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12The Tar Heel Thursday, May 26, 1988
Quality, service often disregarded in corporate circles
From Associated Press reports
NEW YORK The two most
commonly used words in business
advertising probably are quality and
service. In practice they might be
among the most neglected.
This dichotomy still shows in
surveys of American corporate prac
tices, even though the consequences
are well understood by management
and labor, having caused them
serious problems in the past.
Further evidence comes in an
analysis of 105 responses to a survey
of Fortune 500 companies by Organ
izational Dynamics Inc., a manage
ment consulting and training com
pany based in Burlington, Mass.
The survey found executives are
virtually unanimous in their belief
that responsibility for quality must be
shared by everyone in the company.
Almost all agreed that "everyone in
the company affects customer
The questioning continues, leading
to this finding:
In the typical company surveyed,
just 23 percent of workers were
involved in quality improvement
activities. Only 17 percent of the
respondents said their company
involves more than half of its
The results underscore what many
quality improvement specialists have
been saying for years, that one of the
major quality defects of American
industry is the failure to follow
through on corporate goals.
The problem isn't one of recogni
tion. Almost every executive will
explain that quality and service are
foremost among corporate goals.
Awareness probably has never been
higher. The consequences of poor
quality are known.
In fact, the current emphasis on
quality arises from the painful expe
rience American industry had with
poor quality during the 1960s, when
U.S. companies began losing entire
markets to the Japanese, who
Oddly, much of the quality control
practiced by the Japanese emerged
from the U.S. experience, and from
Americans who had raised it to the
level of a science, including W.
Edwards Deming and Armand
Some major American corpora
tions intentionally let quality deteri
orate, contending it was more cost-
effective to allow flawed products to
leave the factory, to be fixed later by
It didn't work, largely because
after-sale service was likewise flawed.
That is, the quality of service was as
bad as the quality of the product, and
customers quickly became aware of
Much of the subsequent recovery
of U.S. industry, now showing up as
a resurgence of manufacturing, pro
ductivity gains, improved trade
statistics and healthier profits, is a
consequence of efforts to improve
quality and service.
Legislators to face controversy
over shareholder protection law
From Associated Press reports
RALEIGH An examination of
North Carolina's corporate laws has
unleashed a controversy over how
much those laws should protect
corporate directors and whether
revisions are needed in a 1987 law
designed to protect shareholders.
The dispute pits advocates of
corporate management against advo
cates of shareholders, with big bucks
for some of the state's corporate
lawyers said to be riding on the
outcome. And to influence the out
come, partners in some of those firms
are exercising their political clout.
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Over the past year, two groups
have reviewed ways to update the
state's corporate laws, last overhauled
The Corporate Law Study Com
mission was appointed by the General
Assembly and is made up mostly of
state legislators. The commission is
expected to propose changes that
would be likely to benefit corporate
directors in the legislative session that
begins next month.
A separate panel, the N.C. Business
Act Drafting Committee, also has
studied the laws and will propose
further changes next year. The panel,
which is made up of attorneys and
law professors, is considered to be
more strongly aligned with share
A key issue in the deliberations:
Should shareholders have a voice in
deciding whether directors be
required to pay fines levied against
them as a result of lawsuits brought
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The issue is important, corporate
experts say, because it involves
money the money that corpora
tions and directors might have to pay
to shareholders for decisions that hurt
In the past, such issues were not
as urgent because companies carried
insurance to pay for damages from
lawsuits filed by shareholders. But
when premiums rose sharply, com
panies turned to state lawmakers.
In response to those pleas, the
legislature in 1986 passed a law that
allows shareholders to sue corporate
directors in an action called a deriv
ative lawsuit. If the shareholder wins,
directors might be ordered to pay
damages, but the corporation is
allowed to reimburse directors for
In effect, corporations are paying
for damages against themselves,
caused by the negligence of their
directors. The bottom line: Large
fines can depress a company's earn
ings, stock prices and return to
Some commission members and
most members of the drafting com
mittee say the 1986 law should be
changed so that directors are not so
easily reimbursed if they act
Officials to probe
in some GM cars
From Associated Press reports
safety authorities have opened a
new investigation of 1.4 million
Oldsmobile, Buick and Cadillac
cars, tripling the number of
General Motors Corporation
autos being investigated to deter
mine if a mechanical defect causes
them to speed up unexpectedly.
The National Highway Traffic
Safety Administration (NHTSA)
said Tuesday 110 complaints
involving 1985-88 GM C-body
cars, including the Oldsmobile 98,
Buick Electra and Cadillac
DeVille and Fleetwood, alleged
the cars showed unintended accel
eration because of a "significant
increase in engine speed and power
NHTSA last year opened an
engineering evaluation of 703,000
GM H-body cars the 1986
Oldsmobile Delta 88 and Buick
LeSabre, and the 1987 Pontiac
Bonneville after receiving more
than 500 complaints about sudden
acceleration. Those cars report
edly had been involved in more
than 300 accidents, NHTSA said.
The C-car investigation was
started at the request of the Center
for Auto Safety, a Washington
based consumer group often crit
ical of the auto industry and its
The H-car and C-car investiga
tions are separate cases on the
NHTSA docket, but the center
suggested the possibility of a
connection between sudden accel
eration in the two types of vehicles.
"Those cars share similar
mechanical components, and
that's why we believe that those
(C-body) cars may experience a
sudden acceleration problem that
is as bad or worse than the H
body cars," said Sam Cole, a
spokesman for the center.
GM said it had found no
mechanical cause for alleged
sudden acceleration in the H-body
cars, and so a comparison of the
two vehicles was useless.
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