February 13, 1996

At&T's Plan for Cuts: Be Gentle but Stay Firm


BASKING RIDGE, N.J. -- Top executives at the AT&T Corp. have pored over 10,000 resumes in the last few months, the first wave of more than 100,000 they expect to review by summer.

But these resumes are not from people looking for jobs. Rather, they are from managers who already have jobs at AT&T and do not want to lose them. Nearly all nonunion employees of the company, from low-level supervisors to vice presidents, have been given a standard two-page form on which to list their credentials. For most people, it is the first tangible encounter with AT&T's plan, announced in January, to cut 40,000 of its 300,000 workers over the next three years.

"The idea is that everybody has been asked to step out into a parking lot," Adele Ambrose, a spokeswoman for AT&T said, offering an analogy for this methodical new approach to corporate downsizing. Having decided how to overhaul the entire corporation, senior executives are now deciding which people the have valuable skills that make them worth inviting back into the building.

AT&T, of course, has cut more than 70,000 jobs in the dozen years since the court-enforced breakup of its former Bell System. But now the company is trying to overhaul itself from the ground up and for the first time has developed a elaborate plan to re-evaluate almost every job and every worker in the company.

The process is almost miltaristic in its attempt at precision. And yet, in keeping with the company's former tradition of jobs for a lifetime, AT&T is taking pains to usher people out with the gentlest, albeit firmest, of shoves.

It is all spelled out in a euphemistically worded, 150-page manual for department chiefs and employees alike. There are carefully scripted "roundtable" meetings, moderated by neutral observers, or "facilitators," that decide who stays and who goes. Along the way there are lawyers, job counselors, psychological counselors and an army of management consultants.

And make no mistake: No one is being "fired" or even "laid off" here. Instead, AT&T is carrying out its "force management program," aimed at reducing an "imbalance of forces or skills." Those who are not invited back in from the parking lot are simply those who have the bad luck to find themselves "unassigned."

As the rest of corporate America watches, the big question for AT&T -- and the people who will continue working there -- is whether this new approach to layoffs enables the company to continue some semblance of the loyal corporate "family," while encouraging a culture of individualism that rewards star performers and offers no promises about the future.

Critics say the layoffs demonstrate how modern companies treat workers as disposable tools. Company executives describe a new company that will be vastly less bureaucratic, more dynamic and more flexible.

"People need to look at themselves as self-employed, as vendors who come to this company to sell their skills," explained James Meadows, one of AT&T's vice presidents for human resources, who has helped define the company's new rules of engagement.

"In AT&T, we have to promote the whole concept of the work force being contingent, though most of the contingent workers are inside our walls," Meadows said. "Jobs" are being replaced by "projects" and "fields of work," he said, giving rise to a society that is increasingly "jobless but not workless."

The reality, however, defies the slogans on both sides. Bureaucracy? AT&T employs 2,500 people in the human resources department and 900 in public relations -- and most of those people will keep their jobs. AT&T will continue, as best anyone can determine, to operate a full-service hotel at its headquarters and the AT&T School of Business, which trains thousands of employees every year for new jobs in management and marketing.

Cold-hearted executives? Managers will account for 60 percent of all job cuts, and they will get severance benefits worth, on average, less than half those given to the average laid-off union worker. Thanks to tough union contracts, the average union severance package will be worth about $130,000 and the average manager's package will be worth about $60,000.

For the moment, almost every non-union employee is being judged largely by two documents: the two-page resume and an "Employee Assessment Summary" prepared by the person's supervisor. On the resume, workers list their current job title, salary, information about previous jobs and their most important accomplishments and skills.

The supervisor's report then scores that person's job skills, like bookkeeping or writing software, and "generic skill factors" like leadership, teamwork, planning and information analysis.

"This gives employees a chance to tell us where their strengths are," Miriam Graddick, a vice president for human resources who designed much of the process, said.

Some employees found their heads spinning. "I had never heard of these profiles, and then everyone in my department was told we had to finish them right away," said Joseph Balde, who has worked AT&T for 14 years, most recently as a supervisor in charge of outfitting employees with personal computers. "All the work in our department came to a stop for about two days," Balde said.

So far, about 10,000 people at the corporate headquarters have been through the process. To decide who will stay and who will go, senior managers have held carefully organized "roundtable" meetings to discuss every person in a department. Under company rules, no worker can be discussed unless there is at least one person in the room who knows that employee personally.

Each meeting is moderated by a "faciliator," a neutral, outside expert. These roundtable meetings vary in duration, though some of them have involved decisions about hundreds of workers and have lasted for more than twelve hours. In each case, the final results are then reviewed by lawyers to make sure that the job cuts don't expose the company to possible lawsuits over discrimination -- whether on the basis of sex, age, race or other grounds.

Historically, AT&T has rivaled the Army as an employer that welcomed minorities and people with only high-school educations, offering training and re-training and the opportunity to rise through the ranks over a lifetime career.

"We have traditionally been a very caring company," Ms. Graddick, who is herself black, said. "There's nothing in the process that should affect diversity."

Still, nobody implies that the process is democratic. Balde, who was told on Jan. 16 that his job would in end in 60 days, said he had not been able to find out who was in the roundtable meeting that determined his fate. He said he suspected one of the participants had been harboring a grudge against him, but AT&T executives respond that they took great pains to be fair.

To ease the jolt for those who get cut, AT&T has also created an expansive network of "resource centers" to help people find new jobs. These centers provide office space, telephones, computers and career counseling, as well as a data base of job openings at other companies. The computer automatically tries to match a person's goals and qualifications with its job listings, and mails out a list of possible matches to each person in the program every week.

Among those who keep their jobs, the effect of this process on employee morale is a matter of debate. "The whole issue of loyalty has evaporated," said one executive, who said he believes his job is secure but has been dismayed by the cuts all around him. "There is a climate of fear. There was fear in the old days, too, but when they cut 40,000 people who is going criticize a supervisor?"

Such fear may help undercut the cultural change that AT&T officials make clear they are seeking, in which obedience and seniority are supposed to give way to an environment of ambition and star performers. Yet, some managers, particularly younger ones who have climbed rapidly, say they are exhilarated by new opportunities and are more than willing to accept the risks that go along with them.

"In a high-technology corporation, you have to be willing to change," said Catherine Gibson, as she shared an after-work drink with colleagues at the Top of the Hill Tavern a few miles down the highway from AT&T headquarters here.

Ms. Gibson, a manager in her mid-30s at AT&T's Business Communications group, said she had never assumed that her job would last a lifetime, as she watched AT&T go through previous rounds of job cutting. "It's been here ever since I've been at the company, about six years," she said.

Others are more bitter. "As far as loyalty goes, you can forget about that," said Tracy, a low-level manager in her early 30s, who joined AT&T 12 years ago. Tracy arrived at AT&T with a degree in nursing but moved into jobs at Bell Laboratories that involve surveying new technologies. She said her entire group had been told it had been spared from the current round of layoffs, but was feeling discouraged nonetheless.

"It's been terrible for morale," she said. "I've gotten critical, cynical and more argumentative."

But in the view of Meadows, the AT&T vice president for human resources who has helped create the bold new structure, employees will simply need to accept that the workplace has changed irrevocably.

"People need to recognize we are all contingent workers in one form or another," he said. "We are all victims of time and place."

But the timing is better for some than for others. Meadows, who is 58, has logged 35 years at AT&T. That put him in a position to accept a voluntary buyout. He will walk away with nearly a year's salary and -- unlike many who are on their way out -- with full retirement benefits. His last day on the payroll will be June 28.

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