Choice New solution

(1)

Restructuring & Health

Ericsson

Elisabeth Armgarth

Berlin September 10, 2009

(2)

2002-2005

1997 1998 1999 2000 2001

1995 1996

“Evolution”

Terminations 150 150 400 100 100 25 660 8400

Ericsson TRR

Ericsson Ericsson

Ericsson Manpower

Ericsson Manpower Ericsson

Manpower

Ericsson 6 suppliers Ericsson

Carried out by

(3)

2002-2005

1997 1998 1999 2000 2001

1995 1996

“Evolution”

Terminations 150 150 400 100 100 25 660 8400

Ericsson TRR

Ericsson Ericsson

Ericsson Manpower

Manpower

Carried out by

+ Only 6 weeks

+ Big farewell party!

- Did not let people choose

(4)

2002-2005

1997 1998 1999 2000 2001

1995 1996

“Evolution”

Terminations 150 150 400 100 100 25 660 8400

Ericsson TRR

Ericsson Ericsson

Ericsson Manpower

Manpower

Carried out by

+ ....

+ 6 months OK

- 5 people remaining!

(5)

2002-2005

1997 1998 1999 2000 2001

1995 1996

“Evolution”

Terminations 150 150 400 100 100 25 660 8400

Ericsson TRR

Ericsson Ericsson

Ericsson Manpower

Manpower

Carried out by

- Dismissed and survivors together

- 12 to 18 months – time too long

- Same 5 people still remaining!

(6)

2002-2005

1997 1998 1999 2000 2001

1995 1996

“Evolution”

Terminations 150 150 400 100 100 25 660 8400

Ericsson TRR

Ericsson Ericsson

Ericsson Manpower

Manpower

Carried out by

+ Increased Labour Law knowledge

- 4 new ”leftovers”

(7)

2002-2005

1997 1998 1999 2000 2001

1995 1996

“Evolution”

Terminations 150 150 400 100 100 25 660 8400

Ericsson TRR

Ericsson Ericsson

Ericsson Manpower

Manpower

Carried out by

+ Support Package

(8)

Restructuring in Sweden

Why Support Package?

1. Ericsson wants to demonstrate that the human resource policy also applies in adverse times

2. Ericsson wants to help redundant people in finding new jobs

3. ”Security” for those who stay on in the company 4. Create Goodwill, invest in Ericsson brand

5. Ericsson also wants to decide who should stay and

who should go

(9)

Rules & Legislations in Sweden

1. Swedish Labour Law

– Employment protection legislation (LAS)

• Seniority principle

• Period of notice 1-3 months, etc.

• Enough people left with adequate qualifications

2. National Collective Agreements

– Between employers and trade unions

• Prolonged period of notice for 55+

3. Company rules and directives

(10)

Restructuring in Sweden

Support Package Offer

1. Career Change Program 2. Early Retirement

3. Severance Pay

4. Ordinary Notice to

Quit

(11)

Restructuring in Sweden

Support Package Offer

1. Career Change Program

- 5 – 12 months by external supplier of Career Change Program

- Aim – new empoyment as soon as possible - Ericsson employement and salaries during

the program

6 external companies

(12)

Restructuring in Sweden

Support Package Offer

1. Career Change Program 2. Early Retirement

3. Severance Pay

4. Ordinary Notice to

Quit

(13)

2002-2005

1997 1998 1999 2000 2001

1995 1996

“Evolution”

Terminations 150 150 400 100 100 25 660 8400

Ericsson TRR

Ericsson Ericsson

Ericsson Manpower

Manpower

Carried out by

+ Support Package

+ Steering Group with common goals

+ ”Leftovers”- focus on work capability

- 12 months for everyone

(14)

Work

Capability

What´s your opinion about your work

capability and potential?

Work Capability Analysis

Health

How do you

feel?

(15)

2002-2005

1997 1998 1999 2000 2001

1995 1996

“Evolution”

Terminations 150 150 400 100 100 25 660 8400

Ericsson TRR

Ericsson Ericsson

Ericsson Manpower

Manpower

Carried out by

+ Program requested by the unions

+ Focus on work capability

instead of (ill) health

(16)

2002-2005

1997 1998 1999 2000 2001

1995 1996

“Evolution”

Terminations 150 150 400 100 100 25 660 8400

Ericsson TRR

Ericsson Ericsson

Ericsson Manpower

Manpower

Carried out by

+ ”Glossary A-Z”

+ Rehab coaches

+ Unions approved layoff of

people on long-term/sickleave

- Large meetings Ericsson - dismissed

- 12 months

(17)

2002-2005

1997 1998 1999 2000 2001

1995 1996

“Evolution”

Terminations 150 150 400 100 100 25 660 8400

Ericsson TRR

Ericsson Ericsson

Ericsson Manpower

Manpower

Carried out by

+ 5-12 months

+ One-to-one meetings

+ One common model in place + management training

+ communication plan

+ risk assessment (10-15% of

the people)

(18)

Risk Assessment Areas

• Sick leave - long/short term

• Addiction to alcohol, drugs, gambling, etc.

• Handicapped/disabled - physical/mental

• Personality/mental disturbance, known - unknown

• ”Wrong” self-esteem

• Inadequate ”social competence”

• ”Ericsson takes care of its employees” - victims

• Crime – fraud

• Poor language – Swedish/English

• Cultural differences (more than 20 nationalities)

(19)

2002-2005

1997 1998 1999 2000 2001

1995 1996

“Evolution”

Terminations 150 150 400 100 100 25 660 8400

Ericsson TRR

Ericsson Ericsson

Ericsson Manpower

Manpower

Carried out by

+ HR Models - Restructuring

(20)

Employee

Need for

repositioning Notice Official

termination

Ericsson

•Internal analysis

•Decision about measures

2 months

Voluntary

redundancies •Severance

packages

•Voluntary redundancies

•Support programme

Work release,

Enter support programme, notice period x 2

4-12 months

•New job

•Rehab

•Studies

•Negotiations

•Set up support programme

2 months

Voluntary redundancies

Support programme

ends

Labour exchange

Notice figures:

Termination 70%

Negotiated solution 10%

Severance packages 10%

Voluntary redundancies10%

Model 1: Restructuring Process

8-16 months

(21)

HR Models - Restructuring

• M1 – Restructuring by Notice to quit

• M2 – Competance Shift

• M3 – Partial Restructuring

• M4 – Individual Career Change ”Health Program”

• M5 – Rehabilitation

• M6 – Individual Career Planning

• M7 – Increase of Flexibility

(22)

Model 4: Individual Career Change

CP0 CP1 CP2 CP3

New solution

End of Ericsson employment

Step One

Individual plan

Agree- ment

Step Two

Career program

Choice

(23)

2002-2005

1997 1998 1999 2000 2001

1995 1996

Outcome 2001-2005

Terminations 150 150 400 100 100 25 660 8400

Ericsson TRR

Ericsson Ericsson

Ericsson Manpower

Manpower

Carried out by

?

(24)

2002-2005

1997 1998 1999 2000 2001

1995 1996

Outcome 2001-2005

Terminations 150 150 400 100 100 25 660 8400

Ericsson TRR

Ericsson Ericsson

Ericsson Manpower

Manpower

Carried out by

New careers 85 - 92%

New careers, Rehab 75 - 85%

(25)

(26)

Extra slides

(27)

Restructuring – Why?

• Telecom market down more than 50%

• Market standardization

D-AMPS TDMA

NMT

GSM

Edge CDMA

WCDMA PDC

1G 2G 3G

TACS

(28)

Restructuring world-wide

Decentralized organization

to maximize growth:

• 107 000 employees

• > 80 R&D centers

• Multiple technology platforms

• Local IS/IT solutions

• Local business support systems

• Decentralized HR functions

One global Ericsson

with common functions and processes

• 47 000 by end of 2004

• 25 R&D centers

• 3 technology platforms

• Global IS/IT solutions

• SAP – global business system

• One global HR way

of working

(29)

Restructuring in Sweden

Support Package Offer

1. Career Change Program 2. Early Retirement

- from 58 years of age and 6 years at Ericsson

- 70% from 60 years,

otherwise 65%

(30)

Restructuring in Sweden

Support Package Offer

1. Career Change Program 2. Early Retirement

3. Severance Pay

- 1,75 x Notice Period (1-6 months)

- Employment ends 1 month after day

of notice -

(31)