Screwed by Sprint

Anthony Young stood on a patch of grass, unaware that he was breaking the rules.

He was waiting for a bus to take him from his Overland Park workplace to his Hyde Park home, from suburban day to urban night, Town Center to the Troost Corridor. He waited on the grass for good reason: To stand on the concrete meant getting in the way of hundreds of fellow Sprint employees as they walked to the parking garages.

Did he feel their eyes on him? Yes, he did. But Young, ever the critic of corporate culture, is the first to admit that the place gave him a complex, made him feel like a misfit. For his nonsuburban address. For the gourmet coffee he brought from home. For the ties he wore. For his admission that he didn’t particularly care who’d been voted off Survivor the night before. In Young’s department, these were the hallmarks of a weirdo, a role that from the start had distanced him from the other 10,000 workers who populated Sprint headquarters each weekday.

Weirdo, but also Business Systems Analyst.

And back then, in the spring of 2001, the upside for Young was considerable. Things were falling into place for the forty-year-old California native and his family. New car, comfortable midtown home, well-paying job with a Fortune 500 company that was a telecom-industry leader and the big corporate dog in town. Sprint was even bankrolling his pursuit of a master’s degree in engineering at the company’s own “university of excellence.” For the first time in five years, he had a grip on the present and a sense that his future was bright. He had a nearly euphoric feeling of potential.

So Young, annoyed and contented, waited in the shadow of his corporate fortress for the bus, as he did just about every day. Behind him, the Sprint campus, vast enough to command its own zip code, stretched out across 200 acres of prime Johnson County land. In addition to thousands of employees in countless office buildings, his workplace was home to restaurants, dry cleaners, newsstands, two lakes, a fitness center, a wetland and an outdoor amphitheater for company festivities — auto-racing legend Richard Petty delivered an inspirational speech there. Actually, the Petty party had been fun. The driver’s flamboyant style had puzzled his coworkers, but Young had darted right up to the NASCAR star and shaken his hand.

Of course, when Petty left, so did the flowers. Early on, Young had noticed that Sprint would fill the flower beds with brand-new blooms whenever a dignitary was scheduled to grace the campus, with particular attention lavished outside the building that housed the office of CEO William Esrey. But when the visitors departed, the flowers vanished as well.

The voice of a groundskeeper interrupted Young’s reverie.

“You can’t stand on the grass,” the man said.

Young, thinking the man was joking, merely stared at him.

“It presses it down,” the gardener elaborated. “There are rules here about that.”

“You’ve got to be kidding,” Young said.

The groundskeeper gave him a look that said he would not joke about such things. “No, I’m not.”

Young stepped onto the concrete. He glared as the groundskeeper performed a smug about-face and maneuvered off through the quitting-time crowd. The episode left Young feeling undressed. Like the time he’d complimented a superior for a job well done — genuinely praised him without any self-interest — and the guy snorted back, “What did you expect?” and stomped away.

But Young had pretty much learned to roll with stuff like that. If you looked for the openings, you could take a little back — being extra nice in your “hello” next time around — passive-aggressive acts that wouldn’t get you in trouble but would signal at least some small victory in your own heart.

So Young watched as the groundskeeper shrank in the distance, presumably off to enforce another of the campus’ landscaping laws. Then, in a small act of corporate disobedience, he moved back onto the grass to await his bus.

When Sprint opened its new campus in July 1999, the site was still a few years from completion. Nonetheless, the project was remarkably advanced for something that had begun only a few years before and demanded so many resources that Overland Park city officials had to hire five new planners just to keep things rolling.

For costs that would exceed $900 million, Sprint executives bought into the warm-and-fuzzy philosophy that eschewed soulless skyscrapers and instead provided employees with an expansive environment in which they could eat, shop and exercise without straying from the work site. Patterned after the corporate campuses of Microsoft, Sun Microsystems and Compaq, the Sprint plan envisioned, for example, one tree for every two employees.

Though cookie-cutter in design, the campus’ brick buildings created the illusion of an academic setting. Actual office spaces, however, weren’t quite so lofty. “The campus has gorgeous facilities, but it’s isolated,” notes one former Sprint employee. “Look-alike cubicles. Just miles and miles of identical cubes.”

Saying the 1990s were good for Sprint is like saying a telephone is something you talk into. By 1998, Sprint and CEO William Esrey had vaulted onto the leaderboard of the telecommunications industry, and in dramatic fashion. While competitors were benefiting from massive mergers — exemplified by WorldCom’s $37 billion purchase of MCI in 1998 — Sprint kept its business deals relatively small and its reputation as a conservative Midwestern juggernaut strong.

In 1992 Esrey, a former investment banker, engineered the $3 billion purchase of Centel Corporation, then considered a gem for its cellular potential. That acquisition astonished Wall Street analysts and Centel shareholders; the company should have sold for at least $1 billion more. But such purchases were at the center of Esrey’s goal to integrate every type of personal communication into a single package.

At the time, Sprint already had a pair of aces in the hole. It owned sixteen local telephone companies across the United States, providing a steady and lucrative backbone. And the company could claim the nation’s first fiber-optic network for long-distance calling. Those twin assets put Sprint in a good position to challenge adversaries AT&T and MCI. Then the company built its Frankenstein.

Sprint ION (Integrated On-Demand Network) was designed to combine local, long-distance and Internet services and allow customers to access those services simultaneously. An ION customer might, for example, talk on the phone, send a fax and check her e-mail at the same time. According to Sprint, ION was to be “the Big Bang in telecommunications.” Boasting of “expanding the telecom universe,” the company asserted that the “difference between the capabilities of our competitors and Sprint ION is like the difference between a roomful of pocket calculators and a multimedia computer.” By the time Sprint’s campus opened, employees were receiving a near-constant flood of ION-emblazoned coffee cups, tote bags, radios, beer mugs, even personal-sized coolers filled with food.

Sprint’s timing, however, could have been better. Telecom stocks were beginning to suffer by 2000, and ION’s introduction fell far short of supernova status. Nevertheless, in an effort to keep morale high, Esrey penned a letter to his officers and directors. Dated three years hence, on December 31, 2003, the missive reported a tremendous comeback: “As with many disruptive technologies, I think many of you were ready to chuck ION out the window,” the CEO wrote. “But while the growing pains were tough to take, by sticking with our broadband strategies we discovered that consumers and small businesses were ready to … purchase integrated communications solutions from Sprint. ION has been at the heart of our offering.”

In the real time continuum, though, the newly born ION would entirely cease to exist within a year.

Back when Sprint was soaring in the early 1990s, Anthony Young was in his hometown of Los Angeles, toiling as a statistical analyst for the Los Angeles Superior Courts, tallying the thousands of cases that flowed through the system each year.

Lionel Richie sightings and Alex Trebek spottings were hazards of the job. Going to work meant the possibility of sharing an elevator with Guns N’ Roses guitarist Slash (who was being sued for millions by his ex-drummer) or receiving a memo regarding the autograph requirements of the Moody Blues (collectors’ items only) or the legal entanglements of the comic Sinbad.

Young loved his job. He had a new wife, Lorrie, and a son on the way. But on January 17, 1994, one of the strongest earthquakes of the century tore apart Los Angeles, registering 6.7 on the Richter Scale, killing more than fifty people and haunting Young well into the spring. “There were, like, 125 aftershocks that rattled everywhere you went for months,” he recalls. “There was a ton of damage. And we lived probably five miles from the epicenter.”

Not long after the quake, the Youngs decided to move to Kansas City, where Lorrie had lived during the early 1980s.

For more than three years, the family lived in uncertainty as Young bounced from job to job looking for the right place to get his career moving. He quickly learned that Midwesterners read a lot more into a man’s ponytail than Angelenos do (“Everyone here thought I was white trash”), so he got a haircut. In the meantime, Young continued to play guitar and keyboards for a rock/industrial hybrid called dev/null. When the outfit, which took its name from Unix code for the place that discarded computer files go to die, caught the ire of a Lawrence band with the same moniker, the members shortened the name to the Null. After the band reached its apex with a short tour through Texas supporting a bar-circuit festival called the Drag Poets Ball, though, a founding member took a job on the East Coast. Thanks to middle-age malaise, the Null was no more.

Young had kept his eye on Sprint since he had arrived in Kansas City, and when the company opened its new headquarters, he snagged a position in the Carrier Markets division. Like many new hires, he reported to work with high expectations. For one thing, he’d be earning $45,000 a year. Then there was the allure of working at Sprint’s spanking-new complex. “To me, a campus means exchange of ideas: training rooms, state-of-the-art stuff, all the things that seem like an academic environment,” Young says.

But from the start, the place seemed a little odd. The campus may have been sprawling, but by day its grounds were a wasteland. For all the site’s amenities, lakes and jogging trails, an hour-long lunch break allowed employees only so much recreation; usually Young’s coworkers used the time to support Aramark, the company that provided the campus’ dining facilities. For that matter, employee interaction took place almost exclusively in the campus’ fourteen parking garages, where workers struggled through Sprint’s own gridlock each morning and evening. Young opted to ride the bus.

It didn’t take long for Young to observe that the majority of work at Sprint was performed by a fraction of the employees. Everyone else covered their asses, either through networking or by intimidation. “I know business has to be pretty conservative,” he says now. “People have relationships built up over the years or whatever. But I can tell you for a fact there were people I worked for making $120K and up who were totally computer-illiterate, who were totally literate illiterate. I mean, they could barely turn on the damn computer, and they knew nothing about the industry.”

Sprint’s hierarchy was such that ordinary employees might deal with three or four levels of supervisors, managers and directors. One could easily lose sight of the company’s chain of command. One level of vice presidents led into another level of vice presidents; eventually you got to the CEO. Some inquisitive workers checked Sprint’s computerized directory to determine how many steps it took to get from their position to the top — a sort of corporate version of the eternal Tootsie Pop question. The directory listed each employee and a link to that person’s boss. “It took about ten clicks before I got to Bill Esrey,” one former staffer says with a laugh. “And before that, I got to Bill Esrey Jr.”

For all its managerial intricacies, Sprint could be efficient in some respects. When the lakes on its property started to attract gaggles of aggressive geese, the company recruited the full-time assistance of Shayla, a Border collie specially trained to bully migratory pests.

Young’s gripes may have been shared by many Sprint employees, but they certainly aren’t unusual for a major corporation. Sprint-specific complaints began to surface in October 1999, however, when the company accepted an offer of $129 billion from WorldCom in what was to be the largest corporate merger in history.

“That’s when morale went downhill,” says Gretchen Kaufman, who had taken a post at Sprint as a software engineer earlier that year.

“There was a lot of tension over what was going to happen,” Young adds. “It was consensus that WorldCom was going to call the shots. They always did with their mergers. Sprint was sort of in a cooperative mode to handle some of the merger, but everyone knew that WorldCom comes in and dictates.”

While employees worried about their jobs, Sprint executives put a happy face on the situation. Esrey assured Kansas Citians that the area would not lose jobs. In the spring of 2000, the company bragged that first-quarter earnings had surpassed expectations. The news proved useful. A few weeks later, Sprint shareholders overwhelmingly approved the merger, after Esrey assured them that federal regulators had no antitrust qualms with the deal — even though it would combine the nation’s second- and third-largest long-distance companies. Both of Sprint’s stocks — FON, which encompassed the company’s core business, and PCS, its cellular component — rose as investors waited for the federal government’s blessing.

But the benediction never came. The U.S. Department of Justice and European regulators both opposed the deal, predicting an anti-competitive impact on both long-distance and Internet business. Ultimately, in July 2000, Sprint and WorldCom were forced to call off the merger.

In the aftermath, FON and PCS shares began to drop. If those billions of dollars in losses weren’t enough to enrage shareholders, another consequence of the failed merger added insult to injury. In preparation for the deal, more than twenty top Sprint executives were planning to jump ship — among them, Andrew Sukawaty, president of the company’s PCS division. Thanks to a shrewd move on Esrey’s part, the execs were poised to cash in millions of dollars’ worth of stock options even as they went out the door.

When it comes to mergers, big-time stock options for top brass are the norm. But according to Mark Hirschey, business professor at the University of Kansas, such options typically don’t kick in unless the merger is consummated. But the fine print in the shareholders’ approval of the WorldCom merger vested the Sprint honchos’ options on the spot. In other words, regardless of whether WorldCom ever acquired Sprint, some Sprint executives stood to collect a lot of money. “That’s very unusual,” Hirschey says.

By September 2000 — a mere six months after Sprint had trumpeted its wonderful first quarter — the company reported its slowest growth in years.

The following year, four shareholder groups filed class-action lawsuits against Esrey and other Sprint executives in state and federal courts, claiming they’d been misled about the merger’s likelihood so the company’s senior officials could take advantage of the unusually permissive stock options. “While defendants collectively reaped over a billion dollars in benefits from their activities, Sprint’s public shareholders have lost billions of dollars,” reads one of the complaints.

All of this played out for months in public while the stock market served as a scoreboard for the beating that Sprint took. Meanwhile, on the Sprint campus, thousands quietly braced for layoffs.

The bus Anthony Young rode to work picked him up at the corner of 63rd and Troost each workday morning. An hour and a half later, at about 8:30 a.m., it penetrated Sprint’s cold parking-garage façade. The bus would carry Young past an empty guard shack at the campus’ main entrance, then navigate through a village of nearly identical office buildings, stopping occasionally at intersections with actual street signs devoted to famous locals, such as Walt Disney.

One morning in late October 2001, Young showed up for work, same as always. But as he walked into his building, dozens of people were walking out. Inside, he discovered that the people he’d passed had been the first to go. Having learned that he’d been spared, Young watched from a window as his former colleagues gathered on the lawn below. Some layoff victims carried boxes with their possessions, and the American flags and monuments to 9/11 that poked out of the cardboard now seemed to Young not solemnly patriotic but painfully ironic. For a week, the scene repeated itself.

On January 3 of this year, Young’s turn came. When he arrived at work that day, there was a note attached to his computer monitor instructing him to report to his supervisor. Minutes later he found himself in a meeting room with his boss, a human-resources officer and a man clad in the telltale blue blazer of hired security. Young’s boss told Blue Jacket that they wouldn’t be needing security. “The guy goes, ‘If you need me, I’ll be in the next room,'” Young recalls.

A letter from Sprint’s head of human resources delivered Young’s severance package in the language of the decimal point: Based on two full years of employment, he was to receive precisely 5.2 weeks of separation pay.

As Young was escorted out of the building by his supervisor, he wanted to say something. This would be his last chance to utter a senseless insult or to deliver a passionate discourse on the treatment of workers in the corporate world. “You know, I can say anything I want to you right now,” Young declared. But he didn’t say anything else. He just kept walking, 41 years old and out of a job.

Gretchen Kaufman didn’t get such personal treatment with her pink slip. On a March afternoon, Kaufman received a voice mail summoning her to a group meeting. Having worked overtime for weeks beforehand, she strolled into the gathering with positive thoughts. Her mind even drifted to the whimsical: “I thought I was getting an award,” she recalls.

Then she saw a woman crying and noticed the serious faces that packed the boardroom. “A human-resources woman walked in and said, ‘Sprint isn’t doing well,'” Kaufman says. With that, managers began passing out severance envelopes and telling their workers they’d need to make an appointment to return for their possessions.

Kaufman could only laugh. It wasn’t until she reached her car that she began to cry.

The first wave of Sprint layoffs coincided with the failure of ION. Six thousand workers — half of whom were based in Kansas City — were leveled in a “cost-cutting measure.” Hundreds of others, including Young, would be laid off by the bunch in the months that followed.

The second wave came in March 2002, striking Kaufman and another 2,500 Sprint workers worldwide. By October, when the company cut another 110 jobs, a total of 12,000 employees had been fired in the previous twelve months — one-seventh of the company’s entire worldwide workforce.

In Kansas City, Sprint contracted with Right Management Consultants to help its displaced workers find new jobs as well as to offer counseling and a variety of self-help courses. Thousands of laid-off employees reported to a former Sprint office building in hopes of restarting their careers, working at everything from building résumés to reconstructing psyches.

On the day Kaufman first signed in, she was practically dragged into a conference room by a Right staffer who was shouting, “We have a landing! We have a landing!” Inside, Kaufman learned what the worker meant: A former Sprint employee had just found a job after four months of searching. Such landings were celebrated with champagne and Oreos. It was 9 a.m.

The event seemed bizarre at first, maybe even a little cultlike. But after several visits to Right’s center, Kaufman began to understand its peculiar allure. “It’s a nice atmosphere, because you know everyone’s in the same boat,” she explains.

Right’s most popular resource was also its most depressing: a high-speed link to Sprint’s own job openings. It was, after all, the big show — “the mothership,” as Kaufman puts it — and after working for the biggest player in town, many couldn’t fathom doing otherwise.

According to Sprint’s communications department, 2,000 former Sprint employees have used Right Management’s Kansas City office since last October. Though it’s unclear how many of those workers have found new employment, 350 of them have been rehired by Sprint. (Aside from providing those numbers, Sprint officials declined to comment for this story.)

Despite having put out 200 résumés herself, Kaufman hasn’t found a permanent landing. She’s taken temp positions in offices, folded Applebee’s T-shirts at a Lenexa warehouse, even mowed lawns for some of her friends. After a while, she gave up hoping to find another IT position and decided to take classes to get a real estate license. She has gone through her savings, though, and still needs to find a job in order to pay for the courses.

Young’s luck with the center hasn’t been much better, though he, too, praises its services. By his own estimate, Young has sent out more than 2,000 résumés. Those yielded about twenty interviews, from which he has landed a few temp jobs but nothing permanent. Not long ago, he took his first substitute-teaching job, for a fourth-grade class. He spent the morning dodging debris. “Erasers, candy and pixie stuff all over the place,” he says. “There’s nothing you can do. They don’t give a crap.”

After subbing for a day, Young scored a $9-an-hour temp job with a bank. He hoped to stretch that over a few months, but after his first day the bank didn’t need him anymore. He was back to square one.

As the months passed, Young’s severance pay and savings disappeared into car and mortgage payments. And the longer he went without a job, the more his feelings about Sprint splintered. On the one hand, there were all the corporate politics and office bullshit that made the Los Angeles court system seem relaxing by comparison. But there was also something to be said about the pride he’d felt in improving his standing, even in a community he came to loathe.

“I was really established,” he says. “My career was taking off. I was beginning Sprint’s software-engineer program, which is, like, bitchin’. I was getting a free master’s degree in engineering — and it’s not just software, it’s a regular engineering degree, all paid for. A lot of people take advantage of that. It’s really hard to do, working full-time and with a family, and that’s why I just grabbed a few classes here and there. But I was set for that. And then, boom.”

Throughout the year, Young ate up any news report about Sprint, getting worked up over and over again. In October, he even got into an e-mail spat with a Kansas City Star reporter whose Sprint coverage he’d called “garbage.” (Young later apologized for his tone and admitted that he really just wanted to see Sprint taken to task for the dubious decisions that had led to so many layoffs. “I was really hoping that Sprint would have to own up to what they did,” he wrote.)

Earlier this month, Young and his wife decided they couldn’t afford to keep their house in Kansas City. Now, almost eight years after fleeing Los Angeles, they may be headed back.

“Going to the Midwest, forming a band, climbing the ladder, getting the car, the house, the school … and belly up,” Young says, summing up his Kansas City period. “All the things folks dream of doing on the West Coast, and done in three years. Pretty fantastic.”

Throughout this past spring, corporate scandals blistered Wall Street. Next to the unimaginable corruption of companies such as Enron and WorldCom, Sprint came to appear comparatively angelic.

Of course, were it not for the regulators’ objections, Sprint would be WorldCom right now — a fact CEO William Esrey has glossed over with praise for the Almighty: “Thank you, Lord, you saved us from that,” he told The New York Times in June.

Still, Esrey’s reputation has not escaped unscathed. In April, USA Today revealed what awaits the CEO should he retire when his contract expires in May 2005: “a ten-year deal paying at least $4,300 a day for consulting or participating in company-related activities,” in addition to “office space, secretarial help, use of the company’s aircraft, two club memberships and financial-planning services.”

Forbes, meanwhile, ranked the nation’s top CEOs according to how well they perform relative to their paychecks. Along with Richard Scrushy of HealthSouth and Michael Eisner of Disney, Esrey ranked at the bottom of the list. Reporting that Esrey received $36 million worth of stock options in 2001, even as the company’s stock decreased in value and thousands of employees lost their jobs, the magazine gave the CEO an F.

“Esrey, like anyone else granted options, will only profit if the share price rises,” Forbes writer Dan Ackman noted. “But the size of that profit, even assuming just a modest rise in the share price, is determined by the size of the grant — and those grants have been, and continue to be, huge.”

In October, Esrey got some good news. First, a federal judge dismissed several of the shareholder complaints against Sprint executives. (The company is negotiating with shareholders to settle the remaining complaints out of court.) Then the company’s quarterly report suggested that all those layoffs had had the desired effect on the bottom line: Sprint recorded a profit of $519 million through its “cost-cutting measures” as well as by picking up business from scandal-ravaged competitors such as Qwest and former suitor WorldCom.

When the report went public, both of Sprint’s stocks experienced a modest rise in share price. Less than a week later, Esrey announced that more layoffs were probable. And on November 14, Sprint laid off another 2,100 employees, 660 of them here in town.