The MacNeil/Lehrer NewsHour

MR. MacNeil: Good evening. I'm Robert MacNeil in New York.

MR. LEHRER: And I'm Jim Lehrer in Washington. After our summary of the news this Tuesday, we get five views of how the U.S. economy looks right now, Paul Solman reports on one company's way of motivating low paid workers, and Charlayne Hunter-Gault reports again from Somalia. NEWS SUMMARY

MR. MacNeil: Two economic reports out today had positive news for and from consumers. Personal income rose 3.9 percent for calendar year 1992. A separate report today said consumer confidence improved for the first time this year. The Conference Board, a business research group, said its index was up 5 points but remained well below its December peak. Budget Director Leon Panetta has told reporters he remains very nervous about the nation's economic picture. Comments were reported by several newspapers today. Panetta said he was becoming discouraged about the prospects for President Clinton's deficit cutting plan in Congress. He said Mr. Clinton needed to define his priorities more clearly. At a White House photo opportunity the President was asked if he'd taken Panetta to the woodshed for his remarks.

PRESIDENT CLINTON: Well, I don't need to take him to the woodshed. I needed for him to get his spirits up a little. You know, this is like a basketball game. See, these guys were, there were a lot of times that they were in close games. A lot of times they were in close games they wound up winning. I just think he's been working sixty or seventy hours a week and he got discouraged. I need for him to sort of get his spirits up. He's done a wonderful job for this administration. He's got a lot of credibility, and I think every member of Congress who's ever worked with Leon Panetta would say he's one of the most honest, competent people they've ever worked with. He had a bad day yesterday because he got his spirits down. I want to buck him up. I don't want to take him to the woodshed.

MR. MacNeil: Earlier in the day, the President said he would continue to focus on getting the details of his budget plan through Congress. We'll have more on the state of the economy right after the News Summary. Jim.

MR. LEHRER: The new sanctions took effect today against Serb-led Yugoslavia. The U.N. trade and oil embargo is aimed at stopping the war in Bosnia. NATO defense chiefs met in Brussels, Belgium, to discuss possible military steps. In Washington, Secretary of State Christopher told a Senate committee what his conditions were for military action.

WARREN CHRISTOPHER, Secretary of State: I am personally quite prepared to see the United States use force not only there but any place around the world, but it has to meet some very severe tests. First, are we able to state the goal for which force is going to be used in a clear and understandable way to the American people. Second, is there a strong likelihood that we can be successful in the use of force? Third, is there an exit strategy? Do we know how we're going to get out of the situation? And fourth, and finally, is it a program that will sustain the support of the American people?

MR. LEHRER: Bosnian Serb soldiers backed by tanks launched a new attack on Muslim territory today. A U.N. spokesman said they had captured villages around the town of Bihac, the last Muslim stronghold in Northwest Bosnia. Nineteen hundred trooops in the region have been ordered to use force, if necessary, to prevent attacks on civilians.

MR. MacNeil: The Middle East peace talks resumed today in Washington. Sec. Christopher called all the delegation heads together for a meeting, the first time they'd gathered in the same room since the October 1991 Madrid Conference which started the peace process. Christopher told him it's time to go beyond procedures and start tackling the key issue. After today's working session between Israel and Syria, both sides said there was nothing new to report. Palestinians exiled in Southern Lebanon today continued their protest against the talks. The nearly 400 deportees began a sit-in yesterday about 350 yards outside Israeli lines in Israel's self-declared security zone. Palestinian leaders wanted deportees returned to Israel immediately, but they agreed to return to the talks despite Israel's refusal to comply.

MR. LEHRER: Gunmen in Costa Rica today released one of nineteen Supreme Court justices they are holding hostage. The standoff began yesterday when at least four heavily armed men stormed the Supreme Court building, taking the justices and five other people hostage. The gunmen have threatened to blow up the building unless they get $20 million and the release of an unspecified number of prisoners. Local press reports said the men were from Colombia's Medellin Drug Cartel who want the release of four comrades awaiting trial in Costa Rica.

MR. MacNeil: Federal government scientists today rejected a claim by Exxon that Alaska's Prince William Sound has recovered from the 1989 Exxon Valdez oil spill. In reports prepared for delivery to a scientific conference this week, Exxon scientists said fish and birds had returned to pre-spill levels. But the chief scientist from the National Oceanic and Atmospheric Administration said recovery of most biological resources would take ten years or more. Exxon spent nearly a billion dollars cleaning up the 11 million gallon spill.

MR. LEHRER: And that's it for the News Summary tonight. Now it's on to a fresh look at the economy, motivating workers, and Charlayne in Somalia. FOCUS - ECONOMIC OUTLOOK

MR. MacNeil: We turn first to the economy. Last week, President Clinton's plans for an economic stimulus package stalled in Congress, and today the President's budget director, Leon Panetta, told reporters that the administration faces an uphill battle for other key elements of his economic plan. Panetta also talked about public confidence, calling temporary consumer optimism from the November election and the Christmas season only part of a shadow recovery. He said, "I sense that confidence has diminished somewhat. I think there's weakness out there." Two new figures out today were more positive. The Conference Board's Consumer Confidence Index did, in fact, go up by 5 points to 67.7 after three straight monthly declines, and the Commerce Department reported that personal incomes last year rose by 3.9 percent. What does all this say about the state of the economy? We have five views. Gail Fosler is vice president and chief economist of the Conference Board, the business research firm in New York that released today's Consumer Confidence numbers. Mitchell Fromstein is CEO of Manpower, Incorporated, a temporary employment agency based in Milwaukee. Barbara Rackes is CEO of Rackes, a retailer of women's clothing and accessories, stores in North Carolina and South Carolina. Fred Sands is president of Fred Sands Realtors, a Southern California realtor based in Los Angeles, and Shirley Gross Moore is president of Barrington Dodge, an auto dealership outside Chicago. Ms. Fosler, how are we supposed to read all these different signals? Is Panetta right that confidence is diminishing and there's weakness out there, or are your figures today right showing that confidence is rising?

MS. FOSLER: Well, I think you've actually got a situation where both can be right. Confidence is rising. We had a nice up tick in confidence today but from a very low level. And after the election, we did see a burst of enthusiasm and then we saw consumers' expectations, particularly about future jobs wane. So we are still an economy in search of a recovery.

MR. MacNeil: How would you -- how further would you characterize the kind of state we're in at the moment? Does that mean the recovery has stopped?

MS. FOSLER: Well, a recovery is typically a concentrated period of time when all the signals are green, when the economy grows in all sectors, when we get a big boost in jobs and incomes and it kind of projects us to a whole new level of expansion in income and welfare. Well, we're still in a very slow period of growth, but we're not able to translate what little growth there is really into very much in the way of jobs or improvement in welfare. So the numbers that people see are not really translated into people's own sense that their welfare is actually improving.

MR. MacNeil: Mr. Fromstein, do we still have a recovery, from your point of view?

MR. FROMSTEIN: Yes, I think we do. Everything that we see and anything that we compare to prior recovery periods says that this thing is moving right along. It's taken a little bit longer than normal, and it's gone a little bit shallower than normal in terms of job formation. But in general, it seems to be steady and continuing.

MR. MacNeil: How do you react to Budget Director Panetta's remarks? "I think confidence has diminished somewhat. I think there's a weakness out there."

MR. FROMSTEIN: Well, it's hard to comment on that. I think the President commented on it. If the administration is, is going to think things are weak, that's certainly going to have an impact on what the people out there think.

MR. MacNeil: You mean Mr. Panetta needs to get his spirits up, as the President said?

MR. FROMSTEIN: Well, yeah, and I don't know what he's, I don't know what he's basing it on. If he's saying consumer confidence is weakening, it doesn't seem that. It's up a little bit today after being down for a while. I think what's more important than that is what does the business community think and what are they doing, and what will be the pace going forward from here in terms of job formation.

MR. MacNeil: Well, let's ask some people in the business community and then come back to you economists. Barbara Rackes, what does the economy feel like to you in terms of what's happening in your clothing business?

MS. RACKES: Well, I think one of the things that we're hearing from people is that they're a little tired of the recovery, and they just plain what to be recovered. They want it to be over, and they want to be moving forward. And I think they're looking for reasons to be optimistic. A lot of people that I have spoken to in the last weeks just plain don't want to talk about the economy anymore, and they are spending more. We find our economy in the Carolinas is up, and we're actually realizing some real growth again. While Charleston, South Carolina, of course, is still reeling from the Naval base closure, Greenville, South Carolina; Columbia, South Carolina; and Charlotte, North Carolina are beginning to experience a good deal of expansion, some relocation from unfortunately other parts of the country, and people are excited again about the future.

MR. MacNeil: What's happening in your own business in terms of expansion or not, in terms of hiring and what you're doing yourself that would reflect your attitude about the economy?

MS. RACKES: I think there are two different responses I'd have to that. One is that we're being very cautious about hiring, and we are actually -- I notice you had the gentleman from Manpower - - and one of the things that we're doing is we're outsourcing a number of the services or the needs that we have as a company that we want --

MR. MacNeil: What does that -- for those who don't know, including me, what does outsourcing mean?

MS. RACKES: Excuse me. We are contracturally placing certain projects with organizations that are skilled and specialized in those. It could be a consultant or an organization, somebody that we hire on a temporary basis to complete a specific segment of work for us, rather than bringing that person into our company as a full-time position. A good example right now is that we're using an outside chief financial officer on the basis of one to two days a month, rather than having one on our staff full-time. It accomplishes the same purpose, but it reduces our expense base considerably.

MR. MacNeil: What about expansion?

MS. RACKES: On the other hand, we are expanding, and we're moving into the Greenville, South Carolina, market this coming August. It was a decision that we made after much, much consideration in light of the economy and whether we were recovering or recovered or notrecovering. And we had fortunately the support of one of our state banks and several other sources that caused us to move and take an opportunity which we think is going to be very good for us because other people are laying low, and they're not taking advantage of the voids that have been created in the marketplace by other businesses that have closed in the last several years.

MR. MacNeil: Ms. Gross-Moore, you sell automobiles outside Chicago. How does business look to you?

MS. GROSS-MOORE: Well, sometimes when I listen to programs like this I wonder who are the people that are being surveyed, because maybe I'm just foolishly optimistic, but I find that our business is growing. We're doing very well. Right now one of the problems I have is not being able to get enough of our new, hot products. But other than that, the people are coming in the showroom, they're buying, and it's good to hear that there are a few people who think that the consumer confidence is up because it certainly appears to be in the Midwest, and I don't think I'm just speaking for myself. I think I'm speaking for other dealers here, particularly in the Chicago area, when I talk to my zone people. They say that we're all experiencing this upturn.

MR. MacNeil: Is that because --

MS. RACKES: I don't anticipate --

MR. MacNeil: Is that because you represent Chrysler, and at the moment, their cars are doing quite well, or do you think it is applying to all, all brands of cars?

MS. GROSS-MOORE: I'm not sure about all the other brands, but I don't think it's just because we have a beautiful, new, hot product, however, even with the product, if the consumers weren't ready to buy, they still wouldn't do so. So I think it's a combination of those two.

MR. MacNeil: Have you done --

MS. GROSS-MOORE: I do --

MR. MacNeil: Have you done any expansion -- excuse me interrupting -- have you done any expansion in terms of hiring or anything?

MS. GROSS-MOORE: Since I was here last I have added three people to my staff. Now, remember, I have a small store. For me to increase my staff by three is a considerable number. And I don't believe I'm being foolishly optimistic. The people are buying the cars. That's why I'm doing it.

MR. MacNeil: And Fred Sands in Los Angeles, you had a real slump in your business, real estate, in Los Angeles, how does it look to you now?

MR. SANDS: Well, March was the best month we've had in about the last 12 months. So it's turning up. I expected April to be very poor because we had income tax time, we had Easter, Passover, and we also had the local media countdown for the Rodney King verdict, and April, the first half of April matched the first half of March. So we think that things are turning around for us, not the glorious days of the '80s, but we see it as a feeble recovery and improved sales.

MR. MacNeil: Has that resulted in any extra jobs in your firm? Of course, you work often with part-time people, don't you, in the real estate business?

MR. SANDS: No. We only hire full-time people.

MR. MacNeil: Oh, you do?

MR. SANDS: We have fifteen hundred full-time salespeople and we have about three hundred salaried people. We are expanding. We're expanding through franchising. We just opened two offices, and we're planning to make announcements on more this year. We also did something that's sort of counter cyclical. We started a real estate auction division where we auction condominium projects or lender foreclosed properties.

MR. MacNeil: To what do you attribute the better outlook in, in real estate, when everything one hears about the California economy is fairly gloomy at the moment in terms of employment and defense layoffs, firms moving out of California?

MR. SANDS: We've been surrounded by bad news, however, when dealing with real estate, most people sort of look to the future. Just as the stock market anticipates trends that are going to take place in the next or twelve months, real estate tends to do the same thing. And I think a lot of people are saying interest rates are at their lowest levels in 20 years, and I'm not going to lose my job even though the outlook is not great, I believe that my job will be safe, and they're going ahead and making the plunge. Not everyone, but we're seeing more people that were waiting on the sidelines start to get in and do business.

MR. MacNeil: Gail Fosler, how do you react to these relatively optimistic reports from those three parts of the country and three different consumer industries?

MS. FOSLER: Well, it makes me want to revise my economic forecast out. I think that it does suggest something that's very often missed in terms of looking at the economy, and that is what we look at confidence and confidence is certainly an indicator of attitude, but the consumer has a lot of ability to spend. Consumer liquidity is up, the consumer balance sheets are as good as they were in the beginning of the 1980s, consumer income, it's up, not as much as it is in a usual cycle, so, in a sense, the economy is really just getting started. We've had a very long bottom, and I think we've still got a down tick in the next three to six months. But we have a lot of real positives in place for this economy to do a lot better as we go into 1994.

MR. MacNeil: A down tick in the next three to six months, does that mean down from the big high in confidence in December, or down from where it is now?

MS. FOSLER: No. And I was really referring to the economy in the sense that we got some very high growth rates in the economy at the end of 1992. I think we're going to get slower growth in the first and in the second quarter. We may even get a little bit more of a wave of pessimism as we get into the summer, but I think it's very much like 1992, where we're going to be in a position to take off again at the end of the year. And consumer confidence, I think will lead the way.

MR. MacNeil: I'll come back to that in a moment. I just want to know from Mr. Fromstein, how did you react to the three reports we heard from California and Milwaukee and South Carolina?

MR. FROMSTEIN: Well, I don't think any of it surprised me. I think just the very areas that, that people have been speaking from certainly reflected our business which is, which is personnel support, temporary people, that those are the three areas that we're showing the best growth, the Midwest and the Southeast, and even Southern California at the moment. I think that there's probably a hesitation in terms of the permanent hiring process, and some of it has to do with waiting to see what the government is going to do in terms of new laws that may impact on business. But, in general, things go on, and we see manufacturing increasing at a very strong rate, particularly consumer goods, nondurables, and I think what we're going to see in the second quarter is, is some pretty good hiring figures coming along. Now they may not be what they've been in past recoveries, but at the moment, everything looks to us just like it looked before. It just stretched out, as Gail said, properly so. The bottom stretched out a little longer.

MR. MacNeil: Barbara Rackes, are you holding back in any way? Are you being a bit conservative or cautious because of uncertainty about what's coming from the government in terms of taxes and programs and things? What aren't you -- well, describe that.

MS. RACKES: Well, my answer to that would have been absolutely. We, we have a mentality within our company that we have put in place in the last two years, and we call that our depression mentality. We went back to zero-based budgeting, and the only thing that we budget is the absolute, required items. We have had very good sales trends over the last four to five months and could, indeed, have adjusted our practices so that we were perhaps a little more generous with the way we spent our funds, but we are maintaining the same perspective that we started out with two years ago when we went to a streamlining effort in order to make sure that if there is any possibility of a fallback, of an anti- recovery, if you will, that we're not in a position where we have to go back and find ways of letting people go or shrinking the services that we're able to offer to our customers. We've gone to the very depth of our resources more and more to try to find innovative ways of providing new services and quality products at an excellent price to our customers, and you have to, in order to continue to do that, you've got to maintain your expense structure at a skeletal level.

MR. MacNeil: Are you holding back in any way, Shirley Gross- Moore, as a result of uncertainties in Washington about what's coming in the way of taxes and policies and health care reform and one thing or another, or are you just full speed ahead, following your market?

MS. GROSS-MOORE: Not actually full speed ahead, however, I'm not doing an awful lot of holding back. I had initially started out in a down market, so I cut my staff back, and I have maintained such a skeleton crew that by my putting on three additional people, I'm really only bringing my staff up to the point where we can be really effective and service our customers properly. I am not going overboard, however, there are some things there I'm doing. I'm increasing inventory. I have added the three employees, and I'm being somewhat cautious. I don't think any of us will ever be able to go back to the days where we have an abundance of employees, where everybody only had one defined position that they were responsible for. I think in the future we're going to always have to wear more than one hat, and I certainly haven't changed that, because even though I'm optimistic about what the future holds, I am not foolishly plunging ahead without any consideration to my expense structure and what the new tax, if any, might, how it might affect our business.

MR. MacNeil: Fred Sands, is uncertainty about what's coming from Washington in any way restraining you in your plans?

MR. SANDS: We're being very cautious. We're watching overhead. We don't want to increase any expenses, and we're examining all existing expenses, and if there's something we're doing that we don't need to be doing, we stop doing it because we're uncertain about the future.

MR. MacNeil: Gail Fosler, is that kind of caution about the uncertainty of what's to come restraining the recovery? Is that holding it back?

MS. FOSLER: That's absolutely holding it back. I mean, in some sense this kind of thrust that I talked about that we're accustomed to having, calling an economic recovery, really is, constitutes the abandonment of that kind of caution, and you see this caution in terms of the unwillingness to build inventories and the unwillingness to build plant capacity, all of the kinds of behaviors that these entrepreneurs are describing you see exactly reflected in the economic numbers, and the numbers, themselves, will be in some sense cautious but built on a very solid foundation.

MR. MacNeil: So a real recovery of the traditional kind would be when people like these, business people like these, abandon all caution as you say?

MS. FOSLER: Well, I wouldn't say abandon.

MR. MacNeil: Or go full steam ahead.

MS. FOSLER: I would say go full steam ahead, have some enthusiasm where they can look beyond the next month, the next six months, where they really feel that two years from now they can stock that inventory, they can change that strategy and they're going to be just as successful.

MR. MacNeil: Mitchell Fromsteim, what do you say about that, that uncertainty is holding people back right now?

MR. FROMSTEIN: I think I started the conversation.

MR. MacNeil: You did. I beg your pardon.

MR. FROMSTEIN: In making that statement. And I think as you move up the line into larger companies, multinationals, or the large manufacturing companies, some of them are still in a reduction mode, and most of them, and some of the job formation has got to come from the large employers as well, although it's going to be concentrated in the small and medium companies. I think what you'll find is a lot of hesitation in terms of making decisions to do permanent hiring are falling in the larger companies, and they just are sitting back and saying let's see what the cost of all this is going to be.

MR. MacNeil: Do you think, Mr. Fromstein, we could have another slowdown or tip into a new recession, and, if so, what would cause it?

MR. FROMSTEIN: I'm not an economist. Gail would know that better than I.

MR. MacNeil: What do you smell in the air?

MR. FROMSTEIN: I really don't see another recession. Everything that we see that would normally indicate that really isn't present. You've got low interest rates. You have very small inflation, if any at all. You have a labor force that's, that really is a surplus labor force, and I think that, that the public is just handling it, as Americans very often do, and they do get into line with what the trends are. So I don't see it going into a recession. You always have a bumpy road in a recession. We forget it too quickly. We had it in '80, '81, '82. You had it in '75 and '76. But -- and there'll be some bumps maybe -- but I certainly don't see the thing dipping into recession again.

MR. MacNeil: Do you see, briefly, do you see any danger of it really going down again?

MS. FOSLER: No, I see absolutely no risk of recession, and to the contrary, I think we're building a very solid base, and we're going to be surprised in the next eighteen to twenty-four months about how strong the economy really is.

MR. MacNeil: Well, Gail Fosler, Mitchell Fromstein, Barbara Rackes, Shirley Gross-Moore, and Fred Sands, thank you all.

MR. LEHRER: Still to come on the NewsHour tonight, Paul Solman on motivating workers, and Charlayne Hunter-Gault with the new U.N. man in Somalia. FOCUS - MASTER MOTIVATORS?

MR. LEHRER: Next tonight, motivating workers who do menial work at minimum wages. Business Correspondent Paul Solman of public station WGBH in Boston reports on one company's approach.

[WOMAN TALKING TO WORKERS]

MR. SOLMAN: The Olympics comes to Polk County, Florida, in this case the Custodial Olympics where five teams of local school custodians are going for their version of the gold. Individual events glorify jobs that most people view as menial at best. They're trying to change that perception here.

WOMAN: Custodians don't get a lot of recognition in the schools, and so this is good for us.

MR. SOLMAN: These competitors are the low end employees, mostly minority, usually dispirited, that our businesses prefer to keep more or less out of sight. People who clean up after the rest of us typically work in isolation for bottom-of-the-barrel wages, but they're part of the economy's one growing sector, services, and the lower end of that sector is simply burgeoning. If we ignore these people, says Harvard Business School Professor James Heskett, we do so at our peril.

JAMES HESKETT, Harvard Business School: We have a work force of probably more than 10 million people in this country who are basically nomads moving from one, narrowly designed, poorly compensated job from another, with no medical benefits, no pension funds, no nothing. It's basically a time bomb waiting to go off in the U.S. economy.

MR. SOLMAN: What do you mean, a time bomb?

JAMES HESKETT: A time bomb with -- caused by people who are unsatisfied with their work, have no future, and who will express their dissatisfaction in ways that we've seen in recent years.

MR. SOLMAN: Prof. Heskett has coined a phrase to describe the fate of America's ten, some say as many as sixteen million nomadic service workers, the cycle of failure. It begins with firms that have no faith in their workers and, thus, idiotproof their jobs, from janitor to stock clerk to the proverbial hamburger flipper. But idiotproofing makes the workers feel like idiots and demoralizes them to the point that they perform poorly, which causes firms to think even less of them. Heskett's been looking for companies that can break this cycle. He thinks he's found one in ServiceMaster, a company with an unusual philosophy that has the ability, it seems to inspire the janitors of Polk County, Florida. The Blue Basket Grand Prix is the second event of the day. ServiceMaster manages some 1/4 million workers. Its Polk County contract is typical: Earn a management fee by transforming $4.50 an hour employees into a spirited work force. It's a tough start for the team from the County's South Central school district, but they pick up ground on this leg of the relay. That's Cassandra Jenkins, now a supervisor, but a custodian when ServiceMaster first arrived.

SANDY JENKINS: Well, ServiceMaster brought a new level of consciousness to Polk County, because all of a sudden a custodian wasn't just a custodian. It was the person that cleans your school. It was the person that everybody depends on to get in every day. It was the person that no matter what happened, if it's raining, if it's cold, they're there at 6 o'clock in the morning to open that door. And for a long time teachers or principals might pass by a custodian and not even speak because it was considered to be beneath some people. All of a sudden, ServiceMaster brought a level of pride to Polk County, and it raised everybody's awareness, custodians as well as administrators in the schools.

MR. SOLMAN: Yanker leg of the race, South Central rallies and wins in a time of one minute, thirty-one thirty.

SPOKESMAN: How are you feeling?

RACE WINNER: Oh, I feel fine.

MR. SOLMAN: Now a custodial olympics might seem a trifal hokey but with techniques like this, ServiceMaster has built a $2 1/2 billion a year business and is one of the fastest growing firms in the country. It has grown by cultivating at its hi-tech headquarters outside Chicago its corporate culture, and at ServiceMaster, though you may not notice it at first, culture begins with old time religion. Founded 50 years ago by Marion Wade, a devout Christian, ServiceMaster has been run by Protestant fundamentalists ever since. The first of the firm's four corporate objectives is engraved in stone in the lobby: "To honor God in all we do." Even the name ServiceMaster is a devout double entendre; in mastering service, they do service to the Master. Bill Pollard is the current CEO.

BILL POLLARD, CEO, ServiceMaster: We believe there's an absolute frame of reference for what is right and what is wrong in running a business. The sourceof that reference is God.

MR. SOLMAN: Moreover, says Chuck Stare, since God respects all work, the firm's faith gives it a competitive advantage over companies that don't treat their workers with dignity.

CHUCK STARE: None of us wants to pass off the face of this earth without making some kind of contribution. And it doesn't matter if you're president or if you're cleaning toilets someplace; you have that same aspiration.

MR. SOLMAN: Now corporate cultures like ServiceMaster's cut two ways. What's good about them is their potential for reversing the cycle of failure. What's bad about them is their tendency to exclude people who don't buy into the corporate culture. We'll get to the downside in a bit. But first, a short lesson in scientific mopping.

DR. BILL BOND, ServiceMaster: Let me show you the mop. That's probably one of the more interesting things because --

MR. SOLMAN: Dr. Bill Bond is a true believer. He heads up R&D at ServiceMaster and loves to show visitors how the company re- engineers, for instance, the janitor's job. He asked how I use a mop.

MR. SOLMAN: [demonstrating how he mops] I'll try to rub off a stain, you know, using that hard part there, and then I'll bring it back like this and sort of, you know, get all the, the guck, you know, all the dirt up, and then I'll go to the sink.

DR. BILL BOND: That's the wrong way to do it.

MR. SOLMAN: So Bond showed us the ServiceMaster way.

DR. BILL BOND: This is the proper method for wet mop. You'll notice that I stand up straight. First of all, when you're doing it, you're bent over. When people walk past our cleaning people and they're bowed down, they feel as if they're in a humble state. We give them more dignity because we allow them to stand straight.

MR. SOLMAN: Standing straight is also easier on the back, as is this patented hollow handle, reinforced with plastic and fiberglas, and then there's the trash holder that opens on the side, saving the strain of heavy lifting. But does R&D in the lab translate into dignity in the field? For Jose Rivera, custodian at a Chicago area school managed by ServiceMaster, it certainly seems to.

JOSE RIVERA, Custodian, ServiceMaster: And you know, everybody enjoys what I do.

MR. SOLMAN: How do you know that?

JOSE RIVERA: Because I get a lot of compliments in my building.

MR. SOLMAN: From whom?

JOSE RIVERA: From the teachers, the students, principal, you know, people who visit our building say we have one of the nicest buildings in the district. So that gives me pride in what I do.

MR. SOLMAN: In other words, at this school, as in Polk County, ServiceMaster's culture seems to have taken root, but in other places, the corporation's blending of faith and finance has been a problem. Something like half the company's management employees are said to be practicing Protestants. So when ServiceMaster bought another company, ChemLawn in 1992, it asked all ChemLawn employees to reapply for their jobs by signinga form of commitment to the corporate culture. Bob Kozlowski couldn't do it.

BOB KOZLOWSKI: The major objection was the religious part that said that I had to honor God in all I do, to be an ever expanding market vehicle for use by God and to make that commitment to that. Where it states the principles and the objectives of the company, it says, to give careful consideration to its meaning and to make the commitment to it. And I was not, I could not do that. I could not do that in good faith because I don't believe that.

MR. SOLMAN: So agnostic Bob Kozlowski didn't sign on as God's market vehicle and in a religious discrimination lawsuit drawn up by attorney Ruth Berkwin charged that it literally cost him his job.

BOB KOZLOWSKI: You know, and they said, you either sign it or this is the alternative. And I didn't know that at the beginning but I knew it on Wednesday when they finally told me to pack up my office and leave.

MR. SOLMAN: ServiceMaster has recently settled with Kozlowski out of court, paid him and no longer requires employees to sign the form, though it will still be included in the job application. Now, of course, if ServiceMaster's way of winnowing workers were illegal, no one would condone it, but even if a corporate culture operates wholly within the law, the stronger the culture is, the more some people are likely to be rejected by it or to reject it themselves.

JAMES HESKETT: The fact of the matter is that nearly every outstanding service company we've looked at excludes people for one reason or another, is very selective in people that they do choose and build on that as a tremendous source of strength with a group of people that share a common mission and are able to work well together. These companies are not for everybody.

MR. SOLMAN: Meanwhile, back in Polk County, where fundamentalism flourishes and ServiceMaster's culture is well received, controversy of a more Olympian nature has erupted in the so-called "diskus throw." Leader of the Northwest school district team, Terry Fisher.

TERRY FISHER: We got disqualified.

MR. SOLMAN: Tied for first, Northwest can't use its modified bucket top.

TERRY FISHER: I got ingenuity and cut an inch and a half off the lid to get better wind.

WOMAN: And it floats.

MR. SOLMAN: Nowadays Fisher can laugh off adversity, but he hasn't always been this way.

TERRY FISHER: Before I didn't like talking to people. There was just, you know, always pressure from work, pushing me, you know, worried about, you know, what somebody was going to say, what has been done, and here it's not like that.

MR. SOLMAN: Fisher wasn't particularly religious before working for ServiceMaster but he now attends church on a regular basis and credits the company with turning around his life.

TERRY FISHER: Now, you know, if I'm doing a good job, they come out and they tell me, you're doing a great job, this is terrific. You know, I mean, and you're like wow, I guess I am, you know, and it really makes you feel better. You're like, you know, it's appreciated.

MR. SOLMAN: Unfortunately, after 10 events, Terry Fisher's Northwesst team is running dead last to the sharp shooting leaders from rival Southwest. Now to be fair, even in Polk County, ServiceMaster has its detractors. And as we checked around the country, we found several other places, schools and hospitals, dissatisfied with the company's performance, although of course we found other happy customers as well. The difficulty seems to be that corporate culture has a hard time translating in some places, especially in a company that's growing as fast as ServiceMaster, especially with workers as demoralized as the workers this company tends to inherit. But, has ServiceMaster really broken the cycle of failure? We put this last question to Professor Heskett.

JAMES HESKETT: When you consider the alternatives in this industry, Paul, you have to conclude that what ServiceMaster has done has broken the cycle of failure.

MR. SOLMAN: And Professor Heskett reminded us of what the company has done in at least some places.

JAMES HESKETT: I think basically re-engineered jobs, they provide training to people who in the past have not received training. They've attempted to deliver a level of self-esteem that many of these workers have never had in the past.

MR. SOLMAN: How important is that as an economic problem in America?

JAMES HESKETT: Well, to the extent that it leads to more job continuity, better benefits, actually entering the mainstream of the American work force as opposed to sort of the nomadic 16 million who hold down several jobs a year, I think it's very important.

MR. SOLMAN: Finally, back in Polk County it's medal time.

[AWARDS CEREMONY]

MR. SOLMAN: In the end then with more Americans and immigrants competing for low end service jobs, many analysts despair of doing anything about the cycle of failure. That ServiceMaster can do something in Florida or anywhere else for that matter may be a sign of hope, and that it can also fail may be a testament to just how hard and vital the job really is. FINALLY - RETURN TO SOMALIA

MR. LEHRER: Finally tonight, Charlayne Hunter-Gault's return to Somalia. U.N. troops are now taking control of that East African nation from a U.S.-led force. Recently Charlayne accompanied the new U.N. envoy who will oversee the transition on his first trip to a town hit by last year's devastating famine.

MS. HUNTER-GAULT: Who forget these images, living death masks that brought an international force of some 38,000 troops to Somalia last December. Here in Bardera, Somalis were dying at an estimated rate of 10,000 a day. A few of them were buried soon after they died. Many more lay on the streets for days before being collected and buried, often on top of one another. It is to this place that the United Nations Envoy Jonathan Howe will travel on this day, his first visit to the tiny village about an hour's plane ride outside of the capital, Mogadishu. Howe was appointed to head the second stage of Operation Restore Hope, widely known as UNOSOM 2, the acronym for United Nations Somalia Phase Two. He knows that he will not have to confront suffering on the same tragic scale as four months ago, but he also knows that what he will confront is the biggest job the U.N. has ever undertaken, peacemaking as well as peacekeeping.

JONATHAN HOWE, U.N. Envoy, Somalia: It's hot in Bardera. It's 107, that's the average temperature in the afternoon. The airfield's about 10,000 foot. It's a good airfield. C-130s have no problems coming in.

MS. HUNTER-GAULT: The United States is in the process of turning over to the U.N. control of places like Bardera throughout Somalia. This trip to Southwestern Somalia is to help Howe, a retired admiral and former National Security Council aide, get a handle on just how big the U.N. job is going to be. Of the three U.N. envoys who have served here since the U.N. returned to Somalia last September, Howe is the first American to hold the position. The first stop is the military encampment just outside of the town. A force of 200 Botswanans has been sent from duty in Mogadishu to take over from the U.S. Marines.

JONATHAN HOWE: Let me just say I think this is a great moment when we are about to change from the U.S. Marines to the great troops of Botswana, and I'm delighted to be here to see how that is shaping up. I'd like to first congratulate the Marines on the terrific job you have done here. Although this is my first visit, everybody I talked to that comes back from here talks about the great job you've done. And now I'm just very, very pleased that as the U.N. gets ready to take over, that we have these fine troops from Botswana who will be taking your places here in town, so my congratulations to the Botswanan army. I look forward to coming down and seeing you when you have full responsibility a few months down the road. I wish you great success and great luck. Thank you very much.

MS. HUNTER-GAULT: Even though it is rumored that the local Somalis are unhappy about the handoff, clearly, the Marines are not.

MS. HUNTER-GAULT: You've been interacting here now with the Botswana troops. Do you think they're ready to take over?

SPOKESMAN: Yeah. I think they're pretty good.

MS. HUNTER-GAULT: Yeah?

SPOKESMAN: They all speak English, and they've all been accustomed to this area for, at least Mogadishu, for 30 days, and they seem pretty eager to get up here. They like the climate here also as far as being really calm, peaceful.

MS. HUNTER-GAULT: Next, to the mess hall tent a meeting of elders for the region is well underway. Polite greetings over, the elders list their grievances. The U.N. needs to secure more of the region. The private relief agencies are not getting enough food to all the starving people, many still dying. What are the plans for bringing back the refugees? Contracts are not being given to locals. And just what is UNOSOM II anyway? The admiral listens, takes notes, then promises to take all he has heard under consideration.

JONATHAN HOWE: I am convinced that if we work hard and work together that we will be successful. I am absolutely convinced of that.

MS. HUNTER-GAULT: On the way to the next step, United Nations High Commission for Refugees, we are told that the grievances cited by the elders are not new and many are embellished. Under the watchful eye of a Botswanan and a Marine, we hear the other side.

KILLIAN KLEINSCHMIDT, UNHCR: Our main problem is clear from all sides and from all the locations we are having in the cross border operations within Somalia and on the border is implementing partners for the U.N. agencies, become scars because they're fed up. They're fed up with the instability, with the problems they're facing and discussions with the elders and not being able to operate for a month or two. I have been in Elwak for quite some time. I've been sitting there in front of this border and watching the border, once for one month, and I couldn't go. These elders were showing up and were telling me we're discussing. Today the same elders tells me you have not been doing enough, the NGOs are not doing enough, people are dying, which I don't believe, because in all these places they die from diseases but certainly not from starvation anymore. It's -- I can't believe that.

MS. HUNTER-GAULT: However, the U.N. and the private relief agency, the World Food Program, share the elders' concern about the remaining 300,000 refugees, 50,000 of whom are waiting along the border in the Kenyan camps of Elwak and Mandera. There is a pilot project to bring back one thousand to two thousand before the fast approaching two-month long rainy season makes already fragile roads impassable. But of evenmore immediate concern are the villagers who flocked to Bardera months ago because that's where the Marine security and food were. Both relief agencies, CARE and the International Committee of the Red Cross, have shut down their feeding centers and left town in part because the emergency was over, in part because their hired armed guards were also affected by the general disarmament now in force by the Marines. The current strategy is to no longer provide free food but food for work, both to help wean the refugees from the handouts and to encourage a return to self-sufficiency. For example, the refugees will be given straw to make mats for sleeping that can be bartered in exchange for a cow or seeds and tools.

SPOKESMAN: The group that came here in originally they just demanded food from CARE, and it got pretty nasty. They came to me and said we want to be fed, we're victims of the civil war. So are orphans and widows and the traumatized and the victimized and the displaced and the refugees. Everyone's a victim of this civil war, we can't give you food just for being a sub-group of that anymore. That was going on. Now we're targeting that food. Let's get food for work, food for clearing the land, food for building a shelter. That gives them some income generation for themselves and also some food for now, but they're doing something.

MS. HUNTER-GAULT: But Admiral Howe is told that all of these plans are going to require a lot more personnel and security, possibly some small, permanent military forces dispatched to some of the outlying areas.

SECOND SPOKESMAN: We're afraid to expand very much because of the security situation, and I think it would be extremely helpful if UNOSOM would consider perhaps sending down a permanent, small, small force to places like Sakowan and Garbahade.

THIRD SPOKESMAN: A good, viable police department is what is reuqired, and I don't think we should even attempt in my opinion, in my opinion, to repatriate in large volumes of people, you know, two, three hundred thousand, until those support mechanisms are in place.

MS. HUNTER-GAULT: We head out to look at the first recruits for the reconstituted local police force, passing through the brief but bustling and orderly heart of town. At the edge of town, the Juba River. More benevolent now, thanks to a water purification system set up by OXFAM, the British relief agency. Nevertheless, the river still serves as an unbreechable divide between two hostile clans, the Rahan Wane on the near shore and the Narah Han of former President Siad Bari on the other.

JONATHAN HOWE: Do you have a magistrate here?

SPOKESMAN: This is what it was, sir.

MS. HUNTER-GAULT: As we approach the newly reopened police station, we are told that they are not yet enough police, and they are not yet armed, but Bardera has taken the re-establishment of justice beyond the police. Here they have a court and a jail.

INTERPRETER: One of them is condemned because he shot someone.

MS. HUNTER-GAULT: He's condemned because he shot someone?

INTERPRETER: Yes.

MS. HUNTER-GAULT: He's condemned to --

INTERPRETER: He's condemned to death.

MS. HUNTER-GAULT: Oh, he murdered somebody in the Islamic court?

INTERPRETER: Emergency court has this condition.

MS. HUNTER-GAULT: And who else is in there?

INTERPRETER: There is all those who commit different crimes in this vicinity. Some, some thieves we catch. SPOKESMAN: And bandits.

MS. HUNTER-GAULT: The next stop is unscheduled, a visit to a hospital run by the French hospital Sans Frontiers, Hospitals Without Frontiers. We are told by one of the doctors that it was destroyed during the fighting. It took two months of negotiations between the International Committee of the Red Cross and the elders before the work of restoring it could begin. Initially, Lt. Col. Sullivan asked our cameras to remain outside, but he relents during the presentation of the Navy's achievement medal to a young boy who three days earlier had shown bravery in the face of having his leg amputated.

JONATHAN HOWE: It's a great pleasure for me to present this achievement medal to you, which in recognition for your courage. So I'm going to pin it right here so I won't hurt you, but that comes with all the respect of the Marines and of all of us in the United Nations.

MS. HUNTER-GAULT: What happened to his leg?

DR. PHILLIPE MAUGHAN, UNOSOM: He injured his leg in a traffic accident, and the leg, the bone of the leg, the phemer, was sticking out of the skin. It was dead. The bone was dead but a traditional healer had tried to put it back in place, and this had caused gangrene, and the whole leg was dead, and we were forced, no option but to amputate it, or he would die. There are a number of traditional healers. Some of them are good, some of them not so good. Some of them are very good, and --

MS. HUNTER-GAULT: How's this hospital?

DR. PHILLIPE MAUGHAN: The hospital's come a long way. It was in very bad shape when we got here, destroyed in the fighting, and the way I see it rehabilitated most of the rooms, and we can do simple surgery. There's a little laboratory. We can find out if people have malaria and other parasites, and the hospital most importantly is getting a reputation. People are beginning to come back, which is a good sign.

MS. HUNTER-GAULT: And they're not as sick?

DR. PHILLIPE MAUGHAN: They're not as sick. They're not as malnourished.

MS. HUNTER-GAULT: At a brief stop at an intensive care feeding center, there is graphic evidence of the waning crisis. The population of people who are falling below 70 percent of their body weight is now down from five thousand a day to between thirty and forty a day, mostly people from villages that have somehow fallen through the relief net or have dragged in from the Kenyan border. The death rate is also down now from a high of about ten thousand a day in January to about two or three a day now. Our final stop is an orphanage inhabited by some women and children but mostly children. It has been billed as a special pride and joy of two Marines, Master Gunnery Sgt. Ross Cochran of El Paso, Texas, and Sgt. Major Herman Lang of San Diego. They built most of the playground equipment for the 500 or so children here.

SPOKESMAN: What we did here, like you see the merry-go-round, a lot of this stuff is made from the technical vehicles that were confuscated. First of all, we dedicated the park to the two Marines that we did lose, and we felt that would be appropriate in January.

JONATHAN HOWE: Charlayne, what they've done is they've taken parts of technical vehicles.

MS. HUNTER-GAULT: Yes, they told me.

JONATHAN HOWE: Cut them down and put them together.

MS. HUNTER-GAULT: That's great.

JONATHAN HOWE: Isn't that terrific?

MS. HUNTER-GAULT: Yes, great.

JONATHAN HOWE: Very ingenious, swords into plowshares program here. That's great. How are you? Very nice to meet you. Chief of the village, great.

MS. HUNTER-GAULT: The elder tells the admiral that he is grateful for all the help he has received here, even though he is still faced with the near total absence of general services like water and sanitation.

SPOKESMAN: For the last 60 days we are lacking of mainly supplies or food or any other means of assistance.

MS. HUNTER-GAULT: But at the end of the day it is the sound of laughter of children that brings the tour to an end. That and a sudden appearance of a rainbow on the horizon. RECAP

MR. MacNeil: Again the main stories of this Tuesday, the government reported personal incomes rose 3.9 percent during 1992, a report by a private business group said consumer confidence was also up. New U.N. sanctions took effect against Yugoslavia, but fighting flared again in Bosnia. The Middle East peace talks resumed in Washington after a four-month suspension. Good night, Jim.

MR. LEHRER: Good night, Robin. We'll see you tomorrow night. I'm Jim Lehrer. Thank you and good night.