Nortel Insider – by Desk Jockey

The view from one Desk Jockey

The stress of a “death spiral”

with 6 comments

angryfaceThere are many who like to quip that Nortel is in a “death spiral”.  The theory is that customers may be hesistant to buy Nortel at a time when its solvency 2-3 years down the road is questionable.  Understandably this makes them wary.  After all, they want to be sure that product support, often as important as the product itself, will be available in the future.  They want insurance behind their purchase.  For this reason the competitors’ sales teams are likely exploiting this reason to gain market share, causing Nortel to lose more customers.

The loss of customers causes a further decline in revenue, thus hastening the slide towards bankruptcy.  And so the cycle continues.  

This is analysis has been so widely reported that it need no further discussion here.  But one thing that’s worth pointing out is how this “death spiral” is affecting workers.

Just the other day we became aware of an employee who said that two people were laid off from their group. With the current hiring freeze (and freeze on most other spending) there are simply no resources available to replace them, onsite, offsite, onshore or offshore.  The remaining members will just have to “pick up the slack.” Of course, this isn’t really possible, so their deadlines will slip, or product quality will suffer, further deteriorating the brand name and reputation of Nortel.

But what’s to be done? There is no easy answer, of course.  It may be that the bad management decisions of yesteryear are coming back to haunt the executives one last time.  And it may be that under the current conditions recovery is hard to unlikely.  But one thing that is for certain is that this situation is placing much more undue stress on workers who have been living in fear for many years.  Some will continue to handle it, though some will eventually crack and seek employment elsewhere.  This will further contribute to the “death spiral.”

After the most recent quarterly earnings release, Nortel released a FAQ to its employees.  One of the questions was, “What is the attrition rate of employees at Nortel?” In the answer, Nortel refused to disclose the exact numbers (as is expected since this would be valuable information to competitors/recruiters) but merely said that the Nortel employee base was “extremely loyal.”

While it is true that many be loyal, their patience is certainly being tested beyond what would be considered loyalty.  (The entire topic of loyalty deserves its own article)


Written by Desk Jockey

November 26, 2008 at 7:07 pm

Posted in Uncategorized

Tagged with , , ,

6 Responses

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  1. Nortel workers are extremely loyal. NORTEL WILL SURVIVE. Deadlines will be meet because those that are left are dedicated to our customers and have the firm believe that Nortel will come out of this a better company. Almost every company is struggling so Nortel is not unique in that respect.


    December 8, 2008 at 12:00 pm

  2. My only problem is this: I’ve worked at Nortel for 21 years, with the last 6 of them being on LTD. I don’t know what’s going to happen to my LTD, let alone my mingy (and it is) pension.

    With all the changes to pensions and their benefits, I don’t think I’m even going to have one. I’m stunned.


    December 10, 2008 at 7:19 pm

  3. alixs, your situation was one we covered in a previous post: The real tragedy behind Nortel.

    You are not alone. Many other employees stand to lose a sizable pension should bankruptcy become a reality, which seems to be more and more the case nowadays. Management has yet to address this issue and has blindly kept insisting on “The Path Forward” and “Business as Usual”. We like to call this “The Wool Over Your Eyes”.

    Your pension is something that you earned and was part of your contract. You deserve every cent of it. LTD is no small matter and it must even be more heartbreaking for you to see more bad news everyday. Our thoughts are with you.

    Desk Jockey

    December 11, 2008 at 7:16 pm

  4. Tammy, you miss the point. Yes, companies are struggling right now because of the economy, but Nortel has been in this state for quite some time. Each and every year we are told that the next year is crucial and requires our 100% dedication and devotion in order for the forecasted turnaround to happen.

    Like Boxer from Animal Farm we have been worked and worked while being deceived from the very top. All of this is counter to a productive work environment.

    Desk Jockey

    December 11, 2008 at 7:19 pm

  5. […] for “key employees” so that they don’t leave for greener pastures, causing a death spiral. This idea isn’t completely without merit but in the case of Nortel it is a damn near a crime […]

  6. I love your wp format, where did you get a hold of it?


    June 5, 2012 at 6:05 am

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