The Workplace

By John Greenwald

Good management is largely a matter of love. Or if you are uncomfortable | with that word, call it caring

-- James Autry, Love and Profit

What's that again? Love? Caring? But how can the Age of Aquarius be descending upon corporate America, flooding boardrooms with 1960s-era flower children, when retail chains are closing hundreds of outlets and major firms laying off thousands of employees?

At last look, tough-guy tactics were in vogue and such crash courses in killer management as Winning Through Intimidation and Leadership Secrets of Attila the Hun were required reading in the executive suite. The practitioners were effective in at least one respect: their massive layoffs, often executed with the finesse of a Marine drill instructor, have left the atmosphere at many firms thick with hostility. "I feel like I'm walking along a geological fault line within U.S. companies," says Robert Rosen, author of a recent book, The Healthy Company. "There is more frustration and tension between employers and their employees than I've ever seen. Mutual cynicism and mistrust seem to be at an all-time high."

Into this breach comes a new breed of management experts and executives. In a spate of books with such titles as Love and Profit and A Great Place to Work, these experts are pulling in the horns and preaching a gospel of full worker participation in running companies. Such thinking has already won converts at the likes of Ford, Goodyear and General Electric. The books stress cooperation over conflict. "To compete in the marketplace, workers and management must collaborate," declares Charles Garfield, who describes his view in Second to None. "It is in these collaborations that human ingenuity and creativity are best realized."

This apparent New Age emphasis on teamwork and trust is really a homecoming for theories that U.S. companies cold-shouldered -- and Japanese managers embraced -- when American social scientists first proposed them in the 1950s and '60s as a key to creating high-quality products. After all, executives reasoned then, U.S. firms already dominated the world using top-down management. "These ideas are coming back now because of the quality movement here," says B. Joseph White, dean of the University of Michigan business school. "U.S. senior managers have decided they have got to catch up." That has helped make "empowerment" a buzz word for the '90s.

As a result, some companies are experimenting with employee groups ranging from the now familiar quality circles that discuss specific problems to self- managing teams that design and build entire products. "The typical company has put its foot in the water," says Edward Lawler, a management professor at the University of Southern California business school, who estimates that more than 80% of FORTUNE's top 1,000 firms have at least token employee participation. He adds, however, that few firms have installed such programs on a systematic, company-wide basis.

One big reason for the experimentation is the need to tap the skills and ideas of employees who have survived the elimination of 6 million jobs since 1983, many of them held by middle managers. "You can't run a military-style organization if you've fired all the top sergeants," says Audrey Freedman, management counselor for the Conference Board business research group. "You have to find ways to rely on the initiative and morale of your workers." Concurs Walter Scott, a management professor at Northwestern University's Kellogg business school: "Companies that have just cut back without empowering people are destined for even more problems."

One manager who is emblematic of this shift in approach is GE chairman John Welch. Known in the '80s as "Neutron Jack" for zapping 100,000 employees -- 25% of the company's work force -- Welch now stresses the importance of teamwork. Says he: "To get every worker to have a new idea every day is the route to winning in the '90s."

To help bring good ideas to life, GE holds "work-out" sessions in which groups of workers and managers spend three days in shirt-sleeve meetings on anything from gripes to pitches for new products. The high point comes on the third day, when employees pepper their bosses with scores of suggestions that the brow-mopping managers must accept or reject on the spot. Most turn out to be keepers. In a session at an aircraft-engine plant last September, one team pitched a plan that cut the time needed to produce a jet-combustion part nearly 90%. And an electrician proposed a design for an aluminum reflector that has cut the plant's light bill in half. Over two years, the grueling workouts have spawned dozens of innovations, ranging from improved light-bulb packaging to the elimination of reams of paperwork.

Conrail, one of the largest U.S. freight lines, turned to its remaining employees for help after slashing its payroll from 70,000 jobs to 28,000 over the past decade. Chairman James Hagen authorized workers to assemble problem- solving teams on their own initiative. One such group met with an irate steel shipper last spring and quickly found ways to reduce the error rate on the customer's bills to a manageable 3% from an exasperating 14%. The team's ultimate goal: total accuracy on all 56,000 bills that Conrail sends the steel firm each year.

Empowering workers has paid dividends for tiremaker Goodyear, which was burdened by $3.7 billion of debt and pinched by depressed sales to the auto industry when new chairman Stanley Gault arrived last June. Gault, who had revitalized the housewares firm Rubbermaid, swiftly assembled teams to complete work on languishing new products and opened his door to complaints and suggestions. Since Gault became chairman, Goodyear has rolled out flashy new tires like its deep-grooved Aquatred model, which helps prevent hydroplaning -- skidding on water. "The teams at Goodyear are now telling the boss how to run things," boasts Gault. "And I must say, I'm not doing a half-bad job because of it."

Many teams break down the barriers that traditionally divide and isolate departments from one another. In Second to None, author Garfield describes how Michigan-based Steelcase, the world's largest maker of office furniture, overcame these barriers by building a corporate development center to bring together more than 400 teams to design products and work on special projects. "There are no separate departments for different functions anymore," says retired Steelcase chief executive Frank Merlotti. "We tried to remove anything that got in the way of people communicating, discussing ideas. We wanted to get rid of this top-down thing."

Autry, the retired president of Meredith Corp.'s magazine group, whose titles include Ladies' Home Journal and Better Homes and Gardens, cultivated the cooperation he describes in Love and Profit. To develop new titles, Meredith encourages employees to pursue their pet ideas for future magazines after hours. Workers who have come up with promising concepts have been permitted to write, edit and manage their offspring. The strategy has led to new titles like Wood magazine, which has grown to a circulation of 600,000 among weekend hobbyists since it was launched in 1984.

At oil giant Mobil, field crews make decisions on when and where to drill that were once the preserve of management. Mobil also consults with its workers on such strategic questions as which plants to keep and which to sell.

All this is not to say the millennium is at hand. The idea of teamwork still often goes against the grain of U.S. industry, which has traditionally stressed top-down control. "The resistance to these and even more profound changes will be fierce," says Garfield. "Old-line managers will fear losing their centrality." Concurs the University of Michigan's White: "U.S. firms are getting much better at teamwork, but it's not really natural for us. It involves learning a lot of new skills and attitudes."

Even firms that have enthusiastically endorsed worker participation can backslide. Ford used more than 700 employee suggestions in its Taurus, which became the hot American car of the decade after it appeared in 1986. But management waited five years to bring out a new version that amounted only to a modest restyling, by which time such Japanese firms as Honda and Toyota had rolled out all-new rival cars. "An awful lot of people give an awful lot of lip service to teamwork," says former Ford chairman Donald Petersen, who retired in 1990 and describes his tenure in his book A Better Idea. "But the moment they find themselves in difficulty," Petersen adds, "they revert to form."

Some skeptical managers see power sharing as little more than the latest B- school fad. "Motivating people has been the name of the game forever," says Robert Malott, chairman of the executive committee of FMC, the Chicago- based munitions and chemicals maker. "What's new about that? But I think sequestering everyone in a group-therapy session with touchie-feelie urgings to motivate each other is nonsense."

Not so, say other executives. The trust that some companies now place in their workers represents "a need to find new ways to set standards, motivate performance and improve organizational effectiveness," says Rex Adams, Mobil's vice president for administration. "It means maintaining flexibility across the entire work force, building morale at a time of economic stagnation and fostering teamwork when individuals feel more alone and at risk than ever before." Put another way, teamwork and caring can pay healthy dividends in the constrained 1990s and beyond.

With reporting by William McWhirter/Chicago