Functions of Management: The Case of T-Mobile

Functions of Management T-Mobile US Inc. is a US-based wireless communication provider and Deutsche Telekom holds the majority share in the company (63 percent to be exact). T-Mobile is headquartered in Bellevue, Washington. The company primarily provides services including voice calls, messaging and data services in the postpaid, prepaid and wholesale markets. It caters to approximately 72.6 million customers, and has around 50,000 employees at its disposal worldwide, while 15,000 employees in the US (“Company Information | Quick Facts About T-Mobile,” n.d.).  T-Mobile seems to have a good financial standing as there was a 16.2 percent increase in its reported revenues in 2016 as compared to 2015 (MarketLine, 2017). This paper will analyze how T-Mobile makes use of four functions of management: planning, organizing, leading, and controlling to its advantage, and how these have contributed to its success.

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T-Mobile considers the diversity of its workforce to be one of its competitive advantages and has taken multiple steps to cherish and promote diversity inside the company. The firm sternly believes in the idea that an inclusive company has the potential to be successful, thus it tries to attract a diverse group of customers by employing diverse people (“Company Information | Diversity and Inclusion | T-Mobile,” n.d.). T-Mobile not only focuses on gender and ethnic diversity, but it also fosters multigenerational network among its employees. Various events are organized where employees are allowed to gain insights into the perspectives of people who joined the organization in different times and ages (“Company Information | Diversity and Inclusion | T-Mobile,” n.d.). 

Managing an enormous and diverse workforce is not an easy task, and requires a strong and powerful leader to keep all employees motivated. T-Mobile is a well-managed organization and is prepared for profitability in the future. The organization has already won awards, such as, ‘Best Place to Work’ and ‘Top Employer’ by various different industry experts, renowned human rights organizations, and the media (“Company Information | T-Mobile Awards & Recognition,” n.d.).

Section II – Background

            The origin of T-Mobile can be traced back to 1994 when General Cellular and Pacific Northwest Cellular merged to form Western Wireless. In 1996, this new company launched VoiceStream Wireless, which became a success as it was able to attract a million customers in only five years. In 1999, VoiceStream took over four other companies, which were, Omnipotent, Aerial, Powertel, and MobileStar. At roughly the same time, Deutsche Telekom agreed to acquire Voicestream and turned it into its mobile phone subsidiary which the world now knows as T-Mobile (CXO Media Inc., 2006).

            In a short period of time, the company had more than 7 million customers, and this figure reached around 22 million by 2006. The company’s growth was primarily ascribed to the formation of partnerships with other organizations, such as, AOL, Borders bookstores, Kinko’s, and Starbucks. Moreover, T-Mobile continuously introduced new services for its phones, for instance, messaging, Wi-Fi, Web access, and other applications which further contributed to its growth (CXO Media Inc., 2006).

            In 2004, T-Mobile faced a severe backlash when Paris Hilton’s phone was hacked and her private information was made available to the public. Analysts suggest that this security breach was a result of so many mergers and acquisitions taking place too quickly. It was difficult to apply security policies or introduce technology in the organization because of its size, and therefore, a mistake of this sort was inevitable (CXO Media Inc., 2006). In October 2004, the hackers were finally arrested and in an attempt to win customers’ trust back, T-Mobile notified more than 400 users whose data was accessed (Poulsen, 2005). The company made new policies and hired specialists to prevent such an incident from occurring again.

Section III – Analysis

Planning

            The planning function comes before all other functions of management. Researchers have concluded that planning and controlling cannot be separated, and that any attempt to control a firm without proper plans has no meaning. Planning also provides the degree and standard of control (V.S.Bagad, 2009). An important part of planning is the annual goal setting, which informs employees about the targets that they should try to achieve in the next year. Goal-setting in the telecommunication industry in US is usually has three main characteristics. Firstly, targets are determined by the top management, typically by the CEO. Secondly, goals are communicated to the employees in numerical terms, for instance, the number of services they need to sell per month. Lastly, deadlines are given to employees, such as, selling 100 phone lines in 30 days (Fuhrmann, Hobin, Clifford, & Lindstaedt, 2013).

            Last year, it was discovered that out of the four major carriers in the US, T-Mobile had the largest number of complaints per subscriber and the most complaints filed against fraudulent enrollment per subscriber (Burlacu, 2017). A labor advocacy group published a report to further search this issue, and its findings were rather alarming. It was discovered that the annual company goals required employees to use high pressure sales tactics. Moreover, many employees reported that in order to meet the company’s demanding targets, they were urged to add unrequested services, phone lines, and equipment to customers’ accounts (Change to Win Labor Federation, 2016).

            T-Mobile’s sales reps admitted that they tricked customers into signing up for unwanted services and charging them extra without notifying them. It was also reported that T-Mobile stores expected the sales reps to get 80 percent of customers on the ‘Jump’ insurance subscription program by using any means necessary. The employees began to use a tactic in which they sold products by convincing customers that they were free, when in reality, the cost of those products were added to their monthly bills (Burlacu, 2017). The reason behind such fraudulent practices is most likely to be T-Mobile’s high pressure sales culture, combined with low hourly pay for retail workers, which puts employees in a moral crisis as they have to choose between doing right to customers and their own survival in the organization (Change to Win Labor Federation, 2016).

Leading

Leading, the second function of management, is a set of processes used by the organization that gets employees to work together in order to increase the interests of the organization. Researchers consider leading to be the most important and the most challenging function of management (Griffin, 2015). John Legere has been an influential leader at T-Mobile ever since he joined the company as CEO in 2012. Although his tactics are unconventional, he has managed to prove himself as a modern corporate leader who has transformed T-Mobile from a struggling mobile carrier to the third-largest carrier in the US (Feloni, 2016).

            Legere’s management style is simply to lead from the front. He believes that the key to run a successful business is to pay attention to not only what the customers are saying but also to what employees suggest (Feloni, 2016). One reason why Legere’s antics have worked is that the people of US are becoming increasingly skeptical of what an organization’s CEO tells them, whether it is the employees or customers. Legere provides them with the much needed authenticity and bluntness that they crave (Sacks, 2015).

            Legere can be categorized as a transformational leader, who always directs his followers to find solution in a logical, rather than a traditional manner. Moreover, these leaders tend to pay attention to employees at an individual level. Research has shown that transformational leadership has a positive relationship with employees’ satisfaction, motivation, and performance (Ahmad, Abbas, Latif, & Rasheed, 2014). When Legere first joined the T-Mobile, he focused on boosting employees’ morale and took steps to make them more comfortable in the workplace, for instance, he changed the policy regarding employees not having tattoos (Legere, 2017). Moreover, T-Mobile previously discussed important strategies and other business affairs only with the senior management, however, Legere insisted that all employees have valuable opinions that the management should benefit from and started conducting meetings with employees from all hierarchical levels. To get a better understanding of the problems that employees face, Legere visits call centers and company stores on his off-days (Legere, 2017).

Organizing

            Organizing is a function of management that converts plans into reality. It is a process which ensures that all necessary human and physical resources are available to achieve organizational goals by first determining the responsibilities related to each job and then categorizing jobs under different departments (Sims, 2002). T-Mobile USA Inc. has a total of 633 executives. There are four levels of hierarchy at T-Mobile and at the top of the hierarchy is John Legere, the CEO. 14 executives work directly under him, including the Chief Financial Officer, Chief Operating Officer, Heads of Corporate Services, Corporate Strategy, Customer Care, Retail and Direct Channels, Communications, Indirect Channels, Technology, Information, Marketing, Human Resources, and Legal departments (“Management & Board of Directors | T-Mobile,” n.d.). 

            The third level of hierarchy includes managers in each of the departments mentioned above, and the last level has normal employees, such as, sales reps.  The hierarchical structure of T-Mobile suggests that it is a ‘Flatter Organization’ which is an organization that removes layers in the company and seeks to open up lines of communication (Morgan, 2015). These types of organizations thrive on technology and employees depend on them to communicate with each other. Moreover, flatter companies focus on collaboration, improving the employees’ experience, challenging status quo inside the organization, and developing a frame of mind which believes that managers exist to support the employees and not vice versa (Morgan, 2015). All of these properties can be easily spotted at T-Mobile.

Figure 1: Levels of hierarchy in T-mobile. John Legere is the CEO of the firm under whom fourteen managers operate.

Controlling

Controlling, the last function of management, regulates the performance of different units of the organization and keeps them under pre-determined limits (D. S. K. Singh & Gupta, 2016). Employees’ performance is based on the extent to which they can contribute to the revenue generation in the firm. Sales staff at T-Mobile have reported that the performance metrics the company has developed are very harsh and unrealistic, and the employees often feel threatened that if they do not meet their goals, they will lose their jobs (Change to Win Labor Federation, 2016).

            The aim of performance evaluations is to interrelate the goals of the organization with those of the employees. Performance evaluations are mostly used to identify and compensate top employees, and can also help increase employees’ motivation and reduce their attrition (P. Singh, 2015). Managers monitor sales goals on an hourly basis and some are even reported to have explicitly asked employees to commit fraud. A survey of 500 hundred sales reps at T-Mobile revealed that if the employees fail to meet their targets, they get lower hours, and with less hours it becomes harder to meet goals. This cycle further adds to the stress of employees (Change to Win Labor Federation, 2016). It was discovered that this situation was not in the knowledge of John Legere whose focus has always been on employees’ comfort. Many employees have petitioned Legere to reform the company’s sales culture, develop achievable sales metrics, and treat employees respectfully when targets are not met. Legere has started investigation on this issue and has promised the introduction of reforms soon (Change to Win Labor Federation, 2016).

            Telecommunication companies in the US use budgeting as a benchmark in their control systems. Managers use budgets to compare actual performance with estimated desired performance. There are three categories of the budgeting process, which are, yearly budget plan, mid-term budget plan and long-term budget plan. Time difference is the only differentiating factor among these categories, and all three involve making assumptions related to clients’ needs, tariffs, distribution costs, etc. (Nawrocki, Aghvami, & Dohler, 2006). Budgeting information about T-Mobile is not available publicly.

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Section IV – Conclusion

There is a huge number of complaints against T-Mobile, however, it can be seen that the number of customers that the company has are still steadily increasing. Managerial problems in the areas of planning and controlling are evident, which are inevitable in any organization that operates at a huge scale. T-Mobile, overall, is a well-managed organization and is prepared for profitability in the future because of its exceptionally blunt and authentic leader who has made the organization win several awards for keeping employee’s content. The company has been exercising four functions of management efficiently. The practice of fraudulent activities in the company cannot be ignored, however, the reputation of Legere as a pro-employee leader should be kept in mind while predicting the future of T-Mobile.

References

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