Moutter's blunt message to Telecom staff

Telecom staff face a pay freeze and smaller bonuses; telco about to split into two parts

Telecom staff face a pay freeze, smaller bonuses, benefit changes and further restructuring according to leaked memos obtained by Labour ICT spokeswoman Clare Curran.

In a blunt message to staff, Telecom chief executive Simon Moutter says the changes will bring a "leaner, more competitive Telecom" that wouldn't be the right fit for everyone.

"So if you don't think this is the place for you anymore, then you should feel free to talk to the human resources team about your options," he writes.

Memos sent to staff by chief technology officer David Havercroft said Telecom was proposing to split into "two distinct parts" currently dubbed "Servco" and "Netco".

Netco would have responsibility for network, technology and operations.

Customer-facing Servco would combine Gen-i and Telecom's retail business, though "the detail is still a bit of a work in progress", he says.

"It is not an uncommon operating model for telecommunications companies. But we will have to work hard together to get it right."

Havercroft says Telecom's technology and shared services (T&SS) business unit, which employed 1733 permanent staff in December, was in the midst of a 20 to 30 per cent cull. But the decision to split Telecom into two parts meant "bottom line, there will be more change needed". Staff in some teams will be offered voluntary redundancy, he says.

Moutter's memo says he did not believe it was appropriate or right to be giving pay rises this July.

"It simply doesn't pass the red face test for me so there'll be no funding budgeted for salary increases, myself and the leadership team included."

Short-term incentives - or bonuses - were likely to be "significantly lower than you have seen in recent years" and based on the company's overall performance, rather than those of individual business units.

"I can't be exact as we haven't finished the year yet, but on current performance the payout is likely to be low."

Moutter points out the company has already downgraded its profit forecast in February and told staff "the reality is this year isn't going to be a high-performing year for us".

Moutter is on an annual package of up to $4.7 million, comprising a $1.35 million salary and maximum $3.35 million in incentive payments.

Telecom will stop using online forms to appraise staff performance, reverting to a "far lighter" system of one-on-ones and "adult-to-adult conversations" on regular four-to-eight week cycles, he says.

The "forms and processes" associated with performance appraisal have impeded Telecom, he says.

"When we hit 'appraisal season', the company nearly grinds to a halt with the bureaucracy."

An arrangement under which staff get discounted Telecom services supported by a dedicated helpdesk will be scrapped and replaced with a "straightforward monthly credit" of $150 against their monthly bill.

An employee share scheme, in which 300 staff are enrolled, will also be axed.

Moutter announced last month that the company will shed between 930 and 1230 staff during the first six months of this year.

Forsyth Barr analyst Blair Galpin has forecast job losses would climb to about 1750 following a second round of cuts in about a year. But Curran says her information is that additional cuts to more senior staff ranked at "tier four" and above were planned for September.

"I am not saying there shouldn't be a restructuring in Telecom," she says.

"Clearly there is a lot of unnecessary expenditure, but what is going to happen to all these people?"

Telecom spokesman Andrew Pirie said on Thursday that the company had no job cuts currently planned beyond those that had already been announced.

The initial team-by-team restructuring of the T&SS unit began on March 1 and should be complete by May 8, Havercroft says.

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