Organisational and Workforce Restructuring in a Deregulated Environment: A Comparative Study of The Telecom Corporation of New Zealand (TCNZ) and Telstra

Abstract

In the late 1980s, governments in New Zealand and Australia began to deregulate their telecommunications markets. This process included the corporatisation and privatisation of former state owned telecommunications monopolies and the introduction of competition. The Telecom Corporation of New Zealand (TCNZ) was corporatised in 1987 and privatised in 1990. Its Australian counterpart, Telstra, was corporatised in 1989 and partially privatised in 1997. This thesis examines and compares TCNZ and Telstra's changing organisational and workforce restructuring strategies, as they responded to these changes. It further examines how these strategies influenced the firms' employment relations (ER) policies. Strategic human resource management (SHRM) and transaction costs economics (TCE) theories assist in this analyse. TCE links organisational restructuring to the make/buy decisions of firms and the asset-specificity of their employees. It suggests that firms will retain workers that have developed a high degree of firm-specific skills, and outsource more generic and semi-skilled work. Firm strategies are also influenced by national, contextual, factors. From a TCE perspective, these external factors alter relative transaction costs. Hence, different ownership structures, ER legislation and union power help to explain differences in TCNZ and Telstra's organisational restructuring and ER strategies. During the decade from 1990 to 2000, TCNZ and Telstra cut labour costs through large-scale downsizing programs. Job cuts were supported by outsourcing, work intensification and the introduction of new technologies. These initial downsizing programs were carried out through voluntary redundancies, across most sections of the firms. In many instances workers simply self-selected themselves for redundancies. TCNZ and Telstra's downsizing strategies then became more strategic, as they targeted generic and semi-skilled work for outsourcing. These strategies accorded with a TCE analysis. But TCNZ and Telstra engaged in other practices that did not accord with a TCE analysis. For example, both firms outsourced higher skilled technical work. TCNZ and Telstra's continued market domination and the emphasis that modern markets place on short term profits, provided possible reasons for these latter strategies. This thesis suggests, therefore, that while TCE may help to predict broad trends in 'rational organisations', it may be less effective in predicting the behaviour of more politically and ideologically driven organisations aiming for short term profit maximisation. Some TCNZ and Telstra workers were shifted to subsidiaries and strategic alliances, which now assumed responsibility for work that had previously been performed in-house. Many of these external firms re-employed these workers under more 'flexible' employment conditions. TCNZ and Telstra shifted to more unitarist ER strategies with their core workers and reduced union influence in the workplace. Unions at Telstra were relatively more successful in retaining members than their counterparts at TCNZ. By 2002, TCNZ and Telstra had changed from stand-alone public sector organisations, into 'leaner' commercially driven firms, linked to subsidiaries, subcontractors and strategic alliances.