Cisco CEO John Chambers just shared some surprising details about the huge reorganization the company underwent last fall, as first reported by Business Insider.
Talking to Wall Street analysts on the quarterly conference call, Chambers proudly revealed that the company had ditched over 30% of its managers and that the reorganization had affected 40% of its total employee base.
“It was our choice to move early and boldly, with incredible speed, to realign 40% of our employees to priority areas; to reorganize from product groups into integrated solutions teams; to replace more than 30% of our leaders. We are seeing the results in our relevancy with our customers and our operational excellence.”
Cisco just reported a good quarter, with revenue and profits growing and beating analyst’s expectations.
But that 30% number is interesting. When Cisco announced in August that it would be having another layoff, for the fourth year in a row, a leaked tape from an internal employee meeting surfaced. In it, COO Gary Moore said that the layoff the year before (fall of 2013), “took out 21% of VP-and-above population.”
Before the next round of cuts, Cisco added back 29 VP-and-above managers mostly through acquisitions, he said. Moore warned that there would be “VPs-and-above” that would be part of the fall 2014 layoff, although he also said “we’re not as top heavy as we were” and promised that Cisco was not going to single out middle management for particularly heavy cuts.
Even so, looks like if you were a manager at Cisco in 2012, you had a pretty high chance of getting laid off or replaced.
Sources at the time told Business Insider that about 25,000 people were affected in the reorg, but that referred mostly to the engineering teams. Cisco employs around 75,000 people, so 40% means that closer to 30,000 were impacted.
Other units besides engineering were involved. For instance, Chambers also said that the company had reorganized the whole security business as well, across the globe, including giving it a separate sales force.
In addition to cutting 6,000 employees, Cisco hired and acquired about 6,000 employees, leaving its 75,000 employee headcount roughly the same.
Cisco badly needed to do this. Insiders told Business Insider that years of acquisitions, coupled with its focus on individual products, had created a company full of mini-fiefdoms. An employee affected by the layoffs even told us such a change was good for the company.
Chambers was extremely proud of the situation. “I’m not sure those outside Cisco can understand the magnitude of the changes implemented in the last year,” he said. “Cisco has never, ever been better positioned.”
That was a phrase he repeated many times during the call.
The company says the restructuring will cost a total of about $US600 million in fiscal 2015.