Danish retailer Fona makes a classic mistake - The Chief Happiness Officer Blog

Danish retailer Fona makes a classic mistake - The Chief Happiness Officer Blog Danish electronics retailer Fona is losing money so they just announced that all store employees must accept a 5-10% pay cut or face termination (Danish article via Google translate). Thats a mistake and heres why: This is bound to make employees unhappy and frustrated leading to bad customer service and lower sales. Those employees who can find a better job somewhere will do so. Fona will be left with only those who cant get away. Circuit City tried something very similar in the US a few years ago and saw exactly those two effects. And they went bankrupt a very short time later. And if youre in retail, staff is NOT the place to save money. A study found that: every dollar in additional payroll led to somewhere between four and twenty-eight dollars in new sales. Stores that were understaffed to begin with benefitted more, stores that were close to fully staffed benefitted less, but, in all cases, spending more on workers led to higher sales. What could they do instead? Heres a fantastic example: In 2000 computer chip maker Xilinx was facing massive financial problems and they introduced a pay cut that was progressive and voluntary. Read the whole story here its a fascinating case of facing a serious crisis with creativity, instead of with layoffs. I wrote about this in my 3rd book you can read the whole story of Xilinx here. I just want to make it very clear, that Im not saying that Fonas decision is mean or morally wrong. They are well within their legal rights as employers. Im saying that its a bad business decision that will end up costing Fona much more money than it saves them. Related posts Let me tell you how I feel about the crisis. Hooray for the crisis. Thanks for visiting my blog. If you're new here, you should check out this list of my 10 most popular articles. And if you want more great tips and ideas you should check out our newsletter about happiness at work. It's great and it's free :-)Share this:LinkedInFacebookTwitterRedditPinterest Related