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Supervalu Inc. announced yesterday that it “plans to reduce its national workforce by an estimated 800 positions. A majority of these reductions will take place by the close of the company's fiscal year on February 25, 2012. The reductions include both current positions and open jobs that will not be filled.”

According to the announcement, the moves are part of the company’s “strategic plan to remove permanent expenses from its business as well as reduce overall operating costs, efforts which are necessary in helping the company achieve its plan to deliver more competitive pricing to its customers. The announcement affects all company offices and crosses most departments within the organization. In general, store level associates are not affected by this announcement. Associates whose positions are eliminated will be eligible for severance and outplacement services based on our eligibility guidelines.”
KC's View:
It is hard for me to judge these reductions from the outside. On the one hand, maybe they are necessary in order for Supervalu to remain viable. But it also perpetuates the image of a company in retreat, not moving forward.

But let’s look at the reductions from the inside. I got a couple of emails yesterday that are relevant to the discussion.

One MNB user wrote:

Concerning the announced layoffs of up to 800 employees at Supervalu, I would like to make an observation of not only SV but all companies going through downsizing.  As one of the ‘downsized’ in SV’s cost cutting initiative last year I believe I have insight into this.  I understand that companies need to make periodic cost cuts to stay competitive and more importantly to stay in business, but are they really making the best decision for their own company?

Case in point, I was part of an entire department that was eliminated, but the layoffs mainly affect those long termed or higher paid associates that will allow the companies to achieve their cost reduction goals the quickest.  With this strategy you not only gain your salary, benefits, bonus (if any) reduction goals but hundreds if not thousands of years of experience also are eliminated.  Sure,  you can hire many replacements for those downsized at a cheaper salary but also with minimal or even no relevant experience for the role.  Many have never worked in the industry or even understand the business.  What I am curious about is why don’t they use a Total Cost of Experience (TCE) model?  By that I mean use a model similar to a Total Cost of Ownership used for application, hardware, etc., purchases – long term value versus short term cost savings.  For example a person with 25 years of experience who makes $100,000 would have a TCE of $4,000 per experience year while someone who was just hire 2 years’ experience who is paid $30,000 per year would have a TCE of $15,000 per experience year or a 73% TCE savings.  In this case the long term employee is the much better value to the company.   It has never been possible to turn around a company when much of the knowledge, history and experience has left.

Of course the company or Wall Street doesn’t measure by TCE, only the bottom line cost reduction

BTW.  Am I bitter about being downsized?  No, it was a blessing and I am now at a company that values my experience, knowledge and talents.   And I don’t have to look over my shoulder to see if a pink slip is being sent my way.


And, from another MNB user:

Supervalu will lay off 800 people this week. It started today, the last day is scheduled to
be 2/24/12. I was one of those laid off at Shaw's. Needless to say, I must ask for anonymity.

I wish I had something of value to add to the article you will inevitably write about this. I wish my experience at Shaw's was better, but the people that I saw there had no imagination, just did what they were told and brought nothing to the table in terms of differentiating themselves in terms of the marketplace. Shaw's/Star is a store of last resort for too many people. I would listen to Mike Stigers talk and be mesmerized by his speaking ability (the man could lead a cult). But in the end, Shaw's will probably go down as another New England institution that could not keep up with the times. They are introducing an app soon that is a mere extension of their website - you can't order groceries through your phone - so what's the point?


As I said...views from the inside, about a company perceived by some as being in retreat, losing value instead of adding value.

I look forward to responses from the other side.