NEW CEO CREED Leaders must empower workers to survive

THE BALTIMORE SUN

NEW YORK -- Memo to top executives: If you still have a picture of Gen. George Patton above your desk, you are in trouble. For a new model, try: Captain Kirk, Vaclav Havel, or the woman who rescued Girl Scouts of the USA Inc.

Chief executive officers today are under fire, and not only because of their big paychecks.

Customers want them to listen -- not turn on the public relations spigot, as Dow Corning has done in the breast implant controversy.

Employees want recognition, as General Motors workers illustrate; they are spending as much energy fighting management as working for it.

Shareholders and Congress want chief executive officers to open up. Bills are pending, and corporate battles brewing, over how much companies must disclose to the public, and who gets to vote on corporate policy issues.

In years past the standard top executive took a hard line against such demands. But management specialists and CEOs in the vanguard say that approach is failing.

Arnold Hiatt, chairman of Stride Rite Corp. in Cambridge, Mass., said the "toughest boss" syndrome was only so much "macho residue."

No one is heralding an age of the corporate wimp. But in this decade, say these specialists and CEOs, successful executives will have more of a style that makes some people squirm: warm, fuzzy and democratic.

Take it from "Neutron Jack" Welch, CEO of General Electric Co., so named for his habit of eliminating masses of employees while leaving buildings standing.

In GE's 1991 annual report, Mr. Welch said that in the future the people losing their jobs will be managers -- even those who bring in big bucks for the company -- who insist on being "the autocrat, the big shot, the tyrant."

Instead, Mr. Welch is looking for managers talented at inspiring "teamwork, trust and empowerment." While some business colleagues are laughing at his overnight conversion, few doubt he knows which way the corporate winds are blowing.

Others who watch corporate image have noticed the shift. In the 1980s limousines and corporate jets added gloss to the corporate image. Today they can have the opposite effect.

Wendy's International, the hamburger chain, has discovered this principle with a simple TV advertisement. As of December, its 4-year-old "Dave campaign," featuring Chairman David Thomas as a sort of Pop proprietor of the big chain, has produced a huge increase in sales, exceeding profits from the chain's "Where's the Beef?" ads, said Bob Levite, account supervisor at Backer Spielvogel Bates Worldwide.

The latest ads show humble, rumpled Dave besieged, but welcoming, as customers make demands on him. The campaign also appeals to employees, said Mr. Levite, "because it tells them that somebody cares."

The caring part of the new CEO's role can be hard work, said Dee Soder, president of Endymion Co. in New York.

Some executives might consider such niceties as complimenting employees superfluous during a recession, when the consensus that many employees are grateful just to have a job.

But people like Sam Walton, head of Wal-Mart, are telling CEOs otherwise. Mr. Walton built Wal-Mart into the nation's biggest retailer, with a steadily rising stock price. And he is the third-richest man in the United States.

"Sam runs the most horizontal company in America," said Mr. Hiatt of Stride Rite, referring to Wal-Mart's emphasis on employee participation. At Wal-Mart, for instance, every employee is literally invested in the company through profit-sharing.

Another model of CEO thinking is Frances Hesselbein, who transformed the fading, old-fashioned Girl Scout organization in the 1980s into a vital, more popular group that attracted thousands of new members. She now runs a non-profit management foundation. Ms. Hesselbein's style, which emphasizes circles of colleagues, rather than hierarchy, is studied at Harvard Business School.

In 1990 management guru Peter F. Drucker told Business Week, "If I had to put somebody in to take Roger Smith's place at GM, I would pick Frances."

Mr. Smith himself, and his successor at GM, Chairman Robert Stempel, are chosen by many management specialists as the classic "don't do" models. Mr. Smith was lampooned as fatally remote from his employees in the documentary, "Roger and Me." Analysts blast Mr. Stempel for pitting employees, plants and managers against each other as he shrinks the company.

Today's employees, said Robert Kelley, business professor at Carnegie Mellon University, may tolerate this treatment. But just because they keep noses to the grindstone doesn't mean the company will thrive.

Today's work force, Mr. Kelley said, is mostly baby boomers, "a generation that had tremendous impact," whether it was in the Vietnam War, civil rights or the women's movement. They aren't satisfied with the rhetoric of "empowerment;" they want to act. With this kind of employee, Mr. Kelley said, CEOs shouldn't be "heroes, as much as hero-makers."

Since job security has gone the way of the tail fin, employees today demand other rewards. "It used to be, you sacrificed pay, you squelched your creative spirit, but you got 'cradle-to-grave' security," said Steven Berglas, a Harvard University psychiatrist who runs an executive stress clinic in Chestnut Hill, Pa. "Now, it's, 'You don't want to give me safety? Give me a say.' "

CEO Jack Stack at Springfield (Mo.) Remanufacturing Corp. has done that. The company has loosened its traditional grip on information; every employee is given weekly financial reports, from inventory to profits, and they meet every Wednesday morning to discuss the finer and bigger points of corporate strategy. If employees don't understand and enjoy the big picture, he said, they can't contribute to it.

In their quest for power, shareholders appear to have a big edge on employees. Big investors can get management's attention through the proxy statement, a yearly ballot and via the board of directors, which is supposed to represent shareholders' interests.

But until the takeover decade in the '80s, all this was often just for show. "It was standard practice as recently as five or six years ago for the board not to care what shareholders thought," said John C. Wilcox, chairman of Georgeson & Co. of New York, which handles conflicts between management and shareholders. But lately boards have been galvanized, in part by the lawsuits against them for failing to do right by shareholders.

Last month, after pressure from shareholders, the Securities and Exchange Commission told companies to let shareholders vote on the executive-pay process. Congress is considering bills limiting tax deductions for executive pay and forcing companies to reveal more, and in plain English.

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