A Firing Ripple Effect

Stephanie Armour, for USA TODAY, writes Circuit City Stores' (CC) decision to lay off 3,400 employees in order to hire lower-paid replacements is raising questions about the impact of severe cost-cutting on employee morale.

The consumer electronics retailer announced Wednesday that it was immediately firing store associates "who were paid well above the market-based salary range for their role." New workers will be paid less, although Circuit City did not reveal the pay of the workers.

Laying off workers who earn higher pay raises the risk of deflating the morale of employees who are left behind, says Penelope Trunk, author of Brazen Careerist: The New Rules for Success.

"People left behind are probably thinking they don't have a future there," Trunk says.