HR Restructuring at Lucent Technologies|Human Resource|Organization Behavior|Case Study|Case Studies

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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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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The HR Restructuring Exercise

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.

Human Resource and Organization Behavior | Case Study in Management, Operations, Strategies, Human Resource and Organization Behavior, Case Studies

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...

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...


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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