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NCR Corp. Excels With the Help Of Its ‘Stakeholders’

June 6, 1987

DAYTON, Ohio (AP) _ NCR Corp., flying high in the computer industry, aims to keep its lofty position by making sure employees are grounded in the idea of serving what it calls ″stakeholders.″

NCR wants its employees, suppliers, customers, communities and shareholders to embrace the idea that each has a stake in NCR’s success.

Experts in the field say such programs are difficult to manage, but the rewards can be tremendous.

″Clearly, it’s an orientation ... that will be required in the next generation of organizations,″ said Jeffrey E. Ford, an associate professor of business and human resources at Ohio State University.

″Academics use it a lot. But to walk into a company and have a company use that type of language is something I have not seen,″ Ford said.

NCR, which today makes a wide variety of business information processing systems at plants all over the world, rolled out the concept as the theme of this year’s annual report. It also recently brought the point home to headquarters employees with a day of meetings, speeches and lunch on the building’s spacious front lawn.

Giuseppe Bassani, vice president of corporate relations, plans to bring the message to each of NCR’s 62,000 workers.

″It’s not something new. NCR is 103 years old and many of these activities were done 100 years ago,″ he said recently, ″But somehow we are pulling together a lot of actions into some conceptual elements.″

In essence, NCR promises to take into account the needs of all its stakeholders when it makes business decisions.

As an example, company officials cite the introduction last month of an array of new personal computer products as a venture that touches all NCR stakeholders. Employees benefit from the jobs created by the development of new products; customers get the products; shareholders benefit if the products get a good reception in the marketplace; suppliers may get more business; and local communities where NCR plants are located may realize an increase in tax revenues.

″The emphasis is on interlocking relationships,″ said NCR spokesman Mark Feighery.

If the stakeholder system works, according to Rosabeth M. Kanter, a Harvard Business School professor who was hired to explain the concept in the annual report, stakeholders will realize NCR’s first duty is to make money and will be more likely to ″accept even very difficult tradeoffs.″

Bassani said it also will make it easier to push decision-making down through company ranks, something Chairman Charles Exley Jr. has said NCR needs to stay competitive.

″What we are trying to do is give more information to our people to let them make their choices,″ he said.

″Conflicts are inevitable,″ added Feighery, ″but companies close to stakeholders have an advantage in handling bad news as well as good. There’s a perception that people are being listened to.″

Bassani, who prefers to be called ″Pino,″ first became enamored with the concept of stakeholders 10 years ago as an NCR manager in Italy when he saw the term used in a letter from headquarters.

He later nurtured the program on a limited scale as vice president of NCR’s Latin America operations before moving to corporate relations last August. He said it hasn’t hurt that NCR continues to post record profits after fighting back from a financial catharsis in the 1970s.

″When you are doing well, you have more time to dedicate to elements that probably do not have any immediate return,″ he said.

NCR’s program is a five-year commitment that distinguishes it from corporate cheerleading, Bassani said.

″Cheerleading is something that companies do because they feel it is good, not because they believe it,″ he said.

″If you try to do things in bad faith, you try to manipulate people, people are intelligent ... and they will understand that these programs ’are just new things to make me work more.‴

Richard V. Knight, associate professor of management at Antioch College, said such programs often fail because employees, told to take into account all the impacts of company decisions, ″still are judged by profitability in the end.″

Other times, constituencies have been played off against each other, Ford said.

But he said People Express - the no-frills airline that relied on employee participation before it was absorbed into Texas Air Corp.’s Continental Airlines - showed in its heyday that such programs can produce some efficient and effective business decisions.

Ms. Kanter, author of a book entitled ″The Change Masters″ that discusses new management techniques, said that in 1981 she examined NCR as one of 45 companies recommended by experts as innnovative in the way they treated people.

Compared with 40 companies of similar size, but not nominated to the list, ″the responsive companies had out-performed their counterparts over a 20- year period on numerous financial measures,″ she said.

NCR posted earnings for 1986 of $336.5 million, or $3.42 per share, on revenue of $4.8 billion, compared with earnings of $315.2 million, or $3.15 per share, on revenues of $4.3 billion in 1985.

For the first quarter ended March 31, NCR had record earnings of $61.5 million, or 65 cents per share, on revenues of $1.1 billion. In the same period last year, the company had earnings of $50.2 million, or 51 cents per share, on revenues of $960.7 million.

Knight, a specialist in the changing corporation and its effect on community development, said workers and communities need reassurance that a new breed of companies still is creating something of value.

″I think it’s increasingly necessary when people can’t see what you are making,″ he said, citing NCR’s metamorphosis from a maker of cash registers.

Ford said the true extent of American corporate commitments to such programs won’t be seen until there is another business downturn.

″When the going gets tough, these things go real fast,″ he said. ″That’s where you find out what is puff and what is serious.″

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