By Darryl Geddes
When Chevron CEO Kenneth Derr accepted an invitation a year ago to give the 1996 Durland Lecture, he could hardly have anticipated the public's anger and resentment toward corporate chieftains. In the past year, a firestorm of bitterness has been fueled by news coverage of CEOs receiving multimillion-dollar compensation packages for orchestrating job-cutting restructuring programs.
Derr, who has headed Chevron since 1989, digressed from his prepared speech on corporate performance to defend corporate America and answer the portrayal of CEOs as "heartless architects of downsizing who receive huge compensation while employees are losing their jobs."
"I recognize the pain and dislocation to many people that has occurred in the last five, six, seven years as American companies restructured," he told more than 300 people in the David L. Call Auditorium of Kennedy Hall, April 17. "It has not been fun for any of us to manage through this period, but I think the point we have to remember is that this restructuring was necessary to allow American companies to fully become global competitors."
Derr, an alumnus and trustee emeritus, said corporate America has done a "lousy job" explaining to the public how it tries to ease the impact of downsizing. "Our efforts have gone untold or have been dismissed as token gestures."
In his 30-minute presentation, Derr spoke of Chevron's restructuring effort, which has resulted in the loss of 13,000 employees during the past four years. "We have tried to handle this restructuring with sensitivity, and I know we have not always succeeded, but I can tell you our efforts have been sincere and I think they have been caring.
"In all cases, we provided outplacement services which helped a majority find jobs in six months and generous severance packages and generous hunks of stock," he said.
The fallout from a restructuring effort can have deleterious affect on operations, Derr cautioned. "The way companies treat employees who lose their jobs has a tremendously strong influence on the performance of those employees who remain. We all have a lot to learn about how to better manage people issues in this complicated global economy."
Derr said increasing employee commitment and morale will have profound impact on corporate America's future in global competition. But such work is not easily accomplished. "People have been through a lot; fear and commitment don't mix," he said.
One way to help increase the level of employee commitment and morale is by "valuing all employees as partners instead of managing them as overhead," he said.
Derr underscored the importance of dealing with employees honestly and with integrity as a way to increase trust in the workplace. Creative compensation programs, such as those employed by Chevron that guarantee workers the opportunities to earn bonus and stock options, also help strengthen employee commitment.
But Derr said that there are limits to what corporations can do to win employee commitment and trust. He said employees ultimately must take responsibility for their own performance and job security. Reading from a list of Chevron team values, Derr offered: "We accept individual responsibility in partnership with the company for the success of the business and for our own personal development."
Derr suggested that these restructuring efforts have made companies, employees and the economy better off because they faced the realities of a global marketplace in transition.
"Ultimately history will judge most American business leadership of this period as realistic, decisive and sensitive to the human needs of our employees," Derr said.