Cost cutting masks BT’s covert mission

BT’s HR team responded to the turbulent times leading up to 2002 by
simultaneously introducing a range of strong HR initiatives and cutting costs
and staff numbers.

Margaret Savage, director of HR policy, strategy and organisational
development, told delegates that while BT launched its ‘Cost Busters’
initiative to record, clarify and drive down basic staff costs, it also made
moves to revolutionise the way its HR department functioned.

BT has now introduced a system of "triple bottom line accounting"
which takes into account brand and value growth as well as financial growth.
Value growth includes measures such as people capabilities, and brand includes
the company’s achievements in corporate social responsibility and work-life

The BT HR community is now "reinventing itself" in line with the
new company strategy, putting in place a balanced scorecard and promoting the
function as "people gurus" and "motivational magicians",
Savage told delegates. HR policies have been reduced from 273 to 97.

Savage likened her approach to a "stealth bomber", underpinning
cost savings while quietly introducing progressive initiatives. Guided by
Professor Andrew Mayo’s book, The Value of the Enterprise, HR worked on
building data, establishing benchmarks and identifying measures for individual
business groups.

As a result, the company expects the total labour cost to be reduced by
nearly £3bn.

Savage said the company’s £30bn debt meant managers felt BT was fighting to
survive in the telecommunications sector and this forced HR to appear focused
on cost reduction.

While the company was equipped to value BT’s human capital, the timing was
not right to switch the focus to measuring intangible assets.

"If we were to use the language of adding value through people it would
have scared the patients, they just wouldn’t have played," said Savage.

Savings have been achieved through outsourcing, redundancies and traditional
efficiency measures such as managing absenteeism and productivity.

By Noel O’Reilly

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