Flattening The Organizational Pyramid
AT&T Journal - August 1989 - By Victoria Memminger
Productivity and efficiency zoom as AT&T Credit Corporation's hierarchy evolves into customer-focused teams where everyone shares responsibility for leadership and innovation.
Teamwork, customer satisfaction, and quality are the operative words in today's business community, but if businesses were graded on how strongly they supported the concepts behind the words, it seems doubtful that more than a few would get very high marks.
One contender for top honors would be AT&T Credit Corporation in Morristown, New Jersey. And taking these words to heart has paid offin only four years the company has become one of the top 20 leasing companies in the United States.
While doubters might point out that AT&T-CC could hardly fail, since it is backed by AT&T, most observers seem to think that its team concept and its nonhierarchical management structure are major factors in its success.
"I came from highly structured organizations," says AT&T-CC president Tom Wajnert, "and I know one thing: a structured environment is great for the person on top. But that isn't the person who's doing all the work."
It was the people doing the work who inspired Wajnert to try something new. In its early days, AT&T-CC retained a bank to process lease applications for the division supporting General Business Systems. But the work was done in assembly-line fashion and the workers had no sense of the larger picture. Wajnert wanted a structure that would put the customer first and was more efficient. The teams he created three years ago did both.
The teams, which serve AT&T-CC's general markets division, each consist of 10 to 15 people. Each team serves a different geographic area. They are, Wajnert says, mini-SBUs, responsible for their own scheduling, hiring, and firing. The team members are also cross-trained in the four Cs credit checks, contracts, customer service, and collections. Cross-training means that if one team member is on vacation or sick, other members can do the job without dropping the ball.
Do they really do all this unsupervised? WaJnert says they do, but in case they need advice they can go to their regional operations manager, who acts as a guide or a coach but not as a boss. Wajnert describes the regional managers as "subject-matter experts" in fields such as credit and collections. The teams work together in the general markets operations center (GMOC, or Geemock, as it is familiarly referred to), a very long, well- lighted room divided into lowwalled cubicles. The teams, A through P, have hand-lettered signs on the wall identifying their area, and there is a team board that tells which team is getting the best results.
This would seem to pit one team against another. Wajnert says there is an element of competition, but that they are also ready to pitch in and help each other if it becomes necessary.
Whatever the chemistry is, there are numbers to prove it works. The teams process twice the number of applications that the bank did and final approval can be given in 24 to 48 hours; under the old system, approvals could take several days.
The success of the original teams led to the formation of others within the general markets division such as the renewal team, a group made up of representat~ves from each of the GMOC geographical teams. Issues common to all the teams are examined by these 10 people and the team members change as the issues change.
These were the first steps on the road to a new culture. Some of the indications of this are small things: alphabetizing buck slips, rather than putting the top person at the top; referring to people as "members" not "employees"; and the disappearance of titles for intemal use. A highly visible sign of AT&T-CC's difference is the salary administration plan that has replaced the traditional AT&T plan.
Organized around "job families" that are based on work outputs, the AT&T-CC plan has eliminated salary grades People can move to other positions in their job family, or they can change families if they want to learn another aspect of the business. Since there are no salary grades, only salary ranges and a list of outputs, AT&T-CC has its own section in the computerized MRS job postings. Human resources manager Ruth Morey is as customer focused as Wajnert. "We want to make sure that our human resources policies are linked to our business strategies," she says. "We have to keep asking ourselves, what are the skills we need to best serve our customers?"
The ultimate in participative management, however, is yet to come.
A recently formed organizational design team is putting together a recommendation for redesigning those units within AT&T-CC responsible for handling AT&T business. As a part of this redesign, the team is looking at how to organize to become more efficient and more customer focused.
"We're not looking for a grand design," WaJnert says. "We're experimenting! We want to be as flexible and as responsive to the market as possible. And since the people who are designing the structure are the people who will be working within it, they~re going to come up with something that makes sense for everyone."
Recognition for this innovative management style has come from sources as diverse as Business Week and Work In America, a nonprofit organization based in New York. Business Week ran a box on AT&T-CC as a part of its July 10 cover story on the benefits of teamwork. Work In America has said that AT&T-CC is farther along than any other company in terms of participat*e management. Asset Finance & Leasing Digest, a trade publication for the leasing industry, put AT&T-CC on its March cover and called its ascent into the top 20 "impressive."
Gerri Gold has been with AT&T-CC since the beginning (she still remembers that she was the forty-seventh person hired). Gold was one of the pre-organizational design members who designed the GMOC team structure with three basic priorities in mind: the customer, the bottom line, and AT&T-CC people. Employees were then asked to fill out an application if they wanted to be on the new design team. Gold wanted to, and was selected.
Team members spend 50 percent of their time working together and the other 50 percent doing their regular jobs. They have been given a charter by a steenng committee of four people: three from the business unit dinsions and one from human resources. Once a month they report to the committee to ask for concurrence on their progress. A facilitator leads their meetings to make sure they stay on track.
"This is not easy," says Gold. "People have to be trained to work this way.
"I think people have the idea that teamwork is just fun and games," Gold adds, "but that's not true. If the end result is the right one, then it's true that work is more fun but getting people to work as a team is a lot harder than letting them go their own way. Don't forget, in this environment, for the same money you're being asked to do more you're being asked to make decisions and l*e by those decisions. But if it works for you, there's nothing like it. I go home at the end of the day feeling as though I have really accomplished things."
What has made this work for AT&T-CC, Wajnert says succinctly, is "hard work!" But there are obviously some other factors involved.
In the first place, AT&T-CC, like the National Systems Support Center (see the story on page 16) began with a work force that had no common culture. Only one-third of AT&T-CC's work force is from AT&T; the other two-thirds is divided pretty evenly between former leasing industry employees and those from other businesses. Then, too, there is the urgency that develops from working directly with customers. Again like the NSSC, it becomes clear that working together as a team is the bestand the fastest way to solve problems and make that person on the other end of the telephone happy. Could staff people work as a team? Gerri Gold says the organizational design team is investigating ways to bring those people closer to the customer, thus investing them with the same sense of urgency.
A third consideration is an insistence on getting the right people. "Some people want structure," Wajnert says. "This way of life is not for everybody."
To make sure that they get the right people, AT&T-CC has set up what else? another team called the selection team. Kate Santoro, who has been with the company for two years, has been on the selection team for six months and wishes it weren't a rotational assignment. She describes the work as "very satisfying."
There are four people on the selection team and they all screen the resumes that are sent in. Those who are selected as possible job candidates are given two appointments. On the first visit the candidate takes a standard AT&T entry test, gets a walkthrough of the offices, and is given the literature on AT&T-CC and a skills test. A written communications test, which can be done at home, is also given to all candidates.
On the second visit, a standard interview is conducted and the applicant is asked to "role-play" a part in three diffierent situations.
These exercises seem to establish whether or not the person has the ability to work as part of a team," Santoro says. If the candidate is selected, the selection team tries to find a match. Teams have definite personalities," Santoro says, "and we try to put new members where we think they would be most comfortable."
Although it is generally accepted that Wajnert is the architect of AT&T-CC's success, he gives most of the credit to AT&T.
"People are always asking me, how did you get permission to do this? Whom did you have to fight? I didn't have to fight anyone the senior officers of AT&T urged me to do something different. I've always had their backing. I think they have done something very enlightened by creating this environment, but it wasn't done as a noble experimentit was done so we could become more competitive."
Does all this empowerment and participative management ever make Wajnert nervous? All the time, he says. "I'm learning, too. You have to learn to trust people to make the right decisions. You have to learn not to worry. But look at our resultsthis is an American success story. It's an adventure."
