1. 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
This team is comprised of Jorge Cardenas, Rick Farmer, Leslie Menard and Leslie Morgan (L1 & L2)
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 product offerings vary and their organizational cultures vary as well.

2. Verizon Communications, Inc.
Based in New York
Wireline, wireless communications
Broadband Internet
Fiber-optic communications, information and entertainment
Formed in 2000 from a merger
Bell Atlantic Corp. and GTE Corp.
Verizon Communications, Inc. is based in New York
Offers wireline and wireless communications services to mass market, business, wholesale, and government customers,
Also 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.

3. AT&T, Inc. Based in Dallas, Texas
Formed in 1997 from four other entities
Added BellSouth, Cingular Wireless, YP.com, and AT&T Corp.
Mobile broadband and broadband Internet
IP-based television and communications
Wi-Fi and wireless communications
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 Internet, a national Wi-Fi network, IP-bases business communications, the publication of Yellow Pages directories, and wireless voice and data services.

4. Organizational Behavior
Assessed against four areas:
Employee Motivation
Internal and External Communication
Power Bases and Power Structures
Organizational Culture
Organizations similar in structure
Organizations differ in products and culture
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.
While revenues and profitability can be measured in a “precise and bankable way” (Heller, 2008), employee morale and employee productivity cannot.

5. Motivation Interview – employee felt valued
Tiered compensation structure
Leadership training and employee development
Interview – employee did not feel valued
Tiered sales but competitive environment
Luke Wilson motivational speech
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 want 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?
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.
The AT&T Interview:
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.
Employee: and fliers (memos), Boss reads them to us, Boss doesn’t care – says to produce or go home.
Employee: Tiered sales, more sales, more money, 3, 5, 7% tiers 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.
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.
Motivation seems to be a point of difference between the two companies.
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).

6. Communication Formal Informal Thinkfinity Formal Informal Aspire
Memos, meetings, press releases, etc.
Informal
Blogs, , text messaging, social media
Thinkfinity
Extensive website offering database resources and teaching aids for K-12.
Formal
Memos, meetings, press releases, etc.
Informal
Blogs, , text messaging, social media
Aspire
Contribution to preventing high school dropouts
Both AT&T and Verizon as telecommunications giants market a variety of communications 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, , seminars, and webinars.
Informal communications for both organizations include blogs, , 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.

7. Power Bases Reward Referent Legitimate and Expert Coercive Reward
LEAD program
Referent
Shifting leadership
Legitimate and Expert
Flat organizational structure
Coercive
Unknown
Reward
Varied benefit packages
Referent
Frequent leadership changes
Legitimate and Expert
Flat organizational structure
Coercive
Unknown
The power structures at Verizon and AT&T are similar in organizational structure and apparent reporting systems
Verizon was created through mergers (Verizon Communications, Inc., 2011)
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 CEO and COO in charge at Verizon Communications, Inc., and a Chairman and CEO in charge at AT&T.
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 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.
The promotion of leadership though in-house training and mentoring can both build power within and redistribute power throughout the organization.
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.

8. Culture Respect Individual rewards
Diversity
Inclusion
Individual rewards
Organization sees “crisis and change as opportunity, not threat”
Teamwork with an emphasis on sales
Morale issues
Tiered recognition de-emphasizes individual effort
The culture at Verizon appears to be based on respect, both professed and in fact.
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.
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 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 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.

9. Conclusions and Recommendations
Verizon:
Individual recognition
Training and leadership skills
Communications carry value and meaning
Rework executive compensation structures
AT&T
Increase individual rewards
Place higher value on human capital
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.
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. 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.

10. References
AT&T. (2011). AT&T: Rethink possible. Retrieved February 15, 2011, from AT&T Company Information: AT&T. (2009). Executive Summary: 2009 Citizenship and Sustainability Report. Retrieved February 15, 2011, from AT&T: AT&T, Inc. (2011, January). AT&T Code of Business Conduct. Retrieved February 2011, from AT&T: Bischoff, G. (2003). Frustrated union attacks Verizon in the pocketbook. Telephony , 244 (15), 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), 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: 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.

11. References
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: 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), 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: Verizon Communications, Inc. (2010). Code of Conduct. Retrieved February 20, 2011, from Verizon Communications, Inc.: Verizon Communications, Inc. (2011). Corporate Responsibility - Workplace. Retrieved February 15, 2011, from Verizon Communications, Inc.: