I'm am always saddened to hear about companies that are laying people off, filing for bankruptcy, or going out of business. Unlike those who celebrate the Darwinian brilliance with which capitalism corrects its mistakes and evolves on, I always find myself thinking about the employees who get caught in the crossfire.
And I'm always saddened when the company doing the laying off, bankruptcy filing, and going out of business is local.
As in Tweeter, which is located in Canton, Massachusetts.
Now, I don't know if I actually ever bought anything at Tweeter, but the Tweeter store in Back Bay was a frequent stop of walks, a grown up candy store where my husband could lust in his heart after a mega-flatscreen TV. I haven't been by in a while, so I don't know if it's still there, or is going, going, gone.
In any case, Tweeter - with its high end products and services has been boxed out by the big box stores and their relentless, race to the bottom pricing and service strategies - has fallen on hard times.
When they began making noises about shutting down certain parts of their operation (stores and distribution centers) earlier this year, some employees jumped ship right away. Others were encouraged to stay in exchange for a severance package.
That was then. This is now.
A recent Boston Globe article by Se Young Lee chronicled the troubles of one Ron Rivera, a Tweeter employee in California who hung on to help shut down the distribution center where he worked, agreeing to stay on until mid-May.
Rivera, counting on almost $7,000 from the company, as well as a month of paid health insurance, turned down two job offers and decided to take a month off to spend time with his two teenage daughters.
But Rivera did not get a check on June 15, when the first payment was supposed to arrive. When he called the company Monday, he learned what hundreds of other employees who stayed on at one of the 49 stores being closed are finding out: There is no check coming, because of the Canton company's June 11 bankruptcy filing.
The CEO, Joe McGuire, who is clearly in a very difficult and painful position here, was unfortunately quoted as saying,
"Employees were expecting severance, and the company was really hoping to pay it. It's unfortunate, but it is what it is."
It is what it is.
Thanks, Joe, for those words of wisdom.
The 150 or so employees who have had their severance pay severed are obviously aggrieved. They have been told that they can file a claim with the Bankruptcy Court, where, I expect, they'll need to get in line.
When I volunteered for separation from Genuity in 2002, the company was on the brink of bankruptcy. I left in May and the company filed, I believe, in July.
Within about 3 1/2 seconds of filing, there was a rumor swirling around the ex-Genu listserv that severance packages were going to be a casualty of the bankruptcy filing. I can't recall the exact structure of the Genuity six-months severance package I got, but I think I got paid regularly for a couple of months and was then going to get a lump sum payment for the remaining four months, due any day.
One of the reasons I raised my hand for the Spring 2002 lay-off at Genuity was that I figured it was going to be the last reduction that came with good severance packages. I was wrong. Bankruptcy and all, the company paid out the same severance packages until the bitter end, and also honored the bonus deals it made with those who agree to stick around and turn the lights out. I don't know how they did it, but it's apparently true that - at least in some cases - even in bankruptcy, companies can still pay severance out.
As I awaited my final payment from Genuity, I can honestly say that I sweated it out. The day it arrived, I rushed to the bank to deposit it and continued to sweat until the check cleared. So I can imagine how Ron Rivera of Tweeter felt:
"It was kind of like a big rock falling on you," he said.
"All of a sudden I have a mortgage to worry about and a car payment to worry about. I'm in a bad spot right now."
When you're counting on a severance package and it falls apart, I'm sure it does feel exactly like a big rock falling on you.
My sympathies to Ron Rivera and the other former employees, sitting there stunned. Just as if they were hit in the head with a big rock. Warehouse men, store clerks, distribution center employees. Don't those rocks seem to fall disproportionately on the little guys?
11 comments:
Nothing like a big "it is what it is". Sounds like what it is, is a crock.
This is a big flaw in US bankruptcy laws. I saw the same thing happen when Interliant, where I once worked, went into Chapter 11. While regular employees were having their final paychecks bounce, of course, executives got bonuses for selling off the assets. It stinks. Employee pay should be handled differently than other pre-filing debts.
And now like magic, the Tweeter team asked the court to approve incentive pay because of all the hard work they must now do in selling the company and cleaning up their own mess - boo who . Funny if they would have been leaders this never would have happend and there would be no need. Must be nice to get a little extra change for your own screw ups -
I wonder how many of them have already hooked back up with Jeff for their next paycheck ?
FWIW, I think Tweeter was yet another of those companies with good employees but bad top management. I was in the market for a high end stereo system a year ago, and went to Tweeter because a composer friend recommended a particular sales person. The guy was extremely knowledgeable and helpful, and I really wanted to buy something from him. But the audiophile brands they had were all no names and also rans. They must have been selected because they came with much higher gross margins, but that didn't do Tweeter much good if they couldn't get anyone to buy the stuff.
Well after the news about our severance dissapearing, now they've cut our earned vacation and discretionary time payments in half. Freakin' scumbags!
Tweeter Etc was my first employer out of college. I have not worked there in 20 years but I always found the management to be honest and morale. The electronics retailers they compete with pay poor wages and have high employee turn over.
Steve
Steve - times have changed unfortunately. the simple fact is that if the entire office in canton were to disappear from the equation, the company is profitable and functional. They just couldn't see it from inside the building.
I would just like to add, had the CEO, Joe McGuire, requested that severance pay be paid out to the employees to the bankruptcy court, IT WOULD HAVE! He is fully allowed to make that request AND HE KNOWS IT AND HE PROMISED HE WOULD to all the loyal employees that stuck around to help close the stores. Don't think for one moment the employees didn't see the writing on the wall and so they knew to ask the question.
The piece most don't know is that a few months prior to the shutting down of the stores and before the filing, Both Joe and Sandy Bloomberg, original co-founder of Tweeter, BEGGED everyone to please hang on, things were going to change, BIG changes. They were apologizing for the bad management decisions they had made and were going to make them right.
The first right thing that has happened since the Tweeter Newco acquisition is that Sandy is gone. The 2nd righ thing will be when Joe is gone!
Well , the second thing happened. Joe is gone ! I just wish him the same as he did to all the folks that were promised severance. All that is left to say is " Joe - it is what it is !"
I worked for Tweeter for 10 years and held a dept. management position with the company. So much has been wriiten that the declining sales was the resean for the fall of this company. That is only half the story. One thing I know that was a big factor was poor
operational management. I personally saw thousands of dollars written off because of product damaged by distribution center employees with no accountability for it. To many people left in operational management positions who didn't have a clue. If you went to upper management when you noticed a problem that was causing the company to bleed, the standard answer was "it's not in my circle". I believe that over half of the executive team was color blind since the could not see the red ink on the P&L statements from operational issues.
"I personally saw thousands of dollars written off because of product damaged by distribution center employees with no accountability for it" I was a sales person for a succesful Tweeter location about ten years ago and left them for that same reason. They grew thru aquisition way too fast with Sandy's philosophy of putting a Tweeter store between a Best Buy and a Circuit City location with the anticipation of skimming off the top 10% of the business from them but it failed miserably because Tweeter senior management believed that they would somehow maintain exclusive distribution on select brands, ala Mitsubishi, etc. The many catagories that Tweeter marketed became "mature" rapdily, meaning the gross margins dropped significantly as these products became more widely distributed to the big box retailers, sucking any exclusivity out of the air for Tweeter almost entirely. Also they did virtually no advertising whatsoever, it was if they almost ceased to exist to many customers. I would ask folks coming into the store for accessories as to where they bought a system from only to hear many times, "I forgot about you guys until I really needed to talk to smeone about hooking all the stuff up" They were virtually forgotten by a huge customer base. The corporate offices were filled with many chiefs but not enough common sense Indians
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