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Organizational Behavior Analysis: Verizon and AT&T
Jorge Cardenas, Rick Farmer, Leslie Menard, and Leslie Morgan
OLCU 613 Seminar in Organizational Dynamics
February 24, 2011
Darin Hand
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Table of Contents
Executive Summary …..………………………………………………………………………… 3
Introduction ……………………………………………………………………………………... 4
Company Overviews ……………………………………………………………………………. 4
Motivation ………………………………………………………………………………………. 5
Communication …………………………………………………………………………………. 7
Power Bases …………………………………………………………………………………….. 8
Culture …………………………………………………………………………………………..11
Conclusions and Recommendations ……………………………………………………………12
References ………………………………………………………………………………………14
Appendix A: Analysis Summary by Organization………………………………………………16
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Executive Summary
A discussion and analysis of the organizational behavior similarities and differences
between telecommunications giants Verizon Communications, Inc. and AT&T, Inc. requires a
system of uniform elements in order to offset the differences. Both companies have evolved
through mergers and acquisitions, and both have experienced major reorganizations. The
product offerings are similar in the areas of wireless and wireline telephone service, but Verizon
also offers broadband Internet through a fiber-optic network. AT&T’s product line also includes
the publication of Yellow Pages directories and a Wi-Fi network. Focusing on motivation,
communication, power bases, and culture offers insight into the complexities of organizational
behavior within Verizon and AT&T, and demonstrates the resulting differences in culture despite
the common industry and the similarities in structural design.
Although Verizon and AT&T have similar pay structures for the consumer sales
divisions, the motivation within both organizations varies and interviews with an employee from
each company supports the final conclusions. The communications methods and means
employed by both companies are the same, and both companies place a high value on the use of
social media. The power bases in each organization have experienced the same impact of
multiple mergers and acquisitions, but the culture at Verizon appears to have processed change
far more effectively and to have a much stronger emphasis on employee value than AT&T’s
does.
The recommended changes include restructuring the executive compensation at Verizon
to create more discernable and visible equity, and AT&T would benefit from building a culture
that places a higher value on the employees of the organization.
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Organizational Behavior Analysis: Verizon and AT&T
Telecommunications giants Verizon Communications, Inc, and AT&T, Inc, both offer
similar services and both have complicated organizational histories and evolutionary tracks. The
organizational structures mirror each other with one Chief Executive Officer and Chairman at the
top of AT&T and both a Chief Executive Office and a Chief Operations Officer at the top of
Verizon Communications, Inc. The organizations compete directly with each other in the
wireless communications industry, though their other product offerings vary and their
organizational cultures vary as well.
Verizon Communications, Inc.
Verizon Communications, Inc. is based in New York and offers wireline and wireless
communications services to mass market, business, wholesale, and government customers, along
with broadband Internet and communications, information, and entertainment services through a
fiber-optic network (Verizon, 2011). The company was formed in June 2000 from a merger of
Bell Atlantic Corp. and GTE Corp., both of which had long histories in the telecommunications
industry. Verizon Communications, Inc. operates two separate business units: the wireless
segment and the wireline segment.
AT&T, Inc.
AT&T, Inc. is based in Dallas, Texas and evolved through the acquisition of Pacific
Telesis Group, Southern New England Telecommunications, and Ameritech Corp. by
Southwestern Bell Corp. in 1997, creating SBC Communications, Inc. In 2006, BellSouth,
Cingular Wireless, and YP.com (Yellow Pages) were also acquired, and the new AT&T, Inc.
was formed after SBC Communications, Inc. acquired AT&T Corp. AT&T, Inc. offers
consumer services that include mobile broadband, IP-based television service, broadband
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Internet, a national Wi-Fi network, IP-bases business communications, the publication of Yellow
Pages directories, and wireless voice and data services.
Organizational Behavior
An analysis of organizational behavior between two similar yet different organizations
needs to address common factors and elements. Assessing motivation, communication, power
bases, and organizational culture offers uniformity and an attempt at equalizing common
dynamics between both organizations (Appendix A). While revenues and profitability can be
measured in a “precise and bankable way” (Heller, 2008), employee morale and employee
productivity cannot.
Motivation
In assessing employee motivation for both organizations, two interviews were conducted
with local sales associates. While an executive in a corporate office would likely respond quite
differently, a lower level employee can effectively model a corporate culture without deliberate
effort.
The Verizon interview:
Farmer: How do you like your job and those that work with you?
Employee: The job is OK, the people are fine, everyone is young and the Boss is OK guy.
Seems like he wants to help you.
Farmer: How does your company communicate with you?
Employee: The Boss comes to place of work and discusses things, policies and procedures,
makes me feel good like I am important.
Farmer: How is your pay structured?
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Employee: Tiered sales, more sales, more money, 3, 7 and 9% tier increments with downgrades
within 30 days of returns. Different levels for new sales or rollover (additional service)
sales plus basic salary.
Farmer: Do you feel like you are part of the company?
Employee: Yes, when the boss talks to us it is always upbeat and he listens to our concerns and
has acted on some of them. It is a small issue but we brought up floor pads for behind the
counter and it was done in three days. If you get “talked to” it is away from everyone
else (Employee V. , 2011).
In contrast, another interview was conducted with an AT&T employee with an equivalent
role in his organization.
The AT&T Interview:
Farmer: How do you like your job and those that work with you?
Employee: OK Job, people are hard to get along with due to competition. The Boss pushes too
hard and is not easy to deal with.
Farmer: How does your company communicate with you?
Employee: Email and fliers (memos), Boss reads them to us, Boss doesn’t care – says to
produce or go home.
Farmer: How is your pay structured?
Employee: Tiered sales, more sales, more money, 3, 5, 7% tier bases on sales total and is
incremental, will downgrade tier if returns on sales are made within 180 days. That’s too
long most others are 30 days for sales. Basic salary is too low.
Farmer: Do you feel like you are part of the company?
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Employee: No, I just feel like another employee, talked at, not to, if someone does something
wrong or has a problem it is brought up in the group by the Boss and the person is singled
out. Everybody knows about it, it’s not fair (Employee A. , 2011).
Motivation seems to be a point of difference between the two companies as the tier
commission system also provides for a form of reward that is similar but very different when it
comes to the amount of the commission percentages. A two percent difference at the levels, with
one having a much higher top tier, may be enough variance to have an impact on employee
motivation. The way the employees are treated seems to be a major difference between both
organizations, with interviews with an employee of both companies indicating that Verizon is
more employee-centered than AT&T.
Verizon also appears to promote and actively pursue employee development through
training. The LEAD program, discussed later, offers employees with college degrees the
opportunity for additional leadership training, and emphasizes employee development in highly
critical and valuable areas. AT&T, on the other hand, hired actor Luke Wilson to branch out
from the 3G coverage area television ads he was doing and record a motivational speed to the
employees (Mick, 2009).
Communication
Both AT&T and Verizon as telecommunications giants market a variety of
communication tools to residential and business consumers, and not surprisingly, both have
extensive Web sites and comprehensive Internet presences. Formal communications for both
Verizon and AT&T follow standard paths through press releases, memos, meetings, newsletters,
teleconferences, intranets, email, seminars, and webinars. Informal communications for both
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organizations include blogs, email, wired and wireless phone calls, text messaging, and the
extensive use of social media such as Twitter and Facebook.
The internal impact and effect of both organizations’ communication processes is
difficult to determine from outside the organizations, but the external communication suggests it
is regular and frequent. Verizon’s website demonstrates an organizational commitment to the
open sharing of information with the usual sections of press releases and media kits. AT&T’s
website is easier to navigate, and offers essentially the same information. Both companies have
active foundations for charitable work and to highlight social responsibility, with Verizon
emphasizing Thinkfinity, an entity created to offer K -12 educational tools, support and training
for both students and educators, and AT&T promoting the Aspire program which seeks to lower
the rate of high school dropouts.
Power bases
The power structures at Verizon and AT&T are similar in organizational structure and
apparent reporting systems, though Verizon was created through mergers (Verizon
Communications, Inc., 2011) and AT&T, Inc. operates as a publicly traded holding company for
the numerous entities acquired (AT&T, 2009) over a period of several years. Both organizations
relatively flat in structure, with a Chief Executive Officer and Chief Operating Officer in charge
at Verizon Communications, Inc., and a Chairman and Chief Executive Officer in charge at
AT&T.
Despite a self-proclaimed commitment to high standards in corporate governance,
Verizon Communications, Inc., faced an investor revolt, led by a group of retired Verizon
workers, in an attempt to reduce executive severance pay which they deemed to be excessive
(Gunther, 2003). Three years later in 2007, a group of investors included Verizon as a test case
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in a forum established to analyze company executive pay practices as a means of assessing
managerial confidence (Morgenson, 2007). Another indication of a power struggle within
Verizon was demonstrated in the call for a boycott by Communication Workers of America in
response to Verizon’s expressed intent to eliminate jobs, relocate jobs to other regions, and
reassign workers in response to economic and technological factors (Bischoff, 2003). This
prolonged emphasis on Verizon’s leadership compensation and management actions may have
had an impact on internal operations and could have damaged perceived power structures within
the organization.
Verizon’s reorganization in 2009 created a simplified reporting structure that combined
Verizon Telecom and Verizon Business into one organization: Verizon Wireline (Verizon
Communications, 2009). Other changes in business structures have continued relatively
regularly since Verizon Communications, Inc. was formed in 2000, and this likely has both
positive and negative impacts on the power bases inside the company. With structural changes
every few years, there is limited opportunity for individuals and smaller business segments to
retain an excessive hold on information or assets, and yet the regular disruption posed by
acquisitions, mergers, and reorganizing leaves employees throughout the lower levels of the
organization with little time to become deeply invested in a culture.
A standout feature of Verizon’s employee development programs is the LEAD program
(Leadership Excellence and Development Program) that offers 150 new college graduates per
year up to 24 months of training in areas such as communication, leadership, diversity, labor
relations, and business knowledge (Hutson, 2010). The promotion of leadership though in-house
training and mentoring can both build power within and redistribute power throughout the
organization.
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AT&T’s business structure has evolved through the breakup of the original organization
because of an U.S. Department of Justice antitrust lawsuit in 1974. The company relinquished
its hold on local telephone operations but kept its long distance, research and development, and
manufacturing segments. In 2005, SBC Communications has acquired AT&T and assumed its
name. The new AT&T is relatively young in corporate years, but as a composite of other
acquisitions and mergers, it has a great deal of reach in the telecommunications industry.
In 2003, AT&T streamlined its internal reporting structure in a stated effort to speed the
decision making process through the reduction of management layers (AT&T, 2011), though
restructuring is generally directed at financial goals. Numerous layoffs have marked other
reorganization efforts and may reflect a too-narrow focus on specific business segments. AT&T
channeled a great deal of resources into obtaining the exclusivity of the iPhone and while it
added value to the brand, the downside was the excessive use of bandwidth by the smartphone
(Shields, 2010).
It is likely that AT&T’s power structures suffer the ripple effects of each merger,
acquisition and reorganization. While some changes can become a source of cultural pride, there
is also a chance that the changes will build a culture within the lower levels of the organization
based in cynicism and distrust. A critical element of the use of any form of power in both
Verizon and AT&T is creating a sense of stability that will support ongoing corporate changes.
Power that is used to communicate a consistent organizational identity, a strong commitment to
diversity, or a drive for excellence will provide the continuity to hold onto an effective and
productive culture.
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Culture
The culture at Verizon appears to be based on respect, both professed and in fact.
Respect is viewed as respect for all cultures in the diverse workplace, “diversity means
embracing differences and promoting an inclusive organization that values the diversity of
employees, customers, suppliers and community partners because it’s the right thing to do and
drives business success” (Verizon Communications, Inc., 2011). The impact of unit sales
rewards based on individual rewards by employees appears to have created a highly affective
business cultural model.
The clarity of communication concerning the integrity issue with the company is highly
apparent. Verizon bases customer outlook on perceived integrity of its employees. “We see
crisis and change as opportunities, not threats. We run to a crisis, not away. Change energizes
us. We work hard, take action and get things done. Our actions produce measurable results”
(Verizon Communications, Inc., 2011). The best guidelines are individual conscience, common
sense and unwavering compliance with all company policies, applicable laws, regulations and
contractual obligations (Verizon Communications, Inc., 2010).
At AT&T, team work and a sales related rewards systems applies pressure to adhere to
the espoused values to which all must work under (AT&T, Inc., 2011), yet morale issues plague
the business, A user going by the s/n ara 313001 blogged the following:
“I work for ATT (wireless sales.) I can say that it does feel like we work
for the aforementioned companies above like Goldman and Lehman Bros.
Between arbitrary sales pressure, constant complaints about our network and
unenthusiastic corporate bosses I feel hopeless. For instance, did you know that
att corporate raised sales goals during christmas and iphone launches to protect
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themselves from paying us too much? We get paid according to how close we get
to our total monthly goals. If you exceed the goals you get paid more; something I
feel is fair on months like December and June (iphone launch) when we have to
deal with all the extra bullshit.” (DailyTech, 2009)
The sales goals are a moving target with changes reflecting either the season or
competitive issues, and that can cause deterioration within elements of the culture. Tier related
recognition derived from total unit sales or team sales with minimal individual recognition of
performance reduces individual contribution. Minimal training appears to be another area in
which AT&T has compromised the organizational culture. By allowing training needs and
requirements to be determined locally, the timing is indeterminate and varies depending on local
lead requirements.
“A positive culture recognizes the difference between a job and a career and supports not
only what he employee does to contribute to organizational effectiveness but also what the
organization can do to make the employee more effective (personally and professionally).”
(Robbins & Judge, 2011).
Conclusions and Recommendations
Both Verizon Communications, Inc. and AT&T, Inc. have similar structures and similar
product offerings, and both companies profess to have the premier customer service in the
business. As a business it would be counterproductive not to profess this, but Verizon appears to
have better internal customer service in the way employees are treated. The motivation within
both cultures is based in pay incentives. Both companies have tangible reward systems however
they are different with AT&T providing the lesser income value based on tiered commissioned
sales for the employee. These scales provide for both a base salary and commission additions.
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The tier system for commission may seem at first glance to be a good way to incentivize
employees however once looking past the first blush this can create a very competitive working
unit. This can create unrest in the unit especially “when one person seeks to satisfy his or her
own interests regardless of the impact on the other parties to the conflict,” (Robbins, Judge,
2011) and if this takes place in a very volatile environment, unrest can take over the unit and
produce ineffective results. Training and leadership skills are emphasized more by Verizon, and
that appears to contributed to a healthy cultural environment in which employees are valued.
Communication follows the same channels in both organizations, but it seems evident
that the messages sent through Verizon’s systems carry greater value and meaning in a cultural
context. Efforts by both organizations to create flatter structures were timely and likely
increased the quality and efficiency of communication efforts.
Recommendations based on the organizational behavioral analysis suggest that Verizon
should actively rework executive compensation and create more visible equity. AT&T should
place less concentrated emphasis of resources on narrow product offerings in the future, and
initiate more individual rewards over team rewards. AT&T would also benefit from a corporate
shift in thinking to place a higher value on the human capital. Both organizations have come
together from mergers and acquisitions and both have experienced extensive reorganization. To
some degree, organizational behavior will continually shift and change because of the nature and
structure of both Verizon Communications and AT&T and the ever-changing technologically
based industry in which they operate.
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References
AT&T. (2011). AT&T: Rethink possible. Retrieved February 15, 2011, from AT&T Company
Information: http://www.att.com/gen/investory-relations?pid=5711
AT&T. (2009). Executive Summary: 2009 Citizenship and Sustainability Report. Retrieved
February 15, 2011, from AT&T: http://www.att.com/gen/corporatecitizenship?pid=18039
AT&T, Inc. (2011, January). AT&T Code of Business Conduct. Retrieved February 2011, from
AT&T:
http://www.att.com/Common/about_us/downloads/att_code_of_business_conduct.pdf
Bischoff, G. (2003). Frustrated union attacks Verizon in the pocketbook. Telephony , 244 (15),
12 - 13.
Employee, A. (2011, February 4). (R. Farmer, Interviewer) Burlington, Washington.
Employee, V. (2011, February 5). (R. Farmer, Interviewer) Burlington, Washington.
Gunther, M. (2003). A big win for the little guys. Fortune , 147 (12), 21-22.
Heller, R. (2008, July 8). Employment policy: choosing and implementing the right employment
policy is a vital ingredient to the success of a business. Retrieved February 18, 2011,
from Thinking Managers: http://www.thinkingmanagers.com/management/employmentpolicy.php
Hutson, B. (2010, September). Learning how to LEAD: Verizon helps new employees develop
their management potential. Black Enterprise, 41(2), p. 61. Retrieved February 18, 2011,
from Academic OneFile via GaleGroup.
Mick, J. (2009, December 23). Amid low employee morale, AT&T turns to inspirational speech
from Luke Wilson. Retrieved February 17, 2011, from Daily Tech:
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http://www.dailytech.com/Amid+Low+Employee+Morale+ATT+Turns+to+Inspirational
+Speech+From+Luke+Wilson/article17211.htm
Morgenson, G. (2007, June 17). Hear ye, hear ye: corralling executive pay. The New York Times
. New York.
Robbins, S. P., & Judge, T. A. (2011). Organizational Behavior (14th ed.). Upper Saddle River,
New Jersey: Prentice Hall.
Shields, M. (2010). Verizon's strategy: simple, boring, effective. MediaWeek , 20 (23), 26-27.
Retrieved February 14, 2011, from EBSCOhost database.
Verizon Communications. (2009, October 5). Verizon announces restructuring focused on
growth acceleration and productivity enhancement. Retrieved February 14, 2011, from
Verizon: http://newscenter.verizon.com/press-releases/verizon/2009/verizonannounces.html
Verizon Communications, Inc. (2010). Code of Conduct. Retrieved February 20, 2011, from
Verizon Communications, Inc.:
https://www22.verizon.com/about/careers/pdfs/CodeOfConduct.pdf
Verizon Communications, Inc. (2011). Corporate Responsibility - Workplace. Retrieved
February 15, 2011, from Verizon Communications, Inc.:
http://responsibility.verizon.com/home/results/workplace/
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Appendix A: Analysis Summary by Organization
Verizon Communications, Inc.
Motivation
Rewards Based on sales and increases in pay are
awarded in connection with yearly increases and
commission levels.
Recognitions Tiered commission structure related to
individual sales, not based on unit. Unit recognition
based on unit’s individual employee sales.
Consequences Achievement of various levels of
commission if not reached can result in additional
training or personal attention to bring up to speed.
Continuous lack of performance could result in
dismissal.
Communication Formal
Website, meetings, newsletters, intranets, email, etc.,
strategically employed to support performance
coordination and information flow;
Informal
Blogs, face to face, email, phone, text message, social
networks like Facebook and Twitter
Power Bases
Reward
LEAD program rewards good students with strategic
career assistance; generous employee benefits and
compensation packages appear to be offered equitably
to most employees; controversial executive pay
practices and generous severance packages
Referent
Numerous management changes may be hard to follow
leadership inside the organization; respect forms from
established connections.
Legitimate
Flat organizational structure under CEO and COO
offers more direct management from key
organizational leaders
Expert
Organization formed in 2000 with highly qualified
leadership with long histories in telecommunications;
heavy industry experience emphasis seems to be placed
on hiring.
Coercive
No anecdotal or empirical evidence to suggest
coercion is used, however, a group of retired
Best Practices of
Organization
Employee-centered
focus is evident.
Rewards are good,
but are backed up by
apparent caring and
genuine concern.
Thinkfinity Website
offers educational
tools, support and
training for both
students and
educators as well as
professional
development
resources
LEAD program
(Leadership
Excellence and
Development) offers
new entry-level
employees 18 – 24
months of leadership
training and
mentoring.
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Culture
employees publicly pressured Verizon into reducing
executive compensation. Possible at lower levels of the
organization.
IntegrityIntegrity is at the heart of everything. Organization
professes to be honest, ethical and upfront because
trust is at the foundation of relationships with
customers, communities, stakeholders and coworkers.
RespectRespect is defined as critical at every level of business.
Diversity, individuality and careful listening listed as
part of respect.
Performance ExcellenceHigh performance standards; innovative ideas and the
teamwork valued. Continual questioning how to make
the customer experience better.
AccountabilityBelief in responsibility for actions as individuals, as
team members, and as an organization; working
together, supporting one another and never letting the
customer-or coworkers-down.
The espoused values
are highly evident
throughout the
corporate and
business web sites.
High visibility
concerning culture
related issues.
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Best Practices of
Organization
Rewards Delivered either by increase in pay based on
Tangible reward such
performance (commission) or by referral system.
as commission is pay
Recognitions Tier related recognition related to unit sales check related. Referral
and commission sales. Corporate designed through multi- system rewards are
unit, section sales over quarter.
prepaid charge card.
Consequences Lack of achievement required training and (difficulty in the system
possible loss of commission status. Continued lack of
of provision) Hard
performance in the commission sales force grounds for
work is recognized but
dismissal.
must be maintained
over time.
Well-designed social
Formal
Website, correspondence, meetings, newsletters, intranets, media page on
email, seminars, webinars, teleconference.
corporate Website
increases access to
Informal
Alternative practices relied upon by employees for more
organization through
credible or additional information; Blogs, face to face,
over 28 separate social
email, phone, text message, social networks such as
media channels.
Facebook and Twitter.
Advancement in
Reward
Generous but different benefit packages for bargaining
technological areas is
unit and non-bargaining employees, voluntary benefits
promoted in hiring
include veterinary insurance; in-house training and testing practices. In-house
for motivated employees for advancement in technical
training to build
careers
knowledge and skills
supports preReferent
Possibly difficult to form with numerous reorganizations
employment testing.
and acquisitions of new companies
Legitimate
Flat organizational structure offers more direct lines of
communication and creates a visible leadership presence;
lead by CEO and Chairman.
Expert
Highly qualified and well-educated leaders. All came from
telecommunications industry and most had roles in
acquired organizations.
Coercive
No anecdotal or empirical evidence to suggest use of
coercion though it is possible at lower levels of the
organization.
Espoused values Honesty and integrity, respectful
The espoused values
treatment of coworkers in an inclusive and diverse work
are evident throughout
environment; safety, security, community involvement,
the commercial and
political involvement, environmental and fiscal
corporate websites.
responsibility and transparency.
This provides for high
AT&T
Motivation
Communication
Power Bases
Culture
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Commitment to maintain proper ethical fiscal actions.
Enacted values Emphasized training. Team discussions
concerning performance not as an individual but as a
team. All pay related issues are not fully a team concept.
Commission style pay structure is individual along with
rewards.
visibility of the culture
related issues.