Analysts Approve Telstra Mass Sackings As Shares Rise

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A Telstra announcement yesterday that the telco will slash nearly 1000 executive jobs and restructure the company to make it more streamlined and focused on marketing and sales has been well received by industry analysts – though possibly less so by the horde of executives being ushered to the door.



Telstra says the 950 jobs to go will include executive and mid-management roles and the cuts will help reduce duplication and provide a more streamlined sales and marketing regime.

The market had been widely expecting the moves from the telco which had employed a number of management consultants in recent times.

David Kennedy, Ovum research director, told CDN the move would take the “cost out of the company.” “It is line with indications which we have been seeing though out the year,” Kennedy said.

“What we are now seeing are the specifics that they have been talking about. The savings resulting from taking 1000 positions out of middle and upper levels is going to have an impact on its cost base going forward,” he said.

Telstra CEO David Thodey says the changes are part of a company-wide program to simplify company processes, improve customer service and satisfaction and save costs.

The job losses will mainly affect middle management in Australian capital cities. Affected employees will have access to assistance programs and redundancy entitlements of up to 80 weeks pay.

“Telstra will improve customer service, even with fewer employees, because it is simplifying the way decisions are made, reducing process errors that require manual intervention, and introducing online-self service options for customers,” said Thodey.

“Change is always difficult, even where it is made in a way which is focused on improving service to our customers,” he added.

Telstra has set aside $220 million to cover the cost of redundancies over the next year.

Telstra also announced it would have a simpler business model, with changes that will empower local managers. It will create a new Innovation Office, simplify sales and marketing channels, and reform key internal processes.

“Telstra will now be organised as a sales and marketing company that is faster to market and more focused on our customers,” Thodey said. The new operating model would shift decision-making from head office to local managers – “and allow our frontline employees to get results more quickly, with fewer steps and approvals,” he said.

Under the changes Telstra will establish four business units:

– A single, local consumer business that will combine Telstra Country Wide and the retail shop network.

– A new Innovation Office that will aim at linking product development with customer needs.

– A simpler product management structure aimed at eliminating duplication between customer-facing business units and Telstra’s Chief Marketing Office.

– Simpler business planning and reporting processes aimed at streamlining company strategy, planning and internal reporting. – Kate Castellari
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