Please read the following story, and answer the questions. Please answer the fol

Question

Please read the following story, and answer the questions.

Please answer the following questions:

1. Why do you think Telia had to restructure employees hierarchies in addition to the overall organization of the business?

2. Why do you think there was such a lapse in time between the two restructuring within Telia?

3. Would a U.S. firm be able to restructure its employees in the same manner as Telia?

TELIA: RESTRUCTURING IN SWEDEN One of the largest firms in Sweden is a Telia, a telecommunications firm that is layoffs (the gree to set aside the law that covered firm or take early retirement. Natural Employment of Security attrition resulted in only 200 emplo comprised of over 50 different busi Act). The law allowed for such cooper- ees having to be let go. However, t nesses with over 34,000 employees inative arrangement 100 countries. Telia began a restructur-at the time in Sweden ing program in 1995. Three major unions represent the workers of the firm. tiations for s but they were rare firm was able to restructure itself sig nificantly and thus become mor Telia and the unions were in nego competiti an entire year but ulti This approach to restructuring is n 1992, Telia pursued restructur mately came up with a solution that very consistent with Swedish culture ing, but the effort was widely seen as a was good for all parties. Telia initially which places a high prioriy on the failure because of widespread demon-identified those areas they wanted to collective good. While Telia was able trations and employee hostility follow restructure. Then it developed a con to move its strategic orientation in the ing the restructuring. A subsequent sultation team for each division. This early 1990s, by early 2000 it real- restructuring effort in 1995 was pur team was composed of all threeized that it needed to make other sued in a different manner. The head unions and management. The team changes. Specifically, the firm sought of personnel determined to work with initially determined the skills neces to reorganize its: the five business the unions to design a program that sary to fill the jobs that would result units: Telia Mobile, Telia International minimized worker dislocation but stillfrom the restructuring. Then the firm Carrier, Telia Networks, Telia Internet allowed the firm to achieve its goal of placed 20,000 of its employees who Services, and Telia Equity. Each busi becoming more competitive. Part of this were affected by the restructuring in a ness area is responsible, within its change was an education process on new division. These employees would Telia's part. For example, the personnel have to apply for the new jobs. A department prepared statistics on the consultation committee in each area den and throughout the world. This requirements of the restructuring and determined if the employees had the the implications if these restructurings skills required to fill the new positions were not pursued. Specifically, the per- Approximately 6,400 people were sonnel department prepared a worst- not competent for the new jobs, and case scenario of replacing employees these individuals were given the Case studies. Telia. European Foundation based on the typical rule of lastin, first- choice of changing occupations in for the Improvement of Living and Working out (that is, the more recent hires are thethe firm where their skills were a bet Conditio first ones released by the firm). The ter fit (i.e., a lower skilled job), orTelia: Comparable Financial Figures 1999 product area, for the group's total earnings across all markets in Swe- new structure gives greater independ acts for employment and competitiveness . ence to each business group 2000 in the New Group Structure. (2001 s, convinced of the need to restruc- receiving training for a year for the ure, were determined to work with the new jobs. If neither choice was firm. One method they used was to able the individuals could leave the ai 73399134 9), http://findarti s/mi_mOEIN/is_2001_ April_19/ pri ar

Explanation / Answer

Why do you think Telia had to restructure employees hierarchies in addition to the overall organization of the business?

Telia is one of the largest firms in the Sweden with 34000 employees and 50 different business. It can be deducted from the case that Telia wanted to restructure itself to be competitive in the market. The company wanted worker with the new skills. That is why the whole restructuring was supposed to take place to make a collectively beneficial decision. Telia did not want lose it old employees. The employees were given a choice to either apply for a job which suits their skills or were given a year training to learn new skill. Employees who would not want to do any of it were given option to go early retirement.

Why do you think there was such a lapse in time between the two restructuring within Telia?

The first effort to restructuring took place in 1992. This was put down because of widespread demonstration by employees who thought they will lose their jobs. There was a lapse in time because the Telia has to come out with a different idea wherein employees also would feel secured. Telia in 1995 came up with the same restructuring but did it in a different way. Telia had to educate its employees on the importance and the effects of restructuring of the company. It spent considerable time and effort to make its employees understand about its benefits. Communication becomes important factor in situations. Later, when the employees were communicated to, in a way that the unions were ready to have discussion on this.

Would a U.S. firm be able to restructure its employees in the same manner as Telia?

Restructuring this way is challenging for any company. It needs both employees and employers understanding and willingness to work for the bigger collective goal. I doubt that this kind of restructuring can be done in a firm US. I think people in general are more aggressive in US. Also, many times one tends to think of more individualistic benefit rather than benefitting collectively. For these reasons I think it is very difficult to restructure a firm in the same manner as Telia

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