Lucent Technologies, a subsidiary of AT&T faced a severe financial crunch (falling stock prices and receding profit) due to bad financial management, economic recession, and tough competition. The reason for such a dismal performance was the lack of investment in the research and development of new technology and acquisitions of several companies without considering important organizational and Human Resource (HR)-related issues. Many of the mergers and acquisitions failed not because of strategic or financial reasons, but for HR-related matters. This organization ignored the importance of organizational and HR issues before the acquisition like cultural compatibility, organizational structure, leadership issues, retention of key talent, compensation and performance management systems, communication problems, and employee relation issues. Apart from this, there was a high employee turnover due to fear, anxiety and job insecurity. All this had resulted due to unresolved HR-related matters since there was no standard HR policy.

One of the major initiatives taken up by Lucent was to restructure its HR policies and practices to make it uniform and standardized. The `GROWS’ initiative helped the company to grow by paying more attention to the customer requirements, and creating an open and supportive environment for workers, who could deliver the services with speed. The company looked into the compensation system of the acquired company and found out the cost of human capital to rationalize and integrate it with Lucent. Lucent developed HR strategies and integrated those with other functions to retain talented employees and started working to develop a strong organizational culture, which can help the company to compete and grow.

The company adopted standard global HR policies and procedures to improve its efficiency, and it aligned its HR strategy with its business strategy. The formation of the `Tiger team’ to meet the financial challenges with minimum disruption to its HR activities helped in improving its HR efficiency. The project management office, implementing the suggestion made by the team, helped Lucent to have a cost-effective HR operations and an effective organizational structure. It also made sure that employees are made accountable for their work. It invested in IT to support its HR systems, and training to line managers. They adopted a three-phase strategy resulting in developing a long-term vision and a structure for HR, that can work as a blueprint for all existing HR operations across the organization. It had the commitment and support of the top management along with an efficient communication system. The entire HR was restructured into (1) Operation center, (2) Center of Excellence and, (3) Business partner organization. This segmentation was made for clarity in tasks, and decision-making. Some of the activities (routine, repetitive and transactions) were outsourced to save cost and time, and to reduce the workforce. Employees were trained to work in an IT-enabled environment for self-service to process many routine matters. This was done with an objective that the HR management could devote more time to take up more critical and important issues like retention and motivation of talented employees and contributing towards the organization’s performance. Initially, employees resisted these initiatives, but later they were convinced about the benefits of going for this change. This significantly reduced HR costs.

Lucent, in a bid to become lean and thin, reduced its workforce drastically to face the market challenges. They adopted certain HR practices, such as valuing diversity, creating an open and supportive climate, allowing employees to express their ideas freely and frankly, and helping workers to achieve greater performance.

As a result of these activities, a number of important issues emerged for consideration. They are as follows:

1. There seems to be a direct link between employee motivation and behavior, creation of value for customers, and increasing shareholder value. The HR must fulfill its role by creating HR strategies, policies, and procedures, and work towards their implementation. They must also understand what kind of HR the organization will need, in order to compete successfully.

2. In case of acquisition, the HR’s main challenge is to identify the culture that is required for both the companies.

3. In case of global operations, the HR’s role is to facilitate growth by selecting the right local leadership, and balancing the local and corporate demands.

4. If a company wants to enter into new markets, or with new products into the existing market, the HR has to create a business culture that emphasizes radical innovation and continuous improvement.

5. The HR should align their strategy with their business strategy to achieve the organizational goals.

6. And, finally the HR must review its contribution as a function and how it would restructure itself, and if possible, adopt a technology-driven approach to reduce the operation costs to improve quality and consistency of the HR services, and continuously improve the HR process so that they can act as a strategic business partner.