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This is the memo Telstra's CEO sent to staff about cutting 1400 jobs

People walk past a Telstra logo in Sydney on February 12, 2015. (WILLIAM WEST/AFP/Getty Images)

Telstra’s plan to sack 1400 employees as part of a $1 billion cost-cutting drive was leaked to the media on Wednesday morning before management had a chance to brief staff.

Now the message explaining the rationale to the telco’s employees (full transcript below) reveals chief executive Andrew Penn blaming technology and the NBN for the need to trim the 32,000-strong workforce.

“We need to transform, urgently. This is particularly the case where [digital disruption] trends are combined with the increased competitive pressures and the accelerated rollout of the NBN.

“This means we will need to become a leaner organisation, one built on digitised systems and services for customers and employees, and one where we will continue to rely on partners for scale.”

Ultimately the sackings would provide “improved customer experience”, he said, and would provide “greater simplicity and accountability across the business” — something that Penn claims staff have told him would make their roles “easier”.

The staffing cuts and restructure will impact five areas: operations, retail, Global Enterprise & services, Telstra Business and media & marketing.

The future for the company would be bright with new roles and technologies, although Penn admitted cuts to existing jobs and corporate restructures are “confronting and difficult”.

“Some of the jobs we do today will no longer exist and new roles will need to be created to focus on new technology driven by expansion into digitisation, software, robotics and artificial intelligence,” he said.


Also read: The union that leaked news Telstra was cutting 1400 jobs has accused the telco of ‘ambushing workers’


“This evolution of roles is not exclusive to Telstra or our industry – it is something that is happening worldwide and across almost all industries.”

Penn acknowledged to staff that sacking 1400 people over the next six months would be “a difficult time” for those leaving and their colleagues.

“We recognise that if these changes proceed, it will mean some valued colleagues will be leaving the business. Change of this magnitude is always hard. I can assure you our proposal for these changes has been made after careful deliberation.”

Last year, Telstra flagged its intention to find $1 billion in cost savings over five years and had already started trimming staff numbers in smaller increments in the last six months before the big announcement this week.

Telstra has reportedly arranged a meeting with the Communications Workers Union (CWU) for 2pm Thursday.

This is Andy Penn’s full statement to staff:

Like all businesses today, Telstra faces an unprecedented world of technology innovation and digital disruption. This presents opportunities because we are at the centre of helping our customers adapt to technology innovation in their own industries. However, it also presents significant challenges as technology is disrupting our own operations as well.

I strongly believe we can succeed in this environment, however to do so we need to transform, urgently. This is particularly the case where these trends are combined with the increased competitive pressures and the accelerated rollout of the nbn. This means we will need to become a leaner organisation, one built on digitised systems and services for customers and employees, and one where we will continue to rely on partners for scale.

Responding to these trends, today we are announcing proposed organisational restructures and workforce changes across Operations, Retail, GES and Media & Marketing; changes that are designed to enable us to work and deliver simpler end-to-end services, reduce our overall operating costs and allow us to compete more effectively.

We are consulting with our people on proposed changes that would ultimately result in up to 1400 roles no longer being required over the next six months. This impacts positions from most parts of the business, at all levels of seniority and from all states and territories and, in some cases, internationally.

I understand this is a difficult time for those impacted and their colleagues supporting them – I want everyone to know that the CEO Leadership Team and the business unit teams have not taken these steps lightly. We recognise that if these changes proceed, it will mean some valued colleagues will be leaving the business. Change of this magnitude is always hard. I can assure you our proposal for these changes has been made after careful deliberation.

As a company, we are facing rapidly changing customer expectations, intensified market pressures and increasing competition, disruptive technology changes and shifting industry economics. This includes things that we have talked about previously – the $2-3 billion EBITDA gap due to the rollout of the nbn; margins on resale of the nbn likely to be lower than today; and meeting our customers’ increasing expectations of us.

As I said earlier, I believe we have a great future ahead, but to be successful we cannot afford to operate as we have always done – we must change in order to continue to deliver for our customers. That means that we have to transform and challenge every aspect of how we work.

I am confident about the future given we are embarking on a once-in-a-generation set of strategic initiatives, including Digitisation and Networks 2020, which will truly transform the way our customers experience us as well as transform the way you will work.

Since we announced the extra $3 billion in extra capital investment and our new strategic priorities last year, we have been working on how best to design the organisation to achieve these objectives. We have also considered what the mass volume rollout of the nbn means for our business in terms of changing demands on our resources and people.

The proposed changes we have announced today are to set us up for the future – overall, for us to win in the long run, we need to grow our business, continue to reduce our costs and work more simply.

That is why today we are announcing a number of proposed changes that we believe will drive greater simplicity and accountability across the business – many of which you have told us would make your roles much easier.

These changes include:

• Operations: New organisational structure to provide end-to-end responsibility and reduce complexity in four key lines of business – Networks, nbn & Commercial Delivery, IT and Digital Solutions, and Customer Service Management.

• Telstra Retail: Evolving our business model to bring together like capabilities from across the group to create three core divisions – Customer Experience & Transformation, Telstra Products, and Consumer & Small Business Sales & Service. We will also renew our focus on Belong. Reflecting these changes we will also change the name Telstra Retail to Telstra Consumer & Small Business.

• Global Enterprise and Services: Implementing a new sales and service model to give improved customer experience by bringing together the traditional Sales and Services functions into one team, which will have end-to-end accountability for the customers they serve. We will also change the name of GES to Telstra Enterprise.

• Telstra Business: To maximise product alignment and growth opportunities and to better serve our business customers, Telstra Business will be integrated into Consumer & Small Business, and Enterprise. This will see the Premier Business customer segment and teams who serve them move to Enterprise, and the Small Business customer segment remain in Consumer & Small Business.

• Media & Marketing: To simplify our operations, focus more on the customer and be more agile in how we work we are streamlining how we go to market, including bringing together our domestic and international marketing teams for Enterprise and continuing to make changes in our Media Team to better deliver our media strategy, which is growing in importance to Telstra.

Each business impacted will be talking to teams today about the changes and how they will be impacted.

The future

We have a bold plan – to transform our culture, processes and systems to meet current market expectation and succeed in the future marketplace. World-leading networks, premium products, brilliant experiences and an easy service experience will be our priorities.

Other parts of the plan are confronting and difficult, but we know we need to change in order to do things quicker and in an easier way. We know we need new and different skills to support new technologies and services. We know we need the ability to be more flexible with our resources.

Some of the jobs we do today will no longer exist and new roles will need to be created to focus on new technology driven by expansion into digitisation, software, robotics and Artificial Intelligence. This evolution of roles is not exclusive to Telstra or our industry – it is something that is happening worldwide and across almost all industries.

For our future employees, you will work for a leaner and more nimble organisation that places high emphasis on developing your skills and leveraging partners to grow and shrink as demand grows.

While our size and shape will evolve, our success will continue to be built on people with deep connection to customers, expert knowledge and recognised technical expertise.

We are committed to being a dynamic customer-centric company that invests deeply in leadership, agile ways of working and developing your skills to keep pace with the changing nature of our industry.

All great companies have the capacity to manage periods of change and disruption and reinvent themselves as they go.

I recognise this will be difficult for some but please understand that we must make these changes to ensure we remain a great company in the future.

Andy

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