Tracking Today's Business World
NEW YORK — A COMPANY's reputation is often one of its biggest assets. But today the reputation of the chairman may be equally important. Take, for example, the recent wrangling over Eastern Airlines. The reputation of Frank Lorenzo, the chairman of Texas Air, was so bad that the unions that worked at Eastern, a subsidiary of Texas Air, were willing to sacrifice their own jobs just to avoid working another day for Mr. Lorenzo.
Then there are scores of business leaders who use their more positive reputations to hawk their products: Lee Iacocca of Chrysler, Victor Kiam II of Remington Products Inc., and Roger Smith of General Motors, to name a few.
Whether or not these reputations are deserved, they are part of the new business environment, says Rosabeth Moss Kanter, a professor at the Harvard Business School and author of ``When Giants Learn to Dance'' (Simon & Schuster, $21.95).
``This is partly because the companies are so unstable, they keep breaking up, they keep changing,'' says Ms. Kanter. But she also says reputation is more important these days because leadership within a company is more important. ``You have to make a name for yourself,'' Kanter says.
This change has implications up and down the corporate ladder. ``You don't hide behind the office or company name anymore,'' she says, In fact, companies now publicize their own workers' achievements, sometimes in their in-house publications and sometimes through press releases. Executive recruiters comb through issues of Fortune and Business Week trying to locate future stars.
Kanter sees still other changes taking place within the corporation itself. Because corporations will have fewer administrators, middle managers are an endangered species, she says.
There will still be jobs with the pay level of a middle manager. But instead of supervising other workers, the individuals at this level will actually be doing the work.
``There are going to be more professionals or entrepreneurs within a company than old-fashioned managers climbing up a ladder in a hierarchy,'' Kanter says.
One of the implications of this shift is that the workload on these new professionals will be increasing. A recent cover story of Fortune detailed the ``Workaholic Generation.'' Kanter believes this is positive. ``The opportunities are much greater at any age or any level for anyone with initiative and half a brain and the willingness to lead a project,'' she says.
And the rewards are not just financial. ``You have accomplished something tangible, you have enhanced your own reputation.''
What does this do for the individual who is a team player? Kanter says the trick is for the stars to mobilize the rest of the team. Then the team becomes the star and becomes more important within the corporate bureaucracy. This is a balancing act, concedes Kanter, who was originally going to name her book ``The Great Corporate Balancing Act.''
This is Kanter's third book on management and the corporation. ``Men and Women of the Corporation,'' her first, looked inside one bureaucratic corporation. As she notes in the preface of her new book, ``I was like a game photographer catching the last members of an endangered species. I recorded life in the big `corpocracy' at the moment before its historical dominance faded.''
``The Change Masters,'' Kanter's second book, made her into a corporate guru. The book, which eventually sold about 150,000 copies, compared the old-style corporation with the new market leaders - those who could anticipate change. On the basis of her following from the book and Kanter's own ability to articulate, she became a consultant to such companies as Honeywell, General Electric, General Motors, and Citicorp.
The latest book looks more closely at how various types of companies cope with financial and technical changes.
One of Kanter's favorite tales of good and bad management is the comparison of Eastern Airlines and Western Airlines.
Both were part of an industry that had just been deregulated. To cope with rising cost pressures and falling air fares, management went to the employees for wage concessions. In return, the workers would get representation on the board and stock ownership. Everyone agreed to make it a partnership.
``But Western really meant it, and they put a lot of time and effort into making the employee participation work - into building team spirit. The reports were that Eastern's management was not really committed to participation, and so there was an undercurrent of tension as the workers felt manipulated by management rather than included by it.''
By the mid-1980s, Western Airlines realized it did not have the scale to compete. It searched for a merger partner early and successfully combined with Delta.
Eastern, in the meantime, waited too long to find a good merger partner. As the industry became more competitive, management got rougher with the employees. The employee representatives on the board forced out Frank Borman, the chief executive officer, and agreed to merge with Texas Air. They found themselves with a chairman they disliked even more.
To Kanter, the moral of the tale is that a company can draw up a perfect plan on paper: employee participation, wage concessions, and worker ownership. ``But that doesn't mean a thing. It is how you execute it,'' she says.
In principle Kanter is not opposed to mergers. ``This is how entrepreneurs have traditionally been rewarded - selling out to a larger company,'' she says. But she says hostile mergers need closer regulation, since they have a dramatic effect on people. ``There are a lot of resources diverted to the battle, and then paying for it later, that could be used to invest in capacity,'' she says. She believes there are alternatives such as joint ventures and strategic alliances. These allow companies to eliminate some of the human cost to a merger while keeping its own independence.