Tuesday, October 06, 2009

Sears Canada outsources 250 Regina call centre jobs to Philippines where minimum wage in Manila is 382 pesos or $8.63 CAD per day; CEO rolling in cash

Sears Canada call centre in Regina

Approximately 250 workers lost their jobs on September 17, 2009, when Sears Canada closed its call centre in Regina.

On June 25, 2009, the company announced it was closing the call centre, which has operated since 1993, outsourcing the work to the Philippines.

Penny Smalley, who worked at the centre for 12 years, said the announcement was a “complete shock” and came with no advance warning. [Call centre shuts down (Leader-Post, September 19, 2009)]

At the time, Sears Canada director of corporate communications, Vincent Power, would not reveal the name of the company taking over the work. However, he did tell the Leader-Post it’s a Canadian firm with operations in the Philippines and that the majority of Sears’ calls will be handled by the people in that country.

According to the Leader-Post, Power said the call centre industry is facing constant technological advancements and improvements. Sears must invest in the technology or work with a third party provider that already invests in the knowledge, he said.

“We took the decision to outsource the call centre positions at Sears that are to do with basic order taking and give those to a third party provider who’s in that business all the time,” said Power. “That allows us to focus on our core business of merchandising. (The provider) will stay up to date with all the technologies.”

In other words, even though Sears had been in the business for 16 years, it seems the company didn’t want to spend the money to upgrade the equipment. It was easier to farm the work out.

Power told the newspaper another determining factor in the decision to close the call centre is that because Sears is a retailer with seasonal peaks in sales, it’s hard to schedule the hours in a call centre in an efficient manner. A third-party provider, which deals with other customers, can balance out that seasonal issue.

Again, for 16 years Sears seemed to be able to get the job done, but now it’s too difficult?

The company is offering terminated workers job search assistance, such as resume writing, and separation packages will meet provincial government standards. Power also said that providing they have the skills, associates can apply for any other Sears jobs that become available in Regina.

What this could mean is that workers will receive the bare minimum by law nothing more, nothing less. Thanks for your service and good luck. Don’t let the door hit you on the way out. And with the way Sears has cut jobs over the last few years how many of those will actually find work at the Regina store?

“This move has nothing to do with the way our employees were working, or their performance. It’s just the call centre industry has changed in Canada," Power told the Leader-Post. “If we want to stay competitive and viable, and save more jobs in the long run, we’ve got to take steps like this from time to time – they’re difficult decisions though.” [250 to lose jobs as call centre closes (Leader-Post, June 26, 2009)]

So workers like Smalley are supposed to think of it as taking one for the team. Lose your job to save others.

One possible reason Power or the newspaper didn’t mention is the cost of labour and how much Sears will be saving by moving the jobs offshore where the work can be done for a fraction of the cost.

Baylosis and Culangen, a law firm providing legal services to international corporations, small and medium enterprises and individuals in the Philippines, says on its website that the country “is the second largest outsourcing center in the world and a viable source of cheap and reliable labor for any business.”

The Philippine Department of Labour and Employment website notes that the minimum wage for workers in the non-agricultural sector in the capital Manila is 382 pesos per day. This works out to about $8.63 Canadian – a day. In sectors such as retail or service it’s 345 pesos per day or $7.79 Canadian. In other regions of the country it’s a lot less. Could this be the real reason why Sears Canada moved the jobs half way around the world?

Meanwhile, at Sears Canada headquarters in Toronto, CEO Dene Rogers seems to be making money hand over fist.

The company’s most recent management information circular states that Rogers was appointed as the president and chief executive officer of the corporation on December 21, 2006. Prior to this appointment, Rogers held the position of acting president since May 9, 2006. From October 2005 until December 2006, he served as the executive vice president, restructuring and business development of Sears Holdings. Previous to this position, Rogers served as the executive vice president and general manager of Kmart Holding Corporation from October 2003 until October 2005.

In just three years Rogers’s total compensation appears to have increased 67 per cent going from $2,084,872 in 2006 to $3,491,440 in 2008. His company pension payable at age 65 is already $26,600 and the total value of his Sears Registered Retirement Plan (SRRP) and Supplementary Retirement Plan (SRP) at year end is $146,000.

Rogers’s annual compensation is based on U.S. currency, as per his current employment agreement. Prior to this his compensation was paid in Canadian funds.

The employment agreement between Rogers and Sears Canada was revised in 2008 and became effective on October 1, 2008. The agreement has a term of three years (October 1, 2008 to October 1, 2011) with an option to extend the agreement for an additional twelve (12) month period by the mutual agreement of the corporation and Rogers.

Under his employment agreement, Rogers is entitled to an annual base salary of $700,000 U.S. per annum, which will be reviewed periodically.

As a result of the current economic conditions, Rogers took a 15% voluntary salary reduction and effective March 1, 2009, his salary is $595,000 U.S. per annum.

When you consider how much Rogers made in 2008 the $105,000 pay cut is miniscule, representing just 3 per cent of his total compensation. You can bet he will make that back in no time.

Rogers’ employment agreement with Sears Canada provides for termination payments in the event his employment with the corporation is terminated.

If he’s terminated by the corporation without just cause prior to October 1, 2010, Rogers may be entitled to a total cash compensation of $3,233,895. If the termination occurs after October 1, 2010, the cash compensation could be as much as $4,120,800.

The information circular doesn’t say whether Rogers would be offered job search assistance or help with updating his resume as part of his termination package.

Even if Rogers were to quit outright on or after October 1, 2010, he could still get $1,717,000.

That’s not bad for a guy whose company’s total revenue has decreased each year since he’s joined: $5.93-billion in 2006, $5.84-billion in 2007, and $5.73-billion in 2008. Interestingly, in two of those years Sears recorded two of its highest net profits this decade: $304-million in 2007 and $289-million in 2008. And that’s what probably matters the most – the bottom line.

Since 2000, Sears Canada’s total revenue has fallen 9.8 per cent. The most startling number, however, is the number of workers that have been jettisoned. In 2000, the company had more than 56,300 full and part-time associates. By 2008 that number had dwindled to just 32,626, a drop of 42 per cent.

And if that weren’t enough the information circular notes that one Sears Canada senior executive appeared to receive nearly $19,000 last year to pay for a leased vehicle.

It would take a lowly associate working full-time for a nearly a year at $10 per hour to gross that much. Then again it would take a worker in Manila making minimum wage six years non-stop to make the same amount.

Business weasels see it as a “competitive advantage,” while others might call it something else, like greed and exploitation.


At 7:29 AM, Blogger DarkFox said...

Just another example of terrible business practices. Lower the number of workers and your profits should go up right? Obviously not. Lower your staff compliment and customer service suffers, angry customers don't make multiple purchases. They might part with $50 this time and then never shop there again. Provide excellent customer service and those customers will keep coming back, even if your price for an item is $4.99 and WalMart's is $4.97.
Canadians are already showing their discontent with their wallets. We look down on sweat shops and yet somehow convince ourselves that this isn't glorified slave labor in a country that apparently condones it.
My heart goes out to those employees and I'll be showing my own discontent with my wallet.

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At 5:48 AM, Anonymous Anonymous said...

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At 2:16 PM, Blogger Marck Andrew said...

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