Guitar Center’s Gene Joly Responds to Employee Unionization Efforts

Earlier this spring, a flurry of criticism aimed at the nation’s largest MI retailer, Guitar Center, began sprouting up online. GC workers in New York City ramped up an aggressive campaign for unionization, including a petition which lists a number of high profile artist endorsees of the initiative.

In May, Guitar Center’s executive VP of stores, Gene Joly, sat down for an exclusive interview with MMR to offer his take on the complaints being leveled
against GC, his views on the company’s relationship with employees, and more…

MMR: Can you discuss how – from your and GC’s point of view – this whole unionization effort came about? What was the catalyst?

Gene Joly: Well, I find it interesting that there’s a union office located on the same block as our Manhattan store – but I don’t want to speculate beyond that. I think only they know for sure why they’re doing this, but it’s not complicated – the RWDSU [Retail Wholesale and Department Store Union]
is a business, too, and they need to grow
revenues just like every other business.

MMR: My understanding is that in the past few years, GC’s employee turnover rate is actually down, salaries for some are up, and so on – in light of that data, how and why would now be the right time to launch such an aggressive unionization effort, if that’s truly the case?

GJ: I’m glad you’re reporting that, because that part of the story often gets overlooked. Look, our people are paramount to this
organization and anyone who doubts that for even a moment should just look at how heavily we’ve invested in them over the past five years. We’ve made significant increases in training, improved our processes, upgraded IT infrastructure, and delivered critical new customer service tools for them across the country. Right now, our average sales associate has actually seen a double-digit pay increase and store turnover has decreased 38 percent over the last five years. Are we there yet? Of course not, but we’ve been working hard to introduce new programs and systems to improve our people’s career skills, work life, and compensation potential long before this issue was on anyone’s radar.

MMR: Certain media channels are making something of a big deal out of the Bain
Capital connection, even linking to the past year’s presidential campaign (Romney) and larger social and economical issues. How do you respond – Fair? Nonsense?

GJ: I think it’s absurd – total nonsense on several fronts. I’ve been in the M.I. industry for almost 40 years and I’ve worked with a variety of different owners. My past few years experience with Bain Capital has been extremely positive. These guys are smart, fair and they’re hard-working people. Working with them has helped us advance our skills in analytics/decision support and store site selection, as well. More importantly, they’re not trying to trip us up or interfere with Guitar Center’s executive leadership team. We manage the company day-to-day and we’re the ones who are accountable to every individual who works hard for this company. Our mission is clear and we’re free to pursue it our way. We’re going to continue helping people make music by providing our customers with a great mix of products and services at competitive prices, delivered by knowledgeable and empowered sales and operations associates, repair techs and teachers.

MMR: What about the allegations of
commissions being docked if GC employees don’t meet certain goals or quotas?

GJ: Very few sales associates have their commission docked, and that’s less about meeting a quota than it is about accountability for consistently meeting customer service standards.

MMR: Moving forward, what steps – if any – is GC hoping to take to resolve these unionization efforts?

GJ: It’s not our place to stop a union from attempting an organizing drive – it’s a free country. Unions are businesses that need revenue, and like most businesses they desire new sources. Guitar Center has expanded and grown over the years, and that makes us a more attractive target for unions.

MMR: Lastly, can you comment on the status of GC’s debt repayment that was to made in April of this year?

GJ: Yes – we paid off the $129.8 Mil note in April without a hitch – exactly as we said we would – and there are no additional debt payments due until 2017.

MMR:   Thanks   much   for   your   time, Gene.