Telkom has sent a letter to all of its 2 635 management staff, telling them they may be affected by a retrenchment process that could be in the offing, because of its "unsound" financial situation; a move that has led to chaos and other staff fearing for their jobs.
The letter explains the telco is in an "unsound" financial state, facing increasing costs and dwindling revenue, despite its previous bids to cut costs - including last year's voluntary retrenchment and early retirement process. It notes Telkom wants to implement a flatter management structure, which could lead to some staff being out of work.
Telkom has 19 215 staff, of whom 2 635 are categorised as management and specialist employees; a ratio of 6.3 workers to each manager. Telkom explains it "intends to reduce the management layer by about 25% by the end of the process," which puts the number of jobs on the line at around 650, close to the rumoured 1 000.
Alternatives such as outsourcing and joint ventures may also be explored as part of the business and organisational restructure in the future, it says in response to a request for comment. "Telkom intends to build the right organisation for the future by improving the business performance and unlocking efficiencies."
Solidarity spokesman Marius Croucamp says Monday's news created chaos at the telco, with the rest of the staff fearing they are next. He says the company is "like a war zone" and does not know how it was functioning yesterday.
Calming fears
In a bid to settle concerns, Telkom boss Sipho Maseko sent out an internal e-mail yesterday, explaining Telkom has been "experiencing significant challenges as manifested in the financial underperformance of the company". He notes it continues to be beset by declining revenue and increasing costs.
"Much as we might have started efforts to improve our financial situation in the last financial year, we still need to do more and we need to do it very quickly," says Maseko. Its exact financial position will become clear when it reports annual results next month.
Maseko writes Telkom has developed a turnaround strategy to stabilise its situation and improve performance, and has already implemented several initiatives to cut costs, but these do not nearly go far enough. "Regrettably, one of the areas that we need to constantly look to challenge and improve, as part of managing our turnaround, is our employee costs. We have to manage our employee costs down so that we can be competitive in different areas of our business."
Maseko says Telkom has identified the need to flatten the managerial level, the only part of the organisation that could be affected by the pending consultation process with staff. "Doing this presents a huge difficulty to myself and the executive team. However, given the unsustainable financial position, this step has to be explored."
Staff cuts, Maseko writes, will only be implemented as a last resort as Telkom continues to look at other ways of trimming expenses. Telkom will soon be consulting with the staff that may be affected.
No trust
The fixed-line operator's retrenchment criteria are based on qualification and experience, qualification and potential, the last-in-first-out practice, as well as in accordance with "employment equity retention", the notice to staff states. The last criteria has angered Solidarity, with Croucamp saying Telkom is not allowed to retrench based on race, and it will go to court to prevent this.
Croucamp adds Solidarity wants a formal consultation process, and also wants to bring in the Commission for Conciliation, Mediation and Arbitration, because "we don't trust them in this process".
The South African Communications Union, which has 220 management members of the 900 who are unionised, and other organised labour, are still working out details of the consultation process, says president Michael Hare. Communication Workers Union spokesman Clyde Marvin has not responded to requests for comment.
The letter indicates staff will be offered a period during which they can apply for jobs based on their qualifications and experience, after which unsuccessful staff will be retrenched between June and next March.
Telkom is offering 1.5 weeks of pay for each year of service for those who have been with the company for 10 years or less, after which an additional week's pay is granted. In terms of the Labour Relations Act, companies only have to offer one week's pay for each year worked.
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