Surviving the Fall

On a Friday in February, Tom Hagerth and his team at Global Crossing Ltd. worked into the night, rushing to round up some 750 computer tapes stuffed with corporate e-mails that needed to be shipped overnight to the Securities and Exchange Commission office in Los Angeles.

Facilities manager Matthew Sullivan found himself moving from room to room in Global Crossing’s offices in Madison, N.J., removing paper shredders and piling them in storage.

Sue Riccardelli, who once busied herself writing product literature, now spends her days poring over bankruptcy motions, affidavits and rulings.

This is life now inside Global Crossing, where employees who were once flush with valuable company stock are taking up unexpected tasks and trying desperately to salvage what’s left of the once-proud firm. The company, which built a worldwide fiber-optic communications network, collapsed under the weight of debt payments and slumping sales, filing the fourth-largest bankruptcy in U.S. history in late January.

Its many flaws have been in the news ever since. There are questions about Global Crossing’s accounting methods, its cozy relations with accounting firm Arthur Andersen and how top executives and stockholders profited despite the firm’s travails. The company is under investigation by the SEC and the FBI and is facing scrutiny from congressional lawmakers. In Bankruptcy Court, Global Crossing’s future hangs in limbo.

For Global Crossing employees, the situation is painful and more than a little stressful.

“It’s like being trashed. It’s kind of like, ‘How does the Catholic Church feel right now?’” said Ian Mitroff, a workplace crisis management expert and professor at USC’s Marshall School of Business. “It’s unfair, but that’s what happens in a crisis, and that’s why you don’t want to get into one of these things.”

Under pressure to slash costs, Global Crossing recently offered employee buyouts, then followed with layoffs. The company has about 5,000 employees, down from a peak of more than 14,300 in March 2001, not counting employees at subsidiary Global Marine and sister company Asia Global Crossing.

The payroll cuts have thrown about 4,500 Global Crossing employees out of work in the last year, with many of them leaving without promised severance payments from the company.

Firm’s Situation Tough on Those Still There

Employees who have stayed with the company are traumatized too.

“You don’t sleep, and when you do sleep, you dream about this place,” Riccardelli said. During the latest round of buyouts, “I must have gotten 10 e-mails from people saying goodbye. It’s very, very hard.”

Sullivan, the New Jersey facilities manager, is forced to face each employee departure head-on because he’s the one who picks up and stores the idle computers, phones and other equipment they leave behind.

“It’s almost like going through someone’s stuff that died,” he said.

And every day, Riccardelli and other employees get blunt reminders of how far the company has fallen.

They’re surrounded by empty cubicles, vacant parking spots, unused conference rooms and unfilled seats in the cafeteria, where the service has been downgraded to mostly sandwiches.

In California, employees who once worked in the luxury of the company’s swank Beverly Hills office have set up shop in decidedly unglamorous digs in El Segundo, a mostly industrial city near Los Angeles International Airport.

“It’s not as pretty, but it’s not horrible,” said Robyn Adel, Global Crossing’s vice president of sales in the Western region. “We have the furniture from Beverly Hills, so it’s fine.”

But Adel and the others still employed have extra work now, and lots of it.

“With the head-count reductions, that work doesn’t go away, so you start to pick things up you didn’t do before,” said Maria Funkhauser, an area vice president. “Your job just gets harder and harder on a day-by-day and a minute-by-minute basis.”

Workplace experts said such stress frequently dampens productivity and undermines efforts to lift employees’ morale.

Bitterness also can enter the mix at companies where executives get bonuses or severance payments at the same time lower-level employees are loaded down with work or leave with little or nothing in compensation, said David Bowman, chairman of TTG Consultants, a firm that specializes in “human capital.”

At Global Crossing, most laid-off employees had expenses that were not reimbursed and had their severance pay abruptly halted when the company filed for bankruptcy. Most employees still at the firm are doing more work for the same pay.

Executives, meanwhile, are in line to get lucrative retention bonuses for the duration of bankruptcy proceedings. And Chief Executive John Legere was awarded a $3.5-million signing bonus just weeks before the Chapter 11 filing. He also is scheduled to receive as much as $11 million in compensation this year.

Atmosphere Has Some Trying to Leave

Surrounded by stress, uncertainty and hard feelings, it’s inevitable that some employees will choose to flee to another company--or at least try to.

Kevin Rosenberg, managing director of Irvine-based BridgeGate, said his executive search firm has received “innumerable” calls from Global Crossing managers hoping to find a new job. If the industry wasn’t in such bad shape, he said, “they might have been very quickly assimilated into other companies.”

But the telecommunications industry has never been in worse shape, with companies closing offices and slashing jobs on an unprecedented scale.

In a little more than a year, equipment firms, carriers and other telecom companies have cut more than 400,000 jobs, nearly three times the tally for the dot-com bust affecting Internet and other high-tech firms. On top of that, there is the potential stigma of having worked at a company in bankruptcy and under investigation by federal officials.

“You’ve got to put Enron, or Andersen, or Global Crossing on your resume, don’t you?” said Bowman of TTG Consultants. “What do you say when the interviewer asks if you were partly to blame?”

Many employees have rejected the notion that there is a gloom-and-doom atmosphere at the company. They said morale is gradually improving now that the publicity has died down and several interested buyers for the company have emerged.

“I almost feel that the worst is over, and there might be light at the end of the tunnel,” said Alan Rosenberg, vice president of sales engineering, who joined Global Crossing after spending much of his career at AT&T.;

Rosenberg said his job remains challenging and stressful, but “I’ve gotten more out of 18 months here than I got out of 16 years at AT&T.;”

Sullivan, the facilities manager, said he’s nervous because he has a wife and three children. But he has an air of determination about him.

“I haven’t even updated my resume, because for me, failure is not an option,” he said. Besides, Sullivan added, “The people make it fun to work.”

A sense of humor also helps. One employee joked that he hasn’t worn his Global Crossing T-shirt or cap for a while, and Rosenberg noted that his job “makes great dinner conversation.... I’m very popular now.”

Carl Grivner, Global Crossing’s chief operating officer, said he’s noticed that his mother now ends every phone call with: “Well, I’m praying for you.”

He said his job is an energizing experience because there are few templates for handling a company in crisis.

“You go look at Harvard Business School, and where’s the class on bankruptcy or on cash management in cases like this?”

Grivner said Global Crossing is focused on keeping employees motivated, serving customers and bringing in badly needed revenue.

Legere, the CEO, is battling the internal malaise through daily company newsletters, frequent employee teleconferences and visits to company sites to conduct in-person town hall sessions with employees in offices throughout Europe, the United States and Latin America.

“It’s hard to be a team when you’re in times like these--where you’ve got bankruptcy, plus you’ve got congressional hearings, plus you’ve got allegations, plus, plus, plus,” Grivner said.

“We’re not sitting on the floor singing ‘Kum Ba Yah,’ but that’s kind of what it’s about right now.”