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Intel To Lay Off 1000 Managers
sprash writes to mention a Forbes article about an Intel cost-cutting measure. In response to stiff competition from AMD, the company is laying off 1000 managerial positions. From the article: "In April, Intel reported a 38 percent drop in first-quarter profit as demand slackened for PCs and microprocessors from AMD continued to steal market share. That same month, Chief Executive Paul Otellini vowed to spend the next 90 days identifying underperforming business groups and cost inefficiencies in an effort to save the company $1 billion a year. He said he planned to make changes as his analysis progressed, rather than waiting until the end of his review."
In my experience it's middle-managers who go first, then after consolidating groups and departments, headcount follows. If this is 1% of Intel's workforce then there's likely 5% or more to follow, which would be 5,000 or more when the next boot hits the Linoleum.
It's inevitable when a business loses a significant amount of market share and only the most ignorant Intel employee wouldn't see this coming. I wish them luck. This is probably more a move to maintain profitability and stock value (got to convince those anaylists on Wall Street you're minding your P's and Q's) than "streamlining for growth", which is exactly what you hear when they are doing major houseclearing no matter whether the house is merely smoldering or engulfed in flames.
The pity is those most responsible rarely are held to account for keeping a business trundling along only to be blindsided something some from the inside saw coming, but weren't taken very seriously (Yamhill). Intel may pare their losses, but they'll never enjoy 90% market dominance again.
A feeling of having made the same mistake before: Deja Foobar
I remember over the years how a bunch of the regular mods used to mod me down as troll when I defended Intel against the "they're a monopoly!" posts. For the newbs here, Intel in the past was right up there with Microsoft now, IBM in the 90s, GM in the 80s, etc. Intel wasn't a monopoly, they were just a very aggressive company with a great marketing system, great support, great products and happy customers. As I said many times (I wish I could dial back to quote my old posts), Intel's future would be as shortlived as IBMs was, as Atari's was, as GM's was -- there is no need to start screaming anti-trust! anti-trust! when a company you don't like seems like they'll never fall. I said Intel would have its down days, just as I say today that someone will beat Microsoft fair and square some day, too.
Here are some posts that I recall people talking about Intel being a "bad monopoly," looking back in recent slashdot times:
Timeline Set for Intel/AMD Antitrust Trial
Intel and Skype Exclude AMD
AMD Files Antitrust Lawsuit Against Intel
Japanese Government Raids Intel Tokyo Offices
AMD Alleges Intel Compilers Create Slower AMD Code
Of course, some people will defend their "Intel is a monopoly" belief by saying they're not really a monopoly, they just engage in anti-competitive practices. Like what? Lowering prices below market value? That is _good_ for consumers because NO business can sell for a loss forever -- the minute that they raise their prices after they've wiped the competition clean, new competition will turn up the beat them down again. It has to be good prices, good quality hardware and good quality support -- if they want to give items away, let them. The other anti-competitive practice we hear about is how they "force" suppliers to buy bundles or maintain a certain ratio of items sold to branded items bought. Again, this is all acceptable if the contract stipulates these situations -- most suppliers are happy to sign agreements if they know what the customers want.
I'm glad to see these big companies fall because they're all colluding with the various governments to maintain their power through what I consider negative rights -- copyright, patents and ridiculous mandates requiring their products. Some even have defense contracts. They fall because the customer decided -- there are no natural monopolies as long as the customer is given the opportunity to make their decisions. The market will decide the victor, and the victor won't be on top for long.
Unlike the company I work for that creates an entire new layer of management, then does layoffs for all its technical (read: non-management) workers.
There are only 10 kinds of people in this world... those who understand binary and those who don't
I Am Not An Intel Manager. But I do work there. I can say that there are way too many managers and that this action is required :-)
I can not count the number of managers that have two or three people reporting to them. There are^H^H^Hwere managers who have never worked in the field they manage. I say that before becoming a manager you should have years of experience doing the things that the people you manage do.
Paul Ottelini rocks!
TFA says:
... predicting Intel would reduce its work force by more than 10,000 employees
...Intel had about 100,000 employees
and
So, the 1,000 managers will be followed by some 9,000 more, for a total of about 10% of the workforce - if the predictions / estimations are correct. If so, then this is very significant.
I personally know three people who worked at Intel, one who still does. All worked in the same division, so this isn't a representative sample. But all of them saw money thrown around quite freely, including on hardware and on salaries (which are among the highest in the area here). I hope they tried to cut other things before they started firing.
How much of a pay cut will the Board of Directors and CxO's take?
Here is the internal email from Intel CEO sent to all top level managers. This is sourced from a relative that has been working there since the 1970's.
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From: Otellini, Paul
Sent: Thursday, July 13, 2006 8:14 AM
Subject: An important and difficult step: Manager reductions
To: All Intel employees
This week we're taking an important and difficult step in our efficiency project: reducing the number of Intel managers by about 1,000 people worldwide. Only managers, ranging from senior to first-line, are affected. This step is important because it addresses a key problem we've found in our efficiency analysis--slow and ineffective decision-making, resulting, in part, from too many management layers. It is difficult because the managers who will leave the company are our colleagues and friends, and since we have limited internal job opportunities, redeploying their skills is not a viable option.
We are notifying the majority of impacted employees on Thursday and Friday this week, and (except where a country's laws require different steps and timelines) we plan to have all affected employees informed by Monday, July 17. In the U.S., most employees' last day of work will be July 28, and their benefits will include a minimum of about three months' separation pay (and more for lengths of service over two years). In other regions the process and benefits will differ. While we can't eliminate the impact to these employees, we're committed to offering them support during this difficult time.
This manager reduction is one of the first major actions coming out of our structure and efficiency project, and I believe it's an essential first step toward making us more competitive. Over the last five years at Intel, the number of managers has grown faster than our overall employee population. Our efficiency analysis and industry benchmarking have shown that we have too many management layers, top to bottom, to be effective.
In addition, this finding is consistent with what our organizational health surveys have suggested: that the relative increase in management has impaired decision-making and communication, reducing the company's efficiency and productivity. Many of you have made the same point in your individual inputs to the efficiency team.
As I've said in previous Webcasts, one of the outcomes of the structure and efficiency project is that we'll be a leaner and more agile company. We'll make quicker decisions, collaborate better across the company, and enable a cost structure that allows us to continue to win in our extremely competitive industry as it evolves.
This manager action is one step along that path. Another was the decision to sell our communications and applications processor business to Marvell. We'll continue to identify other opportunities, act on each one as soon as we can, and tell you about the changes as soon as possible. I'll talk more about this and our business priorities in my employee Webcast on July 19 at 4 p.m. Pacific time.
In April I said that we had decided not to do an immediate "across the board" layoff, because that would be reactionary - focused only on the current environment rather than the long term strategic needs of our company. Instead, we chose to undertake a longer, more comprehensive project to analyze all of our operations and make strategic, data-driven decisions. That is still our plan. This manager reduction was the result of careful assessments of the management and leadership roles we need for our future success. We are in the process of fundamentally changing our behaviors and our structure for where our business and industry are going. You should expect that we will continue to take actions, including selective reductions, as we complete analyses and decisions about investments, expense levels and organizational structures. You should also keep in mind that at the end of this process we will still be the largest and most profitable semiconductor company on earth. Our actions are focused on ensuring tha