manconsult development change management 2007-11-19; rev. 11-25/ keo cm – ice-bth page 2.1 itu...

2007-11-19; rev. 11-25/ Keo CM – ICE-BTH page 2.1

Manconsult D

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Change Management

ITU Workshop

Cairo, Egypt 13-17 April 2008

Change Management for an Incumbent Telco

Part 2 – The Swedish Case


Manconsult D

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Change Management

The Swedish Case

The change case for the Swedish incumbent telco

– ”Omställningen” (The Change Over)

• Background

• Reasons and needs for change

• Key issues

• Changing environment

• The change process

• The results


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Change Management

Key questions we asked ourselves

The key questions we had to ask ourselves were

• What shall our company do – our long term objectives?

• What are the prospects for us now and in the future?

• What are our options to continue develop our

enterprise?

• How shall we go about it?

• What will the consequences be?


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Change Management

Background and changing environment

Technology developed in a synergetic process with customer demands:

• New technological options

• New services could be offered and was to be offered, with changing market structure

(monopoly liberalized market)

• Customer demands changed: new services, better services (delivery time, down time, quality, customer care, tariffs)

• Owner’s sensitivity to market and consumers' demands.


Manconsult D

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Change Management

Background

• Telia emerged 1993 as a state owned public company from the

earlier Televerket,

• Televerket: a state run administration with certain independence in

running the telecom business, financing its operations and

investments with the revenues from its operations.

• Requirements from the state were mainly on service levels and

tariffs; the state saw its role as 'protector of the public interests and the

consumer’.

• Televerket/Telia had through heavy investment programmes built an

infrastructure that covered 100% of all inhabited area in Sweden and

modernized nearly 100% to digital technology in the mid 1990’s.


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Change Management

The change process (1)

Stepwise changes within Televerket and Telia first years

In late 1980’s and early 1990’s

Change in legislation to company law

• Market orientation (from outside in)

• Attitude change

• Results and service oriented management


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Change Management


In mid-1990’s• Restructures• Adaptation to new products and customer

segmentation• Change from production oriented to sales and

service oriented business idea• From local and regional units to national

business units


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Change Management


Late 1990’s and early 2000’s• Telia in full competitive environment and with a

'no touch' policy from the owner• Partial sale of Telia shares to the public and to

investors• Merger with Sonera, the incumbent in Finland• Joint ventures and company takeovers in other

countries• Out-sourcing

The state as owner: changed role in retrospective


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Change Management

The practical change processes

A basis for successful implementation of changes:

1. Early restructures and change of company culture

2. Changes in a competitive environment

3. Need for speed and for planning was accepted

4. To see the goal or at least the clear direction of

moves, taking early and repeated actions:• First restructuring with staff lay-offs (1992)• Second restructure, division into subsidiaries (1993-1998)


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Change Management

First major restructure with lay-offs

Telia had learnt

to make operations cost-effective to meet the emerging competition,

needed to reduce excessive staff numbers in professions not required any longer

Handled by the respective regional and local organisation

then the basic structure of the whole organisation.


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Change Management

First Major lay-offs 1992

• Possibilities to keep staff by giving training in areas with new

demands (competence change) were limited,

• In 1992 about 3 000 employees were dismissed in one batch (of

about 40 000 employees).

• Various ways of managing the lay-offs were applied:

training in new areas and transfer to new tasks, support for searching

and preparing for other employment, compensation for time of

dismissal etc.

• These were costly measures, not only in direct economical terms:

Methods used varied between different parts of the organisation

Caused a lot of anger and frustration

Also among those who stayed and middle and low level management.


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Change Management

Second major restructure with lay-offs

Lessons learned for the next step:A major restructuring process:

the division of the operations and customer oriented units into subsidiaries based on market segmentation and not on geographical coverage,

=> needed more coordination and standardised ways of managing the staffing issues.

The overall most important issue: to handle the staffing issue


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Change Management

The staffing issue

The staffing issue was of course:• to have the right competence and number of

staff in various professions and positions required to meet the market needs.

and• to prepare for constant changes required to meet

the changing environment.


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Change Management

The big re-shuffle

Adaptation of the Telia Group to meet the market• Required a big re-shuffle of existing staff from

the geographically based units to the new subsidiaries, division of assets and all other structure required for the operations, sales and customer service.

• It also meant that a big number of employees had to be dismissed, since there would not be enough work for all and at least not in their old competence ranges.


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Change Management

Implementation process

The implementation process for the restructured organization was coordinated by a national Implementation Project reporting to a Telia Group Steering Committee.

The Implementation Project for the Change Over process coordinated all activities to redistribute all assets, staff and other resources and structures from the regional operational organisation to the new subsidiaries.

The staff redistribution plan showed a significant number of staff that would not be required by the new units according to their business plans.

This would be The Challenge!


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Change Management

“Division Personalförsörjning”

• To deal with the reduction of about 10 000 obsolete positions a new organizational unit was created directly under the Telia Group management, the ‘Division Staff Supply‘

• It became the legal employer of all staff, 32 000 persons, should be operating during 3 years, 1966 - 98.

• All positions in the new structure were announced (internally) as vacant, and all staff were eligible to apply, many persons had to apply for their own old position.

• Nomination and appointment of staff followed established procedures for internal appointments. The staff unions were represented and took active part in the whole process with ”Division Personalförsörjning”.


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Change Management

Staff reduction process

• Persons that did not succeed in getting a position were included in a special unit of the Division for 'movable staff'.

They were given either temporary work, such as temporary reinforcement during the transfer period of units requiring extra staff for a short period, or given individually designed training that would make them qualified for other jobs, inside or outside Telia.

These measures had been successfully used during the first lay-off period by some of the regional units, now systematically applied for all excess staff.

• As final measure, in the last year of the Division (1998), all remaining staff received an offer to terminate their employment with compensation of 12 months' salary.

Those who did not accept this offer were transferred to their ‘original’ organisational unit (defined earlier), and there they would be under notice as of dismissal due to lack of work.

• “Division Personalförsörjning” was managed by experienced operational managers, with experience of many years of changes in Televerket/Telia.


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Change Management

Results

During the three years that Division Personalförsörjning managed the excess staff situation, more than 6 500 persons had been subject to the staff supply procedures described.

About 2 000 persons were in excess after the period, the remaining number (about 4 500) were those who were transferred to similar jobs as they had left or had been given training to take up new jobs.


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Change Management

Continued restructures

• After the temporary organisation finished its job, responsibility for handling staff supply and competence change was transferred to each business unit.

Totally Telia staff was reduced by half during the period 1989 - 99.

After the second restructuring process described above, Telia staff was reduced by another half from 1999 - 2001 (i.e. 3 years).

• This was mainly achieved by outsourcing activities not seen as part of the ‘core business’.

• After 1999: focus on IPO of Telia shares, merger proposals with other telecos, finally concluded with the merger with Sonera of Finland in 2002.

• During the whole period, joint ventures have been created (mostly) in Eastern and Southeastern Europe, or substantial holdings in local telecom companies has been acquired.


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Change Management

Characteristics of changes in telecom market today

The need for change has developed from• How to manage emerging competition (early

stages) - ‘survive‘, to • How to finance continued operations under a

liberalized environment:development of technology, market, structural development etc.

and basic operational costs, like staff, own premises, vehicles and own service functions

• State financing is no longer an option in a liberalized market


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Change Management

Reduction of excessive costs

• It is essential to reduce as much of the fixed costs as possible - to get rid of the ballast (‘unnecessary body flesh’).

=> The excessive costs make the ship immovable and it will finally sink.

• To find new investment options (through investors and partners), the overhead and excess costs have to be reduced, and development costs must be paid under normal commercial conditions.

=> Which means the enterprise's finances must meet the requirements of lenders or potential investors/partners.

• A most positive factor - and THE challenge – is:

the strong market growth and the development of new services and products, as well as new user groups.


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Change Management

Lessons learnt

• It is easy to underestimate the time it takes

• The transition strategy must be clear and steady

• The strategy and the goal must be made understood by 'all'


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Change Management

Name things for what they are

Name things for what they are:• Reduction of staff means fewer employees and dismissals - if

other measures don’t help• Being dismissed is primarily a bad thing and not a ‘new

opportunity’ to the persons subject to it; even if it could be a chance in the long run, but requires a lot of efforts

• Don't hide facts and reality - be open and explain what you will do.

• Don’t say that ‘things will be OK’!• Don’t drag out - if you see changes are coming and needed,

prepare yourself and your staff as early as possible. The earlier actions are taken the easier will the end result be achieved,


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Change Management

As leader and manager:

To succeed in this challenge of managing changes:• Be open about the changes needed, speak out clearly• Be visible and available

- communicate and listen to fears and proposals

• Involve all concerned,motivation is a major driving force to help implement the changes

• To manage changes, use trained managerscentral staff persons HR people shall assist but are not trained in managing people in changes.

• Never forget the core issue:

“to have the right competence and number of staff in various professions and positions required to meet the market needs, and for the core business of the enterprise.”

manconsult development change management 2007-11-19; rev. 11-25/ keo cm – ice-bth page 2.1 itu...

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