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At many once paternalistic companies, the cost cutting has produced stunning changes in the corporate culture. Eastman Kodak, which has always prided itself on being a home away from home for its workers, has closed its employee bowling alley and billiard rooms, and no longer provides dinners with dance bands. Reluctantly abandoning its virtual guarantee of job security, the company trimmed away nearly 13,000 of its 129,000 employees last year as part of a program to save $500 million annually. Says Kodak Chairman Colby Chandler: "The principal object is to make the company more agile, more competitive and more flexible."
Even with those goals in mind, cutting even one job, says AT&T President Robert Allen, is "painful." Cost cutting can also hurt the companies if it is done sloppily or with too little thought to the future. Robert Reich, a Harvard professor of political economy and management, cautions against "slash-and-burn management" that sacrifices employee loyalty and teamwork with an eye only to short-term profits.
Executives and academics agree, though, that most companies have no choice but to shape up. Says General Electric Chairman John Welch: "The managers in the 1980s who hang onto losing business ventures for whatever reason won't be around in 1990." A less somber view is that the corporations that rid themselves of bureaucratic excess now stand to be among the healthiest entrants in the strenuous competition of the future.