Will The Telstra Management Changes Matter?

  So will the latest Telstra announcement make any difference?The company yesterday confirmed the well-leaked re-organisation that followed the decision by internet chief, Justin Milne to depart after being apparently marginalised by CEO, David Thodey.So out came the statement & #160;which included news of a & #160;new consumer chief whose identity was missed in the media reports yesterday announcing the imminent reshuffle.The market was well-tipped off to the changes, but there was still an underwhelming reaction and the shares closed unchanged at & #36;3.07.The changes consolidate Mr & #160;Thodey's top executives into four main groups: customer sales and support, product and marketing innovation, operations, and corporate support, the company said in the statement.Mr Thodey justified the changes this way: & quot;This reorganisation is designed to get the right people and processes in place. It will enable us to better deliver Australians the services and products they want and to profitably grow our business domestically and internationally. & quot;The main changes & #160;are:A Hewlett Packard executive, Gordon Ballantyne, will become group managing director of Telstra Consumer and Channels, effective in June.He was & #160;vice-president of the personal systems group at Hewlett Packard in the UK. At Telstra, he will oversee all of Telstra's retail sales outlets and replaces & #160;acting group managing director of consumer and channels, Glenice Maclellan. She's resigned, but will stay to handle the changeover.Kate McKenzie, formerly group managing director of strategic marketing, will move into a newly created position of chief marketing officer.The statement says she will oversee product innovation, promotion and pricing across Telstra. The major product development units - Wireless, Data, Applications and Services; Mobility Products; and Voice, Broadband and Media - will now report directly to Ms McKenzie, the statement said.And group managing director of customer experience, simplicity and productivity, Robert Nason, will take on added responsibilities, for corporate strategy, mergers and acquisitions and the program office. & quot;He will lead our drive to win new customers and better serve existing customers in the consumer market, & quot; Mr Thodey said.Telstra also confirmed the departure of & #160;Mr Milne, who held the title of group managing director of voice, broadband and media.He leaves June 1.An executive called J B Rousselot, will become executive director of voice, broadband and media.That apparent downgrading of an integrated voice, broadband and media reporting role seems to be a signal that Telstra doesn't believe in the idea of a single & quot;new media & quot;.If that's the case, does that extend to strategy insofar as the negotiations with the government over the NBN are concerned?In fact it seems Telstra is circling the wagons ahead of rejecting any deal with the federal government and facing a very uncertain, legalistic future.The parts of the business being & #160;negotiated by Telstra and the government are all dying, low margin, falling profit businesses. & #160;Telstra should be really flicking them to the 'bunny' investor in the government and grabbing the money to reinvest in its growing businesses, led by mobile, new media/the internet and Pay TV.There was a real worry in the statement yesterday from Mr Thodey when he said that his new super executive, Mr Nason had already started a review & #160;the company's operations with the goals of reducing costs and improving competitiveness. & quot;Robert's work will help us to significantly reduce costs and improve our customer satisfaction, & quot; Mr Thodey said. & quot;The way we work - everything from our corporate decision making processes to the way we serve our customers at the frontline - needs to be simplified. & quot;I thought that was what happened under Sol Trujillo and previous managements.If a company is locked into a cost cutting as its major strategy, what hope is there for any growth path?Cost control is fine and vital in every industry, but companies of all sizes must have an easily understood plan for growth, even if it is in reality defending a difficult position such as Telstra finds itself in at the moment.When Telstra customers and shareholders hear the words cost controls, cost cuts and competitiveness, they know that there's pain and PR disasters ahead because the company has not been able to handle any change in a business-like fashion in the past.Resolving the NBN impasse, once and for all, & #160;remains the most important issue for the company. The only thing supporting the stock is its huge dividend of 28c a share, and yield of 9.3%. & #160;  

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