Best Buy quietly shaving its ranks at headquarters

  • Article by: THOMAS LEE , Star Tribune
  • Updated: August 5, 2013 - 11:00 PM

Job cuts have been so regular lately that workers say they dread “Termination Tuesdays.”

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The Best Buy store in Eden Prairie.

Best Buy Co. has been quietly laying off employees in small groups at its Richfield headquarters over the past several months, incrementally reducing a corporate staff already hit hard by cuts.

The recent wave of cuts is spread across all departments and ranges from single digits to as many as 25, Best Buy confirmed Monday. The reductions follow 400 layoffs of corporate workers in February and another 400 workers last year.

The consumer electronics giant, which is working to eliminate hundreds of millions of dollars in expenses, has been trimming its staff on such a regular basis, usually on Tuesdays, that employees have nicknamed the day they receive layoff notices “Tornado Tuesdays” or “Termination Tuesdays,” according to multiple sources within the company.

Best Buy spokeswoman Amy von Walter said the company hasn’t been cutting employees every week, emphasizing that Best Buy provides a “meaningful” severance package that includes salary, health care benefits and outplacement services to support departing employees.

At one time, Best Buy employed as many as 9,000 people at its corporate campus, although in recent years the number has fallen to around 5,000. The company declined to say how many employees are working there now or what its final target for staff reductions will be.

“When we committed to reducing costs as part of our transformation efforts, we said our first priority was to identify savings in nonsalary expenses,” von Walter said. “But we have also had to make some difficult decisions involving head count, which ultimately allow us to accelerate our work to transform our business.”

As Best Buy wrestles with soft sales in the United States, the company has pledged to shave $700 million in costs over the next few years — part of an initiative called Renew Blue. Since the cost-cutting began, the company has eliminated about $295 million in annualized costs — but not all of that has come from job cuts.

The company credits Renew Blue, which includes cost cuts and an emphasis on customer service, for its improving stock price, which has more than doubled since December.

Often, large corporations prefer to lay off a large number of workers all at once, not only to immediately fortify its balance sheet but to prevent such disruption from morphing into a long-term distraction. But since its last round of large job cuts, Best Buy has chosen to reduce staff by laying off smaller groups of workers over an extended period of time.

That’s akin “to peeling off the band aid slowly,” said Dan Le, a Minneapolis-based attorney who specializes in workplace issues. As a result, Le said, morale plummets because employees constantly fear losing their jobs, whereas a mass reduction suggests the company won’t fire anyone else in the immediate future.

Climate is tense

Several Best Buy employees said the climate can be tense at the company’s headquarters, especially on Tuesdays.

“Whenever someone leaves their desk, we think that person just got laid off, when he or she might just be going to the bathroom,” said one surviving employee who requested anonymity because the individual was not authorized to speak to the news media.

Marshall Tanick, an employment law attorney at Hellmuth & Johnson, said Best Buy’s strategy allows it to work around a federal labor law that requires large employers to give workers 30 days’ notice of major layoffs. The Worker Adjustment and Retraining Notification Act (WARN), however, does require employees in some cases to report cumulative layoffs over a 90-day period.

But company spokesman von Walter denies that was Best Buy’s motivation.

“Over the past year many have speculated about Best Buy and its intentions, nearly all have been wrong — including in this instance,” she said.

Best Buy’s process does allow the company to better adjust its workforce based on its immediate financial needs, Le said. Executives can weed out underperforming employees without resorting to large, indiscriminate layoffs that sweep away good workers as well. In the past, Best Buy has laid off a larger group of employees only to hire some of them back a short time later.

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