Philips Medical: A Followup

In a Nov. 2008 post entitled "Who Leads in Intellectually Challenged Responses to Medical Informatics Backgrounds, The U.S. or Europe?", I chastised Philips Medical for their ossified and uninspired approach to biomedical informatics talent management (by nonmedical "experts", in fact), and that ossification's deleterious effect on innovation.

I forwarded the post to Philips management. Needless to say, I never received a response.

This appeared on Aug. 5, 2009 at layofftracker.blogspot.com:

Wednesday, August 5, 2009

Philips Healthcare announces layoffs

Got via a Tip.

Philips Healthcare announces layoffs. Memo below.

Message from Steve Rusckowski

Dear Colleague,

In our Q2 and Semi-Annual 2009 Report released on July 13, Philips reported a year-on-year decline in Healthcare sales. While we are substantially lower in our profitability as compared to Q2 2008, material improvements were made in our profitability from Q1 2009 to now, due to our sustained efforts on cost-containment. However, we still fell short of our targets and there is risk for further deterioration in several of our markets.

To build a stronger organization for our future, we need to be a simpler, leaner, more flexible organization, while continuing to bring costs and capacity in line with current demand levels. Our long-term success will be measured by our ability to pro-actively and purposefully navigate through the lingering economic slowdown.

The Healthcare Executive Team, in collaboration with our extended management across the sector, will adapt our organization to the needs of the markets. Where we see opportunities we will seize them, where markets change we will take the necessary steps to enable profitable growth.

To safeguard and strengthen our business, our sector will expand, and where possible, accelerate our efforts to cut further operating costs, including an additional reduction in our workforce. After careful analysis and consideration, this action will impact nearly all of our businesses and functions within North America beginning this month.

The necessity of this workforce reduction is driven by increasing double-digit declines in equipment orders across all of our businesses in North America. The combination of tightening credit markets, persistent delays in capital equipment purchases, reimbursement pressures and the uncertainty of health care reform, are contributing to a weak overall U.S. health care market. [He forgot to mention innovation failure - ed.] Responding to these dynamics is crucial to secure our immediate business performance and preparation for our future.

In North America, the vast majority of employees affected by the workforce reduction will be notified next week. Some employees will be notified as early as this week, with others notified later, as business needs dictate. Impacted employees will be notified by management and/or representatives from Human Resources.

As always, Philips is fully committed to supporting all employees through this process and will treat everyone fairly, professionally and with respect. In accordance with local legislation and procedures, affected employees will be offered severance packages and other appropriate assistance and support. [Being treated with "respect" at a time of massive unemployment, of course, means being handed a few months' salary -- unless you are an executive -- and then being booted out the door - ed.].

I recognize the impact of these decisions is difficult and distracting on a personal and business level. [Getting laid off is indeed somewhat "personally distracting" - ed.] On behalf of the Executive Team, I want to thank you for pulling together and giving your best effort to stay focused during these challenging times.

It is important to recognize, we are battling a global recession, with impact extending across all sectors and geographies. While we are taking these measures within the North American region, we will continue to assess economic conditions and business challenges across our sector and will implement further cost measures whenever needed.

I will continue to keep our lines of communication open [to survivors - ed.], as we proceed ahead. As we do, let’s continue to focus on our customers, as we commit to supporting one another.

I remain confident in our business strategy and our collective passion to make a positive difference in health care.

Best regards,

Steve Rusckowski

CEO

Philips Healthcare

I suggest that to "build a stronger organization for our future" ("our" referring to those who actually retain their positions for now), Philips management start reforms at the top. One reform would be to re-evaluate just how "expert" their experts are.

Philips shareholders, take note.

-- SS