One January day two years ago, Charles L. Brown, chairman of American Telephone & Telegraph Corp., called in the heads of the Bell Telephone companies and told them that the company they had devoted most of their working lives to would be no more.
Several of the corporate presidents broke down and cried, so awful was Brown's news, according to one AT&T executive in the room.
What they were mourning was not just the impending breakup of the Bell System, but the destruction of the most ingrained, durable corporate culture in American business.
For all the shock and confusion that AT&T's customers have experienced since the breakup one year ago, the real turmoil was felt by its employes and managers. The court-ordered breakup turned AT&T overnight from an invulnerable utility giant into a harried high-tech company whose long-distance monopoly is under attack and whose ability to sell its advanced telecommunications products profitably remains in doubt.
There is a school of thought with many believers which holds that successful corporations develop a culture, a sense of what is expected, that is spread throughout the organization. "Consider any great organization -- one that has lasted over the years -- I think you will find that it owes its resiliency not to its form of organization or administrative skills, but to the power of what we call beliefs and the appeal these beliefs have for its people," said Thomas J. Watson Jr., who personally orchestrated the patriotic corporate culture at International Business Machines Corp., which so many critics have poked fun at and so many employes have sworn by.
It may seem farfetched to speak of a corporate culture or personality running through AT&T, an army-like enterprise with 1 million employes and $150 billion in assets.
But a culture did exist, says W. Brooke Tunstall, an assistant AT&T vice president and a key executive in the planning of the January 1984 breakup.
"I happen to believe that AT&T had some of the strongest glue and cultural values -- the things people believed about their customers, managers and fellow employes," said Tunstall.
There was no doubt among AT&T's vast bureaucracy about what the job was, says Tunstall. It had been laid down 70 years ago by Thomas Vail, the management genius who turned Alexander Graham Bell's invention into a national telephone network. The goal, Vail said, was "One System, One Policy, Universal System." Translated, it defined a Bell System that extended from the scientists' benches at Bell Laboratories to the switchboard operators and repair crews.
His scheme was to wed the Bell System to its surrounding regulatory environment, producing phone service at rates low enough to put as many customers as possible on the line, while "striking a fair balance" with employes and shareholders, in the words of AT&T President Walter Gifford, more than 50 years ago.
That sense of a service responsibility affected everything -- the kinds of people AT&T hired; the jobs it gave them, and the understanding they had of what they had to do to prosper, says Tunstall.
"Nobody called it a culture, but these beliefs were very consciously passed on," he said. A symbol AT&T kept constantly in view was the print of Angus McDonald, a Bell System lineman in the 19th century, battling a blizzard to keep the system operating.
"There was an unwritten social contract that Bell employes would be treated fairly, paid according to the marketplace, and, if they performed well, could count on lifetime jobs," he said.
It was a culture completely unsuited to the competitive world AT&T now inhabits, Tunstall acknowledges.
"We all knew things would have to change, and indeed they have," he said.
"Suddenly, you wake up one day and find that three-quarters of the company is gone" -- the local phone systems that made up the core of the Bell System were severed, becoming independent regional phone companies. "It's like finding out that everything west of the Mississippi is now in another country. . . . "
Tunstall, who conducted studies of morale among AT&T employes, says the breakup hit many employes almost like a death in the family.
And the shock waves continue. When divestiture occurred, 136,000 employes were transferred between AT&T and the new independent operating companies. Since then, AT&T has cut its work force by 10,000 people. An extensive early retirement program is in place, presumably to create vacancies as incentives for AT&T's younger managers.
For the executives who remained at AT&T, there was no longer a guarantee of lifetime employment. A new pay system has been put in place tying bonuses to the success of the company and the individual manager. (At the top, AT&T's search for a new identity is continuing, as yesterday's corporate reassignment of four of its highest-ranking executives demonstrates.)
"I would say there is a considerable amount of insecurity ," Tunstall said. "Rightly so. People can't be as secure as they used to be. We're in a highly competitive business."
Tunstall is optimistic a new culture will emerge at AT&T to match its new environment. "It changes faster when a company is threatened. The deeper the difficulty, the faster they can change," he said. But the risk is that too many at AT&T will remain confused by attempts to define a new set of values, or mesmerized by the insecurity that change has caused.