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Blog: The Business of Management
 

September 23rd, 2008

Here’s One Idiot Manager I Am Sorry to See Go

Recently, I’ve been telling people how thankful I am for people like Tribune Co. Chairman Sam Zell, because without terrible, shortsighted managers like him, I’d have a whole lot less to write about.

And in that spirit, I have to say a silent prayer of thankfulness and a fond goodbye to Phillip J. Schoonover, the now-former CEO of electronics retailer Circuit City, because like Zell, Schoonover’s idiotic business strategy helped to fuel this blog with no end of wonderfully bad management decisions and practices.

Schoonover was canned by the Circuit City board on Monday, as I predicted they would do last December. As The Wall Street Journal noted, Schoonover was brought in from industry leader Best Buy some four years ago to turn around the troubled Circuit City chain. “Instead, the 48-year-old executive, who was named CEO two years ago, presided over a further decline in the company’s fortunes. He attracted criticism for decisions that backfired, such as dismissing veteran workers to cut costs.”

I love the understated simplicity of The Wall Street Journal, but saying Schoonover dismissed veteran workers to cut costs doesn’t really capture the full idiocy of Schoonover’s “management” decision. He didn’t just dismiss veteran workers, he purposely fired his most senior, highest-paid (and most experienced) floor workers and replaced them with lower-paid employees in some misguided cost-cutting experiment that not only demoralized his workforce and damaged customer service, but led to a number of age bias lawsuits as well.

Schoonover never admitted the terrible mistake he made despite withering criticism of his decision in The Washington Post, The New York Times, The Wall Street Journal, and here in the Business of Management blog. Even a big drop in sales and a sinking stock price failed to dissuade Schoonover of the folly of his decision, and his singular denial of any responsibility for his terrible people-management strategy led me to award him and Circuit City as the winner of the 2007 Workforce Management Stupidus Maximus Award “for the most ignorant, shortsighted and dumb workforce management practice of the year.”

The Journal’s story on Schoonover’s ouster quoted Colin McGranahan, a retail analyst at Sanford C. Bernstein & Co., who noted several of Schoonover’s blunders over the years, such as replacing the highest-paid, most seasoned staff in the company’s stores in an attempt to recoup losses caused by falling TV prices. “He underestimated the disruption that would cause,” McGranahan said. “If you worked at Circuit City, the only way to interpret it was that if you do well, you will be fired. It led to bad morale and staff disengagement.”

Yes, it is remarkable that a business strategy that rewards the best in your workforce with involuntary termination would be seen as anything but bad, but that’s why Schoonover won the Stupidus Maximus Award. How could anyone with any sense see it as anything other than dumb and foolish?

So, farewell, Phillip Schoonover. I’m sorry to see you go, because now there is one fewer shortsighted and idiotic manager to write about. But don’t worry about me. I’ll make out just fine. After all, I still have Sam Zell and his gang to keep me busy.


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