The Horns and the Halos: A Look at Who Kept Us Company This Year

It was the best of years, it was the worst of years, it was the age of wise management, it was the age of foolish management, it was the epoch of belief in philanthropy, it was the epoch of incredibly large layoffs. In short, it was 1997. Here’s a look back at a few of the corporate demons and darlings that made headlines.

DEMON: Eager to amass a hospital empire and maximize profit, Columbia/HCA Healthcare has instead given a black eye to the entire health-care industry. The company, accused by critics of unabashed greed and arrogance, has been rocked by the largest health-care fraud investigation in history, as federal officials have alleged in court documents that the company engaged in a “systemic corporate scheme” to defraud Medicare and other government health insurance funds. Columbia has denied any systemic wrongdoing, but former Columbia doctors and executives say the company used illegal financial inducements to get doctors to refer patients to its hospitals. In October, quite late in the crisis, the company installed a top defense-industry ethics expert, Alan Yuspeh, to engineer a much needed overhaul of its practices.

DARLING: Media magnate Ted Turner pledged $1 billion in stock for United Nations social programs over the next 10 years. The gift could diminish if the promised Time Warner shares depreciate. Regardless, that is one commendable donation to charity. Asked about his motivation, Turner replied that he has been “learning how to give.” Thank you, Jane Fonda.

DEMON: It’s a small world, and news of a public relations gaffe can spread mighty quickly. So Walt Disney Co. learned when it attempted last March--ever so quietly--to end Happy Hearts, a two-decade-old program that allowed disabled children to enjoy Disneyland at discounted prices twice a year. The company’s goal reportedly was to reduce the number of discounted and free admissions to the Magic Kingdom. After being denounced by parents and activists, Disney not only reinstated the program but also boosted the number of days when disabled people could visit the Anaheim park at a discount.

DARLING: Ford announced last week that it will invest $420 million in a clean automotive technology that could very well replace the internal combustion engine. Throwing in its lot with Germany’s Daimler-Benz and with Ballard Power Systems, a pioneering Canadian firm, Ford hopes to bring autos powered by fuel cells to market in seven years. Fuel cells, which use hydrogen and oxygen to create electricity to power a car, produce exhaust that is water vapor and little else. So long, smog. (Well, we can dream.)

DEMON: Demonstrating the dangers of too much industry consolidation, Union Pacific Railroad plunged the nation into a transportation nightmare. The rail giant badly misjudged the staffing, equipment and logistical efforts needed to make last year’s merger with Southern Pacific Railroad work smoothly. The result was massive gridlock at West Coast ports and elsewhere, the effects of which continue to ripple through the economy. Far from getting a lock on its business, Union Pacific had to take the unusual step of asking competitors to handle some shipments.

DARLING (OR DEMON?): Levi Strauss failed to heed changes in its core business--jeans--and missed the teenage craze for wide-leg jeans. The San Francisco company is now being pummeled by designer brands and even private labels from J.C. Penney and other merchants. In early November, Levi Chairman and Chief Executive Robert Haas announced that Levi would fire a third of its 18,800 factory workers in North America and shut 11 of 37 factories. Haas thus sounds like any other macho CEO, but there is a big difference. Long a champion of social responsibility and a generous leader, Haas reportedly agonized for years over problems of overcapacity and kept workers on longer than was wise. But he also gave every laid-off employee eight months’ notice and is spending $31,000 or so on each one to help them find work. This is no Chainsaw Al Dunlap.

DEMON: Management consultants have long preached that corporate anorexia is misguided, that companies cannot shrink to greatness. Yet look at the tens of thousands of pink slips being handed out in the waning days of ’97 by the likes of Eastman Kodak, Fruit of the Loom, Whirlpool, Citicorp, Apple Computer, IBM and Hasbro. Problems in Asia and maturing U.S. markets make it tougher to grow. But these companies should take note of aerospace giant Boeing’s recent harsh lesson in the new social contract: Two years after dumping 7,000 workers in the name of efficiency and shareholder value, the company took a $2.6-billion charge against earnings for late-delivery penalties, overtime and unexpected production-related expenses. Turns out that Boeing didn’t have enough skilled workers on hand to handle a steep ramp-up in orders. That $2.6-billion penalty for not-in-time manufacturing could have kept thousands of people working at Boeing and helped preserve much needed loyalty. And now Boeing, which says the problems have eased, contemplates an additional 12,000 job cuts--though next year’s reduction will at least be handled mostly by attrition. Just remember, employers: A skilled bird in the hand is worth two novices in the bush.

Has your company been a demon or a darling, and why? Write to Martha Groves, Corporate Currents, Business Section, Los Angeles Times, Times Mirror Square, Los Angeles, CA 90053, or e-mail [email protected]