HR Restructuring at Lucent Technologies
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Case Details:
Case Code : HROB055
Case Length : 11 Pages
Period : 1998-2004
Pub Date : 2004
Teaching Note :Not Available
Organization : Lucent Technologies
Industry : Telecom
Countries : USA
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Excerpts
The HR Restructuring Exercise
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In mid-2001, the HR unit began to work towards developing a single global
service delivery platform to better integrate and support Lucent's different
businesses across the world. As part of this, the unit decided to leverage new
technologies and automate transactional duties through a Service Delivery
Project Team. The major objective of this team, led by Karen Sansone, HR
Director (Service Delivery), was to simplify and standardize global HR policies
and processes, in order to improve efficiency throughout the organization,
giving HR management a position of strategic importance in the entire
transformation process at Lucent.
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In February 2002, Lucent selected six HR leaders from its domestic and
global operations to serve full time for six weeks on the HR restructuring
exercise.
The six member international team was named the "Tiger Team." The major
objective of the team was to create a road map indicating how the company
could meet the financial challenges of its various businesses, without
disrupting the company's day-to-day HR operations.
Commenting on this, Goldberg said, "Minimal disruption was a specific design
goal for the team. As we talked about how we were going to do things, 'with
minimal disruption' was our mantra. If you set out to design with minimal
disruption, your decisions end up reflecting that goal."
Though the company's revenues declined from $12.3 bn in fiscal 2002 to $8.5
bn in fiscal 2003 (a 31% decline over 2002), it succeeded in drastically
reducing loss per share from $3.49 in fiscal 2002 to $0.29 in fiscal 2003.
Lucent reported a net income of $99 mn for the fourth quarter ending
September 30, 2003 (its first profitable quarter since March 2000) as
compared to net loss of $2.81 bn for the same period in fiscal 2002.
Following the signs of revival, Lucent's stock price increased from the low
of $0.76 in September 2002 to $2.16 in September 30, 2003...
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The Result
Due to the severely adverse market conditions during 2001 and 2002,
Lucent, along with other telecom companies, experienced substantial
decline in revenues. Lucent's share price fell below one dollar
during this period and it reported astronomical losses of over
$14.17 bn and $11.82 bn for the fiscal 2001 and fiscal 2002,
respectively, from a profit of more than $1.43 bn in fiscal 2000.
Hence, Lucent constantly upgraded its restructuring strategies
during this period to survive the worsening market conditions. |
According to reports, Lucent not only met its cost reduction
target of $2 bn per year, but even exceeded its targets through its cost cutting
initiatives, which involved both streamlining the product lines and reducing its
workforce.
In fiscal 2003, Lucent announced a $5.6 bn reduction in its total expenses and
about $6.8 bn reduction in its operating losses, as compared to fiscal 2002. The
company attributed this to its restructuring initiatives, including its HR
restructuring efforts...
Exhibits
Exhibit I: Five Year Stock Price Chart of Lucent
Exhibit II: Five Year Financial Summary of Lucent
Exhibit III: History of AT&T
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