This week’s lesson planner comes from a District Manager out of the south who’s still with the company. Now odds are that you’re not that familiar with company history, but Steve Morgan used to be the VP of Electronics Boutique. He stayed on with Gamestop until the spring of 2008, and the company explanation for his departure had some spin or other to do with him ‘pursuing a CEO position elsewhere’ because he couldn’t obtain one internally. With any large, faceless, soulless conglomerate, we’re never going to know the official reason behind his actual departure (or if he quit or got fired for that matter), but the District Manager who contacted me shed a bit more light on what really happened and the motives behind his leaving the company.
While Gamestop is more of a cult-like compound in terms of internal staff, EB Games always had a sales-based staff. Steve Morgan was the living embodiment of this. He was a hard-nosed, results-based leader who demanded a return on the bottom line. Once upon a time, this was important in the retail world. In many cases, driving profitability and improving profits and losses per stores was much more important than lobotomizing store managers and cooking stats to make your company seem more successful even though your yearly numbers were better because you opened a thousand more stores overseas instead of improving your store sales per each location. Call him kooky, but Steve Morgan had a knack for getting every store to improve their prior year goals or else. He was respected, revered and despised, but he was an effective VP.
Flash forward to 2006 when the merger went down and by fall of the same year, commissions for subscription sales and warranties were removed entirely. Any incentive at the store level was null and void. Steve Morgan stayed on and continued to tout the new Gamestop vision. Here’s where things get interesting…
After ‘black Tuesday’ (the top secret company term for the day in 2007 when scores of EB District Managers were fired for any reason that Gamestop could come up with to reduce adequate salaries for top-performers), Gamestop continued to implement a master plan to brush mass firings under the carpet and maintain their public standpoint of a happy merger versus a hostile buyout with mass firings. If you look at the big picture, mass firings were happening, but they were being phased on over the course of a three year period.
By January of 2008, Steve Morgan (grasping at straws to keep the right people in place at the store level) sent a directive out to all of the District Managers in the company. He had a turnover goal. In order to keep the company headed in the right direction, he ordered all District Managers to adhere to firing a MAXIMUM of one Store Manager for calendar year 2008. The funny thing is, by January of 2008, one particular Southern Region had already hit their goal of one manager per district.
A store district (in Gamestop terms) consists of 8-16 stores. The public stance in PR releases and merger terms withheld the vision of maintaining quality people and retaining all hard-working managers no matter what side they were on before the buyout. We all know how that turned out. In three years, more Electronics Boutique staffers have lost their jobs than Gamestop drones. After terminating legions of EB Dms in 2007, Gamestop started axing Store Managers. I’m not sure who’s plan this was, but it certainly wasn’t Steve Morgan’s. Shortly after his directive (by the First Business Quarter of 2008), Steve Morgan had ‘left the company’ to ‘pursue a CEO position’. What a crock of shit.
On the local front, Lisa (my former DM in one of the two Buffalo markets) terminated no less than four store managers in 2008 and they were all with either company for more than five years. That exceeded Steve Morgan’s goal by quite a bit. Yearly review increases are graded in some part by a Turnover ratio from the Regional level all the way down to a lowly Store Manager. That category is going to hurt like a son of a bitch come April or May when the whores who still managed to kiss enough ass to keep their jobs get their sit-down meetings with the higher ups.
If you look at the big picture, the Gamestop merger was never a merger. After borrowing a few hundred million dollars from their parent company (Barnes and Noble), they implemented the same game plan they’d used in previous buyouts. Check out Wikipedia for previous ‘mergers’. Gamestop pretended that they were joining two company visions when in fact they were saving money on forced retirements and multiple terminations by phasing them in and reducing yearly salaries by keeping original cult members in place and promoting staffers who were too stupid to realize just how underpaid they were compared to the supervisors they were replacing. In the span of three years, an Electronics Boutique employee is outnumbered by Gamestop moonies by three to one.
Steve Morgan made a desperate attempt to keep sales-driven Managers in place at the store level and he was either forced out of the company or terminated like most of the people on that end of the merger. Why pay people for results when you can promote some kid who doesn’t know any better into a store at $26,500 a year, open a few thousand new stores and pretend that the company is making more money overall (during stockholder conference calls) even though they’re losing money per store location due to incompetent leadership and poor direction?
This tactic makes no sense. It didn’t make any sense to Steve Morgan, it makes no sense to people with a head for business strategy and it looks downright asinine to me. Then again, though, I wouldn’t be stupid enough to take out a five year $150 million dollar loan from my parent company while buying up new stores and buying out additional European companies (while assuming their debts), either. I wonder who will be left from the EB side by 2011 when the loan money is due for one of the lowest paying Fortune 500 companies on the list?



