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The lowdown on downsizing // Al Dunlap builds companies up by cutting people out


How I Save Bad Companies and Make Good Companies Great

By Albert J. Dunlap with Bob Andelman

Times Business, $25

Reviewed by Sharon Bond

Don't bother buying Albert J. Dunlap's Mean Business: How I Save Bad Companies and Make Good Companies Great. In it, Dunlap, today's most notorious downsizing expert, pats himself on the back for 274 pages. A few paragraphs of that are enough, and those will be provided here. So save $25.

Dunlap, after all, should appreciate such a cost-cutting measure.

Dunlap gained his notoriety with the downsizing of Scott Paper Co., where his plan for whipping the company into shape included cutting 11,200 jobs. The outcry came when he walked away with $100-million for his effort. In Mean Business, he attempts to justify that compensation by pointing out that he spent $4-million of his own money on Scott stock during his tenure there. When the stock zoomed upward in value, Dunlap walked away with $80-million from the stock he bought and options he was given as an incentive to make the company more productive. Another $20-million came from a noncompete agreement he signed with Kimberly-Clark, which merged with Scott. His guaranteed salary was only $1-million, Dunlap points out.

"And my compensation did not come on the laid-off workers' backs," he writes. "It was earned as a fraction of the increased shareholder value _ $6.5-billion _ that was created while I was chairman and CEO.

"My $100-million was less than 2 percent of the wealth I created for all Scott shareholders. Did I earn that? Damn right I did. I'm a superstar in my field, much like Michael Jordan in basketball and Bruce Springsteen in rock 'n' roll."

That explanation is the gist of Dunlap's book, written with the help of St. Petersburg writer Bob Andelman. Andelman, a contributor to Business Week and Newsweek, is the author of Mr. Media, a column distributed by Universal Press Syndicate.

Dunlap, relishing his role as Chainsaw Al, brags throughout the book about his stays at various companies where he cut layers of people, fired suppliers and even boards of directors and on and on. In a bit of unintended comic relief, he says Scott's packaging was so bad that even the products on the grocery store shelves were embarrassed. "They seemed ashamed of what had become of them in recent years. . . . Quietly, I resolved that the next time we met they'd look so good they'd be jumping into shoppers' baskets."

According to Dunlap, great CEOs answer to and work for the stockholders and no one else. What he ignores is the human element, the misery he creates among those people who lose their jobs through downsizing, many of whom do not own stock but who have worked hard for their company. These are people Dunlap sees as corporate fat.

"The people (at Scott) were unproductive _ not as individuals, but within the bloated corporate structure Scott had become. In a smartly managed operation, they would never have been hired in the first place because their jobs didn't make economic sense."

Dunlap is disingenuous when he claims he himself started his career at the bottom. "I worked the third shift at a dirty, smelly paper mill," he claims. "I swam my way up through a sea of look-alike, soundalike middle managers and stepped onto dry land as Chairman and CEO of Scott Paper."

Well, not quite.

When he started at the bottom in the paper mill, it was in a management program that he knew would lift him out of the "dirty, grimy bottom of the labor pool." He did not truly work his way out of it. Perhaps that is the reason Dunlap has no respect for the workers on the bottom.

Mean Business is written as an instructional manual for other chief executives. Four chapters in Part II set down the how-to rules: Get the right management team, pinch pennies, know what business you're in and get a real strategy. He has a section on executive perks to cut out, and he is ruthless here. But just when you think you want to give him credit, he throws in charitable donations: "I don't want to hear any crying about an executive's cash pledge, on behalf of the company, to some charitable or community organization." Dunlap says about companies' responsibility to their communities the same thing he says about their responsibility to workers: If the company makes money and shareholders are happy, then the community and workers will be happy.

Perhaps. But should community and workforce be tangential in a company's operation? Companies can be such an integral part of some communities that huge job losses have drastic economic consequences.

Dunlap's treatise on how companies should do business no doubt will be applauded by those who share his way of thinking, that enriching shareholders is the prime goal. His book does contain some good, basic business advice, stressing the need to stay competitive and continuing to challenge the accepted way of doing business. He rightly points out that if excesses are not cut, companies will fail and then all employees are out of work.

But Dunlap operates with a basic disregard for the people who work for companies. He does not see them as human beings who depend on their paychecks to live and for whom a job loss can be a wrecking ball. His reputation has been made dispensing with such, so much so that when he took over Sunbeam Corp. recently, the stock rocketed just on the announcement.

If resuscitating a company is only an exercise for the stockholders, then the most difficult element has been removed. In fact, with the human consequences gone, with no concern over wrecking lives and communities, how hard is Al Dunlap's job?

Sharon Bond is an editorial writer for the Times.