Opinion: Downsizing

POSTED: 05/7/12 1:11 PM

The news that telecom provider TelEm is finally shedding some of its payroll may come across as negative news to some. But the fact remains that TelEm’s payroll has been too fat for years, if not decades.

When interim manager Pieter Drenth left the company towards the end of September 2009, there were 201 employees, seven less than when Drenth started his tenure.

That keeping 200 employees on the payroll was royally overdone was understood by everyone except our politicians who kept screaming at every occasion that those jobs had to be secure. That is not the way to make a business profitable in the long run, but politicians tend to be more concerned about votes than about the bottom line.

The agreement about letting employees go based on a pre-pension scheme is obviously a good idea, especially because the scheme is voluntarily. It serves both parties: the company is happy to finally shed some of its workforce, and the employees are happy because they leave with a package that is satisfactory to them.

Of course slimming down means that there are fewer jobs now at TelEm. To remain a viable company it has no other choice than to kick itself in shape. Otherwise TelEm would sooner or later find itself in a position where it is unable to offer its customers good service for an acceptable price.

When the first phase of this scheme is completed, Telem’s payroll could be 21 employees lighter. That is the beginning – though an important one – of the restructuring process.

Pieter Drenth said almost three years ago that it is possible to operate a company like TelEm in Europe with less than 100 employees when he was in office, Drenth aimed for a workforce reduction of between 20 and 30 percent –roughly 40 to 60 people.

It is therefore fair to say that with the steps management and employees took this week, TelEm has completed about one third of its downsizing project. It’s better than nothing, but the company still has a long way to go.

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