Circuit City was the largest competitor to Best Buy in the retailing business. After years of mistakes, Circuit City has finally bitten the bullet. There are many blunders to address, but not enough time in the world to analyze them all. Here are a few of the issues at the heart of the Circuit City collapse.

First, the end of commission. As soon as Circuit City decided to end commission and hire a bunch of hourly goons, it was all over. Nothing is worse than going into a retail store than to see apathetic teenagers who could really not care at all about customer satisfaction. Mix this fact in with the management who was constantly pushing their “cheese” or “service protection plans” on the employees, pressuring them consistently, and it would appear only the apathetic could survive in such a setting, with no true reward for employees who succeeded. Commission served as an incentive that helped generate sales, but also helped create amiable relations between the customer and employees. Concerned employees had a reason to develop a rapport with customers. After Circuit City ended that practice, many of the long time employees left, taking their customer-employee relationships with them.

Second, strange management shifting policies. After being employed there for years, it becomes hard to notice that the management was completely shifted out every few months and moved to separate offices only miles away. This strange disruption seemed to always occur right before it was time for evaluation (which leads to raises). Thus the promises of the old management would become null and void as they disappear suddenly, and often without so much as a word in advance. This would lead to not only many of the good employees promised salary increases getting the shaft, but disruption of the smooth operation of the company. The anger of employees at such schemes may lead to lowered sales and customers being treated with less enthusiasm. If one had the phone number of their old bosses, they were usually at the Circuit City on the other side of town, having not been moved very far.

In finality, it is the bottom line focused nature of Circuit City that killed it. Just before the fall, Circuit City cut all of their employees making above a certain amount. If raises are an indication of good employees, that would mean Circuit City just fired anyone who did “too good” of a job. This type of cost-cutting is of the worst variety. The death of the company soon to follow should come as no surprise.