Worst Practices in Innovation Award Winner!

Circuit City gets the "Worst Practices in Innovation" award for this month.

In a major shoot-yourself-in-the-foot move, they recently announced that they're laying off 3400 of their highest paid hourly employees to reduce costs. These employees will be able to re-apply for their former jobs, at lower pay, in 10 weeks. (As if!)

Just when their competitors are trying to improve customer service, here we have a move that will likely do the opposite; not only do they lose the knowledge of 3400 experienced people, but they also blow a massive hole in company morale, as the message from management is clearly "Abandon Ship!"

According to published reports, starting pay at Circuit City is about $8 per hour, while top pay is apparently around $15. If my math is right, these layoffs therefore save them around $35 million per year.

Behind this move, of course, is the stark math of consumer electronics retailing, where margins are shrinking and competition is fierce. But my goodness, couldn't they come up with a more innovative approach than chop, chop, chop?

I would suppose, for example, that if they engaged the 3400 people in a creative conversation about how to improve the company and increase sales, they would get back a lot more than $35 million. The most innovative companies engage everyone in the organization in the search for great new ideas; the least innovative ones kill innovation from the top down.