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In my wallet, I have two coins. One is a Soviet-era Russian ruble, with Stalin’s face staring at a rocket. The other is a cheap plastic trinket with shiny gold paint and a portrait of a clown. Both are symbols of bureaucratic leadership run amok, relics of a dead system.
A Circuit City district manager, desperate to drive up credit card application numbers, handed out the clown coins in 2005. Every employee had five at the start of a shift which we had to hand to customers. When a customer asked what the clown coin was, we had to say, “I can’t tell you, but if you tell another associate that you have it, they’ll tell you how it can save you money.” The customer, already annoyed, would approach another associate, who would reveal unwanted details about the store’s credit card. If you didn’t hand out five coins by the end of the day, you got a written warning; three written warnings and you could be fired.
It would be enough if the clown coin debacle ended with the manager’s realization that the plan was hopelessly flawed. But when the staff suggested that this was the lamest idea in retail history, management didn’t listen. We were told we simply weren’t making it fun; we were lazy; we didn’t know how to sell a great idea. Inevitably, some associates figured out ways to cheat the system. Clown coins ended up hidden under DVD’s, stolen, thrown into the trash. The kids who tried to do it right were punished, while the others who cheated were handed prizes.
The clown coin was not an isolated incident. In Circuit City’s long history, district managers must have had many similarly delusional strategies. Follow these schemes, and the result is clear: If you cheated, you probably had a better chance of being promoted.
This was not the only way to move up. At one point, we had 10 “scripts” to launch into with every customer. If we didn’t, we would get written up. Customers hated this, but management didn’t care. The staff became nothing more than billboards designed to make pitches about every possible service, to the extent that actually communicating information was completely rooted out of training. Naturally, those who mastered this parrot-like ability to mimic the corporate line were also more likely to be promoted.
Put this all together, and what do you have? You have a practice that rewards and promotes the blandest and most cynical, while it punishes the most creative and honest. As that promotion line moved up, the cynicism became entrenched and institutionalized: On the same day that Circuit City posted a $208 million dollar loss, it awarded its chief executives with $1 million “retention bonuses.”
In March of 2007, that cynicism reached its apex: the company laid off 3,400 of its top sales people in order to hire lower-cost replacements. This came after a similar move in 2003, where it laid off 3,900 of its highest-paid workers. Certainly, it got rid of a good number of slick-talkers. But it also cut out a sales force that understood the needs of customers, a force that could have directed the company toward better decisions had they been asked, or listened to. On Jan. 16, executives announced Circuit City was going out of business.
So what is the moral to the collapse of Circuit City Inc.? It’s the recognition that closed corporate hierarchies will fail. A system needs wide-open channels of communication and collaboration, between all levels of “power,” to understand what its challenges are and to discern realistic, intelligent ways to solve them.
Future middle management workers of the world, please remember the lessons of this lost city. I’d hate to think these 34,000 jobs were lost for nothing.
Eryk Salvaggio is interim editor in chief for The Maine Campus.
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