IZA Tower Talk - Report

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Towards a service culture? Deutsche Telekom CEO Kai-Uwe Ricke at IZA Tower Talk
On February 1, 2006, the CEO of Deutsche Telekom, Kai-Uwe Ricke, was the invited speaker at the IZA Tower Talk. In front of a record audience, Ricke spoke on "Innovations for tomorrow's markets - how technology and personnel management must interact in the age of globalization“.

According to Ricke, the key challenge for the telecommunications industry in the near future will be the shift from obsolete technology-centered business models towards customer-oriented multimedia service packages. It will be inevitable for the market to focus not only on high-quality technology, but equally on service and flexibility. For the service providers, this means complementing telephone and internet access with custom packages tailored to the changing demands of their customers.
Deutsche Telekom is eager to be at the forefront of this trend, Ricke said. In order to achieve this goal in a market with extremely short product cycles, the company must further accelerate the transformation of innovations into new products. This is also a task for personnel managers at Deutsche Telekom as they are facing increasingly stiff competition aggravated by regulatory restraints. While the establishment of new high-speed data networks creates jobs for high-skilled workers, the increasingly dynamic technological change makes entire sections of the corporate workforce redundant and radically changes the task profiles of those who have not fallen victim to the unavoidable job destruction. The CEO asked for some understanding with regard to the plan to reduce the Telekom workforce by 30,000 employees, some of which will be able to switch to other employers after parts of the company have been sold. At the same time, Ricke is planning to hire 6,000 new workers in other segments. He expects the “face” of the entire company to change significantly due to personnel fluctuation and internal competition between sections as a desired means to enhance performance.
During the subsequent discussion with Hilmar Schneider (IZA Director of Labor Policy) and the audience, Kai-Uwe Ricke underscored the pressure that changing market conditions exert on the telecommunications industry as a whole, and Deutsche Telekom in particular. He sees no alternatives to the undertaken modernization program as even comprehensive retraining strategies offer no solution to the employment crisis in individual corporate segments due to strong competition and new technologies. Trying to evade these tasks by refraining from the necessary reorganization would only necessitate even more drastic cuts in the future. In the context of these restructuring processes, however, Deutsche Telekom in particular faces substantial problems in motivating its employees in the light of announced staff reductions, Ricke explained. The company still lags behind not only in terms of service quality, but also with regard to establishing a corporate culture in which “employees are proud to be part of the T.” According the Telekom CEO, technology and personnel management must interact effectively in order to deal with the “massive” challenges ahead.