Great Companies Don't Treat Workers Like Disposable Objects

How ironic. And sad. Circuit City, one of eleven "Good-to-Great" cases cited in Jim Collin's mega-influential book, "Good to Great: Why Some Companies Make the Leap and Others Don't...", announced yesterday that it would be firing 3400 store workers and replacing them with lower-paid new hires.

The company asserts that these people were "earning well above the market-based salary range for their role." According to news reports these workers average about $10-$11 per hour while their replacements will be paid about $8 per hour.

Sadly, Circuit City is doing the same as many other companies in replacing cheap labor with cheaper labor. What's unusual is how open and euphemism-free they are about the rationale for the moves. I suspect a gaggle of class action suit lawyers is already on its way to Richmond as I write this.

Many would argue its good business. Wall Street seems to like it - Circuit City's stock price rose almost 2% after the announcement.

Only time will tell whether this turns out to be a painful, but necessary financial restructuring of the company or a shortsighted tactical attempt to fix problems caused by management mistakes.

In the meantime, Jim Collin's might want to think about dropping them from his list or maybe putting them on a new one - "From Good to Great to Goofed" along with some of his other "great" companies like scandal-ridden Fannie Mae and sell out Gillette.