Boardroom Lectures : White House Aims to Promote Good Corporate Behavior
The Clinton administration has finally settled on an election-year strategy for exploiting popular concern about corporate irresponsibility without resorting to any new government programs to change business behavior.
Instead, administration officials said Tuesday that President Clinton and his aides will use the “bully pulpit” to praise examples of good corporate behavior. They will seek to demonstrate to anxious workers that the administration cares about them and also will try to move corporations toward a more benevolent conduct. Any lingering thoughts of direct government action through administrative steps or legislative proposals have been abandoned.
Illustrating the strategy, Labor Secretary Robert Reich, in a speech at a forum sponsored by Town Hall Los Angeles on Tuesday, lavished praise on good corporate citizens, ranging from Rhino Records in Los Angeles for its employee benefits, to Delaware’s DuPont chemical company for its safety programs.
“Allowing workers to share the gain as well as the pain--and giving them a genuine voice in the enterprise--is a successful strategy that pays big dividends over the long term,” Reich said.
Administration officials pointed to the recently proposed merger between SBC Communications and Pacific Telesis, where the companies quickly announced that there would be no layoffs, as evidence that their strategy is working.
President Clinton also visited Harman Industries in Northridge last month and commended the audio products manufacturer for its effort to avoid long-term layoffs.
“The bully pulpit can be a very important instrument to draw public attention” to the problems that accompany widespread layoffs and downsizing, an administration official who asked not be identified said Tuesday.
Another official insisted that there would be no serious support for any broad-based legislation, such as the plan proposed Monday by Sen. Edward M. Kennedy (D-Mass.), who called for a 25% tax reduction on profits distributed as dividends by “most-favored” companies. Such firms would be certified by the Labor Department if they spend at least 8% of payroll on health insurance coverage, 8% on pension programs and 2% on job training.
Tax help for good corporate citizens is “certainly not something that is a proposal right now and is not something being discussed,” the official said flatly.
In a draft of his speech, Reich singled out Rhino Records for commendation (though Reich left out references to most of the corporate “good guys” when he spoke, apparently because of time constraints). The company “may be best known for its popular reissues of the music we grew up on,” said Reich, a baby boomer who turns 50 this year and whose favorite rock hit is reportedly “Hey Paula.”
“But Rhino employees will tell you,” Reich said, “that the company has great flextime and family-leave policies, good health and pension plans, a program to cover the cost of job-related tuition, profit sharing and bonuses, and an employee-emergency team to address safety concerns.” Reich visited Rhino after the address.
The audience of about 230 business and labor representatives at the meeting gave Reich an enthusiastic reception, and the labor secretary acknowledged that most corporations represented in the audience probably already were following many of the Clinton administration’s precepts of corporate responsibility: establish family-friendly policies, provide health care and pensions, train workers, work in partnership with employees, provide a safe and healthy workplace, and downsize humanely.
Mark Canton, chairman of Sony Corp.’s Columbia TriStar movie operations, called the speech “important” and did not dispute Reich’s premise that corporate shortsightedness is weakening the country.
“It’s difficult for us to judge others,” Canton said. “We all have to do what we all have to do to give back to the community. . . . At Sony, I think we stack up pretty well,” he said, pointing to the company’s day-care center, involvement with local schools and a diverse work force that provides opportunities for women and minorities.
Reich’s speech “was a primer on how to run a business properly,” said Wilford D. Godbold Jr., chief executive of Zero Corp., an electrical equipment manufacturer. “What he’s saying here is something we all have to listen to.”
Godbold’s Los Angeles-based company moved two factories to Utah in 1991 but worked closely with employees who decided not to relocate, he said. An assessment three months after the move found that of the more than 200 employees who were displaced, only one did not find a job, go back to school or retire, he said. Since then, the company’s California work force has grown 20% and its productivity has increased 23%. The company employs 1,950 people worldwide.
Reich declined to give examples of bad corporate behavior.
“It would be presumptuous of me and inappropriate on top of presumptuous to criticize any particular company,” Reich said in response to a union worker’s request for his assessment of massive layoffs by AT&T; at the same time that Chairman Robert Allen was earning about $16 million in total compensation for the year.
Major corporations are clearly concerned about the growing sentiment against business. The National Assn. of Manufacturers will issue a study on Thursday to rebut the harsh rhetoric that businesses treat workers unfairly. “Worker anxiety is real but may be misplaced,” said a NAM source.
Reich takes his corporate good-guy road show to Portland, Ore., on Thursday and the Connor Formed Metal Products firm, which, he said, “has gone the extra mile in providing an employee stock ownership plan, performance bonuses, profit sharing, health insurance and on-site job-training classes.”
Reich, the most outspoken liberal in the Clinton administration, first launched the call for corporate responsibility in February with a controversial speech in which he speculated about various tools to encourage such behavior, including tax credits for companies that have good records on benefits, training and profit sharing.
He was immediately denounced by the business community and ruffled feathers elsewhere in the administration, notably at the Treasury Department and in the offices of the President’s Council of Economic Advisors.
Clinton liked Reich’s general idea for stimulating corporate behavior but rejected the idea of legislation, which a Republican-controlled Congress would reject.
The friction between the Labor and Treasury departments is now being dismissed as a product of staff jealousies. “We’re all singing from the same book now, and the president is leading,” an official said Tuesday.
Rosenblatt reported from Washington and Rivera Brooks from Los Angeles.
* BAD RING
Protest over AT&T; compensation expected. D5
(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)
Reich’s Rules
1. Thou shalt allow flexible, family-friendly work schedules, providing generous leave for family or medical reasons and help with child care.
2. Thou shalt provide a safe and healthy workplace.
3. Thou shalt provide health care and pension benefits.
4. Thou shalt invest in retraining to improve workers’ skills.
5. Thou shalt work in partnership with employees, giving them greater voice in the enterprise.
6. Thou shalt downsize humanely.
Sources: Times and wire reports
