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Case Study: Ericsson

Ericsson is a global company that provides telecommunications equipment and

related services to mobile and fixed networks around the planet. The company was
established in Sweden in 1876 and its headquarters is in Stockholm. Currently over
88,000 people worldwide, 40,000 of whom are service professionals, work for the
Ericsson is a highly sophisticated multinational that places great emphasis on
innovation, seeking not only to keep pace with but also to pioneer technological
breakthroughs. In recent years, it has led the technological development of the
mobile telephony industry.
The companys present day corporate strategy has been shaped by events nearly
two decades ago. At the end of the nineties, the company rode the crest of a stock
market wave due to the dotcom bubble, which led to the company investing too
heavily in research and development (R&D). When the dotcom bubble burst in
2000, the company had to make 60,000 employees redundant. This was a salutary
lesson for the company: ever since it has been emphatic about the need to be lean
as well as innovative.
Competency based management is at the centre of how people are managed at
Ericsson and it involves supporting the development of employee competences and
learning capacities so that they can operate effectively in a knowledge-based
organisation: it aims to create the right mix of employee competences to meet
ongoing business challenges.
Although not insulated from the recession, the markets in which Ericsson operates
have not been severely hit by the recession. At the same time, the senior
management team is very aware that the telecommunications sector is highly
competitive to the extent that any hint of the company not being able to control
costs could potentially send the companys reputation into a tailspin.
Ericsson has been operating in Ireland since 1957 and has now over 1,400
employees in Clonskeagh, Dublin and Athlone, Co Westmeath. Together the Irish
operations are engaged in three main activities, Sales and Support to local
Customers, R&D and the provision of Professional and Consultancy Services to the
Global market.
Ericsson Ireland has a relatively small HRM team employing about 10 people. The
HR department has gone under considerable change over the past thirteen years
due to several rounds of corporate restructuring. Only about 20 per cent of the
workforce in Ericsson Ireland is unionised, with the remainder being non-union.
Different terms and conditions for employees make it slightly more challenging for
the subsidiary to operate an integrated human resource management system.

Relations between the union and the company can be considered workmanlike,
neither excessively adversarial nor overly consensual.
The HR team is very much committed to developing a suite of business relevant
people management policies, with a particular focus on helping to implement wider
business strategy. Controlling costs and developing employee competencies have
been core aspects of Ericsson Irelands business strategies for the past decade.
Considerable effort goes into developing competencies at Ericsson Ireland. Ericsson
has developed an extensive set of resources to support its competency
management system in line with the template established by headquarters. The HR
team has been doing a lot to support competency development. This commitment
to developing peoples skills and competencies has remained undiminished during
the recession. It is seen as equally important to the success of the business as
controlling costs.
Ericsson Ireland adopted a far-reaching competitiveness programme in 2005
designed to drive down costs and increase productivity without making employees
redundant. Ever since, the subsidiary has been aggressively pursuing policies aimed
at improving competitiveness. In a sense, the recession of 2007 arrived two years
early at Ericsson Ireland. When the recession finally arrived, the subsidiary did not
have to uproot established organisational routines, but simply continue with the
existing competiveness plan.
As part of a world-wide restructuring programme, Ericsson Ireland was obliged in
2009 to cut 300 jobs from the research and development section of the Dublin site.
Most of the jobs were not lost due to the recession, but were transferred to China,
Poland and Sweden as part of an overall strategy to reduce the number of R&D sites
globally and to reduce cost. In 2010, the subsidiary had to introduce another round
of voluntary and mandatory redundancies due to another organizational
restructuring programme.
Despite the redundancies that have occurred in recent years, Ericsson Ireland
remains a lynchpin of global Ericsson. Within the multinational, Ireland is still seen
as possessing highly skilled and motivated people both in Dublin and Athlone who
contribute considerable value to the company.
The competency regime inside the subsidiary is key to developing trust and
commitment inside the organisation. Competency development is designed as a
form of organisational public good; it is non-rival: the provision of training for one
employee does not exclude another employee from training; all employees have the
ability to consume some form of training. This creates shared understandings
between employees and managers about the professional conduct and standard of
behavior that are expected of both. Although different problems were encountered
and contrasting bundles of policies implemented in these three case studies, each
company made sustained efforts to maintain, if not to deepen, cooperation and

trust or competencies. There was no attempt by management and unions in

Superquinn or Medtronic to exploit any vulnerability the other side was experiencing
due to the recession. It is likely that a calculation was made in each instance by
management and unions that committing to trust relations would enable more
effective buy-in for retrenchment policies.
These case-studies also highlight that trust relations are not self-organizing or selfsustaining, but instead require deliberate and on-going actions and interventions by
both management, particularly HR managers, and trade unions. In Ericsson a focus
on cost and competitiveness pre-recession meant that now radical displacement
was necessary with the onset of the recession. The focus of HR was to maintain
competency development in the Irish subsidiary, even while unavoidably affected
by global restructuring and associated job losses.
Competency development, linked with global strategy, remained the pivotal HR
practice, and the central means of preserving opportunities for staff unaffected by
the corporate restructuring programme.