BT plans radical internal shake-up

The vogue for corporate restructuring sweeping across British industry has taken hold with a vengeance at BT, with news that the company is implementing a radical plan to split its internal structure into 40 or 50 separate business units.

Fresh from the dramatic programme of staff reductions, which has seen the workforce shrink from 240,000 to 125,000 in just seven years, the company is introducing a radical programme to introduce a full-scale internal market.

Each division involved will act as a stand-alone business with its own profit and loss account and the ability to outsource some operations to other companies. BT said yesterday that the aim was emphatically not to cut jobs beyond the existing reductions in staffing levels and insisted there were no specific targets for cost savings.

It is the biggest internal upheaval since "Project Sovereign" in 1990, which swept away BT's traditional structure based on geographic lines and replaced it with divisions such as personal communications or business services.

The changes have been strongly backed by Sir Peter Bonfield, BT's chief executive who joined the company at the beginning of the year from the ICL computer group. Within weeks Sir Peter had criticised the staff culture within BT's London headquarters which still has elements of civil service bureaucracy.

Jeff Richardson, the director of the internal-market project, confirmed that similar and unpopular reforms carried out at the BBC had been studied before BT's reorganisation began earlier this year. He said several lessons had been learnt from the BBC approach.

"We're going forward in an evolutionary way ... we don't want to take people's eyes off the ball while the changes are going ahead," Mr Richardson said.

He insisted the reforms were not the first step towards hiving off activities. "We are already required by our licence to buy and sell internally," he explained.

The reorganisation is being discussed with BT's main trade union, the Union of Communication Workers, which is determined to ensure it prevents each business unit negotiating wages and conditions separately. Tony Young, the CWU's joint general secretary, said he believed an agreement with management had been secured, though the detailed still needed to be thrashed out.

"The jury is still out on these changes. What it will mean over the next five years we've yet to learn. The real challenge is to continue with collective bargaining," he said.

Separately it has also emerged that BT is to reorganise its complex structure of job grades and responsibilities, heralding a move to multi- skilling which has also been a feature of the changes at the BBC.

The existing grading structure, a throwback to pre-privatisation days when BT's job descriptions were written along civil service lines, separates engineers, clerical staff and the dwindling number of operators.