Online NewsHour: AT&T Economic Insecurity

THE RIGHT CHOICE?

MARCH 22, 1996
TRANSCRIPT

Business Correspondent Paul Solman finishes his week long series on economic insecurity by looking at how workers are coping with changes at AT&T, and the workplace in general.

PAUL SOLMAN: This is Travis McElyae's last day at AT&T corporate headquarters in Basking Ridge, New Jersey. Now 53, he's been with the company since he was 25 years old.
TRAVIS McELYAE, Former AT&T Employee: You know, I've spent 28 years of my life with this business, and I don't think there's anybody that's been any more loyal to the business than I have either. I've had--
PAUL SOLMAN: Thanks for the excellent workshop in change management you've delivered to us--you did a super job, and it's signed by all these people. This is just '95. I mean, there's lots of this sort of testimony to just how--
TRAVIS McELYAE: Yeah. Well, I feel good about my career. I think I've made a contribution. So, you know, that's a part of the negative. I don't think I've done anything wrong. I don't think I've done anything to deserve being downsized.
PAUL SOLMAN: A personnel manager for 28 1/2 years, McElyae and his family moved wherever AT&T sent him.
TRAVIS McELYAE: Moved to St. Louis, moved from St. Louis to Little Rock, Arkansas, Little Rock to St. Louis, from St. Louis to Atlanta, and from Atlanta to New Jersey.
PAUL SOLMAN: Just 18 months away from full retirement, he was told he was no longer needed and became part of the recent downsizing that has earned AT&T so much negative attention. But it's not just the phone company or even business in general, as industrial psychologist Harris Sussman points out. Even government is downsizing these days.
HARRIS SUSSMAN, Industrial Psychologist: To single out the private sector or one firm in the private sector doesn't make any sense. This is happening across the boards. The structure of employment has changed, and the nature of work has changed, and so it's what I call the end of the age of employment.
PAUL SOLMAN: The end of the age of employment. While that may be overstatement, since there are more jobs than ever, it's just that for more and more people the jobs don't last as long. In fact, part of Travis McElyae's job was training AT&T employees to cope with the new reality by learning to think of themselves as self-employed.
TRAVIS McELYAE: Part of the message that I preached to people is that they should provide for their own job security.
PAUL SOLMAN: When McElyae preached the message, though, he didn't think he'd be sent packing, a victim of downsizing. It was AT&T's decision to break itself into three parts, trivestiture, that prompted its now infamous announcement to eliminate 40,000 positions. In fact, the number of actual layoffs will be much lower after reassignments within AT&T, retirements, and the like, but to employees, the net impact was devastating. Or as one told us, while the statue at headquarters still welcomes the world, employees are noticing a less attractive side on their way out the door. Still, says chief financial officer Rick Miller, what else could the company do?
RICHARD MILLER, AT&T Chief Financial Officer: I honestly believe that there's no choice, that what we're doing now is really inevitable. It was going to have to be done sooner or later, and my, my honest judgment is that if we delayed and did--tried to wait a year or two or three to postpone this, that it would have been worse.
PAUL SOLMAN: There's little debate that intense competition and fast changing technology have rattled the phone industry, hence, AT&T's need for a more flexible work force and workers with less security. But Travis McElyae thinks his bosses have reneged on an implicit contract, bosses that on his last day were nowhere in evidence.
PAUL SOLMAN: Doesn't somebody come in and say good-bye or anything?
TRAVIS McELYAE: I don't know. I don't know. Yeah. I'm probably a little bit surprised, but people are busy. They have, uh, they have a lot of things to do. They have to split this company up into three pieces. Remember?
PAUL SOLMAN: At Boston's AT&T Resource Center, the company helps those it's downsized find new work in a mutually supportive setting. Some of the support comes from sharing the pain and anger.
CHUCK MILLER, Former AT&T Employee: And this is kind of like a divorce. This is like everybody, you know, how do you not tell your, your son or your daughter that you're getting a divorce tomorrow, when it's happening, and it's, it's taken away the total family feeling of the corporation that people had loved.
PAUL SOLMAN: Every time there's a downsizing, ex-employees feel they're not just losing a job but a family since so much of American social life takes place in and around work. AT&T is doing more than most firms to ease the pain--generous severance, resource centers around the country, but divorce is always tough, especially if your partner suddenly wants out after years of suggesting otherwise. Vicky Martelli ran one of AT&T's phone stores.
VICKY MARTELLI, Former AT&T Employee: We went to Outward Bound, the phone center people, for a week, and you bonded with everybody in the country. It was the most incredible thing I've ever been through. You were a family. You were the most dedicated people in the world. I mean, if your kids didn't stand up and do the Pledge of Allegiance to an AT&T commercial, you know,--
PAUL SOLMAN: The cast-offs feel betrayed; those still employed feel survivor guilt. And all the team building and bonding they've been put through in recent years makes them deeply cynical as well according to psychologist Harris Sussman.
HARRIS SUSSMAN: What about the people internally who can no longer believe or trust anything that the management says to them from now on? That makes everybody else, I think, much more timid, much more dubious about how long they might be there, and much more reluctant to believe the next internal PR that comes down the pike.
PAUL SOLMAN: AT&T's Hal Burlingame thinks the team-building was appropriate, however; the internal PR, honest.
HAL BURLINGAME, AT&T Human Resources: At that moment in time, we were together, investing very much in the future that we had chosen for ourselves, and so it was a very legitimate kind of investment at that time. Two years later, the marketplace changed, events changed, the whole industry is changing in our case, and I would only say this: The fact they went through some of those programs often helps them adapt to the next stage that they have to be a part of.
PAUL SOLMAN: We should point out that for some workers downsizing can be, if you'll pardon the term, uplifting, even for Bob Morse, with his 30-year gold watch.
BOB MORSE, Former AT&T Employee: The anxiety is still there but a lot of it turning into an energy and an expectation, almost that I haven't--I haven't felt since I left the university 30 years ago.
KIM BERTRAND, Former AT&T Employee: And I took the opportunity to leave to decide what I really want to do in life, so it was an opportunity for me that's not often given to people.
PAUL SOLMAN: Harris Sussman thinks the sense of liberation is characteristic of AT&T ex-employees.
HARRIS SUSSMAN: They haven't seen much of the outside world lately. AT&T is an incredible corporate cocoon, and people have been inside it, living a work life unlike that of most other people in the world for a very long time to such a degree that they don't realize how different they are from most of the other people.
SPOKESMAN: This is the range at which you will find cellular frequencies.
PAUL SOLMAN: In a sense, at AT&T and throughout the economy, it's out with the old, in with the new. Even as it's downsizing, AT&T is hiring, and training new employees for new technologies like wireless, cellular telephone. The hirers are mostly younger and, therefore, cheaper, and many seem to like the more temporary nature of the work contract these days with what they see as simply self-reliance, instead of paternalism. New hire George Menrath in customer care sees a new age dawning.
GEORGE MENRATH, AT&T Wireless Division: People are becoming more in tune with their individualities and restructuring their--theirselves.
PAUL SOLMAN: Do you agree with that, I mean, that this new world of employment is like a realization of the real American dream of individuality like they talked about, you know, Emerson and guys like that in the 19th century?
SUSAN EDWARDS, AT&T Wireless Division: I do agree with that. The opportunities are created in this kind of environment for the individuality. No longer do you just have to nod to somebody and hope that you don't get fired, you can put your input in and not be afraid. You can, umm, try and enhance your career by being able to say what you want and not be afraid that you're going to be fired.
PAUL SOLMAN: Easy to say perhaps in your mid 20's, but far different for someone in his 50's with a home and a family. Travis McElyae's doing what he can, even getting his masters degree with tuition money from AT&T, and the conventional wisdom is that being laid off is becoming a commonplace these days.
PAUL SOLMAN: Everybody says that, that there's no stigma attached to this anymore.
TRAVIS McELYAE: That's wrong. That's absolutely wrong. I can tell you that is not wrong--that is not right. There is a stigma attached to it. There's no question about it. You can see the stigma when I go to school. You can see the stigma in church, you can see the stigma in the community.
PAUL SOLMAN: There's a final difficulty for the downsized in the new self-employment economy. Many of them aren't too good at marketing themselves. Take Mike Spagnola, 40, here with second grade daughter Heather Ashley. Spagnola worked his way up from the AT&T mail room to middle management. He's now been downsized for the third time and fills his days trying to sell himself, not as it happens his strong suit.
MIKE SPAGNOLA, AT&T Employee "At Risk": I mean, there's some people that are really good on interviews. They can, they can smooz you and the best in the world. Um--
PAUL SOLMAN: Are you one of those people?
MIKE SPAGNOLA: No, I'm not. I don't smooz. I just--if someone asks me a question, you know, I'll give you an answer or maybe a rough, a rough answer, but that's the answer that you're going to get. I'm not going to make up things to make me look like I'm the perfect person in the world, because I'm not.
PAUL SOLMAN: Spagnola's wife, Ann Marie.
ANNE MARIE SPAGNOLA: Michael is not a sales person. I can sell myself I'd say 100 times better than Michael could. Umm, that's his personality. Uh--
PAUL SOLMAN: Is something wrong with that?
ANNE MARIE SPAGNOLA: No, there's nothing wrong with that. If there was something wrong with that, then we'd have a bunch of phonies all over the place.
PAUL SOLMAN: To Labor Prof. Jeff Keefe, most downsizees aren't great at self-promotion, but it's true that many are, isn't it?
JEFF KEEFE, Rutgers University: Well, I think that's true for possibly 30 percent of the work force who are well endowed with education and training and entrepreneurial ability. I think they have--they've had a very bright decade and probably look forward to another very good decade. The other 70 percent, though, have either seen their income stagnate or fall. And they've also seen their benefits disappear and many of them have to work much longer hours to have a stable family income, and the long run implications for that, for the stability of families, what's going to happen to children, we can only guess that. But it's probably not too good.
PAUL SOLMAN: At AT&T, however, the long run implication of not downsizing would have been worse.
RICHARD MILLER: Hopefully as time moves along that history will be able to look at us and say this was the right thing to do; value got created here for share owners, customers are being served better with better products that are at lower cost, and employees, although there was some dislocation during this period in early 1996, that the work environments that have been created for our employees is, in fact, better than it would have been under the old structure. So I'd let history take its course here and judge us.
PAUL SOLMAN: Meanwhile, back at the office, Travis McElyae, after 28 1/2 years at AT&T, is ready to go. He has only one official act ahead of him.
TRAVIS McELYAE: I need to sign this.
PAUL SOLMAN: What is that?
TRAVIS McELYAE: Which, which basically says that I will not sue the company, that I have not been discriminated against, and that I will not sue the company. And I get a 20 percent kicker on my bonus if I sign this. So this is, this is worth about $12,000 for me to sign it.
PAUL SOLMAN: Well, then I'd definitely do that.
TRAVIS McELYAE: Yeah. I think it's worth the money.
PAUL SOLMAN: Suppose they'd offered you only $3,000? Would you sign it?
TRAVIS McELYAE: (laughing) No.
PAUL SOLMAN: No?
TRAVIS McELYAE: No.
PAUL SOLMAN: Here. Here's a pen.
TRAVIS McELYAE: There. That's what I'm looking for. Today is the 15th, right?

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