Editor’s notes

You get what you pay for
By Todd Humber
|Canadian HR Reporter|Last Updated: 04/17/2007

Knee-jerk reactions are almost always wrong. Circuit City, the Richmond, Va.-based electronics giant, did a doozy of an HR knee-jerk reaction when, faced with a loss in the first quarter, it decided to get rid of all of its “high-paid workers.”

At the end of March, the retailer turfed 3,400 employees in the U.S. and Canada because it thought they were overpaid and announced plans to replace them with cheaper workers. Betty Owen, 56, of El Paso, Texas, was one of them. Owen, a part-time worker logging full-time hours, was pulling in $10.10 per hour (all figures U.S.).

According to published reports, the company decided to get rid of workers whose wage level was at least 51 cents above Circuit City’s “established pay rates.”