BT puts its cards on the line

The Royal Society of Arts inquiry into ''Tomorrow's Com-pany'' was the 1995 vision of 25 Blue Chip company leaders. They said successful companies would measure not only how they performed for shareholders financially, but in their other key relationships: with employees, suppliers, customers, and in the wider community.

Legally, the fiduciary duty of company directors is not to today's shareholders now, but to ''the general body of shareholders from time to time''.

The RSA says: ''By itself, financial performance does not gauge the overall health of the business. Only through deepened relationships will companies anticipate, innovate, and adapt fast enough, while maintaining public confidence.''

How does BT measure up as a stakeholder company?

BT is back in favour with its shareholders, who for some time had been fixated on its failure to tie up its much-vaunted deal to create a whole new mega-group Concert by merging with MCI of the US. The share price, languishing below 400p a year ago, has recovered dramatically. ''The stock is in the early stages of a re-rating and remains undervalued,'' says Societe

Generale bank.

''Until BT develops an Asian and US strategy it can only be defined as the European super-carrier. BT is in a very strong position in Europe. It has a presence in all the major markets and powerful allies in each. None of the other ''global''

operators has such a well

developed strategy.''

The bank says: ''BT has undergone the restructuring, rebalancing and redundancies which competition requires. It is now focusing on the second stage which is customer services, new products and marketing. We would doubt if the competitors have even realised there is a second phase.''

The City, however, does not tend to be in the business of encouraging long-term investment. Merrill Lynch, for instance, advised investors recently: ''The outlook remains fairly uninspiring but the shares should be sold while

telecoms remain in favour.''

BT wins the plaudits of its employees for its core policies. ''Where a lot of companies through the eighties and nineties were quite ruthless, Vallance hung in there and was also prepared to negotiate decent severance terms,'' says a senior union official. Pay and conditions are in the upper quartile in terms of major companies.

BT has excellent formal policies on equal opportunities, training, and employee consultation. But on the ground, perceptions are different. ''When operational pressures are so great, you can have all the wonderful policies in the world but the system is very tight and

punitive against the target.''

Investors in People has been won for job training, but unions say the company is ignoring developmental training. ''These awards do not cover how you manage people, the integrity and quality of the relationship.''

Getting casual leave, or even annual leave, for non-management grades can be pretty impossible,'' says the official. (Management grades begin at around #20,000pa.) Operators had to account for every minute of their day and restrict visits to the toilet. Field engineers were ''working 20 or 30 hours overtime a week''. Performance targets were ''too tough and too rigid''.

BT's employee attitude surveys are hailed by management as showing a positive and motivated workforce. But the union argues that it is not properly anonymous, as it is sourced down to first-line supervisors. ''If you have a bad survey result, it is bad for you - everyone has to shine for a quiet life.''

The union concludes: ''On the formal policies it is one of the best. But the management style is extremely aggressive.''

BT is the model company for community relations, or so it appears. An authoritative source says: ''All big companies portray themselves as being the ultimate in community involvement, but BT on the ground is a most difficult company to get to grips with.

''It produces nice publications and all sorts of people are wandering around doing things but actually pinning them down to doing things is extremely difficult. The left hand does not know what the right hand is doing.

''For anyone in the sponsorship selling market who happens to make a friend of the right person in BT, it has been great, but to the outside observer there has been very little sense in it.

''This is a company which

portrays itself as being at the forefront of communication technology, but on the little things that actually matter within a company like replying to letters and phone calls - this is where it has fallen down.''

BT has developed new partnership relationships with many suppliers as it moves away from trying to be a one-stop shop for everything from a handset to a 1000-extension installation. It has pulled out of the bottom end of the hardware market and has pulled in former competitors as dealers to enable it to hang on to the business it really wants - the phone bills.

One close observer says: ''There is a tug of war going on because BT is such a big animal to turn round. The old BT still programmes people to believe they are the best and nobody can touch them, and they don't have to work with anybody else. But the new BT recognises that service centres, for instance, have to work with other people to provide a service and keep the business, and there have been some dramatic improvements.''

BT's customers have seen the leviathan become much more responsive and competitive, but only in the areas where the competition has hurt them, according to the Telecom Users Association. Consultant Vic Davies says: ''Everything in our surveys over the past five or six years indicates that BT has improved its technical reliability, its pricing, and to a large extent its customer service. The qualification is that the bigger you are and the more profitable you are as a business organisation, the more improvement you will have seen. The further you are away from the epicentres of competition, the more likely it is that you will have seen less change in terms of

quality of service provision.

''In an area like Scotland, competition has tended to be very fierce and has helped to raise standards generally. In areas where there is less competition, BT is not as proactive, except where they are trying to sell you something, but that is not customer service. Until BT's market share comes down in certain markets and business sectors, there will be no motivation for them.''

Domestic customers are being wooed back by BT, which has been able to cut prices and weaken its rivals who have big infrastructure investments to sustain. Now the Government has given BT the green light to carry broadcasting services in less than three years' time, there will be a new jockeying for competitive position. Davies says: ''Initially because it is a new market they are uncertain about, it will provide a motivation to do it properly.''

On training, BT Scotland boss Doug Riley says: ''It comes back to the sense of loss of a job progression hierarchy or promotion prospects in Scotland.''

On community profile, Riley says: ''We have been reactive as well as proactive and got buried in people looking for our involvement, cash, people, expertise. Some of the things up here have been things promulgated in the south-east of England and rolled out across the country.'' In future any non-Scottish projects would be ''nationally agreed and thought-through with an input from us''.

But on competition, Riley defends BT's record. He says the regulatory ban on BT selling complete packages of IT services has militated, for instance, against customer visits below a certain account size. But he says: ''It is not the case that we don't visit people in Wick but we do in

Glasgow.''

How the company sees its future

BT has 2.2 million customers in Scotland, 3500 suppliers, and 11,500 staff, one-third of whom work for business units managed outside Scotland and 2000 of whom are casual agency staff.

Its vision is to become the world's most successful telecoms group. Its mission is to provide world-class products and services and to: meet the requirements of customers, sustain earnings growth for shareholders, and make a fitting contribution to the community.

It has five key values, and mission statements on ''the way we conduct business'', the relationship with employees, career development and management, pay and benefits, and nine other workplace issues such as equal opportunities and communication. There is an annual employee opinion survey, a sharesave scheme, and a share ownership profit-sharing scheme.

BT is building call centres at Alness (200 jobs) and Dundee (1000 jobs) and is spending #100m on two new flagship headquarters offices in Glasgow and Edinburgh. It is investing #8m in upgrading the network in the North of Scotland, where the digital network created by BT and the development agencies in the early 1990s has brought a new industry - teleworking - and more than 1200 jobs.

BT is involved in all the major Scottish business organisations. It was the first company in Scotland to host a meeting on corporate ethics with Oxfam last year.

It is spending #960,000 on community projects this year, including 50 donations to schools, the BT Festival of Dance, the BT Swimathon, BT Scottish Ensemble, Edinburgh Festival, School Link, BT Assist Centre (children with disabilities), BT Rural Programme and BT Environment Week.

BT is recognised as a leader in environmental reporting, for two years being voted ahead of Body Shop.

At the corporate level, BT's new UK boss Bill Cockburn principally believes its home market can be grown by offering more holistic ''solutions'' in products and pricing, and exploiting better its huge #750m annual spend on research and development.