Circuit City Files Bankruptcy ... Here's Why

Circuit City announces bankruptcy . An article by AP states in part,

"Circuit City, which has had only one profitable quarter in the past year, has faced significant declines in traffic and heightened competition from rival Best Buy Co. and others. The company laid off about 3,400 retail employees last year and replaced them with lower-paid workers, a move analysts said could backfire, hurting morale and driving away customers."

Boy, did that strategy ever backfire.

Why did it backfire?

The executives of Circuit City ignored the importance of emotional intelligence. By laying off their highest-paid floor staff and hiring low-paid workers, they demoralized the sales staff, creating an enormous amount of emotional disengagement (for more on emotional disengagement, see my book LEADING PEOPLE THE BLACK BELT WAY: CONQUERING THE FIVE CORE PROBLEMS FACING LEADERS TODAY).

As a consequent of emotional disengagement on the part of the sales staff, service suffered. I can personally attest to this, as several recent trips to Circuit City left me frustrated by either the unavailability or incompetence of the sales staff.

I'm not alone in these thoughts, either. This article by TIME magazine has the following to say about Circuit City's service:

"For many consumers, however, Circuit City's most obvious failing was its customer service. In March 2007, it announced plans to lay off its highest-paid hourly employees, including salespeople, and replace them with cheaper workers. That same year, then CEO Philip Schoonover received some $7 million in compensation. It may come as no surprise, then, that a quick Web search on "Circuit City complaints" brings up hundreds of thousands of entries."

A word to the wise to CEO's: Rather than focusing on your yearly bonus, focus on building emotional engagement in your staff ... especially those in sales.

A Brilliant Election Year Marketing Strategy

7-11 has nailed a fantastic election marketing strategy, one that they've been running for years now.

Check it out.

It's brilliant because it ...

* gives people a choice
* has a tie in with USA Today newspaper
* sells more products
* is repeatable every four years.

... and SO much more!

Hats off to 7-11 for a brilliant marketing strategy.

Leadership and Emotional Intelligence

If anyone doubts the importance of Emotional Intelligence for leaders, one only has to look at the emotional responses to the economic crisis of the past week.

Do emotions impact the bottom line?

Without a doubt.

Leadership in Economic Crisis: Seven Steps

I've had several clients contact me about the psychological implications to the current economic crisis. Many leaders want to know how to handle this crisis in an emotionally intelligent way.

My advice?

Treat this crisis the same as any other crisis.

Leaders need to:

1. Keep calm.
2. Breathe.
3. Think clearly.
4. Get support for yourself.
5. Gather consensus.
6. Don't rush decisions.
7. Act decisively once decisions are made.

More Evidence of Employee Emotional Disengagement

This article at CNN.com discusses the impact of 'daylighting' or people working more than one job at the same time.

The article by Ron Dicker states, "Many Americans are squeezing two jobs into one shift -- moonlighting by day, as it were -- as a hedge against a sagging economy or to maintain their style of living."

... and ...

"Shoehorning a second career into the same shift as your primary job is tricky -- and ethically questionable. Some workers do it with the approval of their superiors. But many do it in defiance of company policy (the main reason most "daylighters" interviewed preferred to remain anonymous) frustrating managers and human-resource executives."

As I wrote in my book LEADING PEOPLE THE BLACK BELT WAY: CONQUERING THE FIVE CORE PROBLEMS FACING LEADERS TODAY, research consistently shows that between 70% - 80% of employees are working at far less than peak capacity because they are emotionally disengaged from their jobs.

The culprit? The epidemic of poor leadership across corporate cultures.

As long as leaders continue to ignore the emotional impact of their emotionally unintelligent leadership processes, daylighting will continue, erroding the emotional connection of employees even more.

Einstein said ...

"Any intelligent fool can make things bigger, more complex, and more violent. It takes a touch of genius, and a lot of courage to move in the opposite direction."
~ Albert Einstein

Sometimes Leadership Means Saying "No" ...

Saying "no" as a leader can be a smart move.

Especially if your company is attempting to take on a well-established giant.

Take Dell Computers, for example. Reuters News reports that Dell has plans to take on the ever-popular Apple ipod. From a story based on a Wall Street Journal report,

"... the music player which Dell has been testing features a small navigation screen and basic button controls to scroll through music play lists, the Journal reported."

The story recalls Dell's previous failed attempts at leveraging the MP3 market:

"[Dell's device] would connect to online music services via a Wi-Fi Internet connection, and Dell would likely price the model at less than $100, the Journal said. Dell's first foray into the music market in 2003 was a huge disappointment. It withdrew from the music-player market after its DJ Ditty player failed to make major inroads."

I am predicting that this will be another failed attempt on Dell's part. There is little to separate their new MP3 player from the ipod, except for pricepoint. The mp3 market is already saturated with players in the $50 - $150 USD range.

With little to distinguish their product, I would have encouraged Dell's leadership to have said "no" to this project.

Time will tell.