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imminiiiiiHj not made it to the top have won ready access to top management. "Ten years ago, the controller never got into the boss's office," says Chairman and President Robert T. Campion of Lear Siegler Inc., the diversified manufacturer with $700 million in sales last year. "Now he's part of the management team. He's not just keeping score ?╟÷he's playing the game." Why the emphasis shifted Executive recruiters also attest to the growing importance of the controller. Most major placement firms say that requests for controllers have risen more than for any other corporate function. Compensation for controllers has risen 25% to 30% faster than inflation in the past five years, and it now often tops the going salary for treasurers. In fact, the demand for chief executive officers with a controller background has increased sharply and "is even bigger than that for controllers," claims Thomas J. Neff, vice-president of Spencer Stuart Management Consultants in New York. As the controller's job has changed, so have the tools of the trade. In the old days, the controller simply worked up the profit- and-loss statement and the balance sheet. Today the job involves elaborate monitoring and crosschecking of scads of financial data from profits and expenses to return on investment and the cost of capital. Instead of the adding machine and ledger books, the controller works with increasingly complex, sophisticated computer programs that keep him in almost daily touch with almost every facet of the business. The reasons behind the new emphasis on corporate controls are clear. In the early 1950s, production efficiency received most of top management's attention. Later in that decade, the marketing people took over, and advertising and market research flourished. By the late 1960s, with capital plentiful and corporations increasingly diversified, the financial men who could make deals and raise new money rose to the top. Corporations borrowed to the hilt to tions called on the controllers to get the business back on track. In fact, Lear Siegler's Campion credits the rapid rise of the controller directly to the economic tremors of the early 1970s. When inflation hit double-digit rates in 1973, the costs of doing business?╟÷not the least of which was the interest rate on all that debt?╟÷soared. And when the economy dived into its worst postwar recession a year later, corporations saw their profits drop 30% and 40%, sometimes more. Even so sophisticated a company as General Electric Co., with a history of superior financial controls, found itself somewhat at sea in the economy of three and four years ago: business slowing, costs getting out of control, and profits under intense pressure. "The financial How the controller's office has grown +90 4-75 +60 +45 +30 + 15~-f \ I Change in total employment 1970-77 Xerox -Delta Air Lines General Electric General Motors A Percent borrowed to the hilt keep up their all-important growth rates and make acquisitions. By 1973, of course, that bubble had burst, and defensive-minded corpora- crisis of 1974, and the double-digit inflation, brought the controller's job into the limelight," says Alva O. Way, ge's financial vice-president. "The general managers of each of our businesses needed that fellow just to understand what was going on." Nor has the economic recovery since 1974 inspired much confidence. For one thing, when executives began looking back over the wreckage of the mid-1970s, they discovered that 1973 and 1974 had not been their only bad years. Costs of goods sold and of interest had been rising rapidly as a percentage of sales since the mid-1960s. And many of the grand expansion plans of the booming 1960s simply did not pan out. By 1976, profit margins had been falling almost continuously for 10 years, slipping to 5.3% of sales from their 1966 average level of 7%. In such an environment, the turn to tougher financial controls may be inevitable. But it also raises concern among economists, and some businessmen themselves, that corporations are tightening the reins too much and seeking quick returns at the expense of longer- term payoffs. Whereas new investment in the 1960s got out of hand, businessmen's reluctance today to put up new plants and take on new ventures accounts for a good deal of the current softness in plant and equipment spending. "In watching expenses, you can let opportunities slip away," says Charles H. Davison, deputy chairman of Peat, ^ Marwick, Mitchell & Co., the Big Eight accounting firm. M There is deep concern that some I companies are overstressing me- i chanistic control and slighting not I only capital spending but also crit- f ical research and development?╟÷ | truly borrowing from the future to get by today. "What I worry about is that pressure to keep up current earnings and dividend payouts will hurt development programs," says Professor Joseph L. Bower of the Harvard Business School. Indeed, at some companies there is already something of a retreat from tight controls. The dethroning of Arthur R. Taylor as president of CBS Inc. is said to have resulted in part from his emphasis on placing tight controls on a business that depends far more on creative energy. Similarly, observers say the trouble that Franklin M. Jarman had at Genesco Inc., the apparel and retail store conglomerate, had a lot to do with his insistence on controls that straitjacketed operations. Jarman was ousted as Genesco's chief executive last January. Even J. C. Penney, well-known as a tightly managed company, is relaxing some of its controls because they have occasionally taken more of the employees' time than they are worth. "We are very aggressively trying to back off unnecessary controls," says Penney's Northam. As controls tighten up Nevertheless, most companies?╟÷beset by costs that will not quit rising and by the demands of investors for higher returns and better ratios of debt to SEPTEMBER 17