Intel peels off management layers and axes 1,000 jobs

Intel is axing 1,000 managers worldwide as part of the firm’s internal restructuring. In a memo sent this month to all company staff, CEO Paul Otellini said that “too many management layers” had been holding the firm back from being effective.

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By  Dylan Bowman Published  July 23, 2006

Intel is axing 1,000 managers worldwide as part of the firm’s internal restructuring. In a memo sent this month to all company staff, CEO Paul Otellini said that “too many management layers” had been holding the firm back from being effective. Otellini said in April that the company was looking at every aspect of its operations, in a bid to save US$1billion from its budget (see IT Weekly 29 April – 5 May 2006). In the memo, sent to staff on July 13 and subsequently leaked to media, Otellini described the job cuts as “an important and difficult step” but said that it was 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”. The company’s efficiency analysis showed that the number of managers had grown faster than the overall employee population over the past five years, Otellini claimed, and “the relative increase in management has impaired decision-making and communication, reducing the company’s efficiency and productivity”. “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,” he stated in the memo. Intel’s Middle East operation would not comment as to whe- ther the announcement would mean job losses in the region. “We are taking this action to improve decision-making and communications across the company,” said an Intel spokesperson. “One of the outcomes of the structure and efficiency project is that we’ll be a leaner and more agile company,” Otellini said in the memo. “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,” he went on to add. The cuts come just weeks after Intel took the decision to sell its loss-making communications and applications processor business to telecom chip manufacturer Marvell Technology for US$600million. Otellini said the job cuts and the processor business sale were steps on the path to becoming that more agile company, and said the firm would “continue to identify other opportunities” and act on them as soon as possible. He was scheduled last week to discuss further business priorities in an employee webcast. The job losses amount to 1% of the chip giant’s 100,000 global workforce, considerably less than many industry analysts had been expecting. Otellini said the company had avoided across-the-board layoffs, seeing such a move as ‘reactionary’. However, he warned staff that they should expect the company to “continue to take actions, including selective reductions” as it continues its restructuring and review of operations.

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