The privatisation of the Telecom Corporation of New Zealand (TCNZ): Organisational and workforce restructuring in a deregulated environment

This paper examines the former wholly government owned telecommunication company (TelCo), the Telecom Corporation of New Zealand (TCNZ), that was privatised in 1989 and induced to compete in a deregulated operating environment as the New Zealand government moved to open up its telecommunications’ sector to competition. In broad terms this paper examines the organisational and workforce restructuring strategies that TCNZ undertook during this period and how these strategies affected its employment relations (ER) policies. It seeks to use transaction costs economics (TCE) and strategic alliance concepts to assist in explaining why the firm undertook these strategies. The analysis of TCNZ focuses on the period from 1990 to 2000, during which time much of the organisational restructuring and workforce reorganisation occurred. Introduction The telecommunications industry is a large and expanding sector with worldwide revenues in the late 1990s of USD 644 billion, employing approximately 5.4 million people worldwide (WTO 1998). Until the 1980s TelCos in many industrialised market economies (IMEs) were public-sector utilities enjoying ‘monopolies’ in their home market. However, by the late 1980s governments in many IMEs had begun to strip away many of these regulations (Katz 1997; WTO 1998)  the New Zealand government privatised TCNZ in 1990. Thus many former monopolies had to adjust to more deregulated operating environments as they were induced to compete in the market place. But governments differed in the extent to which they embarked on the privatisation process. New Zealand and the UK both engaged in a full privatisation process that saw their former TelCos, TCNZ and BT respectively, sold off as 100 per cent owned private entities. Other countries, such as Singapore, Taiwan and Australia retained significant public ownership, though all three governments have mooted further privatisation (Wilhelm et al 2000). As a 100 per cent privatised entity TCNZ had arguably greater freedom to embark on restructuring programs than those TelCos that remained under majority government ownership. Being a former monopoly gave TCNZ a number of initial advantages in the newly deregulated New Zealand telecommunications market. For example, it retained the ownership of most of the fixed line telecommunications infrastructure, had the most recognisable brand name and to an extent was able to rely on the forces of inertia to retain a customer support base  at least in the shortto medium-term. But TCNZ also began with a public sector culture that included long-term career paths for its workforce and the employment of workers in areas not directly related to telecommunications. The subsequent restructuring of TCNZ included a reevaluation of core competencies as work previously performed in-house was outsourced to the external marketplace. HRM during this period began to take on a