AT&T CEO Randall Stephenson Takes On National Tragedy

Randall L. Stephenson, chairman and CEO of AT&T, No. 4 in The 2011 DiversityInc Top 50 Companies for Diversity, has no other words than “national tragedy” to describe the nation’s high-school dropout rate.

“When I look at our nation’s high schools and I see this dropout crisis, where one-third of our kids won’t be graduating with their class, it’s alarming,” Stephenson said, addressing more than 150 senior corporate executives at a conference on global diversity hosted by DiversityInc in Washington, D.C.

That figure jumps to 50 percent when it comes to Black and Latino high-school students. “I worry the pipeline for diverse talent is at risk of drying up on us and that pipeline starts at the high school,” he said.

DiversityInc’s global research in 12 countries was previewed at the event and an executive summary is available on

Stephenson said companies will not and cannot be successful in the marketplace if they don’t reflect the marketplaces they serve.

“When I think about it from AT&T’s standpoint our customer base is very, very diverse. I look at the ownership of AT&T and it’s a very diverse ownership. I look at our employee base and it’s very diverse,” Stephenson said. “If you don’t have a good, solid pipeline of diverse talent, you won’t bring leaders up through the businesses that reflect the markets you serve.”

AT&T last year launched the Aspire program, a $100-million philanthropic program aimed at tackling the high-school dropout crisis, strengthening student success in school and increasing their workforce readiness.

“Our $100 million is not going to fix this but we think it’s a good start,” Stephenson said. “I really think it’s going to take everyone collectively to get a spotlight put on this issue so we can begin to address it and really move the needle.”

After Stephenson’s opening remarks, he sat down with DiversityInc CEO Luke Visconti to talk in more detail about AT&T’s Aspire program, the largest education initiative in company history, as well as his own personal connection to diversity. Here are the highlights from their very personal conversation:

Visconti: Clearly, when you start talking about education, I can see your personal feeling about this. When I asked how you became so passionate about diversity, you actually told me a great story, and I was wondering if you could share your personal connection to diversity with us.

Stephenson: I actually grew up in Moor, Okla., which is just south of Oklahoma City, a dirty little oil town, right in the middle of tornado alley. It was a very undiversified community. So, I go off to college, in my freshman year, and my dad walks me in and I meet my roommate. My roommate was the first African American I ever met and I was kind of taken aback. I had never actually spent much time with an African American, but Willie and I became the best of friends, and suddenly, I realized there was a whole breadth of experience and talent and capabilities that I had never been exposed to, and it was a very eye-opening experience.

My other germane experience in terms of recognizing the importance of having a diverse leadership team and workforce came when I was working down in Mexico City. We owned a rather large stake in a Mexican telephone company and a mobile telephone company, Telfonos de Mxico. We had 20,000 wireless subscribers and we were trying to ramp this up, so they sent a bunch of U.S. guys down there and put in the business model we knew in the United States of America.

The business didn’t take off. Our model didn’t work down there. So we brought in our Mexican partners and that was the first company to really scale what we call today “the mobile prepaid business”pay-as-you-go. As a result of bringing in some local folks, people who knew these markets, we created a business that today has 200 million subscribers and is one of the fastest-growing mobile companies in the world. That was a big “Aha!” moment for me. If you are going to serve a diverse market, you better have on your leadership team people who know those markets, and not just from a numerical, demographics standpoint but people who have actually lived and breathed and operated in those markets. Those were two very important learnings for me.

Visconti: You are obviously very comfortable with women in very powerful leadership roles at the firm. Can you tell me a little bit about that

Stephenson: The CEO of my home is my wife, so it starts there. AT&T has been one of the leading companies in terms of the progression of women into executive ranks. I think we have set the standard. If you don’t get a diverse perspective, you are not going to address those markets well. My board has five females on it and it just brings a different perspective. I have found some of the best challenges I get on my board come from my female board members. I just think you have to have breadth to be successful in this business.

Visconti: If I can compliment you from an outside perspective, the women I know at AT&T, compared to other organizations, are allowed to be themselves. They’re upfront and very earnest in the way they communicate and that is not the case at a lot of organizations, where women sometimes have to behave a certain way in order to get along. There is almost a typecasting going on. But not at AT&T.

Stephenson: I’m glad to hear you say that. I was sitting here, just reflecting as you were talking to me, on your question about women in leadership roles. I haven’t ever reflected on that before. I don’t think about female executives differently than I think about the male executives. I think we as a company are beyond that.

Visconti: One of the things we look at is not only management representation but also ratios between management and promotions and management and new hires, and your company is exceptional in its ability to accomplish both those thingswhich tells you where the pipeline is headed. There are companies and federal agencies that are competing to be on our lists that are actually recruiting in reverse. You look at their representation and it’s actually getting smaller.

Stephenson: It’s interesting, and I said this in my opening remarks but these don’t happen by gravity. Gravity does not take you to a point of diversity. It is something that requires focused leadership and discipline. It requires a really strong sense of execution. These things don’t happen by gravity, especially when you are starting from a place where your senior team is not as diverse as you would like it to be because just by natureand it’s not deviouswe tend to bring up in the business those that we know. And those that we know often times tend to look like us. You have to put a mechanism in place, a tension in place. Then as you do that, once you get your senior team and your board of directors [to start] reflecting the marketplace, gravity will take hold, but it takes a little willpower to get there.

I believe it is no different than any other business priority you set. You have to measure it and you have to execute on it. Invariably, it comes down to measuring. That is how you get results. And oh, by the way, compensation. As much as we all like to say we’re altruistic and trying to do the right thing, everybody in this room is coin operated, all right

Visconti: I want to go on to education. Again, you are very passionate about this and you have put money where that passion is. Can you talk a little bit about Aspire and about accountability in public schools

Stephenson: With Aspire, the focus is workforce readiness and workforce preparedness and making sure that we have a pipeline to bring in the workforce. When you look at the services we provide, we don’t have the luxury or the option of outsourcing for people who install televisions, or the people who install wireless cell towers or run the fiber. You can’t outsource that overseas. So, we are dependent on a well-educated U.S. workforce. We have to have one or we don’t succeed as a company. So this isn’t all altruistic.

When we go out to the marketplace to hire and we need good technical talent, people who are computer literate and who have good math skills, the talent pool is not deep and it’s alarmingly not deep. So, we said we need to do something about this. We need to do our part; we need to shore it up. So, we put money into this [with the Aspire program], but we put requirements on [grant recipients] to report back to us. We want to see results, and if you are not getting results, the money will not be coming in the future. It’s not just with the organizations we fund. But I’m a firm believer that one of the biggest issues in the education system is accountability, not just at the student level, but also at the teacher level and the administration level. And I get a lot of push-back and I hear a lot of people say we can’t move the needle because of the unions. I say that’s bull. I operate the largest union workshop in the United States. You have to set expectations. You have to get them on board with those expectations and you have to manage the results, and if you do that, you can move the needle.

Visconti: Tell me a little more about the Aspire program.

Stephenson: What we have done is put this money$100 millionout there and it’s basically our discretionary funding over a four-year period. Our foundation had historically put money into various important philanthropic organizations, but it was not focused. But we have [now] set education, and the high-school dropout crisis was priority. I said I want every dollar that is not accounted for over the next four years and it’s mine. Nobody else gets to touch it. It’s mine. We have an RFP process. If you are an organization out there that has demonstrated the ability to affect the dropout crisis, submit your RFP. And if you meet these conditions, we will fund it. It has to meet the objective of influencing the high-school dropout crisis.

Visconti: Your company has done an amazing job of acquiring other companies, some of which were on our DiversityInc Top 50 list already, and you were able to pull it together in a very short period of time. Your company really executed it quite well. Can you tell me how that happened and how you fit that around your efforts around diversity

Stephenson: Step 1 is you got to do the right deal, right I have to give our former chairman credit. He did the right deals. And the companies we bought were just really valuable assets, and we got them at reasonable prices, and so you start there. But then there’s a kind of a secret sauce to integrating those businesses and the secret sauce is that we have always paid a premium for the companies we bought, because when you pay a premium there is no question about who is in charge. And the company that is in charge sets the culture.

I always tell my kids, “You are part of this family and there are rights and obligations to being part of this family. But that doesn’t mean I want you to lose your individuality.” It’s the same thing when you do mergers and acquisitions and you buy a large-scale company. “You are now part of what is AT&T. There are rights and obligations which go with being part of this company.” But I don’t want to break and lose the identity of the culture we are bringing in. I think that is very relevant when you talk about diversity in the workforce. You are bringing a lot of different cultures, racial, lifestyle, gender. You make sure we are all operating as one unique team but you don’t break the identity of any of those cultures. You remain sympathetic and amenable to different kinds of cultures. I think that is key.

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