Executives Keep Tough Times From Sinking Their Business

Mary Berner wasted no time putting her footprint on Fairchild Publications after she was named president and CEO of the fashion-magazine house three years ago.

By CAROL HYMOWITZ Wall St. Journal

The 43-year-old Ms. Berner, who speed-talks, quickly divided the company into three divisions, changed publishers at several of Fairchild’s 12 consumer and trade magazines, and hired a new chief financial officer and other business managers to devise new planning, budgeting and other systems.

She talked about changing the culture at Fairchild, better known for spotting fashion trends than running smooth operations. "Pretty much everything in operations from computer systems to distribution needed fixing," says Ms. Berner, a former publisher of TV Guide and Glamour.

Ms. Berner also promised growth. She announced plans for several new magazines, a rare occurrence under Fairchild’s previous owner, Walt Disney Co., which ran the magazine group on a shoestring. Fairchild is now a unit of Advance Publications.

Then came Sept. 11 and the recession. The advertising market collapsed, shrinking revenues; postage costs rose; and newsstand wholesalers consolidated, dropping the distribution of weaker titles. "It was WHAM! The bottom fell out," Ms. Berner said in her 2001 year-end speech to employees.

Like others who ascended the corporate ladder during the 1990s and became CEOs just when the economy went into a tailspin and accounting scandals undermined trust in business leaders, Ms. Berner has had to rethink her expectations and adjust strategy.

The survivors will be those who don’t become discouraged and strike a balance between crisis management and planning for the future.

"I’m seeing CEOs who are doing all the right things and are still getting clobbered in this economy," says Noel M. Tichy, a professor at the University of Michigan’s business school, author and management consultant. "The challenge is staying the course and doing more right things so you at least limit the pain and position your company for a recovery."

Boston Consulting Group has also struggled in the downturn. It has reduced its work force by 12% in the past year, and trimmed travel and other operating expenses. A planned upgrade of laptop computers was postponed, and the biannual meeting was scaled back. Rather than fly business class to a posh resort, executives world-wide flew coach to a moderate-price hotel outside of London.

But Boston Consulting doesn’t want key clients to feel the pinch. "Our mantra is to grow tight, and we’re focusing lots of attention on our biggest clients," says Ron Nicol, who oversees the consultant’s business in North, Central and South America.

At Fairchild, Ms. Berner and her 11-member management team have similarly cut costs while continuing to make strategic investments. They have pared expenses by, among other things, canceling the launch of WWD.com, an Internet version of its flagship Women’s Wear Daily publication; folding Brand Marketing magazine into Supermarket News; sharing photography resources among magazines; and improving collections and reducing debt.

Several of Ms. Berner’s direct reports are people who have followed her from company to company. She says her team is so cohesive that when members set aside a day recently to discuss cost cuts, they surprised themselves at their efficiency. "We did everything in one hour, then went to the movies," she said.

To buttress its lean staff of about 700 employees, Fairchild expanded its unpaid internship program to 300 this year. "We’ve got M.B.A. students, marketing, communications and journalism majors," says Eileen Cross, vice president of human resources. "It’s free help, and then a pool of very talented candidates to draw from once they graduate."

At the same time, the company has spent money to straighten out its distribution system so trade titles aren’t delivered late to readers — a problem in the past. Several areas have been targeted for investment: a new classified-ad sales system that aims to boost revenues this year; the relaunch of Details, the men’s lifestyle magazine; office equipment; and a companywide performance-appraisal system.

"We didn’t used to have so many formal procedures," says Ed Nardoza, vice president and editor-in-chief of Women’s Wear Daily. "There was a Wild West character to this company that some creative types thrived in. But now there’s a forum for managers and employees to come together in a dialogue."

Communication is the most important task for executives during tough times. "Helping employees to face reality and to mobilize their resources is vital," adds Mr. Tichy.

Ms. Berner is very frank with employees. She doesn’t expect a rebound this year, but she also doesn’t put any blame on them. Instead, she praises employees for working hard. "The performance we brought in was the best it could be," says the executive, who is also the mother of four. "No one here deserves to be sent to your room."