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AI/Automation

AT&T's Stankey creates another stink as 3K more jobs vanish

Gravelly voiced John Stankey, the chief operating officer of AT&T, doesn't sound like a man who gets emotional about job losses. Using the phrase "headcount rationalization" to describe the latest program of cuts, he doesn't sound like a man at all – more a fully automated C-suite executive, with zero-touch capabilities for the social-distancing COVID-19 age. But he collected $22.5 million in total compensation last year, which isn't what you'd expect to pay a cyborg, and he has a flesh-and-blood sister-in-law, too. She earned $131,959 last year, at an AT&T subsidiary.

Perhaps Stankey is just more brutally honest than bosses who talk about their field workers as "heroes" on the front line while their organizations continue to slash jobs. In Europe, the first weeks of the pandemic have been marked by charitable endeavors, references to wartime solidarity and weekly rounds of applause for healthcare and other low-paid employees exposed to the virus every day. Fat cats demanding government bailouts are enthusiastically pilloried as robber barons. Billionaire bashing aside, the communal spirit probably won't outlast the virus, and telecom jobs were vanishing long before it arrived. If the economic malaise deepens, and a survival-of-the-fittest mentality overtakes sentiments about altruism and togetherness, the pace of cuts will increase.

AT&T is already pushing at the boundaries of what's possible. Including the Time Warner business it had agreed to buy, AT&T had about 280,000 employees at the end of 2017. Just two years later, it was about 32,000 lighter. But it's not stopped there. Data published this week alongside first-quarter financials shows that another 3,310 roles vanished between January and March. More jobs have probably been cut in the last three weeks.

It's no massive shock. AT&T had previously announced plans for a major cost-cutting program designed to save it about $6 billion by 2023. Responsible for its execution, Stankey isn't about to let a deadly virus get in his way, he made clear this week. "If anything, we see this as an opportunity to approach all our businesses differently," he said during a conference call with analysts.


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On jobs, specifically, the goal is to cut labor expenses by 4%, or about $1.5 billion. This puts overall labor expenses at about $37.5 billion. If the cuts were spread evenly across all salary bands, AT&T would be looking at about 10,000 layoffs. Although some of these cuts might already have happened, the real figure is likely to be somewhat higher if the ax falls heavily on low-paid staff in call centers and the distribution network, as Stankey suggested it would.

Cuts are feasible on the distribution side because many consumers were already buying products online instead of visiting traditional stores. Even where it hasn't led to closures, COVID-19 has made people worried about leaving the home and increasingly reliant on the Internet. The call center environment, meanwhile, must be one of the most popular hangouts for your host-seeking virus – something like Mardi Gras to the average spring breaker. Substituting artificially intelligent chatbots for customer service assistants can now be done under a health-and-safety banner.

    Table 1: Executive compensation at AT&T

    2017 2018 2019
    Randall Stephenson $28,720,720 $29,118,118 $32,032,925
    John Stankey $10,094,583 $16,552,905 $22,473,006
    John Stephens $13,892,807 $15,642,304 $16,725,328
    Source: AT&T

Some staff in field operations can also expect the chop. Stankey's plan is to use artificial intelligence and other technologies to reduce trips by technicians to customer premises. He might learn a thing or two from Japan's Rakuten, which says it will use drones to inspect basestations. The industry might still lack equipment-installing robots, but AT&T also wants customers to shoulder more of the burden of setting up networks and systems. Keen to avoid exposure to a super-spreading technician, customers may not have to be persuaded.

Amid this carnage, executive compensation in the US is starting to look obscene. Promotions notwithstanding, Stankey last year pocketed $6 million more than in 2018. CEO Randall Stephenson, the man he might replace, enjoyed a $3 million increase, to about $32 million. John Stephens, the chief financial officer, took home an extra $1 million. No one seriously expects senior executives to earn a fruit picker's wage, but collecting eight-digit compensation packages when the global economy is having its most violent convulsion since the 1930s is hard to justify. As the dole queues lengthen, it could also be asking for trouble.

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— Iain Morris, International Editor, Light Reading

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