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Aug 7, 2013

Life hasn’t been easy for big box electronics retailer Best Buy the past few years.

Best Buy used to be one of THE best places to buy all manner of electronics, but a combination of competitive pressures and self-inflicted customer service problems (I can’t mention Best Buy to my brother-in-law without getting a rant about his frustration trying to return a damaged cell phone) makes one wonder how much longer the company can hold on.

The latest issue is one no smart company wants to get into — layoffs becoming so common and regular that “employees have nicknamed the day they receive layoff notices ‘Tornado Tuesdays’ or ‘Termination Tuesdays,’ according to a story this week in the Minneapolis Star-Tribune.

How would you like to work at a place like that?

Whacking employees at Best Buy

Much like other big box electronics stores like the now-departed Circuit City, Best Buy seems to have real issues when it comes to talent management and handling their workforce.

Last summer, it was all about how the company fouled up a management retention strategy that didn’t tie bonuses to performance, and earlier this year, they killed their famous corporate flex work program called ROWE that had been heralded as a really smart and forward-thinking way to manage a workforce.

Now however, as Best Buy scrambles for survival in a world where big box retailers have turned into little more than a showroom for customers who then can find a better price online, the company is cutting staff and reducing expenses as they try to pull out of the downward spiral. As the Star-Tribune story notes:

At one time, Best Buy employed as many as 9,000 people at its corporate campus, although in recent years the number has fallen to around 5,000. The company declined to say how many employees are working there now or what its final target for staff reductions will be.

As Best Buy wrestles with soft sales in the United States, the company has pledged to shave $700 million in costs over the next few years — part of an initiative called Renew Blue. Since the cost-cutting began, the company has eliminated about $295 million in annualized costs — but not all of that has come from job cuts.

The company credits Renew Blue, which includes cost cuts and an emphasis on customer service, for its improving stock price, which has more than doubled since December.”

A “tense” climate on Tuesdays

All of that sounds pretty positive, and fairly standard for a company trying to engineer a turnaround, but then the newspaper adds this:

Often, large corporations prefer to lay off a large number of workers all at once, not only to immediately fortify its balance sheet but to prevent such disruption from morphing into a long-term distraction. But since its last round of large job cuts, Best Buy has chosen to reduce staff by laying off smaller groups of workers over an extended period of time.

That’s akin “to peeling off the band aid slowly,” said Dan Le, a Minneapolis-based attorney who specializes in workplace issues. As a result, Le said, morale plummets because employees constantly fear losing their jobs, whereas a mass reduction suggests the company won’t fire anyone else in the immediate future.

Several Best Buy employees said the climate can be tense at the company’s headquarters, especially on Tuesdays.

“Whenever someone leaves their desk, we think that person just got laid off, when he or she might just be going to the bathroom,” said one surviving employee who requested anonymity because the individual was not authorized to speak to the news media.

Marshall Tanick, an employment law attorney at Hellmuth & Johnson, said Best Buy’s strategy allows it to work around a federal labor law that requires large employers to give workers 30 days’ notice of major layoffs. The Worker Adjustment and Retraining Notification Act (WARN), however, does require employees in some cases to report cumulative layoffs over a 90-day period.”

The opposite of engagement

Now, Best Buy denies that the company’s intentions are to work around federal labor laws. And, a company spokesperson told the Star-Tribune that “the company hasn’t been cutting employees every week, emphasizing that Best Buy provides a “meaningful” severance package that includes salary, health care benefits and outplacement services to support departing employees.”

I don’t doubt what Best Buy is saying, but all of this makes me wonder: is there anyone in Best Buy’s executive management team who understands that piecemeal layoffs, and an environment where employees are afraid to come to work on certain days lest the guillotine take their head, makes for a pretty terrible place to work?

My experience with these piecemeal layoff situations is that they fuel a never-ending amount of employee gossip and speculation to the point that little real work gets done (and what does get done is not getting done very well) because everyone is focused on whether or not they will be the next to go.

Who can really be engaged with their job in a workplace like that?

Why managers need to read Maslow

With so much focus these days on the value of employee engagement, this is a really good example of the opposite of that, of how to quickly disengage a workforce from the tasks at hand.

Smart managers and executives know that human beings generally don’t do their best work when fearful or uncertain about their security, something that Abraham Maslow explained in his famous “Hierarcy of Needs” 70 years ago. Maybe Best Buy management needs to go back to school and bone up on Maslow’s teachings a little more. Or, maybe it is just too late for that.

Either way, having workers fear coming into work on “Termination Tuesday” isn’t the best way to run a railroad. It’s a sign, I think, of the depth of the problems that Best Buy is facing, and, a sign of how bad management practices like this only serve to make a corporate turnaround all that much harder — if not impossible.