Lucent Technologies was a technology company composed of what
was formerly AT&T Technologies, which included Western Electric
and Bell Labs. It was spun-off from AT&T on September 30,
1996.
About Lucent Technologies
- In September 1995, the US based telecom giant AT&T
announced that it would be restructuring itself into three
separate companies- a services company(AT&T), a products
and systems company (Lucent technologies) and a computer company
(NCR).
- In February 1996, AT&T divested Lucent off into a separate
company
- At the time it was spun off, Lucent was already a major
player in many business-mobility, data, optical and voice
networking technologies, professional network designs and
consulting services, web-based enterprise solutions which
linked public and private networks and optoelectronics and
communications semiconductors
- By 1997, Lucent was the leading telecom equipment maker
and was lauded as one of the biggest success stories of the
1990s.
- Lucent had acquired many technology companies in the late
1990s.
Surfacing of the Problems
- In the late 1990s, as the internet and data traffic businesses
gained ground, Lucent lost its competitive advantage in its
core business of telecom equipment.
- Though Lucent invested in a few Internet and wireless companies
after 1996, the company focused more on its core competencies
and failed to evolve in line with the changing market dynamics
towards convergence of voice, data and internet.
- With the growing popularity of wireless technologies, Lucent
began to lag behind its competitors, who were quick to recognize
the potential of Internet.
- Compared to its competitors, Lucent had been very slow to
respond to it customers? need for higher-speed optical networking
equipment which resulted in a severe blow to its revenue as
well as its market reputation
- By late 1999, Lucent's high priced acquisitions were not
earning reasonable profits and the company was also unable
to integrate the operations of the acquired companies effectively,
leading to problems on the corporate culture front.
- The poor integration of corporate cultures led to a major
exodus of talent from the acquired companies, as a result
of which, Lucent could not launch new technologies to match
its competitors
- Besides, Lucent had diversified workforce of over 1,38,000
people across its businesses, and the workforce at each business
unit had its own unique culture. Lucent became a hub of diversified
cultures and varied service delivery models. This made it
difficult for the HR staff to integrate the HR functions across
the business units and to develop and implement efficient
retention strategies.
- In 1997, Lucent launched a major strategic initiative called
"GROWS" an acronym for its key elements - Global,
Results, Obsessed, Workplace and Speed. This initiative promoted
an open supportive and diverse workplace at the company. However,
by late 1999, under McGinn's leadership, Lucent's focus on
HR diminished.
- When Lucent had increased its sales to customers, many of
them defaulted on their payments as the technology and telecom
industry reeled under an unprecedented slump in 2000, which
threw Lucent into a deep financial crisis.
- Analysts and industry observers attributed Lucent's miserable
performance to the wrong strategies and mis-execution by the
top management.
In 2001, Lucent announced a new restructuring plan. The plan
concentrated on the following things:
- Elimination of product lines
- Significant cost cuts to the extent of $2bn a year
- Workforce reduction by 10,000 jobs
- Reduction in working capital
Restructuring Activity
In 2001, Lucent came up with the Service Delivery Project Team.
The major objective of this team 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.
Tiger Team
In Feb 2002, Lucent selected six HR leaders from its domestic
and global operations to serve full-time for six weeks on HR
restructuring exercise. The major objective of this 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. The Tiger Team undertook
an analysis of Hr operations. The team also studied the possibilities
of making HR activities more efficient through policy changes,
automation and process improvements.
Expert Help
Lucent established a Project Management Office to oversee the
implementation of findings and suggestions of the Tiger Team.
During the implementation period, the PMO was assisted by Hewitt
Associates.
Focus on IT
Lucent also focused on IT to save on the costs and time consumed
in transactional and repetitive HR activities by transferring
them to global IT platforms and regional HR operating centres.
Workforce Reduction
Between 2000 and 2002, Lucent resorted to workforce reduction
By early 2003, Lucent had cut its workforce from 1,35,000 in
late 2000 to 45,000 through various means like outsourcing,
spinoffs and lay offs.
Service Delivery Model
Lucent consulted the experts in compensation strategies and
policies, staffing and talent management and also other companies
which had been through similar organizational transformations.
Lucent then went through a rigorous strategy setting phase,
which helped it to lay the foundation for its long-term HR vision.
Effects of Restructuring
1. Since the function of the HR organisational segments were
clearly defined the decision making process became very easy
and quick.
2. The focus on IT, enabled the company to:
- Manage HR functions efficiently.
- Reduce workforce costs
- Drastically reduced the need for manual interfaces.
- Encouraged employees to take advantage of various online
training programs offered by the company.
- Helped HR business partners to align their working closely
with senior managers.
3. A strong shared vision, leadership support and clear communication
was responsible for the success Lucent
4. Lucent not only met cost reduction target but also exceeded
its targets through its cost-cutting initiatives.
Analysis
Proper planning phase: As goes the phrase
"Well started is half done" - Lucent went through
a rigorous three-month strategy setting phase, which helped
it to lay the foundation for its long-term HR vision. Because
of this Lucent could develop a detailed HR organization structure
i.e. the "service delivery model" which led to its
success.
Proper Implementation: Implementation was
done only after communicating the changes to the workforce and
in consultation with the employees. This enabled the employees
to accept the change easily.
Strong shared vision and full support of their
top management greatly expedited the decision making process.
Aligned Hr activities to Strategic Business Goals: Lucent tried to standardize global HR policies and processes,
to align it with strategic business goals thus giving HR management
a position of strategic importance in the entire transformation
process.
Clear definition of functions: Since, function
of the HR organisational segments were clearly defined, the
decision making process became very easy and quick.