At&T Reaches Out And Taps Some New TalentPeter Coy
A few weeks ago, one was running a company in Palatine, Ill., that makes electrical components, while another headed a shipping company in Iselin, N. J. A year ago, one ran an investment firm in Washington, D.C. Two years ago, another worked at a Chicago bank. Now, all of them--and a few others--have jobs in the highest echelons of American Telephone & Telegraph Co.
In a surprising turn for a company that practically patented promoting from within, AT&T is reaching out to tap new talent. In July, it named former Sea-Land Service Preers--typically in their late 40s--are expected to supply expertise in new businesses such as credit cards and computers and add international savvy. Above all, they're expected to teach the 272,000 troops badly needed lessons in marketing and entrepreneurship.
BY THE BOOK. The recruiting effort is precisely targeted. To end chronic losses in office phone systems--estimated at more than $200 million a year--AT&T needed an energetic leader who could cut costs, stimulate teamwork, and respond rapidly to customers. Chairman Robert E. Allen picked Stead, 48, who had raised profits and productivity at Square D. Stead was weighing 19 job offers following the hostile takeover of Square D by France's Groupe Schneider, and he says he picked AT&T because he liked the changes he saw at "one of this country's premier corporations." For chief financial officer, Allen wanted someone with international experience who knew about acquisitions. He found that in Mandl, 47, who has done business around the globe as head of CSX Corp.'s Sea-Land Service Inc. Both men were turned up by a New York-based search firm, Russell Reynolds Associates Inc.
The biggest infusion of new blood will come with the takeover of NCR Corp. By acquiring the $6.3 billion, Dayton-based computer maker, Allen hopes to bolster AT&T's computer efforts, which have lost an estimated $2 billion since they began in 1984. Because the $7.4 billion deal began as a hostile bid, AT&T won't gain the services of NCR Chairman Charles E. Exley Jr. He's bailing out. But AT&T will pick up an experienced management cadre that includes Gilbert P. Williamson, 54, NCR's president.
As a monopoly, the old Bell System had little need for outsiders. Managing was easy because thick manuals spelled out procedures for every eventuality. "Very honestly," Allen once admitted, "it didn't take a whole lot of strategy."
With the 1984 Bell breakup, though, AT&T began competing in the real world. While recruits from IBM and Olivetti launched its shaky foray into computers, other units stuck with homegrown managers. Even today, only 5% of the top 130 officers are AT&T newcomers. But that's changing. This year, the newly formed Operations Committee, which serves as a five-person presidency, will include three new faces: Mandl, Williamson, and Robert M. Kavner, 48, who came over from AT&T auditor Coopers & Lybrand in 1984.
Their No. 1 mission: growth. AT&T has doubled its earnings--from $1.37 billion in 1984 to $2.74 billion last year--mainly by cutting costs, including the slashing of 100,000 jobs. But revenue has risen just 12%, from $33.2 billion to $37.3 billion. "We haven't even begun getting to the kind of growth rates that Japanese companies are putting on their books year after year," says Richard S. Bodman, a Russell Reynolds recruit who is senior vice-president for corporate strategy and development.
BOLD CARD. For inspiration, AT&T looks to people such as Paul G. Kahn, 47, a 1989 recruit who has built the AT&T Universal Card into the nation's fourth-biggest credit card in just over a year. While sketchy on details, Stead says he'll use the same marketing formula to turn around the office phone system business. He preached customers first, bureaucracy last at Square D and recalls with pride how an employee used her own credit card to pay for an emergency shipment of a part to a nuclear plant.
There's a risk that some longtime employees will resent the outsiders. After endless layoffs and budget cuts, morale is a problem. No one wants to alienate AT&T veterans--least of all newcomers such as Stead. But Bob Allen and his team have clearly concluded that one way to bring AT&T into the new world of competition is to hire a few people who have been there.