Sis-boom-bah! For Amalgamated Sponge

Taken cold, it sounds corny, a little self-conscious, as if Varanese had spent too much time with paperback how-to-win-friends manuals, but it proves to be no less than the truth. Moving around Lockheed from the Union Hall to the hush of Mahogany Row with Varanese is like making progress through a Democratic Convention with Jim Farley. The Lockheedians cluster about and invariably let it be known that Big Mike Varanese is just what he claims to be—one right guy.

What it costs and who pays for right guys like Varanese to circulate through factories passing out ping-pong balls and complimentary tickets is not considered to be a polite question in the euphoric Many Man's Family of industrial recreation. Executives who are not shy about announcing corporate contributions to charity, education and community service drives tend to speak softly or not at all about the cost of employee recreation.

"Stockholders," says one management man in off-the-record tones, "are inclined to get restive when they see half a million or so being spent on what seems to them to be mostly horseshoes and bowling."

Employees, on occasion, can also be critical of ostentatious recreation expenditures. "Some companies have tried to equate a big picnic with a 10�-an-hour raise," says Tom McNett, two-term president of the International Association of Machinists, Local 727, whose 15,000 members make it Lockheed's biggest union. "And there have been cases where a softball league or something would be scheduled on top of a union meeting. But none of this holds true for Lockheed," the union boss adds emphatically. "The union is not 100% behind LERC recreation, it's 1,000%." McNett's actions bear out his rhetoric. He himself is a veteran Santa Claus at LERC's Christmas festivities.

Another consequential group that recently looked somewhat askance at industrial recreation was the United States Congress. In July 1964 a House Armed Services subcommittee heard witnesses regarding the practice of industrial firms, working on cost-plus contracts, to charge off recreation and entertainment expenses to the Government. Such charges are permitted if they are "reasonable" and considered necessary for employee morale. However, the burden of the testimony of U.S. Comptroller General Joseph Campbell before the subcommittee was that there was no reasonable justification for some of the charges. Included among bills that the Government had been asked to pay, said Campbell, were those for a $12,000 crab feast given by Martin Co. of Denver for its employees and a $35,000 "outing" of Ling-Temco-Vought, Inc. of Dallas. A "substantial amount" of a $197,000 IBM expenditure helped defray the operation of three country clubs, testified Campbell, and Aerojet-General Corp. put the bite on Uncle Sugar for $101,000 to take its employees and their families to Disneyland (Aerojet, after a flurry of publicity, withdrew the claim for payment). Campbell also raised a disapproving eyebrow at the supposedly nonprofit, employee-run welfare and recreation organization of North American Aviation, Inc. The group got $1.3 million from vending machine profits in 1962 but spent only $546,000 and had on hand assets of $750,000 in cash and Government securities plus property valued at more than $3 million, said Campbell.

As Congressman Porter Hardy Jr., a Virginia Democrat heading the subcommittee, commented succinctly at one germane point: "It seems to me the whole thing is a little bit cockeyed."

Because of all the delicate financial, legal and public-relations issues that can arise, only about 10% of the companies in the National Industrial Recreation Association finance their programs directly through regular budget allotments. By far the most popular method is that used by Lockheed, whereby profits from vending machines in the plant are used for recreation. "The machines are only there for the convenience of employees," says Pettefer, the Lockheed labor relations man. "We're in the aerospace business. We're not trying to make money off peanut-butter crackers and soda pop. Employee recreation is a logical place to put money the employees have put into vending machines."

Also like Lockheed, for legal as well as psychological reasons many companies have set up employee clubs, associations or councils as nonprofit corporations with at least theoretical authority to disburse the recreation funds. Few companies, however, go to such lengths as Lockheed does in insisting on the parliamentary freedom of the employee organization. In many other firms management representatives openly sit on the governing boards, where everyone is equal but some are more equal than others. At Lockheed all employees are automatically members of the recreation club, but at most other firms employees pay a token fee, a dollar or so a year, to join the recreation group. This fee supplements the budget allotment or vending-machine take and also seems to serve a psychological purpose.

"If you pay for something, be it recreation or anything else, you're more apt to use it," says Don Neer, the executive director of the National Industrial Recreation Association. "The money is peanuts compared to what a big company spends, but we recommend that dues be collected."

Participation, vending machines and congressional committees aside, the $64 question, or more accurately the $1.5 billion question, is: Why do corporations shell out hard money so that employees can play games? Does it pay off for industry itself? Neer's NIRA, which is essentially a union of industrial recreation workers, has an obvious stake in answering in the affirmative. The NIRA line is that the present outlay is money well spent, that in the future industry should spend more for fun—and as a byproduct hire more recreation directors.