Radio Shack is in need of a massive organization overhaul. The Board of Directors was hoping to get this type of culture change when they hired a new CEO. To date, the company’s and CEO’s performance continues to show that they are still stuck in a deep rut. Sadly, one with no immediate end in sight.
Having conducted my own research, and based on my observations and analyses about Radio Shack, I have decided to write a letter to Joseph Magnacca to inform him about the changes I believe are necessary to quickly regain financial health, which needs to start with recognizing that his staff is the most valuable company asset.
Dear Mr. Magnacca,
I am writing to you with the goal of informing you of some of the issues that we see down here in the stores. I have been a Radio Shack employee since 2012 and I have seen many changes to our company. With all due respect, sir, I have seen changes that have mostly caused the morale of my co-workers to go lower. I recently did some research on my own time and I found some key areas where improvements may go a long way toward improving the morale reduce the turnover and, contribute to a much more productive work environment.
First, I have observed that many of customers are asking very detailed technical questions and we do not believe that we are able to address their questions well. Sometimes these customers are patient with us while we call some of our colleagues at other stores to ask them if they know how to answer these questions, but most often, they are in a hurry and they leave the store unhappy. Nobody wins when this happens. It makes us feel inadequate and it makes the customers irate.
I believe that if we had some additional training, we could be better prepared to address some of these more technical details. I would like to recommend that we have the reps that come to stock our stores with new merchandise spend more time with us. We could take just a couple of hours to learn all about the new products that we are going to be selling from the experts. It would be helpful if the vendors’ reps gave us a Frequently Asked Questions summary. We could use a document like this as a cheat sheet in the heat of the moment when customers are rapid firing questions at us.
Second, I would like to go out on a limb and tell you that my Manager treats me like a little kid. I get micromanaged constantly and it seems like I never do anything well to please him. Last week he asked me to stock all of the electrical connectors in an hour – all this while helping customers and it was a very busy Saturday. Needless to say, I just could not complete this task and he was so angry with me. If we implemented small changes like making stocking an activity during the slower times, like all day Tuesday, I think this would help us a lot. If there was a document called “Stocking Guidelines” that was mandated to all Managers, then perhaps they would pay attention to how and when they should ask us to do these types of tasks. Then maybe someday, my colleagues and I will be thanked and praised for doing our tasks well!
Third, we have a very high turnover of employees. It is like a revolving door in my store. As a result of this, I often have to work double shifts and do not really have enough time to take my lunch or dinner break. I really do not mind working all these hours because I need the money, but if we could please stock some healthy foods in the break room, it would be very helpful. Items like bottled water, granola bars, microwaveable popcorn, and instant oatmeal or Ramen cups are inexpensive but would help a lot.
Lastly and most importantly, I believe we should be doing a lot more with sales through the internet. There are so many customers that leave the store when I cannot help them find what they are looking for and the last thing they always say to me is: “never mind, I’ll find it on amazon.com”. None of us in my store like to see customers leaving empty handed. I wanted to recommend that we look into the way that CarMax has been using the internet to sell more cars. I have a friend who works there and she loves working there for many reasons. One of her favorite reasons is that CarMax gives her time to work from home on her computer doing internet sales. My friend is able to spend more time with her baby, so it saves her money, but more importantly, she is able to grab some buyers from the internet and make car sales to them. I know there must be a way for us to do something like this? I do not want to lose out to amazon.com anymore. I would love to be able to recommend to my customers that they look at our new and improved RadioShack.com web page and that we figure out a way to work together all across the stores to make this work.
I believe that changes to our RadioShack.com website should make it more user friendly so that our customers will use it, instead of going directly to amazon.com. If the website is easier for the employees to use, we can use it to help our customers order the parts that they need. We could also have competitions between the stores to see which ones are selling the most products through the website. That would be fun to implement!
As you can see, because I’ve worked here for almost two years I know a lot about operations in the trenches and I know that my recommendations would go a long way to making our store, and perhaps our region much more successful. I haven’t addressed this with my Manager yet, but maybe we can test market my ideas by making my store the beta site for these recommendations? I am ready to roll up my sleeves and help you and our management team in any way I can.
Thank you for reading my letter. I wrote this letter to you because I would like the company to be successful.
Below is the research that I conducted on my own time and with my own resources to support the recommendations that I am making here.
Radio Shack was recently selected as one of ten worst companies to work for (McIntyre & Sauter 2013). The research conducted polled employees and middle managers from a variety of companies. Those companies with the lowest scores were selected as the ten worst companies to work for. This is why Radio Shack is on this list. The determination was made solely based on the opinions of the employees, and not necessarily financial performance of the company. The employee feedback focused on issues such as distrust of senior management and perceived lack of credibility of the CEO, to name a few.
Radio Shack began operating in 1967 and grew to a total of forty four hundred (4400) stores globally by the end of 2012, with stores in twenty-five countries, including two hundred and sixty nine stores in Mexico (2013). As of the end of December 2012, Radio Shack employed (34,500) thirty four thousand five hundred employees.
The company has three business platforms, namely, mobility, “signature” which includes components for home entertainment and wireless, and, consumer electronics.
Some of the many risks listed in the annual report include the risk associated with lack of talent at the sales and management ranks. The annual report details that there is a global scarcity of talented resources and that this has affected the company’s performance and will continue to, in the future. Another risk noted is Radio Shack’s reliance on a limited number of name brand vendors. If Radio Shack is not able to maintain these key relationships, then there could be an adverse affect on the financial performance of the company. There is a direct relationship between the way the wireless market performs and how Radio Shack’s are shaped. Therefore, Radio Shack finds itself in a situation where changes and especially cost pressures in the wireless market could adversely affect Radio Shack’s ability to maintain profitability in this critical segment.
Competition for Radio Shack has been multi-pronged and fierce. Sales figures have plummeted as a result of taking a beating from “big box” retailers, discount and warehouse retailers, and online retailers such as amazon.com. The annual report depicts new CEO Joseph Magnacca as eager to revitalize the company and increase both sales and profits.
There seemed to be a series of mis-steps with the brand. In 2009, the company wanted to appear more modern in order to attract new buyers. To accomplish this, they launched a new logo, new signage and even a new name for the company. The new identity was “The Shack”. This had disastrous effects on the company because it diluted the brand; confused existing customers, and did little to attract new customers.
Problem Statement
Last month, the Business Journal of Albuquerque reported that Radio Shack would be closing one thousand stores globally (Choi & Chandler 2014). The information released by the company did not detail the locations of the stores that they intend to close. The company also did not comment about how many jobs would be affected by this cut. Although the authors of this article contacted corporate headquarters to get more detail about this latest company failure, the company did not return the call. Now, a full year into his role, CEO Magnacca is not able to rescue Radio Shack from its inevitable slide into oblivion. In fact, the article goes on detail how the new CEO has made repeated changes in senior management and has cut off major initiatives that were intended to rebrand Radio Shack and make it more competitive. One such initiative was the retail outlet centers that it trialed at major retailer Target. After only one year after its inception, the CEO abruptly halted this partnership and decided to focus on making the existing Radio Shack store more modern looking. Only now to have to close one thousand of these more modern looking stores that evidently still do not appeal to its target shoppers.
The problem is stated well with the above graph that shows how Radio Shack has continued to struggle. The profit margin curve has taken on a steeper slope which is indicative of a company that is losing share and struggling to operate (2013).
Organizational Pattern
When employees were interviewed, they reported that they had a difficult time dealing with customers, which is indicative of poor training and store management. Employees also complained their wages were low, and in fact much lower than the industry average for their type of work. There were no benefits offered to the employees that worked in the stores (McIntryre & Sauter 2013). All of this adds up to poor morale, high turnover and poorly trained and managed staff. Now add a new CEO who has been shuffling senior management and halting rebranding efforts and it is no wonder that the company’s financial performance is so poor.
There is also a problem with modernizing stores only to have them closed. This contributes to poor morale. It’s like putting the employees on a roller coaster ride of emotions – one month they believe that the company is investing in their future by refurbishing their store, and a in a few months they find themselves unemployed.
Issues with middle management also contributed to the misery of Radio Shack employees. They were micro-managed, treated like children or asked to take on tasks that were not feasible, and therefore reprimanded for their lack of accomplishment.
Conclusion
Radio Shack is in need of a massive organization overhaul. The Board of Directors was hoping to get this type of culture change when they hired a new CEO. To date, the company’s and CEO’s performance continues to show that they are still stuck in a deep rut. Sadly, one with no immediate end in sight.
A massive change like the one needed for Radio Shack needs to start from the ground up. To accomplish this, the company needs to recognize that the people working for the company are its most important resource. To make changes that will allow the staff to make slow but steady changes that will amount to operations that are more successful.
In addition, since 2009, there has been significant brand dilution. The company launched new signage that refereed to the company as “The Shack” (Abril, 2013). This strategy was intended to give the retail locations a more modern look, but instead confused customers who were no longer able to relate to the new brand identity. The new CEO recognized that this has been a mistake and reversed direction. Just another in a long series of unsuccessful, unproductive fits and starts.
Thank you for reading my letter. I wrote this letter to you because I would like the company to be successful.
References
McIntyre, D. A., & Sauter, M. B. (2013, July 20). Retrieved from http://www.huffingtonpost.com/2013/07/20/worst-companies-to-work- for_n_3629056.html
(2013). Retrieved from file:///C:/Users/Downloads/RadioShack Corporation 2012 Annual Report.pdf
Choi, C., & Chapman, M. (2014). Radioshack closing 1,100 stores as troubles grow. Albuquerque Business Journal, Retrieved from http://www.abqjournal.com/362524/biz/radioshack-closing-1100-stores-as- troubles-grow.html
Abril, D. (2013). Radioshack hopes new marketing strategy leads to turnaround. Dallas Business Journal, Retrieved from http://www.bizjournals.com/dallas/blog/2013/05/radioshack-hopes-new- marketing.html?page=all
Sorich, S. (2014). http://www.bizjournals.com/sacramento/news/2014/01/17/carmax- expected-to-open-in-february.html. Sacramento Business Journal, Retrieved from http://www.bizjournals.com/sacramento/news/2014/01/17/carmax-expected- to-open-in-february.html
