Nokia 2011 Annual Report Download - page 24

These strategies also involve changing our mode of working and culture to facilitate speed and agility
in innovation, product development and aimed at increasing the efficiency of execution and bringing
more accountability for achieving results. Organizational changes of this nature consume significant
time, attention and resources of senior management and others within the organization, potentially
diverting their attention from other aspects of our business. Additionally, when such changes are
planned and implemented they may cause disruption and dissatisfaction among employees, as well as
fatigue due to the cumulative effect of several other reorganizations in the past few years. As a result,
employee motivation, morale and productivity may be reduced causing inefficiencies and other
problems across the organization and leading to the loss of key personnel and the related costs
associated in dealing with such matters. Moreover, our employees may be targeted by our competitors
during the implementation of our strategies, and some employees may be more receptive to such
offers leading to the loss of key personnel. These factors may have a more pronounced adverse affect
due to the cumulative effect of the previous reorganizations. Should we fail to implement new
operational structures effectively and smoothly and effect the changes in our mode of working and
culture, the efficiency of our operations and performance may be affected, which could have a material
adverse effect on our business and results of operations, particularly our profitability.
Our success is dependent on our ability to retain, motivate, develop through constant competence
training, and recruit appropriately skilled employees with a comprehensive understanding of our current
and future businesses, technologies, software and products. This is particularly important for the
successful implementation of our mobile products strategy and the Microsoft partnership and our
location-based services and commerce strategy where we need highly-skilled, innovative and
solutions-oriented personnel with new capabilities. The potential impacts noted above of the
operational changes being implemented throughout our organization, as well as the cumulative effect
of several other reorganizations in the past few years, may make it more difficult to attract the new
personnel we may need to implement our strategies successfully. We may need to adjust our
compensation and benefits policies and take other measures to attract, retain and motivate skilled
personnel. This will require significant time, attention and resources of senior management and others
within the organization and may result in increased costs. We have encountered, and may encounter in
the future, shortages of appropriately skilled personnel, which may hamper our ability to implement our
strategies and materially harm our business and results of operations.
Relationships with worker representatives are generally managed at site level and most worker
representative agreements have been in place for several years. Our inability to negotiate successfully
with representatives or failures in our relationships with the representatives could result in strikes by
the workers and/or increased operating costs as a result of higher wages or benefits paid to employees
as the result of a strike or other industrial action. This may affect our ability to implement our planned
reorganization and restructuring or increase the amount of associated time or cost. If our employees
were to engage in a strike or other work stoppage, we could experience a significant disruption of
operations and/or higher ongoing labor costs.
We are targeting to reduce our Devices & Services operating expenses by more than EUR 1 billion for
the full year 2013, compared to the Devices & Services operating expenses of EUR 5.35 billion for the
full year 2010, excluding special items and purchase price accounting related items. This reduction is
expected to come from a variety of different sources and initiatives, including those noted above. We
cannot guarantee that we will achieve or sustain the targeted benefits, which could result in further
restructuring efforts. In addition, we cannot guarantee that the benefits, even if achieved, will be
adequate to meet our long-term growth and profitability targets.
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