News: Nokia reduces its headcount

Employee Relations

Nokia reduces its headcount

As the Finnish company looks to save cost, union estimates that about 10,000 to 15,000 positions in the U.S plant could be at risk.
Nokia reduces its headcount

The telecom, IT and consumer electronics company, Nokia is, reportedly, looking to save 1.2 Bn euros ($1.4 Bn) annually by the end of this year following the 2016 acquisition of its former Franco-American rival Alcatel-Lucent. As part of its cost-saving plan, it has already laid off  250 workers in Naperville and expects to lay off another 250 by year-end. 

While an unknown source from the company confirmed the layoff plans, the number of jobs at risk were not revealed. 

“Following the acquisition of Alcatel-Lucent in 2016, Nokia announced a global synergy and transformation program that runs until the end of 2018, and as part of that program we have, indeed, reduced headcount in Illinois,” said spokesperson. 

At the end of last year, Nokia employed around 1,03,000 people globally. Subsequent to the acquisition of Alcatel-Lucent in 2016, Nokia had consolidated workers at the former Alcatel-Lucent headquarters in Naperville, where it employed about 1,800 workers two years ago.

While the Finnish company has not revealed the number of total global job losses, unions have estimated that 10,000 to15,000 positions could be at risk. 

A few weeks back, the German engineering company, Siemens also announced its job reduction plan. Siemens is on an efficiency drive which could result in as many as 20,000 administrative jobs being eliminated. 

Pertaining to the many internal and external challenges that businesses face today, episodic restructuring and routine layoffs have become common. However, such moves have a direct impact on employee engagement of the current workforce. Professor Sandra J. Sucher from Harvard Business School in her eight years of researching on best practices for workforce change in global multinational companies, found that often companies do bad layoffs (layoffs that aren’t fair or perceived as fair by employees and that have lasting negative knock-on effects), do layoffs for the wrong reason (done to achieve short-term cost cuts instead of long-term strategic change) or worse, do both.

The findings of Charlie Trevor of University of Wisconsin–Madison and Anthony Nyberg of the University of South Carolina reiterates the negative impact of layoffs and indicates that downsizing a workforce by 1% leads to a 31% increase in voluntary turnover the next year. 

What can leaders do to mitigate the risks of these moves and how can they communicate their decisions as the right strategy and win employee trust and loyalty?

Here's an article that gives some solutions: Role of a leader during organizational layoffs

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Topics: Employee Relations, #Jobs

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