Rightsizing at

PTCL After
Privatization
Group Members:
Faisal Ahmad Jafri
Osaid Siddiqui
Ovaisuddin Adil
Shozab Abid Azhar
Summaya Zahra Rizvi
Syed M Asad Zaidi

Agenda
1

Background
Background

Privatization
Privatization

Etisalats
Etisalats Steps
Steps

VSS
VSS 2008
2008 and
and 2012
2012

Challenges
Challenges and
and Learning
Learning for
for
VSS
VSS 2014
2014

Results
Results

Way
Way Forward
Forward

8 Recommendations
Recommendations and
and Q
Q&
&A
A

About PTCL
Leading telecommunication service company
in Pakistan
Largest fixed-line network and huge
international network spread through
submarine cable system.
Manages and operates 2000 telephone
exchanges across the country

Offering largest fixed line network

Wireless services like CDMA and high speed
broadband internet

Importance of PTCL
One

of the largest and one of the very

few profitable state-owned enterprise in
Pakistan
Employed 72,000 people across
Pakistan
Previously came under Civil Servants
Act, 1973
Listed in Karachi, Lahore and Islamabad
Stock Exchanges

Dilemma with PTCL

Government had few major issues at hand
for PTCL:

No strategic direction
Lack of monetary resources for
technological advancement
Excess employability/Over staffing
Poor efficiency and poor sweating of
assets

Govts approach to resolution of

issues: Privatization
In

2003, Government of Pakistan

prepared a highly intensive privatization
program
PTCL was privatized in 2006

26% shares sold to Etisilat International

(UAE) with management rights
12% shares offered to general public
62% shares remained with GOP

Etisilats Challenge

The new management had two tasks at hand:

Rationalize Employment (Short Term)
Maximize Profitability (Long Term)
Profit Maximization was only possible through:
Technological advancement and infrastructure improvement
Reduction in operational costs
Multiple stakeholders & pressure groups due to federal scope
Rights of current employees ensured through privatization deal;
forced lay off not allowed
Business continuity was extremely important
Multiple categories of employments

Etisilats Response

The dynamics of telecom industry were changing

rapidly; PTCL had to act quickly
The management decided to proceed with
rightsizing through Voluntary Separation Scheme
(VSS) Program
Business Case Rationale for Rightsizing: PTCL
carried out a comprehensive research through
McKinsey & Company which did a thorough
benchmarking and established to have a
maximum employment for 15,000 people against
the prevailing 72,000

VSS (Voluntary Separation

Scheme)
Employees

were given the option to freely and independently

consider and choose the separation scheme
Applicable on regular and NCPG employees
Divided into following categories:

Transition Compensation
Benefits Compensation
Optee Program
Supplementary Benefits

Package Components
Transition
Compensation

Transition
Transition Pay
Pay
Early
Early Bird
Bird
Bonus
Bonus
Program
Program Bonus
Bonus

Supplementary
Benefits

Write
Write off
off Loans
Loans

Commutation/
Commutation/
Gratuity
Gratuity
Health
Health Fund
Fund
Leave
Leave Encashment
Encashment
Allowance
Allowance Benefits
Benefits

Benefits
Compensation

Optee Support
Program

Job
Job Search
Search &
&
Outplacement
Outplacement Services
Services
Financial
Financial Assistance
Assistance
Vocational
Vocational Trainings
Trainings

Challenges faced in VSS

Implementation
Huge

organizational structure
Nation-wide presence
Organizational politics
Complex employment categories
Pressure groups
Emotional attachment to organization

VSS in 2007 The Success

The

2007 VSS was a huge success

32,000 employees opted to take voluntary separation
PTCL engaged several effective tactics to counter the
pressure groups, by offering counseling, one-on-one
discussions and group meetings
Demotivation grapevines were deliberately spread
across the organization
PTCL took a significant step towards targeted
employment number
However, PTCL also lost on some good talent and senior
executives who got disillusioned by companys strategy

VSS in 2012 The fiasco

Encouraged by the results of 2007, PTCL launched VSS again in

2012

This VSS was launched targeting the senior govt employees

Anticipating the companys move, the senior employees legally

charged the company

PTCL, wanting to avoid any litigation, withdrew the program

Only 5,600 employees took the offer

Socio-politico environment in country also played an important role

Voluntary Separation Schemes
at that time
2008:
2008: Around
Around
30,000
employees
30,000 employees
opted
opted

2012:
2012: Around
Around
5,600
people
5,600 people opted
opted

VSS in 2014 Learning from

mistakes

PTCL carried out comprehensive working prior to

offering the 2014 VSS; a sort of targeted approach so
that high performers stay and unwanted ones leave

Departmental restructuring was done through which

3 categories were identified

VSS in 2014 Learning from

mistakes

Smart tactics were used to identify and isolate the unwanted

employees:

Internal transfers to remote and out of comfort zone locations

Unexpected promotions and expose of non-performers
Delay tactics e.g., for leaves
Demotivation tools, e.g. no increments
Difference in treatment of committed vs non-committed employees
Motivation tactics & retention policy in parallel viz. international
assignments & secondments, increments and incentives
Right use of power and influence tools

VSS 2014 A step closer

Having

carried out the previously

mentioned tactics, PTCL then launched
the 2014 VSS
This program was met with great
success
Approx. 17,000 employees opted for the
VSS
Bringing PTCL closer within touching
distance of their 15,000 employee
target

Comparison
VSS 2012
Minimum Amount
Transition Bonus

Rs. 850,000
(it was 650,000 in VSS 2008)
0

VSS 2014
Rs. 950,000
Rs. 350,000

Retirement Benefits
- Service for Pension
Eligibility
- Addition in Service Years
- Regular (Pension Eligible)
- Regular (Pension Not
Eligible)
- Gratuity (NCPG)
Leave Encashment
Allowance Benefits
Loan Amounts

20 Years (No relaxation)

18 Years (2 Years relaxation)

2 Years
35% to 120% as per Employees
Choice
50% commutation (Min : Rs.
350,000)
(Which is Tax exempted)
Four Basics per Year

Only 35%

Rs. 300,000 as Separation

Bonus
(which was taxable)
One Basic per Year
Max of 96 for NCPG & 180 for
180 for everyone
Regular
(even if leave balance is ZERO)
(Subject to Available Balance)
Given only on House Rent
Given on All Monthly Allowances
Deducted from Final Payment
Written off

Results
Since

rightsizing, PTCL has been able to revive itself in

technology infrastructure
Revenues have more than doubled from 2006, now
standing Rs. 81 billion
Gross profits subsequently have risen to Rs. 25 billion,
with only VSS remuneration bringing it to lower than 2013
Company is now venturing on 3G and 4G projects along
with IPTV services
Customer feedback and response time has improved
significantly
PTCL is developing itself as a respectable corporate brand

Way Forward
PTCL is now few steps away from achieving its goal
It is planning on to bring another VSS to achieve
the target of 15,000 employees
Challenges await, but the management is very
confident of achieving the target earlier than the
stipulated time
It is not easy to layoff the remaining last chunk;
stubborn and insensitive attitude
These employees are strong obstacle in overall
culture change of the organization

Recommendations

A more lucrative VSS

Individual counseling pattern of pressure
groups and underlying factors identified
Pocket Unions
Usage of influential people
Group incentive
2nd phase: VSS + NCPG combo package
(increment and a category change only)

Thank you! Questions please?