A dark time in QVC's past

This year, QVC Inc. chief executive Mike George predicts a decent holiday shopping season for the $8.5 billion television and online retailer. "I think we can cut through whatever headwinds we have from an uneven economic recovery," he said.

Five years ago, in November, 2008, it was an entirely different story.

George stood in the West Chester company's nearby call center and distribution facility, and announced that, for the first time in the company's history, QVC would lay off employees, 900 of them, most of them from the West Chester area, some of whom had been at the company since its inception.

"I appreciate your thoughtful note about the layoffs," George wrote, after I penned a follow-up question by email as I prepared our Leadership Agenda interview, published in Monday's Inquirer. "it brought back many memories of those terrible weeks when the world seemed to be spinning apart, and the painful discussions I and my colleagues had with the team members most impacted.

"Retail sales began softening around April of 2007 – the first warning sign of things to come – and then, following the Lehman failure in September of 2008, sales collapsed in the industry, and remained at epic lows until the very slow and uncertain rebound began in late 2009.

"I pulled our leadership team together in the fall of '08 and we went into crisis mode.  We had no idea how long or severe the financial and economic crisis would last, and we felt intensely our obligation to protect the company, customers, and team members as best we could.  During our over two decades in business, we had never implemented a layoff, and we prided ourselves on offering great long term homes for so many good people.  However, I reached the reluctant conclusion that we had no choice but to lower our cost structure, batten down the hatches, and ride out the storm to the best of our ability.  I felt this was the right thing to do for all of our team members, despite the very painful impact on some of them.

"That November, we announced the immediate layoff of 160 team members in administrative areas, and the planned reduction of our West Chester Call Center and Distribution Center operations, which, over the following 14 months, would result in the elimination of another 750 jobs.

"Some memories stand out vividly for me five years later – going to the Call Center and DC and announcing the news personally to all the team members, and answering every one of their questions, and dealing with the emotion of it – this overwhelming sense of loss of family (many had been with us since our founding), which felt even sadder than the loss of the job itself.  Or standing up in our atrium at Studio Park the next morning, in an all hands meeting, to talk about the layoffs and the reasons.

"We gave people a way to submit anonymous questions to me before the session, and I stood up for over an hour and answered every one.  I still look back at those times with both sadness for the people affected, but also some measure of pride in handling the actions with respect, honesty, and humanity.

"On your specific question of customer service, the decision to phase out our West Chester call center was made for two reasons – first, we knew we faced a long term trend toward customers changing their  behavior – shifting from calling us to ordering online.  We were candid with our team that at some point this would likely result in the reduction of a call center, but we wanted to postpone that as long as possible.

"We thought we had a few years to make that decision, but the sudden drop in calls when the  Great Recession began took away our time buffer – we had no choice but to act more quickly to align our call center staffing with the number of calls we were actually getting.

"So my statement to you that we never eroded our customer service is an accurate one – we did lower our staffing to align with the lower number of calls – but for the customer, the experience was the same – high service levels, low wait times, informed, experienced and friendly reps answering your call, on time delivery, no change in quality standards, no questions asked returns… all the things we're known for.

"And our customer satisfaction ratings (typically 92-95% of customers rate us 7 on a 7 point scale) never changed and our retention rates never changed (89% of all customers stick with us from one year to the next, and 95% of our frequent purchasers).  But, as you noted, our customers did reduce the number of purchases, as they adjusted to the new economic reality, which in turn drove the reduction in phone calls.

"I'm proud that we told our team members in the call center in November of 2008, in the height of our most important selling season of the year, even though we would not eliminate the first jobs until late March of 2009.  I really think there are few companies who would have done what we did – who would have given their folks five months notice (and a generous severance as well) and risk business disruption during this critical time.  Most would have waited until January or February to inform the team, but we felt an obligation to tell our team as soon as we had made the decision.  And the best part of this difficult story is that they responded beautifully, as I knew they would, serving our customers with distinction, and supporting each other as well, to the very last day."

Monday's blog post: Mike George tells his new execs to do nothing -- just spend time learning.