Behind the Wall

Considering its importance in the community, we read and know relatively little about the inner social life of the modern great corporation. I have in mind the way its huge managerial, some would prefer to say bureaucratic, apparatus unites for the purposes of the enterprise, but divides and fights in accordance with the ambitions, beliefs, and personal likes, dislikes, antipathies, jealousies, and hatreds of those who live, indeed spend their lives, in close, inescapable juxtaposition.

Bureaucratic struggles are a commonplace for all who observe and write about public administration. And they are, if in lesser measure, an accepted feature of university and college life—current examples are the well-publicized wars between the president and faculty of Dartmouth and the intensely and, to many, incomprehensibly argumentative factions of the Harvard Law School. In contrast, the largest corporations—General Motors, General Electric, Exxon, the several telephone companies—have, with the rarest exceptions, an aspect of utter outward calm. And from this comes an inescapable impression of inner corporate peace and tranquility—of men and a few women cooperatively at work with efficiency and dedication in pursuit of common goals. The goals are the financial success of the enterprise, the maximum reward to its owners, and, as the public-relations men take a hand, the inspired service to customers, to the public at large, and to the larger reputation of the free enterprise system. All those employed, to repeat, work together in the pursuit of these goals. There is an element of surprise when, in some aberrant organization, some internal fight makes the news. It is also imperfectly, often badly, reported when it does.

The picture of the great corporation as a peaceful cooperative of its participants is more than highly improbable; it is extraordinarily fraudulent. It depends on a compelling commitment by all parties not to avoid dispute, conflict, and hostility, but to keep them out of sight. The modern corporation is socially a theater of all the conflicts that might be expected when hundreds and thousands of highly charged, exceptionally self-motivated, and more than normally self-serving people work closely and interdependently together. But it is surrounded by a thick wall that turns all of these struggles inward upon the participants instead of allowing them to be exploded outward on the public. Explosion is rare; implosion is constant.

The sources of this successful containment of conflict are three. First, the internal politics of the corporation has never been a serious interest of the press; nor is it of the economists or the ubiquitous analysts, as they are known, who presume to maintain surveillance over the corporate world and who are called for comment on corporate affairs, apparently at random, by the financial editors. Their concern is with acquisitions, takeovers, investments, product development, and profits and with the more than occasional aggression—asbestosis, brown lung disease, the dangers of the Corvair and Pinto—against employees, customers, or, as in the case of the waste sites, the community at large. These go far to monopolize press and professional concern.

The second instrument for containing news of corporate conflict, as also in some measure the conflict itself, is money. There is the higher service of participants to their own pay. An employee who carries news of internal strife and dissent to the press or public does so at grave, even total, financial risk to himself or herself. The whistle-blower in public service in Washington has recourse to civil service rules and the law. The corporate dissident or combatant who goes public gets fired, with no legal recourse, and he marks himself as someone not to be wanted elsewhere. Who can tell what he might do next?

The third thing enforcing silence is accumulating mental debility. Corporation executives who are the victims of corporate rows are given early retirement. Or watching over, participating in, or mediating those rows they serve their terms and then retire. In either case the habit of corporate containment of thought and its expression is by then complete. The capacity for dissenting thought and expression is gone. Corporate discipline has taken over the executive mind.

Perhaps one should not be altogether sorry. Occasionally in the past we have had the memoirs of great corporate executives. (There was one from Charles E. Sorenson of Ford who, after sacking numerous high officers at the behest of the original Henry, was then sacked himself.) As a genre they are even more unrevealing, tedious, and generally sordid than those of public officials and politicians, a hard competition to win. We are spared, as Lee Iacocca observes, because in normal cases the individuals involved go quietly to Florida and then silently on to the grave.

Such is the general, indeed the astonishingly uniform, situation. The exception comes not in the management-controlled corporation but when the top echelon still includes some owner or entrepreneurial type who does not conform to the managerial rules or who makes it utterly impossible for others to do so. During the last year or two, from the foregoing source, there have been some illuminating breaches in the corporate containment structures—tears in this aspect of the corporate veil.

By far the most spectacular of these looks within has been at the Ford Motor Company, the result of the clash between Lido Anthony (named by himself Lee) Iacocca and Henry Ford II. It is the principal subject of two books, Iacocca by David Abodaher and Lee Iacocca’s own permanently best-selling memoir.

Mr. Abodaher must be passed over quickly if gently, as, indeed, he will be by all who read the introduction and early pages. A soldier in Iacocca’s advertising agency, Kenyon and Eckhardt, he explains that it was “incumbent” on him to clear his book with his employers. This is a trifle disconcerting. He goes on to say that he did not get to speak with Iacocca himself but that Iacocca “did allow me” to see his wife and relatives. He then tells in the opening chapter that Iacocca’s “bland, almost tranquil expression belied the inner fire that might be expected from his Italian heritage,” that Henry II “ruled the Ford Empire like an autocrat, more in the mold of his legendary grandfather than his father,” that Iacocca’s destination on the day of his discharge, the Ford headquarters, was an “inescapable hornet’s nest,” that Iacocca had been “visibly shocked” when he heard by telephone on an otherwise quiet night at home that he was being given the heave next day. Hereafter if Mr. Kenyon and Mr. Eckhardt are going to censor the books of their operatives, they must have a better eye for cliché. They can’t have clients wondering if this is the way they write their advertising copy.

Iacocca’s memoirs are an altogether different matter, and in no slight measure they deserve their reception. This is not because of the author’s (the principal author, one should say, for he clearly had talented assistance from William Novak) attention to his early youth. He tells of his Italian antecedents and of how his parents made it in this land of opportunity, but in novelty the story does not improve greatly on the experience of my Uncle George Kendall, who, finding life commercially unrewarding in Windsor, Ontario, migrated over to Detroit each day and did well with a machine shop that was somehow in service to Briggs Body, if I correctly remember the company. Iacocca tells also of what a good manager needs—“decisiveness,” study under Dale Carnegie, to be “in the trenches,” not to “strategize endlessly,” to use committees but bring them to a decision—decisiveness again. This does not improve greatly on a commencement speech by Bunker Hunt or, perhaps, Bunkie Knudsen, in Iacocca’s view one of the more disastrous executives during his time at Ford. Bunkie was soon sacked. Bunkie’s father, William Knudsen, with whom I served in wartime Washington, was one of the more grandly ineffective figures of that era. But, as a former head of GM, the elder Knudsen could not then, as a matter of elementary capitalist decency, be given his papers; instead Roosevelt made him a general. Things obviously have become more rigorous since.

Iacocca is somewhat interesting on his struggle to get Chrysler bailed out by Congress and the Treasury, but here too there is an element of déjà vu. Those so asking for rescue always tell first and at length of their unwavering commitment to free enterprise and then of their particularly urgent and meritorious case for being an exception. We now know that in the United States as in the other industrial countries if an enterprise is large enough, it is no longer allowed to fail. Modern socialism is the answer when, there being no other alternative, the corporate jets descend on Dulles Airport.

The real interest in Iacocca’s book is in the luminous view of the inside of the Ford Motor Company and, when he took over, of the appalling desuetude and incompetence inside Chrysler. At Ford it centers on the role of Henry II in relentlessly egotistical conflict with his top executives, including of course Iacocca. Sober and, according to Iacocca, sometimes badly oiled, he wanted it remembered in all daily passages that his was the name on the building. Also according to Iacocca, he would regularly assert his authority in an exceptionally mean or abrupt way without any known or visible provocation. This could happen despite a major contribution to the success of the company—as in the case of Iacocca’s Mustang—and might be because of it. The person in question was collecting too much public credit. In keeping with the corporate culture, those who were sacked, demoted, or shipped off to Europe accepted their fate without a murmur of complaint to anyone outside the corporate pale. Iacocca did so himself during many months of decline before his fall. Once he was out, all of his old friends in the firm, almost without exception, forthwith eschewed him totally. They could not afford to have Henry think they were less than utterly supine.

Iacocca is interesting also on the way the corporate culture destroys thought. This is implicit in the subordination just mentioned; its practical manifestation is in being in agreement with the boss however wrong or stupid he may be. But it is also a function of the bureaucratic dynamic itself. Nothing so establishes prestige in a corporation as the number of one’s subordinates. And nothing is so gratifying as being able to pass responsibility for thought down to such subordinates. The result is a powerful impulse to increasing numbers of nominally employed people and a pronounced tendency to bureaucratic stasis in which the measure of wisdom is what is being done already. Such was the condition that Iacocca found at Chrysler. He expresses sorrow over the hundreds of careers he had to bring to an end. But he takes for granted that those pursuing them, so to speak, weren’t contributing to the corporation anyway.

Two other books of recent months have also got behind the corporate veil or sought to do so. One is Ken Auletta’s on the fall and sale of Lehman Brothers; the other, less successful in this respect, is Robert Lenzner’s on the corporate and other achievements of Jean Paul Getty. In the case of both, the opening was created by the existence of strongly self-motivated entrepreneurs. It is not the corporate culture but its failure to enfold such men that creates the story.

Auletta’s account of the end of the old and once-prestigious Wall Street firm of the Lehman family is both highly revealing and exceptionally well told. Members of the firm evidently talked freely with him after the fact. The vicious struggles within the firm were based partly, as one might imagine, on ambition. But also, to a remarkable degree, they proceeded from relatively pure personal antipathies and detestations. They began at the very top in the late Seventies in the relations between Peter Peterson and Lewis Glucksman, and were evident especially in Glucksman’s dislike for Peterson. It led Peterson, as a conciliatory step, to make Glucksman his co-chief-executive, whereupon Glucksman in his new role and power had Peterson thrown out within a few weeks.

But this, to use a remarkably inappropriate metaphor, was only the tip of the iceberg. The organization was replete with personal antagonisms and had been for a long while. “For nineteen years senior partners Frederick Ehrman and John Hertz did not speak, although their desks were five feet apart in the partners’ room”; “It was no secret that Rubin and Peterson detested each other”; ” ‘He had no manners. Someone would say good morning to him in the elevator and he wouldn’t answer’ “; “The cement for the alliance was common hatred of Peterson.” There are fifty, maybe a hundred, such references in Auletta’s autopsy. Internal disharmony, growing more violent, along with the intensely adverse reaction to Glucksman as chief officer led in 1984 to the sale of the firm after 134 years to Shearson/American Express. The curtain, it may be assumed, was then lowered.

One reason, no doubt, why the internal strife and combat were not completely contained at Lehman was the less confining partnership structure—there were many chiefs, each with his own capital commitment, fewer executives subject to the disciplines of hierarchy. Auletta observes that the corporate culture “placed a premium on the individual rather than the team.”

Money at Lehman certainly had a disciplining role. For the partners generally it enforced a substantial measure of obedience; when the violent showdown came between Peterson and Glucksman, they thoughtfully suppressed their preferences and supported the man they thought would win, the man who would cut their take if they had been on the wrong side. “Everyone enjoyed being raped. We were making money. All the people cared about was their money.”

But at the top money was more a measure of power than something needed for what it bought or otherwise provided. One partner told Auletta: “The money is a point system. Ego counts more. Arguments here always revolved around what the other guy got, not on what you needed to live on.” In other words, anyone of importance had more than enough. This totemic role both led to, and allowed, more freedom for open and uninhibited conflict. Subordinate to the prestige and position it measured, money did not suppress the internal conflict.¹

There is a larger point here: those who subordinate life and interest to the pursuit of money have long been subject to a certain disdain in literature and in society, a disdain combined on occasion with a certain measure of sympathy. A life so lived—or wasted. In the past, I’ve reacted with a well-controlled tear to the career for which the very bright and interesting students of the superior business schools are so competently prepared. It leads, a mere thirty years later, to a dull, repetitive recitation of the current corporate clichés along, frequently, with unseemly corpulence. Yet it remains true that were men (and a few women) unwilling to accept this mental and personal euthanasia, the business system would dissolve in anarchy—or at a minimum go the way of Lehman Brothers. Money, also keeps these people out of more damaging pursuits. I repeat myself here: No one who has stood at the top of Wall Street of an evening can doubt for a moment how much better it is that that throng making its way home is in pursuit of money rather than involved with war, religion, or highly motivated political persuasion. On this matter Dr. Johnson still rules.

Robert Lenzner’s book on Getty is a work of competence that shows something of the corporate culture but even more how hard it is to get inside, in this case one of the larger American oil companies. In contrast, he uncovers, with ease and sometimes in exhausting detail, Getty’s sex life, which roughly resembled that once associated with the ardent male feline and was at least as indiscriminate. When, as on occasion, children emerged from Getty’s brief marriages, he treated them with determined detachment. When one child died, he did express sympathy but not to the extent of attending upon either the last illness or the last rites.

Lenzner does get hold of the early days of Getty’s oil operations and the bitter conflicts of that period. But as the company grew and became a corporation, it slipped off into a world by itself. Getty is at Sutton Place, his great estate near London; the company is away in Los Angeles. One gets back to the organization only when, as for example, one of its executives commits suicide—another of Getty’s sons. It could be that the corporate wall eventually formed around the Getty enterprises just below the level of J. Paul himself. Lenzner pictures him as in firm control from England. I suspect that in so large an organization the bureaucracy—and the corporate containment culture—had taken over even from the rich and financially controlling owner. It is why Lenzner, a highly competent researcher, has so little to say about it in his later chapters.

Two recent books—At Any Cost by Morton Mintz, the dean of modern muckrakers in the best sense of that term, and Nightmare by Susan Perry and Jim Dawson—tell the truly horrifying story of the A.H. Robins Company and the Dalkon Shield.²

The Dalkon Shield, an intrauterine device or IUD, was put on the market with intense promotion in 1971. A plastic affair of crablike appearance, the shield cost a few cents to manufacture. It was sold to doctors for around four dollars after it had been subjected to some gravely specious tests by a Johns Hopkins physician who was set to collect a handsome share of royalties from its sale. The many hundreds of thousands of women in whom it was installed before it was removed from the market (and the women) suffered an impressive range of disorders—punctured and destroyed uteri, pelvic infections, abortions, gravely damaged children, and numerous unwanted pregnancies. The more serious afflictions led to a considerable number of deaths. Robins paid out many millions of dollars in damages and, with hundreds of millions in lawsuits still pending, went into Chapter 11 bankruptcy in August 1985. Previously it had been one of the most successful pharmaceutical firms in the business—for that matter, and helped by those markups, in any business.

The two books just mentioned do not spare the company criticism, more exactly extreme condemnation. Both concentrate on its insouciant pursuit of profits at the expense of the unfortunate women who were fitted with its product. More might have been written on Robins’s self-destructive stupidity in marketing something that was imperfectly tested and functionally disastrous and continuing to sell it or allow its use after the worst was known. If less poignantly, the company as well as the women was a victim.

There were many warnings about what was happening. Presumably within the company there were alarmed voices and sharp debate, with some strong and intellectually distracted individual or group ultimately winning out. But over all this the corporate veil descends. There are some echoes of the internal debate, but generally the company stands whole and firm, against all evidence insisting to both the public and, one gathers, itself on the safety and efficacy of its scientifically ridiculous product.

Or at least the wall held for around ten years. Then the company lawyer who lost the first vital case against the shield and was first demoted and then fired chose to talk. His name was Roger L. Tuttle, an engagingly short step from “tattle,” and the company spared no effort to have the tattler shut up. He could be accused of violation of attorney–client privilege; he could be alleged to have the deeply questionable motives of a still disconsolate ex-employee. Tuttle was able to provide a somewhat fragmentary picture to add to the few earlier revelations of the internal discussion, but more particularly he described one of the methods used to protect the corporate wall. As word kept coming in on the epidemic of injuries being caused by the Dalkon Shield and the accompanying threat of litigation, he was told to search the files and destroy all papers pertaining to the product. Tuttle did so, saving only a few that he believed might protect his own position. For this and other reasons, outsiders, these very competent books notwithstanding, still don’t know much about what went on inside Robins.

In 1969 E. Claiborne Robins, the effective founder of the company, gave $50 million to the University of Richmond, which was thought at the time to be the largest such gift ever to an educational institution and a sum later virtually doubled by other family gifts. Robins was hailed, and not surprisingly, as the first citizen of his city. “Claiborne Robins has put service to his state and country and, above all, his fellow man well ahead of material pursuits,” his local congressman said in putting some thousand words of seriously repetitive praise into The Congressional Record. All this the corporate culture makes known. What it conceals is the highly negative dynamic—collegial stupidity, to repeat—that did Claiborne Robins, his company, and his son down into the dust.

Perhaps in the future, although I have no great hope, there will be more and more successful efforts to get inside the modern large corporation. Iacocca by Iacocca, at least, shows that there is a market for the product.