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CASE 5-3 RadioShack Corporation: You've Got Mail! to move forward with the plan. One month You've Got Mail! Julian Day was brought on as CEO of years. Roberts retired from his chief executive after assuming the chief executive's position, RadioShack to turn the company around fol- position in favor of a seat on RadioShack's Day issued the following press release: Employees and investors awaited the lowing years of financial decay and instabil- Board of Directors. Edmondson, however, left impending layoff's in September of 2006 and, ity in upper management. The British his position after making the scandalous reve- Employee Perceptions on an otherwise uneventful autumn day. executive had been part of the turnaround of lation that he had falsified his resume by claim- nearly 400 employees were given their termi- RadioShack corporate headquarters employ- nation notice with the following words: other U.S. corporations including K-Mart. ing to hold two academic degrees he had never ees were unprepared for the sudden announce- now owned by Sears, and Safeway. Inc. Day earned.* Day was brought in at the beginning "The workforce reduction notification wanted to waste no time implementing the of July 2006 to help turn RadioShack around ment as recent communications had praised is currently in progress. Unfortunately your turnaround plan that the executives and their talents as RadioShack's principal position is one that has been eliminated," If because of his positive record in reviving enabling factor in turning the company Board had agreed upon prior to his arrival. financially unstable retail companies. these words seem stark, then consider their around. Managers approached their teams method of delivery: this message was sent soon after the press release to inform them that out to the affected employees via their com- RadioShack Corporation Financial Troubles and Turnaround Plan the workforce reduction would be a swift pany e-mail account, RadioShack is a consumer electronics goods The change in management and the intense process enabled by the company's intranet. The press and professional organizations and services retailer that operates more than competition in the marketplace have not Employees soon began losing confidence in of communications and human resources pro- 4,460 retail stores in the United States, Puerto gone unnoticed in the company's financials, many of the company's public claims, include fessionals balked at the communication Rico, and the Virgin Islands, In addition to the RadioShack's stock price had been underper- ing the following, used on the corporate method used in the layoffs. A Fort Worth Star- RadioShack retail store chain, the company forming and both its 2005 and 2006 annual careers Web site: "It begins by celebrating Tribune reporter wrote the original story which also operates nearly 800 nonbranded kiosks, reports contain letters to shareholders that are diversity and passion in every department and made AP news and appeared in national publi- offering wireless handsets and accessories. apologetic in nature. As the values below at every level. Our professional development cations such as USA Today and The New York They also manage direct-to-home satellite show, stock prices were down from 2004 and programs, workflow and communication Times and Web logs popped up as seemingly services through 1,500 dealer outlets offering RadioShack lagged its major competitors in processes make great thinking possible. Our everyone on the Internet was talking about the both RadioShack and third-party products and revenues and earnings. people make great things happen." e-mailed termination notices. services to consumers who live in smaller Additionally, total stockholder equity markets, and an e-commerce Web site, www. had deteriorated from 922, 100,000 in 2004 to radioshack.com. The electronics goods indus. 653,800,000 in 2006. Management has real- try is highly competitive and RadioShack is ized its obligation to increase the firm's currently third in the U.S. market behind big financial performance and has laid out a turn- box stores Best Buy and Circuit City. The around plan with the following three objec company is headquartered in Fort Worth, tives: increase average unit sales volume. Texas, and had approximately 40,000 employ- rationalize the firm's cost structure, and grow ees at the end of 2006. profitable square footage of retail space. In describing how the goals would be attained, Instability in Upper Management management addressed the consolidation of Over the past several years, RadioShack has distribution centers, reallocation of resources among RadioShack stores to reflect prof- undergone a series of executive management itability, updating the inventory and product changes including ten new appointments to line offerings, and reducing overhead costs, vice presidential and c-suite level positions since 2004. The most significant change in the executive-level shuffle of employees is the Overhead Costs = Hundreds of Jobs instability in the CEO position: Leonard The public's initial response to Day's appoint- Roberts, David Edmondson, and Julian Day ment as CEO and the turnaround plan was pos- have all reported for the position in the last two itive and RadioShack was given the confidence WRITING ASSIGNMENT Please respond in writing to the issues presented senior level task force member from either in this case by preparing two documents: a com- human resources or corporate communications. munications strategy memo and a professional The task force has been put together to address business letter. You should assume the role of a the issues presented by the case. The strategy memo addressed to Julian Day. CEO of their implications, offer recommendations for RadioShack Corporation, should communicate action and show how to communicate the solu- the details of the case, discuss critical issues and tion to those who are affected
