The Inside Story: A Prognosis of Best Buy from a Veteran Employee
I started working for Best Buy during my senior year of high school and continued with the company all the way through my undergraduate education and into graduate school. As I moved around for college, I worked for three different Best Buy stores in three states and for two different Geek Squad in-home service centers in two states. No, this isn’t the viewpoint of some senior executive, or the analysis of an industry leading authority on business development. This is the view of a six year veteran employee who worked at multiple sites, operating from an organizational communication studies paradigm, who had the opportunity to see a company fall from the top of the food chain and struggle to recover and adapt to the changing market. Throughout my time at Best Buy I observed three big failings that might have slipped by people on the outside.
Trying to Get Commission Results on Non-commission Pay
One of Best Buy’s points of pride is that their employees are not paid on commission. Employees are trained to make non-commission statements, informing customers that they are simply paid a flat rate, in an attempt to gain customer trust. This can be a great benefit to the customer, but isn’t the whole story. It’s true that most customer facing employees (like Geek Squad agents or sales staff) are not paid on commission. However, sales are still incentivized in ways that create a commission-like atmosphere. For example, managers have the opportunity to make big bonuses based off of revenue/margin goals. Lower level employees can hit Blue Crew Bucks (a bonus tacked onto a paycheck). And, some employees (like Best Buy For Business) receive commission on sales. None of these practices are unethical, but giving customers the impression that sales performance isn’t rewarded is simply wrong.
This slight discrepancy never bothered me until Best Buy implemented a new sales tracking system. Now, each sales employee’s performance is closely tracked, as it would be in a commission pay system. Employees are tracked on multiple metrics, including: sales per hour, protection plans sold, margin and gross revenue per sale, payments made on a Best Buy credit card, and accessory attach rate. By implementing this tracking system, Best Buy has instantly and fundamentally changed the work climate within the stores. They have created all of the problems of a commission system, like competitive relationships between employees and in-fighting for sales – both of which damage the customer relationship and defy their claims. It clearly hurts the work culture.
Best Buy understands that such a tracking system has the potential to have a negative effect on the culture, so they instruct management to use the metrics only as a coaching tool. Unfortunately, there is a big difference between the theory espoused and the theory in use. These sales metrics are being used in performance appraisals and to promote/demote employees.
Creating an Inept Workforce
Another point of pride for Best Buy is that their employees are better trained and better educated than the competition. I certainly hold that to be true, but that advantage has been diminished by recent strategy. A few years back Best Buy restructured to eliminate many of the full-time and higher paid sales positions. This allowed them to increase the number of sales people available to serve customers by hiring more part-time employees at lower wages. In short, they chose to sacrifice quality in favor of quantity. Hiring more employees at lower wages can work well in some business models, especially with non-technical positions, but I would argue it was a bad move for Best Buy. In the end, this hurts customer experience, decreases employee retention, and leads to an undifferentiated work force.
Based on my employment in three different states, I would estimate that most full-time sales associates are getting paid ten dollars an hour or less (depending on the location). This might be a competitive wage when compared to companies like Target or Walmart, but not when compared to boutique electronic shops, and not when an educated workforce is a point of differentiation. By paying comparatively low wages, Best Buy attracts a different type of worker than they claim. Their sales employees are largely made up of high school and college students who need a part-time job, or more experienced employees who need a temporary job while they look for something better. This leads to low retention rates, which is a huge cost to the company because hiring and training new employees is extremely expensive. It also leads to a workforce that isn’t any more educated, motivated, experienced, or qualified than competitors’ employees. And in the end, it negatively impacts customer experience. An inexperienced or new employee simply isn’t as familiar with the products and services Best Buy carries, or educated on how to use the internal systems needed to order, schedule, or pay for products and services.
Failure to Create a Singular Vision
If you were to ask me, “Who is Best Buy?” I wouldn’t know how to respond. There is no vision of who the company is, a grand narrative that defines Best Buy, or clear direction of where it is going. At least not one that is well-communicated to the rank and file. I would argue part of this might be because much of their executive staff has changed in the past two years, including their CTO, CFO, and CEO. But I would also argue it’s largely because they have consistently failed to communicate a unified vision or make any successful unilateral moves, even prior to any changes in senior management. Rather, Best Buy has taken a shotgun approach to business and marketing, trying to advance on dozens of different fronts and seeing what sticks. Just take a quick look. In recent years, Best Buy:
- Added bottom of the barrel brands to compete with the likes of Wal-Mart, AND they expanded luxury offerings through their Magnolia brand
- Expanded internationally – particularly in Europe, and quickly failed
- Acquired smaller companies like mindSHIFT to reach different markets – but, like others, found out how hard it is to make mergers work
- Attempted to go head-to-head on price with online competitors, only to recognize this can’t be sustained in light of overhead
- Acquired Napster and CinemaNow – believing their extensive sales force would generate big sales – only to discover that no amount of “pushing” a product will overcome sub-par offerings
- Invested huge sums of money trying to break into musical instrument sales – and failed miserably
As you can see, almost none of their ventures have turned out well, with the notable exception of cell phone sales. Best Buy simply has not known how to answer the questions, “Who are we?”, and “Where are we going?”
To be fair, Best Buy’s new CEO, Joly Hubert, recently unveiled a new 5 point initiative called “Renew Blue” – an initiative that seems to indicate Best Buy might finally be moving forward again and taking some of these steps. Time will tell. What I know is the organization – from top to bottom – needs to understand who Best Buy is and where it is going. They need a solid vision that will ground executive decisions, give direction to lower-level employees, and create a clear identity in the minds of consumers.
Tough Changes Ahead
Though these criticisms may seem harsh, I sincerely want to see Best Buy succeed in the future, and not just because I own stock. Best Buy was my launching platform into the tech world. They paid for a big chunk of my school, allowed me to transfer between stores, and my immediate supervisors within Geek Squad were some of the best I could ever hope to have.
Not only do I hope Best Buy will survive, I believe there is still a spot for them in the marketplace. There is a big gap between commodity stores like Target and Walmart, and boutique electronics shops, and that’s where Best Buy fits. Said gap has shrunk thanks to the commoditization of electronics and become crowded with internet retailers, but it still exists.
In the short term, I believe Best Buy will continue to follow the path of Circuit City. They will close stores and lay off employees until they have shrunk down to a size where they no longer over-saturate the market. I hope that through that process they can decide what type of retailer they are going to be and structure the organization to fit their new goals. Once they have decided on a direction, it needs to be aggressively communicated to all internal and external stakeholders.
I just hope the senior staff has the gumption to admit Best Buy will never be what it once was, but that it can have a prosperous future. It just has to go through the fire first, and it takes strong leaders to willingly walk through that fire.
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Recent Forum Posts:
Pogre, post: 1202942, member: 79914
Reading this article reminds me of my old job as a butcher shop manager. The lack of good people seeking a job has gotten worse in the last decade or so. In the 20 years I was there, employee retention was worse than I'd ever seen right before I quit.
Nobody wants to work for their money any more. All of those kids who got participation trophies, spoiled and told that the world is nerfed and all you need is a safe space with pink walls, rainbows and videos of puppies playing in the background where you can curl into the fetal position and suck your thumb in the corner in between sobs of injustice and “he was mean to me!”. There's an overwhelming sense of entitlement that exists in a lot of the younger workers nowadays and it disgusts me.
Low pay, not enough training and a “you owe me just for showing up” attitude convinced me I'll be a lot happier working for myself. Working in retail has become a nightmare. Especially if you're in any kind of management.
I agree. Although, I have recently hired young fellows into welding, who had fast food aspirations as their only hope, or, the military, perhaps. But, a lot of young men want to be welders because it's a fast road to respect, self, or otherwise. First thing I do is instill old school, shop solidarity, separating them and myself from the redundancies of over-administration. I remember who I respected growing up in the trades and now I am that guy to them. They go from “bro” and “dude” to, “yes sir” without any prompt from me. Young men want role models with hard skills and no nonsense. Of course it helps I don't GAF about pc and I'll kick their damn ass if they get up in my face. The other thing I insist on, if they haven't already is, a HS diploma. 2 of 3 of the young guys in my shop have met that requirement. Now they are standing at the gate ready to work and sometimes it's hard to get them to go home.
Thank the service economy and pc for the problem kids we have now. Industry that builds very little of anything of value anymore, along with the lack of ethic and morale of our young folks.
These were all minimum wage earners and HS dropouts with some criminal issues, if they were working full time at all when they started. They are now (GED'd)at apprentice/journeyman trade wages at around the one-two year mark, get substantial bonuses regularly and not one peep of drama out of them. In exchange, I am in the trenches busting rods with them and go to bat for them and nobody in admin messes with my crew and they consistently out produce the rest of the processes there, willingly.
Here's 3 of them working together to finish a quota on a Friday helping the last (newer kid) man who's fell a bit behind so all their numbers are right.
Here's one of the guys at about 10pm on a Sat night busting nuts on a big order. Double time pay plus OT. He was averaging about $40/hr for that day at 21 yrs old. I've only had to give them a ‘talking to’ once about cell phones. Haven't had to since. These boys are going to be hard core and real men/gentlemen by the time they are 25.
I build all the custom stuff while they are on production. To keep them on their toes and interested, I will draft one of them randomly to weld on one of my projects. You can see them grow up a bit each time and the focus is intense because they can't make a mistake here. This makes them want to be me. Now they want to know the hard math and the science and they get an idea that the path to the elite fleet is not an entitlement.
This stuff is contagious for young people. They are now in a league of their own and they act like brothers at, and out of work. Far away from the incessant adolescent dysfunction that plagues our youth these days. They'll never go back. They have no interest in alcohol or hard drugs and they are all paying their own way.
Dale Doback, post: 1204083, member: 83368
Sure, I buy mostly from Amazon, but, I'd hate to see all the B & M stores vanish. Besides, how great will Amazon be once they take over the world?
Amazon is already drifting from their core business by producing movies, and grocery stores. I expect their customer service will soon deteriorate with so many fingers in so many pies.
Bucknekked, post: 1203168, member: 81008
when I think back to my very first job, way back in covered wagon days, I got hired to work at Sears. Sears in those days was cutting edge in retail: they were the big dog. They are an old mangy dog with fleas today. How did they go from first to worst? You could apply many of the same answers to BB and their decline.
In the macro view of things, the market moved away from Sears and they didn't change as an organization fast enough to match the outgoing tide. They certainly had the resources to make that change when they were still strong enough to do so. But, leadership did not choose that path of change. I think BB already missed that opportunity to make the changes needed to follow their market when they were financially strong. Now they aren't in such good shape and making big changes may not be possible.
BB may become like BlockBuster (another BB) Video. The brick n mortar stayed standing long after the business was actually doomed. I am no seer of the future. BB may yet indeed pull off the changes they need to succeed. Even after reading this thread for a week, I still don't have any urge to go there.
Honestly, the only reason I buy anything from BB is because I get a family discount. If that weren't the case I get everything online. I've only ever used BB as a way to see a product in person. Then go to someone else to make the actual purchase.
Training? Ah, no. Were we skilled at all? Ah, no. Did we make much? Ah, hell no.
Did we appreciate the job ? I certainly did. It was my first job. It was the first rung on the ladder.
It gave me something to put on my resume. It put gas in the tank. It put an occasional burger in my hand.
It was a great introduction to the working world. I knew it was temporary. They knew it was temporary.
It worked out for both sides.
Now, if I was hired as an adult and that was how I was going to spend the next xx number of years and how I was expecting to support a family ? Oh dear. That would have sucked big time.