22 Jun Culture’s Impact on Business: A Lesson from GameStop’s Grave Mistakes

A lot can be learned about a company’s culture by looking at their response to a crisis. Crisis can be a culture’s greatest test. It can reveal all the weak points and strengths of an organization. Over the next month, we’ll look at a few companies to see what we can learn from their shortcomings and successes. In this blog series, it will become clear that by cultivating a strong and healthy company culture while things are going well makes it easier to navigate times of uncertainty.  

For our first case, we’ll look at GameStop: a company that has been heavily criticized for the way it has handled the COVID-19 crisis. Business Insider, Vice, and other publications have gone into detail about different ways the company has mishandled the crisis, and the negative impact this has had on their success. Looking into these criticisms, it is clear that, while decisions made during the virus have hurt them, these decisions are indicative of a culture that was inadequate long before Covid was ever a concern.  

Over the past few years, GameStop has struggled more and more as potential customers opt to purchase their video games and gaming systems online. All retail companies have been facing this threat, but video game stores have proven to be particularly vulnerable to online retailers. Naturally, sales have dipped in recent years. This is where some companies would try to adjust their business model to stay relevant. Instead, if we look at interviews with former employees in Vice or at reviews on Glassdoor, it seems like they’ve decided to respond to the downturn by putting more pressure on employees to meet sales quotas that were no longer realistic. Scrolling through the reviews on Glassdoor, you can see plenty of former employees talking about how management is “out of touch,” “not hands on enough to see how they could improve as a company,” and “unconcerned with their employees.” So before any crisis had even presented additional challenges, GameStop created a situation where their employees felt distrustful of corporate decision making, and uncertain about their value to the company. This leaves workers unsatisfied, unmotivated and skeptical.

A company’s culture before a crisis will inevitably impact their ability to adapt to a crisis.

GameStop entered the crisis with an increasingly outdated business model, unrealistic standards set for their stores, and a strained relationship with employees. The pandemic has only added to the strain, and the decisions that GameStop made during this time have only shown us more of the same kind of decision making that created that strain in the first place.

One of the primary critiques of GameStop during the crisis was their insistence on being an essential business. While stores everywhere shut down, GameStop sent out an internal memo telling employees that they were an essential business despite calls to close down. Eight employees told CNN Business that GameStop was keeping their stores open to profit off of a video game shopping spree during the global pandemic. Video game sales have risen for retailers and online stores, as analysts anticipate more people are playing as they stay home. Some GameStop employees had to call law enforcement to force the closure of the store they were being asked to work at.

“I think I’ve cried every day since Monday… I’m trying not to cry in front of my staff,” said a longtime current GameStop store leader to CNN, who didn’t want to be identified for fear of being fired. “I feel very much like a pawn. It doesn’t matter what the staff on the ground does. They’re just expendable.” There have also been reports about requests for PTO being treated dismissively. Even during the pandemic, employees have found it difficult to take a sick day. Adding to all of this, the efforts that were made to keep employees safe were unsatisfactory. Workers were told to put shopping bags around their hands when handling purchases and cash, and to pass purchases through a cracked front door. There was no PPE provided for workers and the plan to operate safely was a half-measure at best.

The foundation of any strong company culture is a healthy, communicative relationship between management and workers.

In short, when everyone else was making sacrifices for the health and safety of others, GameStop put their employees at risk in an attempt to make up for declining profit. While it’s understandable that GameStop would want to maintain its status as one of the big players, it’s unacceptable that they would use employees as pawns in their desperate attempt to recover lost profits. Between the already uneasy relationship, the poor response to the crisis, and the mass layoff of GameStop staff, it isn’t hard to see why their workers felt undervalued.

But what can we learn from GameStop? First, we learn that a company’s culture before a crisis will inevitably impact their ability to adapt to a crisis. GameStop had a poor relationship with their employees, which was only magnified by the pandemic. A crisis will allow a company to showcase its strengths, but it will also reveal all its weak points. Second, in a global pandemic like this one, cooperation and sacrifice are necessary. GameStop chose to take advantage of increased demand (which is understandable), but in doing so they ignored the crisis and endangered their workers (which is inexcusable). GameStop continued the inflexibility, lack of communication, and neglect for the concerns of their employees. The crisis only made these practices more costly.

There are plenty of lessons to be learned from GameStop. When crafting and maintaining your company’s culture, consider the relatively minor issues that could be amplified by a crisis. It is crucial to make sure your workers feel cared for, listened to, and appreciated. Employees won’t be productive if they don’t feel safe in their own workplace, and they won’t be motivated if they feel that their company is prioritizing profit over the wellbeing of others. The foundation of any strong company culture is a healthy, communicative relationship between management and workers. So, what kind of culture are you fostering in your organization?

Shaara Roman is founder and managing director of The Silverene Group, a culture consultancy that helps companies align their people programs with business goals.