Local execs pick up managing slack at AT&T: headquarters staff cut by 500, or 12%

Cable World, Feb 25, 2002 by Staci D. Kramer

AT&T Broadband executives say the latest management restructuring, which sliced 500 positions from its Denver headquarters, is designed to put more power in the hands of top field managers like Joseph Stackhouse.

"You have to be sitting in the seat to understand what has fundamentally changed," says Stackhouse, SVP of AT&T's Chicago systems.

"It's the mind-set. It's not that we're going to be independent operating companies separate from Broadband. There are resources at the corporate level and consultations that need to take place but I execute, I find out what the issues are. I know it's subtle, but it really does make a difference."

Stackhouse, who moved from AT&T's Denver operations in December, has added 52 customer service representatives and may hire up to 100 more to deal with a history of consumer complaints in Chicago.

In the past, decisions about outsourcing customer service or handling it in-house were made at the corporate level. Now it's up to the senior vice presidents in the field.

"What you're seeing here is a change in the way we operate the company and essentially a reassignment of resources as a result of that philosophical change," says AT&T Broadband COO Ron Cooper. "We are adding additional customer care professionals in many of our markets, and the funding for that is coming by reassigning or reallocating resources that would otherwise be spent here at headquarters."

The arrangement should give field managers more flexibility in areas that will help them meet goals set by corporate management.

"It doesn't make sense to have 12 to 15 AT&T Broadband logos. You shouldn't have 12 to 15 HBO deals; you should have one deal. But in Chicago if it makes sense to have local payment centers and it doesn't in Denver, Ron will help me and he will support me and he will get me the resources that I need to do my job."

AT&T Broadband's large corporate staff was often cited as one of the reasons the MSO's profit margins were lower than industry norms. The low margins prompted AT&T to put the nation's largest cable operator on the block last year. Comcast, which agreed in January to pay $72 billion for AT&T Broadband, cited headquarters as a source of significant cost savings.

Last week's cuts reduce headquarters staff by 12%, to approximately 3,900 from 4,400.

But Cooper says restructuring was a cost cutting move. He says that if field executives use their new authority to hire additional employees, the company's total headcount could rise.

But some analysts see the move as part of the preparations for the merger. "Comcast doesn't want this severance on the books when they take over," says analyst Peter DeCaprio with Thomas Wiesel Partners. "They're giving them their marching orders. Clean this stuff up. Get it fixed."

Cooper denies Comcast was a factor in the move. "We would do this whether there is a merger or not," he says.

A Comcast spokesman had no comment on the changes at AT&T.

Cooper says it also would be wrong to call this a return to the way he and CEO William Schleyer ran Continental Cablevision before it was sold to MediaOne, which was absorbed by AT&T. "We're really focusing on what's right for this company at this time. It would be unfair to characterize this as a return to old days. This company is in a very different place. The scale of this company is more complex. It's not comparable."

The number of dismissals was announced last Tuesday; affected employees were notified by Wednesday afternoon. They will remain in their jobs through Feb. 28, receive full pay and benefits through March and health coverage for six months.

"We're not firing people," said Cooper. "These are jobs that are being eliminated, not being fired for performance reasons. Most of them want to be able to hand off the work that they're doing." They may be eligible for openings throughout the company but most likely will not find comparable jobs.