goes to Circuit City and CEO Philip Schoonover for the decision to fire 3,400 experienced salespeople and replace them with cheaper, less-experienced personnel.
It’s not that I like bad management, mind you, but I seem to be drawn to accounts of criminally dumb management practices the way freeway drivers are drawn to a terrible car crash. No matter how much you try not to look, you just can’t help yourself.
I was thinking about this recently when I came across a 2005 Advertising Age column by Rance Crain, one of the owners of Crain Communications, the corporate parent of Workforce Management. He made the case that if you have to choose, scandalous management was always preferable to bad management.
"Crooked top management can be cleaned up by throwing a few managers in jail, passing legislation like Sarbanes-Oxley, and scaring boards into having a little more backbone," he wrote. "Stupid and insular top management, on the other hand, is harder to root out. It’s more entrenched and harder to identify."
And that’s where the Stupidus Maximus Award comes in. The world loves to recognize forward-thinking management initiatives—as we do here at Workforce Management with our annual Optimas Awards. But there is little that shines a light on the other side: the regressive, ham-fisted policies and actions that cripple and diminish the work of fine people in the workforce. That’s why I’ve offered up the Stupidus Maximus, "for the most ignorant, shortsighted and dumb workforce management practice of the year."
I’ve written about a lot of bad management this past year, both here and in my Business of Management blog. Probably the biggest challenge in picking an honoree for the inaugural Stupidus Maximus Award is separating bad management actions from bad management practices.
There are lots of "bosses behaving badly," as I put it in my blog, but that’s very different from a bad management decision that affects much or all of the workforce. That’s why Circuit City and its CEO, Philip Schoonover, win the inaugural Stupidus Maximus Award for the decision to fire 3,400 experienced salespeople, or 9 percent of its workforce, because they were making too much money, replacing them with cheaper, less-experienced personnel.
Generally, experience is a good thing in a workforce, and that is especially true for an electronics retailer, where experience translates into the ability to talk with customers, answer their questions and, ultimately, get them to buy.
But as The Wall Street Journal wrote last month, "Efforts [at Circuit City] to cut expenses and improve results by reassigning some store employees and replacing 3,000 higher-paid workers backfired last year as sales of higher-margin home-theater systems, warranties and accessories declined in the hands of a less-experienced sales staff. Instead of an expected upturn, the company now sees a ‘modest loss’ for the fourth quarter that ended Feb. 29 and a pretax loss of between $100 million and $200 million for the full year."
It doesn’t take a genius to know that getting rid of your most experienced and productive workers is not only a terribly shortsighted strategy, but incredibly dumb. Shareholder activists are now aggressively (and rightly) pushing for changes at Circuit City, including changes in company man- agement that will probably cost Philip Schoonover his job.
That’s not any big loss. I don’t like to see anyone get dumped from their job, but Schoonover needs to go. He will undoubtedly get compensated nicely for his failure and will walk out the door, as so many other CEOs have, with a bag full of money, richly rewarded for his shortsighted management and terrible decision-making.
He’ll also have his Stupidus Maximus Award, a symbol of the bad judgment, poor decision-making and flawed strategic thinking that has led his company to the brink. He has set a standard for other top managers that will be hard to beat.
Workforce Management, April 7, 2008, p. 34 -- Subscribe Now!