News: Analysis & Commentary: ECONOMIC ANXIETY
SOUL-SEARCHING TIME IN THE CORNER OFFICE
CEOs ask what they owe employees
`We need to reinforce that being good to people, being loyal, are the right things." Thomas J. Moran, chief executive of Mutual of America, was holding forth on "Responsible Corporate Leadership in the 1990s" before 100 executives and academics at a breakfast sponsored by New York City's Baruch College. It was a nicely timed soliloquy, arriving as America grappled with the economic angst perpetrated by its free-market system. Do responsible corporations lay people off? Do they shut factories and raze communities?
Moran talked easily about trust, humanity, and business' obligation "to make its society better." Then someone asked how he would advise AT&T Chairman Robert E. Allen who, having announced 40,000 job cuts, reigns as the current embodiment of corporate evil. No layoffs, Moran said. "No one gets left behind." He paused, then admitted: "I'm glad I'm CEO of this company, and not that one."
How to avoid becoming the next Bob Allen. It's top of mind for many a CEO. But like Moran, few seem sure how far to distance themselves from the shareholder-value-at-any-cost credo of the early '90s. In the face of antibusiness fervor that has shown disturbing staying power, executives find themselves balancing an urge to prove their decency with a powerful loyalty to their laissez-faire roots.
JITTERS. The self-doubt will be underscored on May 16, when as many as 100 corporate chiefs troop to Washington for breakfast with President Clinton and his economic advisers. Clinton will urge CEOs to help ease workers' jitters over downsizing. Then, at a conference at Georgetown University, he will spotlight the best "corporate citizens," asking progressive CEOs to share their secrets for creating family-friendly workplaces, training employees, and providing good benefits.
No question, Washington has embraced economic anxiety with election-year passion. After simmering for three years, a movement to hike the minimum wage to $5.15 an hour has acquired political substance--though likely not enough to actually win passage this year. A raft of proposals from Democratic liberals, including Senators Edward M. Kennedy (D-Mass.) and Jeff Bingaman (D-N.M.), aim to reward employers with progressive labor and community relations.
The White House confab won't produce a mandate, much less easy answers to the question of business' role in society. The Administration wants to play to voters' edginess while promoting its record of low unemployment and steady growth. "Without a strong economy, we wouldn't have the luxury to talk about things like corporate citizenship," says a senior White House aide. The upshot: Clinton will gently prod executives, without embracing legislated solutions that would complicate the tax code and further burden companies.
Even so, the guys in corner offices remain wary of public opinion. Executives such as IBM's Louis V. Gerstner Jr. and BellSouth's John L. Clendenin loudly advertised their do-good participation in the National Governors' Association's Education Summit in late March. And in each of the year's biggest merger announcements, managers have taken pains to downplay the role of layoffs; Nynex Chairman Ivan G. Seidenberg personally assured Labor Secretary Robert B. Reich that job cuts resulting from his company's combination with Bell Atlantic Corp. would be limited. "It's interesting that these companies would make such announcements," Reich says. "It is almost as if the audience has changed [to the public]."
Why, if the threat of punitive government action is so remote? Ego plays a part: "Top executives are driven in very large part by what is seen as acceptable in their community," says Peter D. Cappelli, a management professor at the University of Pennsylvania's Wharton School. More to the point, a corporation's image is worth big money. Public outrage can depress sales, encourage unionism, or block expansion plans.
NOT SO BAD. At best, though, relief from layoffs is likely temporary. Outplacement consultants Challenger, Gray & Christmas Inc. expect that companies will throttle job cuts through the election. After that, says executive vice-president John A. Challenger, "the beat will go on." Indeed, when challenged at Boeing Co.'s Apr. 29 annual meeting on his decision to hire 8,200 new workers this year after cutting 12,600 jobs in 1995, CEO Philip M. Condit told shareholders simply: "We are a capital-goods supplier operating in a cyclical industry. We have done a lot to moderate those cycles, but we can't stop them."
And that, business argues, is not so terrible. The National Association of Manufacturers, the Business Roundtable and the Committee for Economic Development, a group of senior executives, all have released studies recently asserting that the economy is creating new jobs of increasingly high quality. Those papers are echoed by the White House Council of Economic Advisers, which on Apr. 23 reported that 68% of the job growth since February, 1994, occurred in industry and occupational groups paying above-median wages. The CEA also noted that job displacement appears to have declined since 1993.
So it was all a bad dream? Well, no. The economy has, in fact, produced 8 million new jobs in the current expansion. But the trauma Americans feel as they confront an ever-more-open, less regulated capitalist system is very real. Ultimately, business won't do much to ease the pain. "You don't unleash wolves and ask them to behave like sheep," says Edward Luttwak, a fellow at the Center for Strategic & International Studies. He's right, but it's not the answer Americans will want to hear.By Keith H. Hammonds in New York, with Paul Magnusson, Susan B. Garland, and Mike McNamee in WashingtonReturn to top