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1994 General Excellence Optimas Award Profile AT&T

December 1, 1994
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Related Topics: General Excellence, Change Management, Strategic Planning, Featured Article
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Mr. Watson, come here. I want you.

Those words, spoken by Alexander Graham Bell to his assistant in 1876, began a revolution like none other. The birth of the telephone, through which he spoke that fateful day, enabled persons to speak with each other across distances never before possible.

In the more than 100 years that have transpired since, the telephone's use and the services it provides have expanded beyond anything Bell ever could have imagined. Fax machines attached to phone lines instantly zap documents next door or across the continent. Telephone modems allow for similar retrieval of computer-based files. And innovations such as videophones and multiuser lines offer endless communication possibilities.

As the telephone has been updated technologically, one company has ridden the waves of change. Basking Ridge, New Jersey-based AT&T actually was created by Bell and his backers. But just as the telephone itself has evolved, the company has transformed to the point that today's AT&T no longer can be dubbed merely a telephone company; it's a conglomerate of businesses revolutionizing telecommunications.

The fact that the company has experienced the changes it has during the last century isn't surprising given that new technologies have changed the way people work, play and live. What is astonishing, however, is how successful AT&T has been through it all. The last decade, in particular, has been turbulent for the firm. Yet during this period it accomplished some of its greatest achievements to date, including winning three Malcolm Baldrige National Quality Awards and Japan's Deming Prize for Quality. How? President and CEO Robert E. Allen, in AT&T's 1993 annual report credits the company's people and the values they share as the defining factors. A world-class human resources system, led by the forward-looking Senior Vice President, Harold W. Burlingame, has been key in assimilating those values and helping AT&T manage through the changes.

HR rises as AT&T transforms.
AT&T's roots lie in National Bell Telephone, a consolidation in 1879 of two companies created in 1877 and 1888 by Bell's backers. Nearly 20 years later, shortly before the company moved its headquarters from Boston to New York City, its name was changed to American Telephone & Telegraph Co. For the next 85 years, the firm experienced rapid growth as it swallowed up smaller businesses and controlled the United States' telephone service as a monopoly.

It was in 1983 when what could have been tragedy struck. The U.S. government ruled that the massive telephone company must divest, thus ending its monopoly. The following year, the company's telephone service broke up into seven regional Bell companies leaving AT&T with the long-distance business; Western Electric, its electric-equipment manufacturer; and Bell Labs, its research and development unit.

The company since then has fought hard to retain dominance within a newly competitive environment. Maneuvers have included entering new areas of business, such as financial services; acquiring companies that have added products and foreign presence to the AT&T system; and restructuring into 26 accountable business units that form four major customer-focused groups: Communications Services Group, Network Systems Group, AT&T Global Information Solutions (formerly NCR Corp.), and Multimedia Products and Services Group.

Through these efforts, AT&T's holdings today include AT&T Universal Card Services-a consumer credit card business (which earned the company one of its Baldrige awards within two years of its startup)-a financial services arm called AT&T Capital Corp., and cross-business initiatives that address five key marketing and technology areas. These technology areas are networked computing, wireless communications, messaging, visual communications, and voice and audio processing. And, the company's operations and influence have spread beyond the U.S. borders. More than 53,000 people now work in approximately 200 countries other than the United States (more than half of these people were added to the AT&T system through acquisitions), and new alliances with foreign companies are being formed regularly.

The changes are reflected in a move of high-level management to New Jersey from the Big Apple, and yet another name change for the ever-evolving conglomerate. Just this year shareowners agreed to adopt AT&T Corp.-by which the company has been recognized for nearly 100 years-as the official name. The company's 1993 annual report sums up what all of this means to the firm: "The AT&T of today is far different from the AT&T that divested its local telephone companies 10 years ago. Since then we've focused on our strengths, honed our strategies, seized opportunities, trimmed costs and resized our operations. We've transformed ourselves into a formidable competitor at the heart of a dynamic global industry."

None of this could have been accomplished without a strong HR force helping to guide the people through change. To do this, however, the HR function within AT&T had to itself transform. What was once a traditional support unit today is a strategic partner. "My goal always has been to get human resources leaders at the central business tables of AT&T in every part of the business," Burlingame says.

Burlingame became senior vice president of human resources in 1987. That same year he created Partners , an initiative that matched senior HR people with business leaders. Their role would be to collaborate with corporate HR to shape a business-focused direction for the HR community, and to partner with the business heads in strategic planning. Burlingame himself is a member of CEO Allen's leadership team, placing him among the very top management in the corporation.

This initiative put HR people in position to help shape the company's future. But could they do it? Burlingame wanted to ensure that they could. So in February 1991, after allowing HR leaders to learn what their roles should be, he created a professional development group. Its purpose was to help HR leaders assume their new roles of providing added value to the business. Essentially, "it's HR for HR from the standpoint of the strategic aspects," says Jill T. Conner, HR division manager, who heads the professional development group along with partner Jeana Wirtenberg.

For most of that first year, Conner and Wirtenberg evaluated the capabilities that HR leaders had, and determined skills gaps between those and the abilities that they would need to successfully perform their new roles. They did this by interviewing business leaders within AT&T and conducting focus groups with line middle managers. They also looked outside the company at innovative HR competency models designed by such organizations as the University of Michigan School of Business Administration and Eastman Kodak Co.

The partners used their findings to create the High Performance Excellence Model : a competency model that outlines the necessary behaviors and skills that business managers and HR professionals have agreed HR leaders need to add value to the business. The model highlights three areas of accountability for HR leaders: business results, self-image and interpersonal relationship management.

To achieve accountability for business results, the model suggests that HR leaders be results oriented, be strategic thinkers, act as business partners, be customer-focused and demonstrate human resources expertise. To project the proper self-image they must see themselves as catalysts for change and as members of a leadership team, and must demonstrate self confidence. And, to demonstrate effective management of interpersonal relationships they must build information networks, be able to influence others, exhibit interpersonal flexibility, build and manage teams, and energize and empower others. "The model wasn't designed to be a functionally oriented tool," says Conner. "Instead, it's how HR people need to think and behave."

HR learns to be leaders.
The group put the model in place at the end of 1991. But it couldn't be used if HR people didn't know about it, so Conner and Wirtenberg spent most of 1992 communicating its essence to the HR community of approximately 6,000 people through a multifaceted communications package. Its theme was "Success Starts Here". A key component of the package was a 20-minute video featuring Allen and other business leaders talking about how they envisioned HR changing to fulfill its new role. Conner says that the tape, along with the rest of the communications package, was well received by the HR staff, who embraced the concepts it espoused with enthusiasm. "HR as a profession has tended to not get much visibility, not get the most credibility and not have the best image," she says. "So now people were excited about the possibility of a positive change and about the impact HR could have on the business."

To put the model into action, Conner and Wirtenberg created activities that would help create excellence in HR. One of their first initiatives was the Business Partner Lecture Series. Held once every other month, the lecture series features senior business leaders talking about where their businesses are going and how HR can help. The lectures are voluntary for HR people. They can physically attend, teleconference in, or receive the lectures on video or audio tapes. "The feedback has been that these really help HR people increase their understanding and awareness of the business issues," Conner says.

In addition to the lecture series, Conner and Wirtenberg instituted an HR symposium. Now in its third year, the symposium serves as a major developmental event for the HR community. Conner describes it as an internal conference.

For the first day of the two-day event, the company invites academic speakers to talk about leading-edge work in the HR field. On the second day, HR professionals from within AT&T lead break-out sessions for their peers on the work that they're doing. People who wish to make presentations must submit examples of their work to the professional development group. "We have a theme each year and we look for small group sessions that reinforce that theme," Conner says. This year, for example, the theme is "Building a High Performing Workplace: Collaborating to Win." The professional development group received approximately 40 applications for presentations, twice the number submitted the first year.

Conner says that in addition to keeping HR professionals within AT&T abreast of what's happening in the HR field, the symposium offers an opportunity for networking and for learning from each other. There are great innovations right inside the company, she says, and the symposium provides the mechanism for sharing them. "One of our strategies in HR professional development is to facilitate the process of leveraging the learning so that we enhance the professional development of the whole community by using the people inside to help learn from each other," she says.

Another major initiative that the HR professional development group developed to support the HR excellence model is a recognition program, called "Recognizing Role Models of HR Excellence." Individuals and teams within the HR organization nominate themselves for exemplifying the characteristics in the high performance excellence model, forwarding the business strategies or role modeling the "Common Bonds"-which are the company's value statements. A "Blue-ribbon Panel of Judges," consisting of Burlingame and other business leaders, as well as outside experts, such as the University of Michigan's David Ulrich, select the honorees.

Just as with symposium presenters, applications for the award have doubled in the last three years. In 1992, the panel received approximately 40 applications involving 300 people. This year, it had to choose from among more than 80 applications representing more than 800 people. Burlingame calls chosen honorees personally to congratulate them, and then the company recognizes them at a celebratory dinner each October. Winners also receive recognition in internal publications. "It's a visible way to raise people's awareness of the great work that's being done," Conner says.

Currently, the HR professional development group is furthering its support of the excellence model with new initiatives: an interview guide it developed for selecting HR people who demonstrate desired competencies; working on creating a career guide for HR professionals; and evaluating a system for HR leadership development.

The excellence model and activities around it seem to be working. "I don't think that there's a debate anymore about whether HR should be at the table. I think the debate now is what more can HR bring to the table more quickly," says Jeannette C. Galvanek, human resources operational planning corporate vice president.

HR can bring future insight about human issues.
Indeed, the closer HR professionals snuggle up to the boardroom tables, the more their businesses will expect them to contribute. Their roles will continue to evolve: from administrators, to business partners, to consultants. "HR at its very best should be a highly trusted consultant to the business," Burlingame says. "It should share the confidence of the leadership teams and bring forward insight into the capabilities and the limitations of people and organizations."

Burlingame leads by example. To gain insight into the capabilities AT&T people will need in the future for example, he and Education and Training Vice President John P. McMorrow put together a commission on education. Consisting of AT&T senior managers, the group analyzed educational strategies for now and the future. The need, they determined, is to move from formalistic education to a learning culture.

McMorrow says AT&T's goal is to be "an organization that shares information, is willing to admit mistakes and learn from them and spends a lot of time supporting learning from each other. It's also good at taking that learning from various sources and quickly using it in some practical way to influence the marketplace."

He adds that a learning organization has three elements. The culture has to be one in which learning is valued and people always are striving to learn. In addition, people within the organization must be willing-and have the capabilities-to share knowledge. And, learning organizations require an infrastructure for storing information, be it technologically or by a network of people.

To work toward this goal, the commission has implemented some specific initiatives. For example, it made a major investment in communicating the Common Bond to the entire organization so that all people function with the same mindset. "We strived to have people understand what the Common Bond is all about, to think about it in terms of business situations and to start using it as a lens through which they view the world of issues and decisions," McMorrow says.

The commission also is working on creating an orientation package that will acquaint new AT&T people in any unit anywhere in the world with the company. One piece of that is a CD-ROM-based product called "AT&T Explorer" that cites the company's history, mission, and strategy, as well as structure, culture and products. "It's one way to use our technology to get information to people early in their careers when they need it, and do it across the globe," McMorrow says.

But these initiatives only scratch the surface of AT&T's commitment to education and learning. According to McMorrow, the company spends approximately $500 million a year in education and training. It has more than 30 education organizations located within business units that serve their training needs. In addition, there are four specialty education organizations that function across AT&T. There's a leadership training unit, a tuition-based School of Business for workers and customers, a joint company/union group called the Alliance that reskills occupational employees, and a technical education center for the research, development and analyst communities.

Leadership training has been especially important throughout the past 10 years, and continues to be so. When Burlingame took the senior vice president of HR post, the resource book that the company had on leadership for the future had been written three years prior to the Bell breakup. "It didn't have any new shift of assumptions about what we needed in the leadership team of AT&T," Burlingame says. It addressed the needs of people who had been selected to run telephone companies but, as Burlingame says, AT&T didn't have any telephone companies anymore. "So the job then was to rethink what we were trying to do around here, and to rethink the leadership model on what we needed," he says.

As a result, there has been a major leadership change within the organization. "You see new generations of leaders coming up with a whole new set of experiences, very different in terms of their development than the kind of development people like myself had when we grew up in the business," says Burlingame, who has been with AT&T for 33 years.

Many of these leaders have AT&T roots and were transplanted as AT&T shifted thousands of people from one job capacity to another while changing course. "One of the great success stories is that we have transitioned thousands of people from the business we knew to the new business," Burlingame says.

However, during the last decade of transformation the company also has strategically hired from outside AT&T, and at significant levels. "We have at the senior leadership table a very different team than we have ever had in the past," Burlingame says. These people have helped turn around businesses, handle joint ventures and guide operations overseas. They've also been role models, helping AT&T leaders change their perspectives to fit into the new organization.

AT&T reaches beyond its borders for leaders and for business.
Outside leaders have played a significant role in the global arena. Although AT&T had approximately 100 people working outside the United States at the time of divestiture, and attempts had been made to turn the company into a global business, it was far from being considered a viable international player. That changed in 1991, however, when AT&T acquired NCR Corp.-a major computer firm with businesses in 120 countries and a global work force of 30,000. Shortly after the acquisition, NCR and AT&T got together and created a model for a global-growth strategy. This resulted in international expansion of AT&T's businesses, acquisitions and alliances with companies in countries from Australia to Korea.

To bring the international businesses in line with the domestic ones, AT&T created a structure whereby three regional CEOs (two of whom came from outside AT&T-the other position hasn't yet been filled) share financial responsibility with the four group CEOs in the United States (Network Systems Group, Communication Services Group, Global Information Solutions and Multimedia Products Group). "Those business group leaders and these regional leaders need to come together and decide in a matrix what they think can be done in a given market and then they make commitments to that and share accountability," says Richard H. Evans, global HR vice president. "A matrix isn't easy to manage, but it's the model we're going for. 1994 has been a transition year."

Part of managing the international system is creating cohesion between the disparate businesses. "We want them to keep their unique strengths but have them be able to orchestrate together," Evans says. HR plays a major role in accomplishing this. For example, moving people from one group to another is essential for cohesion. To have this type of career mobility, however, there must exist compensation and benefits programs, career management strategies and staffing procedures that enable ease of movement. There needs to be leadership development specific to life within a matrix organization. And there has to be a shared mindset.

"We're working on acculturating the firm to think as a global entity," Evans says. One way of doing that is by accelerating the exchange programs that bring people from outside the United States here for assignment before returning to their countries. The orientation and training programs being put together by the commission in education will be used here also to help people feel part of the whole AT&T.

Most importantly, Evans says, "We have to make sure that anything we implement has a direct correlation to the strategic direction, to that change of thought that we're trying to create. HR's job is to be a part of the strategy and to work on creating the collective thinking of the company."

Galvanek adds that part of that job-both globally and domestically-is bridging present needs with future expectations. "There's a 60%/40% thrust to think about future issues while respecting that today's business has to run with excellence to build for tomorrow," she says. "And because we're a high-tech company, we're constantly defining a new tomorrow."

Management forges the future with unions and employees.
Nowhere in the company is this bridging more visible than within its unionized ranks. It appears in the form of an initiative called Workplace of the Future, bargained in 1992 between AT&T, the Communication Workers of America (CWA) and the International Brotherhood of Electrical Workers (IBEW). The initiative provides the framework for the unions and company to work together-with employee involvement-in building for the future.

Workplace of the Future had its beginnings in 1986 when the highest levels in AT&T's labor relations and the unions formed a Constructive Relationship Council for sharing information and analyzing future trends. They soon realized more needed to be done. "We eventually understood it wasn't enough for the highest levels in the company and the unions to share information, but rather that this needed to permeate the whole organization," says Thomas Burk, labor relations director.

The 1989 restructuring into business units further proved the need for employee involvement. "We realized that the work force of the future we needed had to be more involved in the day to day running of the business," says Frank Palavido Jr., labor relations staff director.

Adds Burk: "There's no easy way for a couple of the big guys from the company and a couple of the big guys from the union to get together and understand what's going on and what's critical to the success of the enterprise. It has to come from within."

The two groups needed a structure in place for this to happen. Workplace of the Future provided that structure in the form of a four-tiered system.

At the base of the structure are Workplace Models-initiatives such as self-directed work teams and quality-improvement programs that workers, their unions and management deem necessary for success within individual divisions and business units. These initiatives are put together by Planning Councils, made up of union and business unit leaders. All initiatives must be run by the next level, which is the Constructive Relationship Council. Basically, this is the bargaining authority.

At the top level of the Workplace of the Future structure is the Human Resources Board, consisting of Burlingame and other key company and union leaders. The board meets three or four times a year for visioning the future. Members discuss such issues as global expansion, implications of Work Force 2000 and future source pools for employees. This information is then passed down to the other three levels as they plan for their own futures.

Here's how the model looks in action. In the early stages, a lot of trust building must occur as each business's managers and union officials begin to talk about their needs. Often, businesses bring in consultants to help the new partners understand each other. The company also has partnered with Rutgers University to deliver training to managers about what a union is and what its needs are. Union officials receive education on AT&T, learning why it's structured in business units and why each approaches issues differently. "As long as the union is going to exist, it's critical that they know our business as well as we do and that we're shooting for the same thing," Burk says. "It's too distracting in a competitive marketplace to not be in the same situation."

After the managers and union leaders within a division or business unit have formed a working partnership as a Planning Council, anything can happen. For example, workers within the equipment installation business may determine from the HR Board's feedback that, to compete in the marketplace, there should be a standardized certification process. Or, operator services workers may need new customer service skills to remain competitive. These workers take their initiatives to their planning councils, which work out the details. The councils, in turn, present the plans to the Constructive Relationship Council for approval.

Palavido says approximately 90% of the represented work force currently have Planning Councils working for them, although they're in various stages of evolution. "It's surprising how far we've been able to come in this short period of time," he says. "We hope that together as partners we'll be able to sustain that momentum going forward."

According to Burlingame, doing so is vital. "We're approaching a time here, very soon my guess is, when we will face as much change or even greater change than we faced at the breakup of the Bell system in 1984. And so we must constantly think about how that will happen and when that will happen and what's required to get ready for that."

As fast as technology changes, the journey into the future promises to be as eventful as the one that began with Bell and his telephone invention.

Personnel Journal, December 1994, Vol. 73, No. 12, pp. 84-94.

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