AT&T Inc., the biggest US phone company, has 350 offices spread across all 50 states, and many employees have worked from home since the pandemic started. So it came as a shock when Chief Executive Officer John Stankey in May mandated that 60,000 managers must report to work in person—but at offices in just nine locations.
Stankey’s demand is a high-stakes game of musical chairs, with team leaders making location assignments to a handful of hubs focused on specific duties. Although the restructuring may yield big savings on real estate and boost collaboration, many employees now facing long commutes or relocations view it as a move to reduce staff. “It’s a layoff wolf in return-to-office sheep’s clothing,” says one AT&T manager who, like others in this story, asked not to be identified for fear of retribution.
Stankey estimated that among the managers affected, about 15%, or 9,000, will face the choice of moving or leaving the company. People inside AT&T say that with the proposed office reductions and task-specific realignments, the estimate is probably closer to 25,000, and most won’t be eligible for relocation money, according to several managers. An AT&T spokesperson says relocation offers will be made by team leaders on a case-by-case basis.
What AT&T is doing is unusual, says Sandra Sucher, professor of management practice at Harvard Business School. Companies typically announce return-to-work policies, or, as seen in tech lately, announce big layoffs. AT&T’s announcement “seems to be serving multiple goals.” The return-to-work message is also “an elaborate restructuring with cost cuts.” If a company is “reorganizing and streamlining the business, people at lower levels will feel like it is a ploy to cut jobs.”
AT&T typically puts teams through a periodic culling known internally as “surplussing.” In the past three years, 69,000 employees have been removed as part of a $6 billion cost-cutting effort. This time feels different. The return-to-office mandate starts in July in Atlanta and Dallas and will be in effect everywhere else by Sept. 4. “I’ve never seen us do something this drastic this quick,” one vice president told her team in May, according to a video recording seen by Bloomberg News.
Insiders say the announcement created a sense of confusion and chaos because there’s been no explanation of how people will be assigned to one of the nine designated hubs: two core central offices in Dallas and Atlanta, along with locations in Los Angeles; San Ramon, California; Seattle; St. Louis; Washington; and two New Jersey towns, Middletown and Bedminster. People now working in one of the designated hubs could still get reassigned to another. “Your leadership team will determine your designation and work location based on the needs of the business, work groups and collaboration partners,” according to an internal document sent to employees. “Depending on your role, it’s possible your work location could change.”
AT&T is struggling with high costs of mobile phone inventory, network construction and lower contributions from its declining DirecTV joint venture, all while mobile phone subscriber growth tapers off. Stankey is also under pressure to cut costs after the company posted far lower first-quarter free cash flow than expected for the second year in a row.
Some managers say the top brass created many of the problems. After a decade of megadeals, AT&T had become a $100 billion media colossus battling with Netflix Inc. and Walt Disney Co. After less than a year on the job, Stankey started dismantling the empire. Now many AT&T managers say they’re being penalized for a failed strategy that squandered billions of dollars buying DirecTV and Time Warner Inc., only to sell them at a loss.
When he announced his staff reorganization plan in May, Stankey said there’d be some tough choices. “Many will make decisions that are appropriate to their lives,” he said. “If they want to be a part of building a great culture and environment, they’ll come along on these adjustments and changes. Others may decide, given the station of life they are in, that they want to move in a different direction.” It isn’t about getting back to pre-pandemic operations, Stankey said, it’s more about the future: “This is how we get the right people doing similar functions in the right places where they can collaboratively work to build this company for the next 10 years.”
Directors and assistant vice presidents of each department are coordinating with their peers to figure out what roles are essential and how to keep the collaboration and support system intact. Some are scratching their head to figure out how the numbers stack up: It’s not as if the Atlanta and Dallas offices can handle 5,000 more people, says one manager facing relocation.
AT&T supervisors are expected to complete the new assignments by the end of June. Exact move-by dates when staff are to report to their assigned locations are still being determined, say two people. Since the announcement, morale hasn’t been great. One New York-based manager says, “If they assign me to New Jersey, fine, I’ll make the three-hour drive. If they tell me I’ve got to relocate to Dallas, I’m getting a lawyer.”Read next: JPMorgan Calls Managing Directors to Office Five Days a Week
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