COMPENSATION CH. 1
Ch. 1: “The Pay Model”
Your Turn…
1. The replacement of highly paid workers with lower-paid workers did not cause Circuit City to perform so poorly. I have come to this conclusion based off of the section, Caveat Emptor, and am confident in my response. I do feel as though the variables were measured effectively and were useful in their research. However, just because it was useful does not mean they were actually related. The replacement of the highly paid workers with the lower paid workers is not necessarily the reason for Circuit City’s poor performance. Even prior to 2007, Circuit City’s stock prices from 2001 onward was always below Best Buy, and for the most part below Amazon and Walmart. I would have to agree with BusinessWeek when it is noted the questionable significance of the cuts and if it even had a relation or affected the in-store customer experience. Additionally, Alternative explanations for this poor performance from Circuit City were not even considered. There could have been plenty of other reasons that could have been the fault that caused Circuit City to go down the drain.
2. I do believe that the compensation changes at Best Buy could be a major reason for its current difficulties. By demoting 8,000 senior sales associates to positions that pay half as much is a red flag “no-no” Yes, this can cut labor cuts, but that can hinder productivity. They also plan to cut 400 corporate jobs, which in turn can take away talent that could help Best Buy move its way to the top. I believe the actions they are taking in relation to compensation are understandable in order to stay afloat but are a little drastic.
3. Walmart, Sam’s Club, and Costco are doing better than Best Buy and Circuit City. This is because the way people are paid affects the quality if their work and their attitude toward customers. Walmart, Sam’s Club, and Costco offer compensation packages and use pay models that work for them and have been ultimately effective as a whole for the
Your Turn…
1. The replacement of highly paid workers with lower-paid workers did not cause Circuit City to perform so poorly. I have come to this conclusion based off of the section, Caveat Emptor, and am confident in my response. I do feel as though the variables were measured effectively and were useful in their research. However, just because it was useful does not mean they were actually related. The replacement of the highly paid workers with the lower paid workers is not necessarily the reason for Circuit City’s poor performance. Even prior to 2007, Circuit City’s stock prices from 2001 onward was always below Best Buy, and for the most part below Amazon and Walmart. I would have to agree with BusinessWeek when it is noted the questionable significance of the cuts and if it even had a relation or affected the in-store customer experience. Additionally, Alternative explanations for this poor performance from Circuit City were not even considered. There could have been plenty of other reasons that could have been the fault that caused Circuit City to go down the drain.
2. I do believe that the compensation changes at Best Buy could be a major reason for its current difficulties. By demoting 8,000 senior sales associates to positions that pay half as much is a red flag “no-no” Yes, this can cut labor cuts, but that can hinder productivity. They also plan to cut 400 corporate jobs, which in turn can take away talent that could help Best Buy move its way to the top. I believe the actions they are taking in relation to compensation are understandable in order to stay afloat but are a little drastic.
3. Walmart, Sam’s Club, and Costco are doing better than Best Buy and Circuit City. This is because the way people are paid affects the quality if their work and their attitude toward customers. Walmart, Sam’s Club, and Costco offer compensation packages and use pay models that work for them and have been ultimately effective as a whole for the