January 07, 1996|By C. Fraser Smith
The most immediate need to "restructure" came after the announcement last summer that AT&T would divide itself into three new companies: one providing the long distance network, an equipment manufacturing company and another for computers. Each of these, whatever their final form, would need fewer workers.
But there was inertia to combat as well.
Because of its lingering name-brand purchase on market share, it lumbered along overweight, sustaining too many layers of administration, Mr. Balhoff said. It was able to charge more because of the sense that it provided better quality of service.
"That's not true now," Mr. Balhoff went on. "MCI and Sprint have high quality networks, too. They're probably every bit as good as AT&T -- but AT&T can still price its service at a 5 or 6 percent premium." Just as people may trust the name brand drug over an identical generic substitute, they still feel they can hear the pin drop more clearly on American Telephone & Telegraph.
Penalties for being fat
The premium was one thing, Mr. Balhoff says, but there was more: "Monopoly shields a company from having to be attentive to pricing and marketing and various other costs. There's a tendency to get fat and not be penalized for being fat." (Shhh! The stockholders might be listening!)
Now, though, new technology and a continued lowering of the regulatory shield are introducing more and more competition. With no obligation to provide universal service, the new phone companies can "cherry pick," taking off the most profitable customers -- big corporations and institutions -- with no corresponding responsibility to provide the more costly residential service in rural areas.
So, AT&T prepares for life in a new corporate form, for further deregulation and for the further onslaught of technology and competition. By this reckoning, its laid-off workers were a luxury, retained at the company's peril.
Unlike many of the new refugee class of workers, the former AT&T managers may have some hope of finding jobs in the shrinking world of work. Competition will produce jobs instead of vaporizing them, according to this view.
"I think there are clearly opportunities for these people," Mr. Balhoff said. But the opportunities will come with a new reality -- "a major cultural shift from the benevolent corporation such as AT&T."
The company itself, in whatever form it survives, will face a new reality, too.
"The old reasons for employees to stay on are no longer there: lifetime employment security, for example," Mr. Balhoff said. "So, if you are a capable individual within the organization you will be more inclined to consider other options and pro-actively look at the opportunities for career development."
Some companies have paid a price for their work force reductions: Talented people have left.
"They had confidence they could go out and find other jobs in emerging companies. Some of the less capable people tended to stay," Mr. Balhoff said. Forty thousand whacks probably land on some good workers as well, in other words. Already, he guessed, important decisions had been delayed, because trusted decision makers left.
The Communications Workers Union in Baltimore and elsewhere has been saying for some months that today's layoff labor practices will undercut quality, and Mr. Bates was not optimistic that the new environment would produce enough new jobs.
"They may hire some workers based on experience and special skills, but not at the pay rate of AT&T. The employers will be anti-union and will hire at a lower pay rate.
"So the quality of life will go down. The sad part about it is that the rest of us don't get concerned," Mr. Bates said, adding that when the downsizing started at AT&T years ago, the victims warned the other workers that they'd be next.
Natural or unnatural, planned or forced, at our doorstep or across the street, there's a disaster out there.
C. Fraser Smith is a reporter for The Sun.
