Dell: 'We'll Fix This Business'

Tuesday Feb 6th 2007 by Ed Sutherland
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In a memo to employees, Michael Dell presents his plan for the near future.

Dell has been in the news a lot of late, with the company facing significant legal and financial challenges. How the company handles these challenges will affect the many small businesses that built their companies on Dell products and services. What is Dell doing to get back on track?

A week after retaking the CEO at Dell, founder Michael Dell is saying changes are on the way. In a memo to employees, Dell said "discretionary awards" would replace bonuses for all but senior managers, whose ranks will be cut nearly in half.

Expecting "a tough couple of quarters ahead," Dell told employees he plans to be CEO for "the next several years." Dell was not immediately available for comment, but confirmed to the Associated Press the memo's authenticity.

Pointing to "great efforts, but not great results," Dell's new CEO said bureaucracy is the company's new enemy. The ranks of top managers will be slashed from 20 to 12, Dell wrote. The first casualty of the new policy: the chief operating officer post won't be filled. Kevin Rollins, who Dell replaced, held that spot.

Dell decried the company's current situation, including poor financial results, shareholder lawsuits and government investigations. "This is disappointing and it is unacceptable," Dell told employees.

Noting the company didn't get into its mess overnight, "we won't fix things overnight either," Dell wrote. He added that the company has changed since he started over two decades ago. "When I started in 1984, it was just me.

"We'll have to make some tough decisions, but we won't be shy about those," Dell continued. The company will focus on the customer experience, leverage its supply chain and build other profitable areas, including the company's intellectual property.

The computer maker will also shorten the period for stock-vesting from five to three years, resulting in less time employees can exercise stock options. Annual bonuses will be planned "against realistic targets," according to the memo.

Dell also outlined changes in the company, including creating several new divisions.

An Americas organization will focus on small and medium businesses, and public, commercial and Americas International operations. A Global Operations division will oversee worldwide manufacturing and procurement. A Consumer group will also be created to handle online and brand areas.

Dell plans greater focus on consumer and small business areas, "ensuring quality, stability and predictability" for larger customers. Tighter design cycles await Dell's Product Group. Speedier design will set Dell apart in customers' eyes, Dell wrote.

"We'll fix this business," Dell said in the memo, first published by the Austin American-Statesman.

Adapted from Internetnews.com.

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