The Oracle "class of " program is rolling out in a big way. MH is super proud of replacing seasoned field sales reps he calls "Mercenaries" with fresh underpaid college grads. Its a win-win / lose-lose. MH and the college grads are happy. An English major with a 3.0 can get a job in sales paying 35K and MH just saved hundreds of thousands of dollars in Salary, its a win for the college grad and MH. However for the seasoned sales rep who busted his bottom and the customer who trusted the sales rep, its a loss all the way around.
MH cooked up this the "class of" Oracle digital plan in 2012 and sold it to LE. In 2013 they took action and bought up real estate all over the globe. In 2016 they put aside 1.1 billion in employee severance packages, and the slaughter began. Tribal knowledge, technical knowledge, customer based knowledge of pain points and problems is being lost on a global scale. Nothing can stop it.
Gotta love this website:
https://markhurd.com/latest-news/class-program-reinventing-sales/
On March 1st we will see the gutting of global support and development ranks. In June we see the end of field sales and sales engineers and enterprise cloud architects- ECAs. Its weighted about 30% - 70% with the lions share to be let go in June. Around 120 Million in severance packages have been approved for March 1st. Again most of the March 1st is support and dev, but the transition will begin and be fairly steady through June.
Sales reps will be put on "plan" given unrealistic targets for Q4, then cut with no package June 1st. You wont hear any complaints from the sales reps. Field sales reps are a different breed. If you ask a sales rep if he has been put on a plan and he or she answers anything but "no," you can be pretty sure they are on a plan. Sales people are the last to complain or let anyone know they are looking for a job. In my opinion they just vanish into the wind like ninjas.
Its the tech staff that will be hit hardest. They are the least likely to look for a job or believe rumors, even if 400 million dollars in severance packages remain to be paid out after a year long layoff cycle that hit the news.
Sign up here to get notified of your lay off package about a week in advance, you should see it show up this Thursday or Friday:
https://www.fedex.com/apps/fdmenrollment/
Expect a 30 minute mandatory meeting on Thursday March 1st 2018 to get instructions on receiving your package. As you exit, remember the tech market is good and you should find a job quickly leaving all this behind you.
MH will have a new party at his house in Atherton CA for the latest round of Class of graduates in June as the rest of field sales gets shown the door. Yipee, Hooray for MH and the ultimate realization of his dream of reducing wages and cutting costs.
All short run strategies pay off handsomely in the short run. It wont be until June of 2019 that the street will hear of the unmitigated disaster that befell Oracle. MH is not an original thinker. This is a common play. Sales people and technical people are the highest paid. They are also the biggest areas for cost cutting. But it doesn't work out well when you fire them.
Lets take a look at this play in action, as a recent history example:
https://www.sfgate.com/business/article/Circuit-City-firing-its-best-salesmen-2635042.php
Electronics giant Circuit City says it will improve its bottom line by firing thousands of employees and switching from commissions for salespeople to hourly wages.
The thing is, though, that to reduce payroll costs by about $130 million, Circuit City has given the boot to nearly all its top performers -- those who'd been pulling down the fattest commissions as a result of their hustle and hard work.
The remaining sales force is largely composed of workers previously paid by commission whose paychecks were relatively modest. They are, in other words, the company's least productive workers.
"It doesn't make sense," said one fired salesman, asking that his name be withheld because he hasn't yet received his severance check. "How could the people who got terminated be more expensive for the company? We got paid well because we brought in more money. That's how commissions work."
The 39-year-old former salesman had been with Circuit City for more than five years and was the top performer in his store for most of this time, averaging about $28 an hour in commissions and other incentives.
He was so valuable to the company that he attended Circuit City's annual Sales Excellence Dinner for its top 200 salespeople on four separate occasions, including last year's event in Orlando, Fla.
"I could sell anything -- big-screen TVs, cell phones, digital cameras," the former employee told me. >"While other salespeople would be standing around, I'd be approaching customers, listening to what they had to say. That's how you do it.
"Not just selling products," he added. "I'd also be selling service -- the extended warranties -- and accessories. We called this hitting a home run. I hit more home runs than anyone."
You'd think this would be precisely the sort of go-getter companies like Circuit City want on their sales floor, not to mention the sort of aim-to- please service consumers desire.
Instead, Circuit City is apparently content to let its second-stringers run the store, with a commensurate impact on how customers are treated.
The company said it fired 3,900 commissioned salespeople last week and converted the rest to hourly pay. It plans to hire 2,100 other hourly workers, meaning the average Circuit City branch will be down about three positions from recent staffing levels.
W. Alan McCollough, the company's chief executive officer, said in a statement that the changes were partly in response to a 5 percent drop in December sales from a year before.
"Decisions related to workforce reductions are always difficult to make," he said. "However, for organizations to thrive, we must understand the external environment and adapt our internal structures to the given conditions. "
Four years later:
https://dealbook.nytimes.com/2008/11/10/circuit-city-files-for-bankruptcy/
Circuit City Stores, the struggling electronics retailer, filed for bankruptcy protection on Monday, becoming one of the biggest, best-known corporate names to collapse amid the faltering economy.
But it wasn't a quick death:
https://richmondbizsense.com/2017/11/21/circuit-city-bankruptcy-9-years-counting/
Like a zombie refusing to go down for the count, one of the largest and longest-running corporate bankruptcies in recent Richmond memory lurches on.
Friday, Nov. 10 marked the beginning of the 10th year of the Chapter 11 liquidation case of Circuit City Stores Inc., the umbrella company of the once mighty Henrico-based electronics retail empire.
A full nine calendar years have passed since the company tumbled into bankruptcy protection with the hope of reorganizing and staying afloat.
But a reorganization was not to be, leaving attorneys to commence a liquidation to unwind operations built around more than 700 stores and tens of thousands of employees, and that left 17,000 creditors claiming they were owed around $1.2 billion.
Oracle has followed the same strategy with its sales team, fire good ones, replace with cheaper ones. It will undoubtedly face the same type of abysmal results, and take about 15 years to painfully die unless LE wakes up and fires MH.