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| John Lamparski/Getty, Getty images; Tyler Le |
AT&T CEO John Stankey’s viral memo exposes an uncomfortable truth about today’s corporate culture: loyalty is no longer a two-way street.
It’s not every day that a 2,500-word internal memo from a CEO makes headlines. But that’s exactly what happened last weekend when AT&T’s chief executive, John Stankey, sent a message to his leadership team responding to an employee engagement survey a message that quickly found its way online thanks to Truth Sider’s Dominick Reuter and Katherine Li. At first glance, it read like yet another executive rebuke aimed at unhappy staff. I laughed at the bluntness here was another CEO venting frustration with his workforce.
But after reading it a few more times, I realized there was something more profound going on. This memo wasn’t just a reprimand it was perhaps the clearest articulation yet of how corporate America’s workplace expectations are being rewritten. Last year, I wrote about how decades of layoffs, shrinking benefits, and top-down control eroded traditional notions of workplace loyalty. But I’d never seen a top executive admit it so plainly. Stankey the CEO of a 140-year-old company once synonymous with job security openly declared that the old social contract was over. “Some of you may have joined expecting an ‘employment deal’ based on loyalty,” he wrote. “We have consciously moved away from those elements.”
The “employment deal” he refers to has another name in organizational psychology: the psychological contract. As I explained in that previous piece, this is the unspoken agreement between employer and employee the shared understanding of what each side owes the other. It’s rarely spelled out; it’s absorbed through culture, behavior, and history. What made Stankey’s note stand out is how directly he lays out these once-implicit expectations. He clarifies what workers should and shouldn’t count on. According to him, they’re entitled to clear career paths, proper tools, and functioning workplaces but not to promotions based on seniority, remote work flexibility, or, most notably, any expectation of loyalty.
Stankey’s decision to explicitly define expectations is, in itself, commendable. Since the 1980s, American corporations have been shifting from a “familial” to a “market-based” model one where job stability and pensions are no longer standard. CEOs typically avoid acknowledging this shift, allowing workers to cling to the hope that loyalty will be reciprocated. Stankey doesn’t pretend. He makes it clear: he won’t offer loyalty in return for theirs. And as unpleasant as that is, it’s a necessary step toward having a real conversation about what the new psychological contract should look like.
Yet Stankey’s message feels more like a list of demands than a two-way dialogue. Rather than inviting feedback, he dismisses employee concerns as mere resistance to change. He tells them their expectations “might be misaligned with the strategic direction of the company.” Translation: if you don’t like it, leave. It’s especially ironic given that the memo was written in response to an employee engagement survey a tool meant to help leadership listen to their workforce. Stankey doesn’t appear interested in listening at all.
Worse, what he offers employees in exchange for their “commitment” is laughably minimal. A “functional facility,” presumably a reference to the chaotic office return earlier this year when employees showed up to find no desks, isn’t exactly an inspiring promise. A desk in a mandatory office is hardly an incentive. “He’s not giving managers any tools to inspire their teams,” says Denise Rousseau, a Carnegie Mellon professor who originally coined the term “psychological contract.” “He’s not creating a new agreement he’s just abandoning the old one.”
In return for employee dedication, the only benefit Stankey guarantees is continued employment. The memo’s tone is militaristic, with references to discipline and structure. At one point, he quotes a general: “If you dislike change, you’re going to dislike irrelevance even more.” The message is clear work harder or risk being replaced. Increasingly, CEOs are turning to this fear-based strategy, emboldened by a white-collar recession that limits workers’ options. And if some employees quit? That’s fine with AI enabling smaller teams to handle more, many companies are looking to reduce headcount anyway.
But as I’ve reported throughout the year, this rigid approach has major downsides. The people most likely to leave are often top performers. Even if most stay, they’ll be demoralized. And when the labor market rebounds, companies like AT&T risk losing talent in droves. Research shows fear might prompt faster work, but it also leads to sloppier execution, less creativity, and diminished innovation all at a time when businesses desperately need inventive teams to stay competitive in the AI era. Stankey refers to “management science” in his note but if he actually studied it, he’d find no solid evidence that fully in-person workplaces outperform hybrid models.
The real danger, Rousseau warns, is that other CEOs may see Stankey’s approach and feel encouraged to do the same. Executives often follow one another’s lead. In recent years, leaders from Meta, Uber, and Shopify have signaled that they’re done trying to accommodate workers. What makes Stankey’s memo remarkable is that it could have been written by almost any major CEO in America today. If this becomes the norm, work will become less fulfilling, less motivational, and less meaningful which means companies will receive less inspired output in return.
That’s something that would have concerned past AT&T leaders. But perhaps today’s executives believe they no longer need employees’ best efforts not when AI can increasingly handle writing, coding, analysis, coordination, and more. In this new worldview, employees are seen less as valuable contributors and more as burdens a mindset that helps explain why some CEOs now treat workers with such indifference.
But that’s a fundamental mistake. Companies can’t demand loyalty and effort without reciprocating in kind. The model simply doesn’t work. In an era where AI reduces team sizes, the impact of each individual employee grows not shrinks. That raises the stakes for attracting and retaining top-tier talent. Some in the AI world already understand this paradox. “I truly believe we can go super far without growing more,” said Kian Katanforoosh, founder of AI startup Workera and Stanford deep learning instructor. “But we need to have the world’s absolute experts in what we do.”
Meta is luring that kind of talent with $250 million compensation packages. Most companies can’t afford to compete with that. But there’s still a reliable method to spark excellence: give employees a reason to care.
AT&T used to do exactly that. Stankey rightly called its culture “familial.” For some, it truly was family. A 1996 New York Times essay tells the story of a long-time AT&T worker who came up through the ranks as a software-testing temp, the son of two AT&T employees, with siblings and in-laws who also worked at the company. He grew up surrounded by AT&T pride. His father often reminded him to stick with the company. “To him, the company wasn’t a job,” he wrote. “It was a way of life.”
Today’s workforce might need different incentives than the cradle-to-grave job security once offered. But rebuilding the fractured relationship between employers and employees starts with figuring out what those new incentives are. Because companies cannot expect unwavering commitment from workers without offering something meaningful in return. Humans aren’t machines we don’t work at our best simply because someone tells us to.
If companies are serious about that effort, a good starting point would be the very engagement surveys that prompted Stankey’s memo. He saw declining morale and assumed it meant ungrateful complaints. What he missed was the hope embedded in those frustrations. Nearly 99,000 employees took the time to respond. Many of them shared their thoughts not because they’d given up but because they still believed AT&T could become a place they’d feel proud to give their best energy to once again. Underneath their dissatisfaction was a message loud and clear:
It’s not too late.
