Business Notes EMPLOYEE RELATIONS

When E.F. Hutton talks to its employees these days, they are expected not only to listen but also to take out their crayons. Last week the firm began distributing, at a cost of $50,000, The Hutton Neighborhood Coloring Book and a box of crayons to its 18,500 workers. The purpose is to boost staff morale, which was battered by Hutton's 1985 guilty plea to a check-overdraft scheme and further bruised by the company's $90 million loss last year.

The book tells of troubles in the E.F. Hutton neighborhood: slumping lemonade sales and rough times with kids like Merrill Lynch. Presenting a "vision of what we can be," the book urges employees to do "much more with much less." But the attempt at spirit lifting may backfire. "Disgusting," said an executive. "We would prefer to think that management could communicate with us in an adult fashion."