Is there a better way to close a store?

Best Buy shutters 15 locations without any warning to employees

On Jan. 31, hundreds of Best Buy and Future Shop employees across Canada showed up at work to find the doors locked and notices on the windows saying the retail outlets were closed.

Without warning, Burnaby, B.C.-based Best Buy, which owns the Future Shop chain, closed 15 stores, leaving 900 employees jobless — about five per cent of its 17,000-employee workforce, according to media reports.

The move was based on an extensive review of the company’s retail footprint in an effort to “reduce unnecessary costs, eliminate redundant operating systems and optimize the real estate strategy to reflect a changing retail landscape,” Best Buy said in a release.

But it is never best practice to catch an entire employee population by surprise with something like this, said Doug Stephens, founder and president of Retail Prophet, a consulting firm in Toronto.

“There’s enough shock to learn you are losing your job, even when you suspect it, but to walk up to the front door one day and have it be padlocked is really adding insult to injury.”

When a company needs to downsize, the first step is making a commitment to tell the truth — not versions of the truth or half-truths, he said.

“We live in a world now where, inevitably, the truth is going to surface anyway and you don’t want it to surface on Twitter instead of in your press release,” said Stephens. “It’s really important for the organization to say, ‘Look, we need to come clean about the reasons we are making these changes and how these changes are going to affect the organization.’”

As soon as the company realizes it may have to close some locations, it should let employees know immediately.

“When employees are informed, ‘Look, things are not as good as we had hoped, it is conceivable we may have to close some locations, we don’t know which ones yet, but it is conceivable,’ it just prepares the employee population, psychologically at least, that there’s the possibility here of trouble,” said Stephens.

HR should play a role in deciding which locations to close and which employees are being let go, said Peter Saulnier, a partner at Logan HR Management in Vancouver.

It should look at the skill sets that exist at a certain location to ensure no critical skills are being lost, he said. And employers can also try to save the top talent by moving them to another location.

Once it has been determined which locations will close, the organization needs to develop a communications plan to ensure the various parties “hear it at the right time and in the right way,” said Saulnier.

People whose positions will be impacted need to hear the news first, said Stephens.

“It can’t just be some nebulous statement that says, ‘Sales are not where we need them to be,’” he said. “HR managers have to be prepared to brief employees thoroughly on all the reasons why this is happening, and they need to understand why them — why they are the ones being thrown out of the lifeboat and not someone else.”

These employees should receive a more than fair exit compensation package, said Stephens. Organizations can basically ignore the requirements of provincial employment standards legislation because the commonly accepted range of appropriate severance is much more than what is outlined, said Saulnier. Employers should consider the seniority of a position, tenure at the company and any extenuating circumstances, he said.

Outgoing employees should also be informed of the various resources available to them. An organization may want to consider offering additional training, said Stephens.

“If you’re letting go of retail employees and you know you haven’t really given them a lot of technology training or business systems training, then maybe that’s something you offer them in order to prepare them more properly for the job market,” he said.

Career transition services can help people prepare to find their next job, such as putting a resumé together and improving interview skills, said Lynn Lochbihler, a partner at HR-Fusion consultancy in Hamilton.

“If people have not had to look for work in awhile, it can be a little overwhelming to suddenly have to be looking for a job and going to interviews. So they might need some coaching on ‘How would I answer certain questions?’ ‘What do I say?’ ‘What should I not say?’” she said. “They maybe need some coaching to give them some skills and maybe some confidence.”

Counselling services may also help outgoing employees.

“In a large restructuring, there will be many different kinds of reactions that individuals experience — anything from grief to shock to anger — and having an impartial third party there can help to mitigate those reactions sometimes,” said Saulnier.

HR should make sure it is available to laid-off employees to answer any questions they have around issues such as their pension, benefits and retirement savings accounts, said Lochbihler. The employees should be given the name and contact information of someone they can reach out to if they have further questions after they leave, she said.

Don’t forget ‘survivors’

The employer also needs to consider the communication needed for remaining workers.

“We always think the people who lost their jobs are the only ones affected by the layoff… but just the opposite can be true. You can have a population of people, I call them the walking wounded — they’re zombies now because they’re on pins and needles because they just saw half of their friends lose their jobs,” said Stephens.

When these employees hear of other locations closing, they want to know “What does this mean for me?” said Saulnier. Their initial reaction will be “OK, my area is next,” so it’s important to assure them their location is remaining open and educate them on what changes they can expect.

This may include an increase in workload, more business being funnelled to the remaining locations and employees transferred from the closing stores, said Lochbihler.

Once employees have been informed, the organization needs to communicate to everyone else, including suppliers, landlords and the media, said Stephens.

And after the layoffs occur, communication needs to continue — especially to the remaining employees, he said. Everyone should have a clear understanding of what the company is going to look like going forward.

“It’s that silence after a significant amount of layoffs that can be disturbing. The HR department needs to understand that layoffs are the beginning... of a new phase of communication and you need to be prepared to talk to people a lot to make sure they are emotionally getting over this and they intellectually do, in fact, understand what’s happening,” said Stephens.

When a company is closing locations, HR should be the “centre of excellence” around managing this change, said Saulnier.

HR should support the workers while at the same time minimizing the liability and risk to the company, said Lochbihler.

“It’s a bit of a balancing act. It could be for financial reasons that a company has no choice but to take this course of action but then it becomes a matter of ‘OK, how can we do it in a way that is as fair and just and reasonable as possible to employees, even though it’s a negative situation?’” she said.

If a company fails to handle a downsizing situation properly, its reputation and ability to recruit top talent in the future can be negatively impacted.

“How you go about removing people from their jobs and how you treat them through that process speaks volumes about the values of the company,” said Stephens. “Having the front page of (the newspaper) with Best Buy employees hugging one another outside of a closed, padlocked location — you don’t get any worse than that.”

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