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Business's Humanistic Approach Paying Off, Expert Says

January 11, 1985|URSULA VILS | Times Staff Writer

Despite the fact that the idea has been around for 30 years or so, Jim O'Toole still calls it "new management." Old or new, it seems to be catching on.

Basically it involves a humanistic approach on the part of corporations to doing business, an approach that recognizes that people-oriented policies can result not only in a more harmonious workplace but in bigger profits.

Almost a Crusade For James O'Toole Ph.D., who holds the University Associates chair of management in the USC Graduate School of Business Administration, promoting new management concepts has become almost a crusade. He speaks about it in corporate offices as well as university classrooms, writes articles and books (a new one due in August already has a pre-sale of 40,000 copies) and pushes New Management magazine, which he edits for its publisher, the USC Graduate School of Business Administration.

He senses a trend: "Almost all of the Fortune 500 companies have tried some of these concepts," he said.

To define new management, O'Toole began with an explanation of traditional management--epitomized in past years, he said, by General Motors--as a concept that a corporation is in business to make money, not cars--or any product.

"That philosophy was the basis of corporate finance, corporate accounting, marketing, general management," he said. "It dominated for as long as 40 years. After World War II it became the curriculum in the nation's business schools.

"There was little question of these techniques. American business was very successful in the '50s and '60s . . . so successful that some Europeans feared that the great American corporations would take over the European economy. It was a period of growth of multinational corporations, and the fear was that Europe would lose out."

The change in philosophy came about, O'Toole said, because the system was failing.

"In the '70s we had the oil crisis, the Japanese success in entering U.S. markets, the changing of our values domestically, including the Vietnam protest," he said. "These things led to an entirely different world situation. Once we were no longer the envy of the world, the model of success, we had four or five years of lower productivity.

"By 1980 things had gotten bad enough that a great number of corporations were forced to change. They took on a more humanistic management."

In 1972, then-Secretary of Health, Education and Welfare Elliot Richardson appointed O'Toole--a Rhodes scholar with a doctorate in social anthropology from Oxford University and work experience with a management consultant firm and in journalism--as chairman of a task force on "Work in America."

Workers' Involvement One of the task force's major findings--and not necessarily a new idea--was that American industry should involve workers in productivity, a notion, O'Toole said, that the Wall Street Journal regarded as a "neo-Marxist plot" to turn business over to workers.

While O'Toole fears that an economic turn-around could send corporations back to their old ways of management, he takes heart in some of the success stories that he recounts in his New Management magazine. Two of his favorites are the Dayton Hudson Corp. and Motorola Inc.

He spoke first of Dayton Hudson, a Minneapolis-based retailer that owns, among others, Target stores, B. Dalton booksellers and Mervyn's.

"Dayton Hudson epitomizes the new management changes in terms of philosophy," O'Toole said. "It leads all retailers in the country in terms of consumer orientation. It has a no-questions-asked returns policy; 90% of customer complaints are handled by the first person to receive them. It has a fetish of serving customers.

'Serving Society' "Dayton Hudson says it is in the business of serving society, of pleasing the customer and treating employees decently. It has probably the largest number of part-time employees (of any company), which has provided a tremendous amount of jobs, jobs for women with children, for people who are going to school. Dayton Hudson says it hires part-time people because it gets the very best employees that way.

"It is also probably the only major U.S. corporation that has consistently given 5% of its pre-tax profit back to the community. My guess is that most major companies give 1%; Arco, which has a reputation for community involvement, gives 2%."

Asked about a recent strike at Target Stores, O'Toole said that unions and management differ substantially on the matter of part-time work, unions preferring full-time jobs and benefits for its people and retailers needing to staff stores during certain peak hours. A call to the striking union, Local 770 of the United Food and Commercial Workers, ascertained that the strike has not been settled, "but we're not doing anything on it right now."

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