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Human Resource and Employment Practices in Telecommunications Services, 1980-1998

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[Excerpt] In the academic literature on manufacturing, much research and debate have focused on whether firms are adopting some form of “high-performance” or “high-involvement” work organization based on such practices as employee participation, teams, and increased discretion, skills, and training for frontline workers (Ichniowski et al., 1996; Kochan and Osterman, 1994; MacDuffie, 1995). Whereas many firms in the telecommunications industry flirted with these ideas in the 1980s, they did not prove to be a lasting source of inspiration for the redesign of work and employment practices. Rather, work restructuring in telecommunications services has been driven by the ability of firms to leverage network and information technologies to reduce labor costs and create customer segmentation strategies. “Good jobs” versus “bad jobs,” or higher versus lower wage jobs, do not vary according to whether firms adopt a high- involvement model. They vary along two other dimensions: (1) within firms and occupations, by the value-added of the customer segment that an employee group serves; and (2) across firms, by union and nonunion status. We believe that this customer segmentation strategy is becoming a more general model for employment practices in large-scale service

operations; telecommunications services firms may be somewhat more

advanced than other service firms in adopting this strategy because of certain unique industry characteristics. The scale economies of network technology are such that once a company builds the network infrastructure to a customer’s specifications, the cost of additional services is essentially zero. As a result, and notwithstanding technological uncertainty, all of the industry’s major players are attempting to take advantage of system economies inherent in the nature of the product market and technology to provide customized packages of multimedia products to identified market segments. They have organized into market-driven business units providing differentiated services to large businesses and institutions, small businesses, and residential customers. They have used information technologies and process reengineering to customize specific services to different segments according to customer needs and ability to pay. Variation in work and employment practices, or labor market segmentation, follows product market segmentation. As a result, much of the variation in employment practices in this industry is within firms and within occupations according to market segment rather than across firms. In addition, despite market deregulation beginning in 1984 and opportunities for new entrants, a tightly led oligopoly structure is replacing the regulated Bell System monopoly. Former Bell System companies, the giants of the regulated period, continue to dominate market share in the post-1984 period. Older players and new entrants alike are merging and consolidating in order to have access to multimedia markets. What is striking in this industry, therefore, is the relative lack of variation in management and employment practices across firms after more than a decade of experience with deregulation. We attribute this lack of variation to three major sources. (1) Technological advances and network economics provide incentives for mergers, organizational consolidation, and, as indicated above, similar business strategies. (2) The former Bell System companies have deep institutional ties, and they continue to benchmark against and imitate each other so that ideas about restructuring have diffused quickly among them. (3) Despite overall deunionization in the industry, they continue to have high unionization rates; de facto pattern bargaining within the Bell system has remained quite strong. Therefore, similar employment practices based on inherited collective bargaining agreements continue to exist across former Bell System firms.

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telecommunications; human resources; employment practices; customer segmentation; technology


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Required Publisher Statement: © Oxford University Press. Final version published as: Batt, R., & Keefe, J. (1999). Human resource and employment practices in telecommunications services, 1980-1998. In P. Cappelli (Ed.), Employment practices and business strategy. New York: Oxford University Press. Reprinted with permission. All rights reserved.

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