Intel management layoffs tip of iceberg

Stan Beer
Friday, 14 July 2006 20:24

IT Industry - Strategy

The news that chip maker Intel plans to fire 1000 managers may not appear to be small beer in the scheme of things. After all, it's only about about one percent of the work force. However, looking more deeply into the action, the implications for far wider scale staff culls at the poorly performing market leader.

It doesn't take a rocket scientist to figure out that losing 1,000 middle managers does not equate to the US$1 billion cost savings that Intel has flagged. Being generous in the redundancy, that might equate to about US$200 million tops - and that's being generous.

So where is the rest of thye savings going to come from? Once again, this does not take a genius level analyst to figure out. Managers, by definition, manage teams of staff. If a company makes management positions redundant, then the chances are that their underlings will also be made redundant.

$1 billion minus $200 million leaves $800 million to be saved on staff cuts. Let's say the average redundancy packege is about $80,000. That would mean that there are another 10,000 or so lower level layoffs to be announced. That would seem a reasonable ratio - 10 staff per manager.

If the above numbers are correct - or thereabouts - Intel is getting ready to shed about 10% of its workforce.