A large electronics retailer experienced a hailstorm of publicity over recent layoffs of hourly employees on the top end of the pay-scale. The employees were replaced with new hires who were willing to work for less money.

I'm sure Wall Street wil be watching this company very closely over the next few months to see if the employee issue influences service and ultimately sales at the company.

The retailer's move seems counter-intuitive to me. Most retailers are struggling to find dependable employees who have an aptitude for operating the cash register and basic customer service skills. It seems to me that having experienced employees would be an asset. And with national surveys showing people are extremely unhappy with the customer service they've been getting from retailers and service providers, why make a move that could jeapordize your customer service?

Electronic products must sell themselves.

OR, this retailer has found that its customer is more informed than in the past and that employees are often reduced to the role of finding a product on the shelf or checking out a purchase. The consumer is likely doing some research, probably on the Web, to learn about product features and prices, then going to the discounter and buying.

Craft retailers- don't follow this example.

Unlike electronic products which are used for the same tasks- to broadcast TV shows, play music, etc. etc. craft supplies can be used in a myriad of ways. Most craft supplies do not come with a little stapled booklet with instructions in four languages on how to install and use the product. Plus, people are discovering new uses for craft supplies every day. The beauty of the products we sell is their versatility.

Yes, our consumers are becoming more informed about product uses through television programming, magazines, books and especially the Internet. But often there are so many more possibilities that can be shared with that customer. Independent craft retailers who want to diffferentiate their stores from competitors need product-knowledgeable employees. In our business, longevity and experience are definitely a plus.

Before you make any move to cut employee pay or reduce your minimum pay rate, think about how this will impact your bottom line in other ways. Low paid employees generally aren't as invested in your business as those who are better compensated. Talented people are likely to find better paying jobs because they have a better skill set. If you are lucky enough to find a gem who started at a low wage, find other ways to compensate that person to keep her bonded to your business. If that employee is a star for you, she can be a star for someone else for another two dollars an hour.

I hear you, money doesn't grow on trees- if only. And, when cuts have to be made, every cost center must be examined. We've all had to do the hard thing. I'm suggesting that before you take any action- look at the long term impact. Lowering wages may have hidden repercussions on your business that with time build and become difficult to overcome.

Good employees can help you through the tough times- in fact they may have great cost-cutting ideas that you haven't considered.--Beth