Telstra Corporation Limited is the Australia’s largest telecommunication and information provider. The company is responsible for the provision of a wide range of telecommunication services across Australia. Telstra Company provides basic services to businesses and individual homes, internet and mobile services, and telephone services. The company has service provision has been improved by the presence of fixed lines and mobile connections. Various studies show that deregulation within major telecommunication companies has always had a significant impact on employee relations. As a result of new and improved technology, digital technologies, and mobile telephones, competition among telecommunication companies has diversified. Many firms have initiated organizational restructuring in order to strive well in the competitive telecommunication industry (Bamber, 2000).
Over the past years, restructuring within large organizations through staff reductions and outsourcing has become common due to the competitive nature of the industry. Most companies opt to reduce cost of production through cutting off some staff members and through outsourcing of labor. Mass layoffs of employees in Telstra Corporation began in the 1990’s with the objective of increasing the firm’s profit. By contrast, layoff of workers is usually the last resort by management associated with firms facing financial crisis. The decision by management to lay off workers presented an improvement in the share prices. According to Bloomberg, Telstra Corporation stated that it would cut off 1,100 jobs in June 2014. Despite high levels of unemployment in the country, the company postulated that it will primarily focus on growth. According to Telstra corporation chief operations officer, the job cuts will represent 3% of the current jobs in the firm. Australian companies have been cutting off their jobs as a result of the deteriorating economy. As a result, the reserve bank of Australia has cut down their interest rates to a very low record in the history (Mui, 2013).
As a leading telecommunication and information company with the best brands in the country, the company offers a variety of services to meet its customers’ needs. Over 39,000 people have been employed by the telecommunication company around the world. In 2009, Telstra Company had invested around $2,800 in learning and development per employee. The company later improved on the number of executive women in the workplace by 4.6% and indigenous employment was also increased by 29%. The Telstra Corporation operates across 52 locations in the entire Australia. Telstra Company forms part of the Australian community since it provides services to the local community and thus contributes to the local economies. The company has been actively participating in some of the community’s activities in the aim of achieving its social corporate responsibility. Telstra globe has penetrated through 230 countries around the world with over 1400 branches across Australia, Asia Pacific, United States and Europe. The Telstra international group operates one of the most high speed networks across Asia and Pacific regions. According to the company’s reports, its network covers over 364,000 km regions in the world (Lane, 2006).
Telstra Corporation HRM Strategy and Policy
Deregulations in the telecommunication industry have had numerous impacts on the operations of the company. This has led to the employment of different strategies in the operations of the company. To align to the new development Telstra has been developing new strategies and policies in regard to the management of human resource. For example, there has been downsizing practices to reduce the cost of production thus focus on the main objective of expansion and growth around the world. The human resource management practice of downsizing of workers has resulted in a significant impact on the performance of employees and their productivity. Downsizing of a company can have adverse effects on employees’ performance due to layoff threats imposed by the human resource management. Downsizing of employees could lead to decline in employees’ morale and commitment in the workplace due to fears of being cut off. Layoffs may also have an adverse effect on the company’s efficiency and performance as a result of high skilled and experienced workers being laid off. Outsourcing of jobs previously done within the company, some technical and professional competencies, may be lost. Therefore downsizing and outsourcing management strategies have been common in the Telstra Company (Fickling, 2013).
Sensis business is a Telstra corporation division that has suffered from a decline in revenues for its operations. According to the company’s reports, increase in operational costs is the main impetus for slashing off employees in the company. Therefore, Sensis employees in Sydney and Melbourne will face organizational restructuring as employees will be cut off to minimize cost. The management team has effectively implemented the strategy over the years, and it is confident that the issue of the cost will be mitigated. Other companies in the area have suffered the same problem and are planning to cut off some of their employees. Unemployment in Australia has been at its peak over the years. Companies slashing some of their jobs will adversely affect the already deteriorating unemployment levels in the country (Fickling, 2013).
Outsourcing the Workforce
Outsourcing of graphic design, production, editing, and customer service jobs in the company are usually done by contractors at a lower price. Some of the areas of contractors outsourcing include the Philippines and India. The company made the announcement early this year for their workers. The announcement sought a lot of reactions from different parties in the country due to its adverse effect on the economy. On management’s side of view, it stipulated that the company was no longer sustainable. The Telstra corporation management argued that the decision was necessary since it had to increase its share price in the market. The announcement of projected workers cut off was met with a series of demonstration of workers against the move. The Australian Manufacturing Workers Union (AMWU) was responsible for the demonstration at Melbourne, outside Telstra offices. The move by Telstra Corporation to lay off workers the next year, was objected by the union officials. According to the workers union officials, they demanded reconsideration from the company through discussions with the union. The union officials urged the federal Labor government to restrict the company’s access to projects funded by the government (Bamber, 2000).
The Telstra Company has been working in concert with workers unions over decades in slashing down employees. According to the company’s reports, the firm first engaged with the workers union ever before its privatization in 2000. The Telstra Company together with the worker’s union has worked to cut off the number of employees in the company ever since 1980’s. The company’s workforce has been downsized from about 90, 000 employees in the 1980’s to 34, 000 in 2011. The workers union has also facilitated the outsourcing of contractors from the Philippines and India at a cheap cost (Lane, 2006).
According to the government, the prime minister stipulated that laying off workers at Sensis was a bad move to the country’s economy. The Labor government in collaboration with the workers’ union was working on a drive that could improve the productivity and performance of the major companies through organizational restructuring. The government was willing to enter into an agreement with the responsible parties to see to it that the slashing off of workers was abolished. The strategy of cutting off employees has been common in Australia and New Zealand with many organizations. For instance, the liquidation of a printing company, Geon, led to loss of employment to thousands of workers in Australia and New Zealand. The increased rate of unemployment has significantly affected the country’s economy. The union officials are holding discussions with the Telstra Company to ensure that there will be no job cuts in the future. The company’s management move to cut off some employees came as a result of increased costs of operations (Jean-Jacques Laffont, 2001).
According to the Telstra chief executive officer, David Thodey, more job cuts were inevitable at Sensis since the business entity was upgrading to a digital business from a parent enterprise. He further stipulated that more job cuts will be necessary in the future as part of restructuring in order to remain competitive among other telecommunication corporations such as Vodafone and Sing Tel. The CEO reiterated the essence of job cuts as to increase the growth of the company through minimizing unnecessary costs of operation. Sing Tel Company had announced a job cut of 450 jobs in the IT, marketing, and networks departments at the Optus subsidiary. According to the company reports, the move was necessary for the company since it had experienced a low growth rate in the mobile market. Vodafone, on the other hand, had cut off 500 jobs in November in a move to expand its operations. The 500 job cuts by Vodafone Company were equivalent to 10 percent of the total workforce (Fickling, 2013).
Outsourcing of employees and contractors from other countries pose a great principal- agent problem within the organization. Telstra Company usually goes for the cheap labor relative to the in house employment. Associated problems of principal-agent lead to a shirking of employees and low quality control in the organization. Outsourcing of employees tends to diminish firms control regarding productivity since, effective firm control, is achieved when operations are within the corporation. Contracting has been changing leading to increased cost of outsourcing as more firms seek outsourcing most of their services to reduce production cost. Therefore, if the conditions of the contracts are twisted, the company has no choice but to look for another contractor. In the process, a lot of costs are incurred in finding and replacing employees (Mui, 2013).
HRM Alignment to Corporate Strategy
Organizations usually have a strategy for achieving their short-term and long-term goals and objectives. Execution of strategies in an organization ensures that the predetermined results are achieved. Human resource management alignment with the strategy ensures that goals will be achieved through workers by means of the human resource strategies and the respective policies and practices. Over the years, the role of human resource has been in the administration of the entire business organization (Lane, 2006). By contrast, with globalization and the improved technology inclusion of human resource management in the strategic decision making process has been necessary.
Alignment of human resource in the strategic plans of an organization has given businesses an upper hand in the economic conditions, industrial infrastructure, and changes in market conditions. The transition of HRM into strategic HRM has enabled organizations to gain a competitive advantage over other industry rivals. Inclusion of human resource into strategic planning initiatives will improve efficiency and performance within an organization. Telstra has been aligning its human resource strategies with its corporate strategy of ensuring growth and profitability of the company. This has been the main reason behind outsourcing and downsizing to increase the profitability and expand the operations through reduction of operating costs and ensuring competitiveness (Fickling, 2013).
The human resource management should focus on strategic practices of an organization more than the administration duties. HRM should be more focused on the strategic initiatives than the normal administrative duties. Therefore, the HRM should not abandon its administrative roles in pursuit of strategic issues. The human resource management should focus on administrative and strategic management to ensure efficiency.
HR Planning and Performance
The human resource management contributes significantly to the achievement of organizational goals and objectives. The human resource is an important aspect of business organization's success. In carrying out its strategic practices, the human resource management should set necessary competencies and skills that will be useful in the strategic initiative. Efficiency in HRM alignment will be improved through technology and improved business knowledge. The HRM needs to posses the aforementioned qualities in order to achieve predetermined goals and objectives (Mui, 2013).
There are several dynamic factors which tend to affect the firm’s employee relations strategy. For instance, a firm could be adversely affected by a shift in its operational activities. Organizational restructuring could lead to the disappearance of some sectors in the organization. Government decisions also have a significant impact on the employee relation decisions. The provision of telecommunication and infrastructure service has been the responsibility of the Australian government. Therefore, the government may interfere with the business operations indirectly (Fickling, 2013).
The management team needs to put some mechanisms in positions when shedding off their jobs for growth and expansion. Cut off of workers could pose adverse effect on the performance of an organization. Therefore, clear procedures and guidelines should be put in place in order to eliminate the chances of poor performance. For instance, the organization has invested so much on training the employees in specific departments. Professional training and skills acquired by employees make them an asset to the company. As a result, the company should be careful in the process of cutting off its employees to prevent loss of important members of the organization.
Employee with high professional skills and competencies will be retained in the firm in order to improve the firms’ performance. Human resource management will eliminate low skilled workers in order to pave the way for the cheap contractors. Shedding off of workers is quickly replaced by the offshore contractors from other countries. The Telstra corporation motive of shedding off workers was to eliminate the unproductive labor force in the organization. Through the human resource management strategy of cutting off jobs, the cost of production in the firm is drastically lowered. Therefore, the company can focus on expanding its global market through effective performance with the remaining workforce. The cost saved through job shedding is invested in the company for expansion of the organization.
Implications of the Current Strategies and Policies at Telstra
Business strategies and policies are aimed at improving organizational efficiency and productivity. Telstra Corporation has adopted various human resource strategies and policies to improve effectiveness and competitiveness of the company. For example over the years the company has employed downsizing and outsourcing strategies to reduce operating costs and improve competitiveness. This has affected the operations of Telsra to some extent, but it has also facilitated improvement in the competitiveness and profitability. A successful strategy should involve teamwork, clear communication between employees and managers, employees’ involvement in organizational planning, transparency, rewards, evaluations and appraisals, and employee training. Elimination of workers in the organization will pave the way for cheap outsourced labor force. The human resource management may engage in principle- agent conflict, in their work operations. There might be changes in outsourcing labor. As a result, the companies are heavily charged for outsourcing workforce (Bamber, 2000).
Unemployment in Australia has increased to 5.8% over the recent months as a result of job cuts by organizations. As a result of evolving technologies, the number of employees required keeps on declining and thus more job cuts experienced in most of the companies in Australia. According to Telstra Corporation, there has been organizational restructuring in some of its business entities to allow growth in some areas. Growth of other organization is precipitated by the amount of saved finance from job cuts across the country. According to the chief executive officer, some of the jobs to be cut off included fixed network technicians, employees operating at the business media team, and customer service workers (Lane, 2006).
The Telstra Corporation needs to focus on the growth and performance of the company in a global perspective. Downsizing of employees is a strategy that will have an adverse effect on the company and the country’s economy in general. The company should focus on other ways of improving its performance without negatively affecting the company and society as a whole. As a result of increased unemployment rates in Australia, the Telstra Company should moderate the salary and wages of their employees while retaining its workforce. This strategy will ensure that there are no job cuts in the country and thus regulate the level of unemployment. The company will achieve its goals and objectives without any layoffs of employees. Employees will have sufficient workloads to work effectively. As a result, employees will not be burdened with excess workloads in the workplace (Jean-Jacques Laffont, 2001).
Human resource alignment with the strategic practices of an organization facilitates in the achievement of organizational goals and objectives. As a result of improved technology and increased competition within industries, Telstra human resource management team should operate both administration and strategic practices in order to have effective performance and high profitability. Downsizing of employees by an organization is a strategy of reducing costs of production in an organization. By contrast, an organization could minimize the level of unemployment in the country through the leveling of salary and wages of their employees. Retaining employees in an organization will prevent outsourcing of workforce from other countries. Human resource management team operating under both administration and strategic levels will positively affect the performance of an organization.
Bamber, P. K. (2000). Deregulation, Downsizing and Outsourcing at Telecom New Zealand and Telstra: Towards an explanation of employment relations strategies in terms of transaction costs economics. Research and Practice in Human Resource Management , 93-109.
Fickling, D. (2013). Telstra to Cut 3% of Workforce Amid Australia’s Jobs Drop. Bloomberg , 2.
Jean-Jacques Laffont, a. J. (2001). Competition in Telecommunications. California: MIT Press.
Lane, J.-E. (2006). Public Administration & Public Management. New York: Routledge.
Mui, A. (2013, May 28). Prexi. Retrieved October 28, 2013, from Prezi Website: http://prezi.com/vf9o7dixjcca/mgx5551-strategic-human-resource-management-telstra/