Nortel Insider – by Desk Jockey

The Nortel Executive Management Team plans for the imminent turnaround of the company.

Remember all that talk about Nortel’s “greatest asset being its people?” Well this week we found out once and for all that Nortel management does not share this view.

In their latest example of “the ends justify the means” actions Nortel management has apparently chosen to break the law and pay the fine instead of treating UK employees with the respect they deserve, simply because this option benefits management more!

The issue stems from the lack of a “90 day consultation period” which is the same as a notice period. Instead these employees, some of whom had been with the company for many years, were given 2 hours to pack up and get out. While Nortel has been doing this in North America ever since filing for Ch.11 over in North America they are allowed to do so while under Ch.11 protection.

In the UK it is a different story. Even while under Administration certain rules apply when laying off many employees one of which is that employees be given a 90 day consultation or notice period. However the fine for breaking this law is a mere £5000, much cheaper than actually having to follow the law and give employees the proper consultation period!

If Nortel management really cared about their employees they would follow the law. But we know that isn’t the case as demonstrated from previous incidents and so perhaps it wasn’t surprising that they decided to deliberately break the law and just opt to pay the measly £5000 fine instead!

This is yet another in a long line of incidents where Nortel has demonstrated contempt for those very employees that helped build company that they eventually destroyed. Even after you are laid off their game does not end there. Nortel HR in the US has been using questionable methods in order to trick laid off employees into signing away their right to severance by making some vague promise of allowing pensions to be accessed quicker. They are able to do this because they know the fragile financial position many employees are in. Instead of helping out in this situation they choose to exploit it for their own benefit. Their aim is to make sure as many employees sign away their right to severance as possible, so that the chances of them disrupting the Ch.11 proceedings are reduced.

It is also not surprising that they decided to hide behind their consultants to let them take care of the whole matter. This time they are using E&Y to deliver the layoff news because they don’t have the decency or respect to tell the employees themselves.

Nortel Executives and BoD successfully argue in favor of bankruptcy bonuses. http://www.bloomberg.com/apps/news?pid=20601082&sid=a0TBFPiL4Luc

In yet another stunning example of management’s corruption and their total willingness to absolve themselves from responsibility, today we have learned that Nortel executives have petitioned the court to hire Mercer “pay consultants”.

These consultants will cost the company anywhere from $225 to $800 an hour for their ridiculous services. In a time where severances have been cut and employees told to save every dollar, nickel and dime for the sake of the company this is yet another slap in the face of those most loyal to the company. First it was the news of Mike Z’s outrageous private jet usage at the cost of $1 million a month (yes $1 million, don’t believe that “incremental cost” BS) even after Nortel filed for Ch.11, and now this! How much more corruption will we learn of?

Here’s what the PRopaganda dept. had to say about it:

A Nortel spokesman added: “In order to execute a highly complex restructuring program, Nortel has sought counsel from experts with specific experience working with companies who have successfully managed their business while under creditor protection.”

Translation: We don’t know what we’re doing, but don’t worry we can throw money at the problem.

But wait, it gets worse:

The company says in the filing that Mercer has “substantial knowledge of (Nortel’s) current operational condition,” which could help it design an incentive plan for key employees.

So, the executive hires these outrageously priced consultants to let them determine how much the bonus should be for the “key employees” e.g. the executives themselves! Yet another devious trick to continue to profit off the downfall of this company!

But this is all part of their plan to wash their hands of any blame. Just like they blamed the decision to remove severance on the “financial advisors” that told them to do so, they will now happily accept huge bonuses even as Nortel flounders through BK protection and say “Hey, we didn’t decide who got bonuses, the consultants did!“

December 10th, 2008: Nortel HQ receives word that the WSJ has found out about their bankruptcy plans.

Sometimes, you have to make light of a grave situation.

As you will no doubt know, Ernst & Young, the firm appointed by the court to be the Monitor of the whole debacle, accidentally sent out letters to many current Nortel employees, addressed to “All Known Creditors”, advising them of the situation and telling them that “information would be forthcoming” about how to establish a claim.

Nortel management was quick to contact all employees and tell them that this was “nothing to worry about” and that they will “act in the future” to “prevent these sorts of mistakes”. It seems as if we are hearing a lot of that talk from them as of late.

It is interesting to speculate, however, what this letter might mean for those who received it. Is it, as one commenter speculated, an indication that you are on “The List” and that your days at Nortel are numbered?  Clearly, we cannot trust management for the truth anymore, as many employees are finding out the hard way.

Dear Mr. Zafirovski,

The past ~36 months have been a roller coaster ride for us, the employees of Nortel.  Even with the consideration of the dot-com boom and bust, never have things been more volatile and uncertain for us.  While the past ten years have borne witness to an unparallelled rise and fall in the successes of Nortel, your term of leadership has served as a microcosm of the overall situation.

This is strange, because you were brought in on a platform of change.  Change from the old ways, a change from corruption and cronyism, and above all, a commitment to turning the company around and setting things right. 

We were very optimistic and hopeful and we trusted you; perhaps because we needed someone to trust after so many years of neglect.  In a way, you were to be Nortel’s savior, a part that you did not shy away from.

We believed in you as well.  When you created Ethics and Integrity courses that all employees were required to take, some initially sneered at the idea, but we thought if anything, it showed a real commitment to your word.  When you announced the creation of Lean Six Sigma programs, USDRP and other top-down initiatives, some of which we disagreed with, we went along with them because we believed it was for the best.

But soon, actions from your management began to tell a different story.  Firstly, there was the replacement of many long time and loyal executives with hand picked former GE managers.  Okay, we thought. Maybe this will be for the better, since Mr. Zafirovski has already vetted these people and has a good working relationship with them. This was how we explained your actions to ourselves.  

But then, in the midst of all the Ethics and Integrity promotion, a single incident occurred that caused many to lose faith in your leadership.  When Joel Hackney assaulted a female university student and refused to answer questions, instead directing media questions to Nortel’s PR department, you had a chance to prove your worth.  You had a chance to stick to your word.  You had a chance to keep us believing. 

Instead, however, you chose to help out your friend.  We cannot rightly judge you for this, as we understand the bonds of friendship can be quite strong and lasting.  However, as a corporate officer, you have responsibilities that sometimes come into conflict with friendships, even good ones.  As the President and CEO of Nortel, it is your duty to act in the best interests of Nortel, even if this requires losing a friendship of many years.  Yes, we understand it would have been a hard decision – but that is why the job of a CEO is as it should be: tough.

Despite this, we kept on going.  We kept up the faith and kept hoping for the best.  We watched as the stock price eroded along with shareholder confidence.  When we asked why this was happening, we did not get an adequate response, as the problem was almost always dismissed as being the result of “media bias”.  

We stuck through it all, even after more rounds of layoffs well into the “3-5 year plan” to turn Nortel around.  We accepted your explanations that these workforce reductions were part of a necessary restructuring plan, even as we watched our dear friends go.  We continued to believe that things would turn around.

Even after the most recent revised earnings release last September, we continued to hope that you and your team would be able to repair the damage and keep the ship afloat.  It greatly saddens us to say that our trust was misplaced, as this became readily apparent after the disastrous Q3 2008 earnings release.  We wanted you to be straightforward with us, but unfortunately that did not turn out to be the case.  We were beginning to lose our trust.

Even after it was revealed that you had been seeking bankruptcy protection for the company, you and your PR team continued to deny this fact.  You continued to tell us that things were better than they sounded and that the media was contributing and adding to all the negative news.  You told us not to worry and to instead to keep working hard, no matter what bad news we heard.  Many of us were skeptical, but kept on working because we had years invested in this company and were not about to quit and lose it.

However, Mr. Zafirovski, the past week has pushed us beyond the normal human capacity for blind trust.  After Nortel declared bankruptcy, it became utterly clear that you had set out to deceive us from the very start.  Many were working because they wanted control of their future.  You have taken that all away from us by ruthlessly removing all severance payments that the employees rightfully deserve.  The employees who have been the most loyal to the company stand to suffer the most from your actions, and in addition, their pensions have been compromised.

How will you explain this to them, as you move to rapidly downside the workforce now that you have no obligations to it anymore? How will you explain that your previous words thanking the employees have meant nothing, and were nothing more than a show to trick us into following you? And, most importantly, how to expect to turn Nortel around with this sort of behavior?

While the media opines about the great rise and fall of Nortel, the real story, the untold story about the financial, mental and emotional suffering that many Nortel families will undoubtedly have to endure, goes unheard.  I am told that you are a family man, Mr. Zafirovski.  I do not doubt it either, considering your frequent jaunts back home to Chicago using the company-provided private jet.  Being a family man, you will no doubt understand the pain of not being able to provide for your family.  Tell me, Mr. Zafirovski, what should the employees of Nortel tell their families?   How should they prepare to receive the news that their financial future is in ruin?  What will you tell those whose livelihoods have been destroyed?

Mr. Zafirovski, you have betrayed us.  You have betrayed the shareholders, customers, but above all, you have betrayed us, the loyal employees of Nortel who stuck through thick and thin because we loved this company.  And this company is made of people, its workforce and does not consist solely of a CEO and his management team.  As an employee, and perhaps the most important employee of Nortel, you had a responsibility to drive the company towards success, not only for your own benefit, but for the safety and security of its other employees as well.  You have failed us.

Right now, we just want the truth.  We want honesty from your management team for once.  We want you to be straightforward with us, even if the truth hurts.  We have been through enough of the pain from lies already, and we can take no more of it.  We want to know how you will personally deal with this bankruptcy.  Will you continue to bestow unwarranted bonuses and large salaries upon the executives and yourself as part of a “Key Employee Incentive Program” (KEIP)  even as the bankruptcy proceeds? Or will you forgo these lavish excesses to show at least some solidarity with the rank-and-file? And exactly how many employees will be let go, and should they have any hope of recouping any of their severance?

Above all, Mr. Zavirovski, we just want something that we can believe in, once and for all.

Sincerely,

Desk Jockey

Or, more accurately, the day after the day after. But the present title seemed more fitting and succinct.  After Nortel’s spectacular collapse into bankruptcy on Jan. 14th (something that was denied again and again by management until it was required to be made known by law), many questions still remain. 

True, Mike Z. held a GIS immediately following the filing, and individual business unit leaders held GISes the following day, but neither of these addressed the fundamental questions that employees have been demanding, and deserving, the answer to.

Questions such as:

• How and why did Nortel get to where it is currently? 
• Is anything being done to rectify the root cause?
• How will you avoid a liquidation?
• How should employees plan for the future?

Do not misunderstand us; there was plenty of talk on both days, but it amounted to a lot of useless blather and repetitive phrases that everyone has heard.  In fact, save for the initial opening statements, much of what was said was almost exactly the same as in previous GISes, such as the one after its diastrous Q3 2008 results. 

There was not a mention of the word “bankruptcy”; instead such euphemisms as “financial restructuring” and “sound footing” were used.  Let’s be clear here: Most employees are fed up with this sort of white washing.  We are not children and we are certainly not so incapable of hearing the truth. Unfortunately, due to the continued behavior of management in this manner, many simply do not believe anything that comes from them anymore.

Even more appalling was the tone with which the current news was delivered.  Rather than accept responsible for their actions that have led to this most tragic outcome, management had the gall to phrase the current news release in the following manner:

“Nortel must be put on a sound financial footing once and for all” – Mike Z.

It’s almost as if management just happened to find Nortel in this dismal shape and decided to ride in on a white horse to save the day.  Never mind the past 3+ years of mismanagement and utter disregard for employee morale.  And blaming the current economic crisis is just an attempt to red herring the responsibility away.  As this report from Gartner notes, things were bad far before the credit crisis hit.  We would go as far as to say that the recession has benefited management, by giving them the scapegoat they were looking for.

Without acknowledging responsibility, we are left with two explanations for the behavior of management, neither of which are good.  Either they truly believe they are doing a great job (and are just unlucky), or they are continuing their pattern of deception, manipulation and propaganda.  In the first case, they would be delusional; God help us all if that is the reality.  In the second case, they would be corrupt, and thus fitting for immediate removal.

I do have to give them credit for honesty in one area.  When asked by an employee whether the contractually promised severance would be paid out in the event of being laid off, the answer was a succinct  ”No”, without a hint of remorse, regret or pity.

If you’ve ever read 1984, you’ll be familiar with these doublethink terms.  Perhaps no one else is more familiar or adept at doublethink (or its loosely derived term, doublespeak) than the Nortel executive management team.  Here are a collection of their quotations, along with the dates of their deliverances.

“I think all of the bad stuff is behind us.”

John Manley, member of the BoD, in a statement to CBC Radio two days before Nortel declared bankruptcy.

“It’s not like we are a shrinking violet.”

Richard Lowe, VP of Carrier Networks, on December 20th, 2008.

“In terms of operational capability, it has little impact… Fact is – we’re into silly season and media are out to write the story they want to write on us.”

Ronald Alepian, VP Global Communications, in response to reports that Nortel was seeking bankruptcy advice, December 15th, 2008.

 ”But I urge you to stay razor focused on the task at hand and not allow the press and pundits to derail your efforts.”

Ronald Alepian, December 12th, 2008.

“Said plainly, media now view us through a rather one-dimensional and challenging lens…  Nortel should be able to sustain adequate levels of liquidity in the next 12-18 months.”

Message to all employees, from Nortel Global Communications, December 11th, 2008.

“Yesterday’s WSJ was fueled by speculation and has no bearing…”

Nortel official FAQ to employees, in response to the WSJ article that Nortel was seeking bankruptcy advice, December 11th, 2008.

“Nortel must be put on a sound financial footing once and for all.”

Mike Zafirovski, Nortel CEO, referring to the bankruptcy filing.

We’ll let the absurdity of these statements tell the tale of Nortel’s ineffective leadership. For reference, Nortel filed for bankruptcy on Wednesday, January 14th, something the executive management must have been planning for during the past few months.  The astonishing descrepency between their words and actions makes you wonder whether they’ve lied so much that they’ve succeeded in only fooling themselves.  To these people, 1984 is more than just a book or manifesto; it’s a way of life.