Walking the Talk17 Dec, 2008 By: Erik Gruenwedel
Best Buy this week reported a 77% drop in net income for the most recent quarter, a result that should have been expected considering the economy and the Minneapolis-based retailer’s previous red flag warning about drastically curtailed consumer spending.
What was also not surprising was Best Buy’s internal response to generating “only” $52 million in profit versus $228 million during the previous year period. The company said it would offer voluntary separation packages to most of its 4,000 corporate employees.
A separation package should not be confused with a parting gift at the office Christmas party or swag at a studio DVD launch. It’s a sweetened offer (extra compensation, extended healthcare) by management to get you to quit.
Whether that also entitles you to unemployment benefits (you chose to leave instead of being let go) is probably best left to human resources or an employment lawyer.
Best Buy said it wouldn’t rule out future involuntary separation — termination with cursory benefits.
Regardless, Best Buy senior management, to its credit, recognized that during tough times you don’t punish employees at the store level. It’s a lesson rival Circuit City ignored and corporate America, for that matter, rarely does as well.
Circuit City, in an effort to save about 50 cents per hour per staffer, last year fired thousands of store employees and rehired them at lower rates. The result was widespread condemnation, a workforce that literally didn’t care, and bankruptcy.
Of course, corporate employees (though, more expensive) are important too. But Best Buy’s action was consistent with its store-centric mentality that publicly values frontline workers and long ago did away with commissions, opting instead for real salaries and benefits. It also actively encourages and rewards staff input.
“They are leaving the heart of the engine alone and focusing on support staff to preserve sales,” said independent analyst Rob Enderle. “It shows a lot of savvy.”
And it’s why I bought Guitar Hero World Tour at Best Buy, not Circuit City.