Grim Tuesday At Target Corp. As 1,700 Lose Their Jobs
MINNEAPOLIS (WCCO) -- It was a grim day at Target Corporate headquarters Tuesday as about 1,700 employees were informed they were losing their jobs.
In other words, roughly 13 percent of the employees working at Twin Cities headquarters were let go. Target also announced that roughly 1,400 open positions would be permanently closed.
"While today's news is difficult, it's important to know that we will continue to make investments in our business and team -- particularly in areas such as digital, personalization, data and analytics, and engineering -- to position Target for future success," a spokesperson said in a released media statement. "Today is a very difficult day for the Target team, but we believe these are the right decisions for the company."
Target said that cut employees would receive more than 15 weeks of pay and additional severance based on how long they worked there. Target will pay their benefits for six months, and they will have access to career placement support.
A filing with the Securities and Exchange Commission indicates that Target will spend approximately $100 million on severance packages for this round of cuts.
"Anytime you reduce the number of employees you have, you're going to take a big hit up front," University of St. Thomas Professor Dave Brennan said.
Target recently took a $5.4 billion-hit closing stores in Canada. And now, the reduction of the work force at headquarters by 13 percent. But Brennan says that doesn't necessarily mean people should be worried about the big-box giant.
"That also means 87 percent of the people are still in Target headquarters, so I think that's a positive sign," Brennan said. "I think what it amounts to is that they've really had to take some hits internationally and in terms domestically to make this a leaner, meaner organization going forward and to create greater value for their shareholders."
Brennan thinks there will be more cuts down the road. They will likely be more targeted and not so broad like Tuesday's layoffs.
Additionally, laid-off Target employees will be able to qualify for unemployment insurance, according to the Department of Employment and Economic Development.
Target employees said that a couple dozen upper managers were let go on Monday. The company said the layoffs were needed to make the company more competitive.
"If you look at what's being done is they're delayering, that is having fewer steps in terms of the hierarchy, in terms of the organization," Brennan said.
He says having more employees does not mean better business.
"It'll make it much more efficient on one hand because you have fewer people and less cost, but it will also make it more effective because you're going to be able to act more quickly than you have been in the past," Brennan said.
In downtown Minneapolis Tuesday morning and afternoon, employees embraced laid-off coworkers and helped them carry boxes and even shopping carts of belongings to waiting cars.
Employees got emails in the morning summoning them to meetings.
"It was very cordial. It was short and sweet," said Tim Holtgrewe, who worked in Target's test kitchens for seven years. "The package seemed to be fine. I will go over it with my lawyers; it seemed to be fine."
While most employees did not want to go on camera, several described tearful and emotional scenes as those who kept their jobs rushed to comfort those who had lost them.
Kathy Dean, a 33-year Target employee, was one of those taking home her belongings. Her husband, Ed Dean, said she was in charge of supplies and setting up meetings for several corporate floors. While Kathy didn't say anything about her termination, her husband said the severance will help.
"They have been great all along," he said. "They are a good company, and it will still be a good company."
Asked if this was it for layoffs, Target responded with a statement that said, in part, "We see Target's transformation as not a moment in time, but an ongoing journey."
Following his meeting with Target CEO Brian Cornell to discuss the impact this will have on the state's economy, Gov. Mark Dayton said Cornell assured him Target will keep a strong presence here in Minnesota.
The silver lining for those whose jobs are affected is that several local and national recruiters, as well as human resources managers here in the Twin Cities, are actively reaching out to Target workers who are looking for new jobs.