January 09, 2002
Motorola to Cut One-Fifth of its Execs
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Motorola Inc., the struggling technology giant, confirmed Monda that about 20 percent of its 600 top executives will be laid off by the end of March.
The high-level cuts, which could start as early as next week, will substantially reduce the ranks of Motorola executives with the title of vice president or higher, according to the Chicago Tribune.
Motorola, based in Schaumburg, Ill., already planned to shed 48,400 employees by the end of 2002, through layoffs and sales of business units reducing its workforce by nearly one-third compared with August 2000, when it had 150,000 employees.
The planned executive departures represent a new effort to streamline the top of the company's corporate ladder. Responding with a statement to questions from the Tribune, Motorola said they're part of the company's previously announced cuts.
"While our sales have dropped more than 20 percent, our officer level has remained fairly constant," the statement said. "As a result of the changes in the business, we have a clear responsibility to eliminate management layers. This effort is critical to increasing our responsiveness and improving our operating efficiency."
Two former Motorola officials told the Tribune that Motorola has long been "top heavy" in comparison to other firms.
Those former executives and other Motorola trackers say the cuts are the handiwork of Ed Breen, who was named the company's president and chief operating officer in October. Breen assumed those positions Jan. 1.
"I'm sure he feels it's too fat at the top," said one former executive. "You can't possibly come from the industry and not feel that. It's overwhelming."
Breen declined to comment on the layoffs, according to the Tribune.
Analysts have criticized Motorola for not being nimble enough in its fast-moving technology markets, and the former Motorola officials said the company's top-level bureaucracy contributed to its inability to move quickly.
"When a guy takes over, he's got to make a couple splashes, and that's a good one to make," the other former executive said.
Wojtek Uzdelewicz, an analyst at Bear, Stearns & Co., also praised the move by Motorola to restructure its organization. But he also told the Tribune that he is concerned about whether a long-term strategic gain will result from the short-term cost savings.
"The big mistake was [Motorola CEO] Chris [Galvin] didn't set a big accountability culture from the beginning," Uzdelewicz said. "It's very hard to change that. They typically wait too long before taking drastic steps."
The Motorola statement said the decision to reduce the executive headcount was made by Galvin.