Monday, November 17, 2008

Newspapers Jettisoning Top Talent to Cut Costs

David Carr writes:

In March 2007, Circuit City came up with a plan to confront softening sales and competition from online and offline retailers: fire the most talented, experienced employees.

Of course, those workers were the retail chain’s single most important point of difference from the legion of Internet retailers and general merchandisers, but in a single stroke, Philip J. Schoonover, the chief executive of Circuit City, wiped out that future.

As a pal of mine used to say when I described a particularly boneheaded course of action I had pursued, “How’d that work out for you, buddy?”

For Circuit City, not so great. The “wage management initiative” erased morale, both for employees and the folks who shopped there. Sales sank after the one-time gain from the layoffs. And last week, the company sought bankruptcy protection.

Mr. Schoonover joined his former employees in the discard box in September, a nice bit of symmetry until you factor in his $1.8 million in severance, $50,000 in outplacement services and a two-year cushion on health benefits. (The clerks axed in Wichita and Tucson got a bit less.)

In the digital age, we’re told, the critical difference between success and failure is human capital — those heartbeats and fast hands that can make a good business great. So are newspapers reacting to their downturn as Circuit City did?

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