Blueprint For Disaster.

Sales are down. Profits are down. How can you bring the numbers up? Wait a minute! I have a brilliant idea. Lets lay off our highest paid employees. We can replace them with people who make less money. Lets get rid of 3400 people. We not only save on salaries but benefits too. Our new people won't be getting as much vacation time or other benefits. That is a great idea and we can all look forward to higher bonus checks because our brilliance. And they all lived happily ever after.

Well if you are going to tell a fairy tell you should stick with the traditional ending. In March 2007, the little scenario I described took place. I won't say that is exactly how it happened, but I don't think it is far from the truth. Most business analysts said it was a dumb idea and nothing good would come from it. One said if it succeeded look for other businesses to follow suit. I personally know of one other retailer that has done so. We now know how successful that idea was. Last week Circuit City announced that they would close 155 stores. This week they filed for bankruptcy. They were a troubled company before March 2007, and their decision to let all of those employees go was the nail in the coffin. They realized the depth of their mistake before last Christmas and tried to hire back some of those let go. The damage had already been done. They had angered enough customers that they no longer shopped with them.

Too many business executives forget that without customers there is no business. Unless you have employees in the store no one will come. If your main business is selling televisions, DVD players, computers, etc. you need knowledgeable employees. If you don't have that why would someone shop with you? Executives need to get out of the office and into the stores more often. I am not talking about appearances where they walk in a store. They need to grab a name badge and spend an entire day waiting on customers, talking and listening to them. See what they want. If you don't do that, you end up facing what Circuit City is now, or even worse, closing your doors forever.