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2005 HR Executive of the Year: The Great Communicator

Karen Jennings, head of HR at SBC Communications and the 2005 HR Executive of the Year, is as effective tackling business challenges as she is influencing people.

Sunday, October 2, 2005
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In 1976, at the professionally tender age of 25, Karen Jennings did what many young American women of her generation did. She abandoned her career to marry and start a family. Before that change, Jennings had worked for four years at Southwestern Bell (which in the intervening years has morphed into Fortune 50 telecom giant SBC Communications, based in San Antonio). Jennings and her husband, Robert, also a Southwestern Bell employee at the time (now retired) soon had a son, Zach.

When she left in 1976, she was SBC's district commercial manager in Southwest Arkansas. Four years later, she was ready to return. But Jennings, by all descriptions as open and honest as they come, admits her motivation had little to do with self-fulfillment or a desire to get to the top. In fact, it had more to do with earning the extra income needed to simply buy essentials, such as some decent furniture.

"When I came back, I certainly had no intention of climbing any corporate ladder," says the outgoing, high-energy Jennings, 54, chosen as Human Resource Executive® magazine's 2005 HR Executive of the Year. "I suppose a lot of it has to do with how you are raised. I was raised in a small town in Arkansas. It was very traditional. Back then, you followed your husband's work.

"If I did have a goal when I came back, it for sure didn't have 'level' attached to it," she adds with a smile in a thick Midwestern accent she's never shed. (Her family moved from Michigan to Arkansas when Jennings was a teen-ager.)

Jennings may have gotten her furniture, but SBC got far more. It landed a smart, charismatic woman who returned as a comptroller's supervisor for service orders, a first-line manager position, in 1980 and took off on a meteoric career that culminated -- at least so far -- in 1998, when SBC CEO Ed Whitacre named her the company's senior vice president of HR (a year later, she was promoted to senior executive vice president of HR and communications, the post she holds today).

"When we had to find someone to lead HR, she was the 'A' list," says Whitacre, a Southwestern Bell veteran himself since 1963. "I told all the direct reports to the chairman about Karen, and she was the unanimous choice. Her personality was perfect for the job."

Interestingly, early in Jennings' career, she was promoted to the district commercial manager position directly as a result of a government-mandated affirmative-action consent order. Though the situation -- particularly her knowledge of the caliber of people who were passed over for the job -- caused her stress at the time, it has also positively affected how she fosters diversity at SBC.

"What carries Karen is she treats people just as she wants to be treated, and that's important to anyone who wants to succeed in this business," Whitacre adds. "Of course, she's also got the smarts on revenues, expenses and all the key business issues."

Whitacre, in fact, credits Jennings with navigating SBC through multiple challenges of tremendous bottom-line significance, including two major corporate mergers (Ameritech in 1999 and Southern New England Telecommunications in 1998), controlling skyrocketing health-care costs (SBC's annual health-care bill is $3 billion) and leading delicate negotiations in 2004 with one of America's largest unions, the Communications Workers of America.

Now, with SBC's impending $15 billion acquisition of original mothership AT&T about to close (SBC got its start as one of six regional phone companies created by the AT&T breakup in 1984; only Verizon, Qwest, BellSouth and SBC remain), Jennings is looking to add another major chapter to her acquisition-experience story line.

Through its busy decade-long M&A activity, in fact, SBC has added approximately 100,000 employees (the AT&T deal initially will add 50,000, bringing the SBC total to just over 200,000).

Jennings' efforts during those mergers would be enough to drive most HR executives up a wall, as she and her staff had to face the daunting task of not only integrating new employees, HR systems, benefits plans and dozens of policies and procedures, but also helping to mesh corporate cultures and face the painful, yet inevitable, task of post-merger downsizing. Certainly not what Jennings expected she'd be doing when she rejoined the company as a line manager (it took her seven years to get back to the district commercial manager level, which she held when she left in 1976).

"When I came back, I just wanted to do as well as I could, to learn as much as I could," says Jennings, who in addition to son Zach, 28, has a stepson, Bob, and four step-grandchildren. "I never really was looking up, only looking ahead."

'Mix of Opposites'

Talk to the people at SBC who know Jennings best, and Whitacre's description seems dead-on: Jennings is the perfect blend of compassion and business, and not just for an HR executive, for any executive. To that end, Jennings wears a rare double hat at SBC, as she also has executive management responsibilities over the company's communications efforts, including advertising, public relations, marketing and employee communications.

"Karen is a wonderful mix of polar opposites," says Margaret Cerrudo, senior vice president of HR and Jennings' second in command who came to SBC when the company acquired Pacific Bell in 1998. "On one hand, she is truly passionate about people, and very open and engaging. On the other hand, she's all about the business.

"Karen's sitting at the table with the chairman, one of only eight direct reports," Cerrudo adds. "She's a champion for HR, which truly holds a strategic position within the company."

Cerrudo's first impression of Jennings was unexpected, and lasting. During one of Cerrudo's first days on the job in San Antonio, Jennings, at the time president of SBC Missouri in St. Louis, sent Cerrudo a congratulatory note on joining SBC.

"It said if I ever need anything, just ask," Cerrudo says. "When I went to St. Louis, I looked her up and we met. We've really become great friends. What you see is what you get with Karen."

In the words of John Stankey, senior vice president and SBC's chief technology officer: "You don't run into many people as flexible and easy to work with as Karen." Stankey works closely with Jennings on several HR-related IT projects, and, in turn, depends on her recruiters to keep his talent pool full for current and upcoming business challenges. "She can easily get past any parochial views or turf issues [and tread into dangerous waters, if need be]. There are times in life when you have to make a phone call you might not want to make, but that's never the case with Karen."

Her approach to the mounting health-care crisis, for instance, has been as direct and unflinching as any other business challenge. In recent years, SBC, like most large employers, has faced skyrocketing health-care costs. At the same time, to stay competitive, it needed to maintain an attractive total compensation and benefits package. When you consider that SBC has 700,000 employees, retirees and dependents to cover, the medical-benefits cost condition becomes even more acute.

To that end, SBC, with Jennings taking the lead, recently introduced a new health-care plan for active and retired nonunion managers based on the emerging, and somewhat controversial, consumer-driven model that provides employee incentives for healthy lifestyles and pre-tax health-savings accounts. Jennings knew consumer-driven health would be a tough sell. So she and her staff traveled SBC's entire 13-state territory, directly answering concerns in town-hall meetings and other open forums about how the plan would work, and taking on the tough questions without hesitation.

"It was a big step to make this a replacement plan for all those employees and retirees," says Sue Colburn, vice president of benefits. "We knew we wanted a more consumer-driven plan, but it still was a very aggressive, tough decision. We weighed a lot of the pros and cons, and Karen didn't make a snap decision. In the end, she realizes this is going to take time and communications, with much feedback -- some positive but a lot negative -- over the short term."

Colburn says that, in her experience, once Jennings embraces an idea as good for both the company and its employees, the openness and honesty really come into play.

"I was part of those face-to-face meetings," Colburn says. "Karen believes the decision is a good one, but also understands it may not be what employees and retirees want to hear. She admitted the questions were tough. But she honestly stood up and gave them the best answers she could. Not many executives can, or will, do that."

Bold Initiatives

Jennings' many other accomplishments also underscore her courageous, direct approach to HR. During last year's stressful contract negotiations with the Communications Workers of America and other unions that represent SBC employees, SBC naturally sought to improve its cost structure to compete more effectively. According to Whitacre, Jennings' leadership during negotiations enabled the company to receive a 30-day notice prior to any strike by the CWA, an unprecedented concession by the union, which represents about 100,000 of SBC's 157,600 current employees.

In a related scenario, Jennings implemented employee-training procedures that enabled SBC to maintain systems operations and customer support during a brief four-day union strike in 2004.

"Karen's tough but fair-minded approach won respect from both management and union representatives," Whitacre says. "It meant a speedy resolution and a new contract beneficial to both sides."

That strong viewpoint can also be seen in Jennings' approach to diversity.

She'll never forget the career boost she got through an affirmative action mandate when she was promoted to district commercial manager before leaving in 1976. But she's convinced there are other, better ways to foster diversity and build a workforce that not only makes SBC a top competitor, but also one that reflects the American demographic landscape.

"I would say, if anything, affirmative action was a way to kick off an initiative, but today we weave it through the fiber of everything we do at SBC," Jennings says. "It's not a matter of meeting some mandated goals. It's got to be part of the company's culture."

Jennings strongly advocates the company's diversity goal to reflect the demographic makeup of its 13-state territory, which is 51 percent female and 36 percent people of color, according to the 2000 U.S. Census. SBC's current employee population is 48 percent female and 38 percent people of color. Women also make up 45 percent of managers and 29 percent of SBC senior managers -- far exceeding the Fortune 500 company average, according to Jennings. (On another front, in 2004, SBC spent 17.2 percent of its total procurement, or $1.8 billion, with minority and women vendors).

While proud of those statistics, Jennings is realistic enough to know that the drive for diversity is a tough, never-ending job -- especially as the business changes.

Along those lines, SBC's internal efforts on diversity include supporting and promoting the company's nine current (and financially self-sufficient) employee-initiated organizations (EIOs), which represent specific ethnic and minority groups within the company.

"Karen and I have had some candid discussions on diversity," says Teron Bowman, senior project manager in SBC IT, and president of the Community NETwork, which helps black SBC employees with personal and professional growth. "Her door is always open, and she's a very strong supporter of what the EIOs are trying to accomplish."

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SBC's diversity efforts are working, at least if accolades are the gauge. SBC was named a Top 50 Company for the Diversity Hall of Fame by DiversityInc, is listed as one of America's Top Corporations for Women by the Women's Business Enterprise National Council, and was chosen as a Top 100 Company for Hispanics by Hispanic Magazine -- all in 2005. In 2004, Fortune magazine ranked SBC as one of its Best Companies for Minorities (No. 1 in industry, No. 12 overall).

"Any company is who its employees are, so you have to make sure you hire people who have the same values and understand what the company is all about, regardless of race or gender," Jennings says.

The OneStop Solution

On the technology front, early in her move to SBC's top HR post, Jennings envisioned launching an employee self-service portal with the dual purpose of greatly improving the SBC employee experience while driving significant costs out of SBC's HR function. The result is HROneStop, an online resource launched in 2004. The HR Web portal enables employees to easily find comprehensive information on HR policies, including personalized savings balances updated daily, pension balances and projections, and more.

In addition, SBC employees receive live support via an HR call center, located in San Antonio, and also have HROneStop's interactive-voice-response feature, which gives employees phone access to check vacation balances, enroll in direct deposit and conduct other transactions.

So far, employees have given HROneStop positive reviews in surveys, Jennings says. But with annual savings of $7 million in HR costs, it also has had the desired effect on the bottom line.

Jennings also created a process to match SBC employees in overstaffed organizations with job openings in other business segments. The program, which supplements SBC's online job-posting and submission process, was an enormous success as more than 600 managers were reassigned to new positions, saving jobs and approximately $20 million in management severance costs.

Finally, any HR executive's most stressful challenge is managing workforce head count during tough times and following mergers and acquisitions. SBC suffered during the telecommunications downturn in the late 1990s and into 2000-2002, but Jennings successfully managed necessary workforce reductions and redeployment, primarily through attrition, online job posting, job reassignments and training.

"It hurts. It really affects me personally," says Jennings of each time she's had to trim the SBC workforce, though SBC tries its best to do so through attrition. "But it is reality in today's telecom environment."

In a related area, Jennings never assumes that SBC HR has all the post-merger answers, either, believing it's critical to look at the new companies to see if there are lessons learned or processes that work better than what SBC already offers.

"In today's environment, it's foolhardy to stick to something just for pride or turf," she says, adding that when SBC acquired Ameritech, the latter had a superior phone-based training tool for consumer-service representatives. "We are using it all over the place today."

Looking Ahead

Even with that string of successes, Jennings' toughest job is now upon her. In the next one to two years and beyond, SBC has made its move to compete directly with cable and satellite in the race to deliver the "three-play" world of phone (mobile/land line), video and Internet. Mainly, that means SBC will be challenging the formidable likes of Rupert Murdoch's News Corp. (owner of the DirecTV Satellite service) and cable behemoths such as Comcast and Time-Warner. Only in SBC's case, it means delivering television content via Internet Protocol TV, or IPTV, a new, yet-untested technology that delivers TV content via the Net and fiber-optic cable to homes.

SBC has invested $4 billion in IPTV, and Jennings has a critical role in keeping the talent tap flowing so SBC can turn this latest effort, which SBC calls Lightspeed (it's delivered via super-fast fiber-optic cable), into a winner.

Whitacre has publicly said he expects SBC will be the first company to succeed at delivering IPTV to a mass audience, which analysts say would be as revolutionary as the advent of color TV or cable supplanting old-fashioned antenna-delivered TV signals.

There is nothing to indicate Jennings and her 1,650 HR professionals aren't ready for this latest strategic challenge.

"We've been through some trying times with very tough economics, and those horrendous scandals in our industry," Jennings says, referring to the WorldCom and Global Crossing financial debacles. "In HR, we make it our business to understand the telecom [industry], especially if we are to be taken seriously. We're still a work in progress, and I love that. But we'll be ready for whatever comes.

"We're going to a whole new type of technology, so we need to look at all the things that go with it, including content, which is new for us," she adds.

Pondering her personal future five to 10 years out, Jennings stops and thinks, and abruptly mentions her duty to her retired husband and aging mother.

Then, ever the college English major, she quotes a small section of British poet A.E. Houseman's poem, "To An Athlete Dying Young," a Jennings favorite about a young runner who died at the height of his athletic career.

Smart lad, to slip betimes away from fields where glory does not stay and early though the laurel grows it withers quicker than the rose.

"I like to apply that poem to business," Jennings says. "Why would someone want to stay past the time when their capabilities no longer match what their industry does? And let's be honest, I was in college when they didn't even have calculators. I can promise you, and I have promised myself, I will never stay past when my capabilities can no longer serve this company.

"But for now," she quickly adds with her patented, convincing smile, "I do feel like I am in a place where I need to be."

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