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Messy Frenzy

December 08, 1985

What President Reagan applauded last week in Seattle as an "economic resurgence" is actually a messy frenzy of corporate crisis management that is producing both winners and losers.

Recent reports on emerging new patterns of American industry by a team of Times business writers make it clear that some of the economic resurgence involves nothing more complicated than jumping ship--shutting down operations in the United States and moving them abroad.

Some companies are indeed shaking the lethargy that gripped them in years of high inflation, of coddling by regulators and of shelter from global competitors. The most successful of these are in the hands of skillful managers who are tearing down head-office barriers to creativity and innovation, pushing authority down the chain of command on the theory that small and nimble may not be beautiful but it sure is competitive. The least successful are those whose managers seem to have learned nothing about survival except slashing payrolls or putting employees on two-tiered wage structures--a concept that may balance the books this year but produces hard feelings among workers that eventually could tear companies apart.

As the reports show, the Capital Game has spun around so completely in the 1980s that nobody knows how well American industry is handling the change. Banks, farms and companies are failing at rates unseen since the 1930s, and polls show that small companies are less optimistic about their future than at any time in the last five years.

The best that most analysts can say about the abrupt changes going on out of sight and mind of Washington and its bright promises of the future is that the country is better off than it would have been had business not shaken itself to action. Even if the statistics offered more solid hope about the outcome of the changes sweeping through business, there would still be cause for concern in one important area.

America's economic system got where it is on a combination of risk and reward; it works best when managers understand that when workers share risks they are entitled to rewards. Some companies are sharing rewards with workers willing to share the risks. But the approach is not universal, and the shakeups, particularly at companies with histories of benign paternalism, leave trails of insecurity and bitterness.

Some of the upheaval at the economic grass roots can be dealt with by emerging new managers who appreciate that managing machinery and motivating people is a better foundation for the future than simply managing money.

But there are still not enough of these new managers to go around. And while trimming sails for survival can be rough on managers, it is far rougher on employees being told that their choice is to take pay cuts or look for work, and even rougher on those sent packing without a choice.

The management revolution is just beginning. The jury is still out on how much better the United States will be able to compete in world markets a year from now, or 10 years from now. One thing is certain: It will be in better shape if management takes people with it on humane terms than if it leaves too many behind. The chances of succeeding also would be helped if politicians from the President on down would take a moment from claiming credit for economic marvels to acknowledge now and then how tough it is in the messy frenzy of crisis management that swirls around American industry.

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