Andrew Tobias - Demystifying Finance

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FIRE AND ICE
The Story of Charles Revson - the Man Who Built the Revlon Empire.

Chapter 7

But You Wouldn't Want to Work There

All I demand is perfection.

-- Charles Revson

By the late forties, Revlon was already ensconced in the Squibb Building, at 745 Fifth Avenue, and had more than a thousand employees on the payroll, there and at the plant. The Revsons had had fifteen years or so to learn how to deal with employees. Yet turnover of clerical personnel was running at 166 percent a year -- the average girl lasted seven months -- and executive turnover was nearly as bad.

People were like checkers in the Revson style of management. One personnel man from the early fifties, now head of personnel for a Fortune-500 company, would have to fire thirty people in the office when business slacked off, then go out and hire thirty more on Monday when business picked back up.

An earlier Revlon personnel manager, Walter Ronner, joined the company in 1947 and was immediately thrown into such a situation. "I arrived on a Friday," he remembers, "and I wasn't there more than three minutes when I got a call from Joseph Danilek, the comptroller of the company. He said, 'We are going to lay off about forty people today. You have them laid off; we are going on an austerity program.' So I asked him, 'How do we do this? By seniority or by job classification?' And he says to me, 'Look, I've got orders from management to lay off forty people. I don't care how you do it, but get rid of them. By the way, we quit here at five-fifteen, so don't notify anybody until five o'clock. We want a day's work out of them.'

"We had two full floors in the Squibb building, all open offices, typewriters, calculators, NCR operators and so on. And I didn't know who any of these people were. I visualized . . . here I am, coming in as a new man, and the first thing I do is discharge forty people. So I said to Danilek, 'I refuse to do it.' He says, 'Do you mean what you say?' I said, 'Yes.' He was not my superior; we were on the same level of authority. 'If that's the case,' he says, 'I'll have to do it myself.'

"Forty people were picked at random, and at five o'clock Danilek lined them tip on the stairs between the fifth and sixth floors -- so the others wouldn't see -- and he gave them a little lecture about lack of work and handed them their severance checks and let them go.

"On Monday morning there was a call from Charles's secretary: 'Mr. Charles wants to see you.' So I went to see him. There was a tray on his desk with mashed peas, a glass of milk, and crackers. He was on one of his diets. The first thing he said to me was, 'Are you a Socialist?' He said, 'You know, when you get orders from top management, your job is to carry them out. It looks like you and I are not going to get along at all.' So I said, 'You can't fire me for refusing that kind of instructions. You and I have a contract.' He said, 'Who the hell gave you a contract? You haven't got a contract.' I said, 'Yes, I do. I have a contract with this company that is superior and takes precedence over any written agreement. I'm supposed to make money for the company. If you ordered me to take ten thousand dollars and dump it in the Hudson River, I have a right to refuse it. This is what you did Friday.'

"He said, 'How did we throw the money away?' I said, 'We shouldn't have given those people severance pay. On the basis of two weeks' average, it came out to almost ten thousand dollars.' He said, 'That's our policy, to give severance pay.' I said, 'Not if people quit. We have thirty-five to forty people quitting here every week. (This was an exaggeration. With 275 office workers then at 745 Fifth Avenue, it normally took about four weeks for that many to turn over.) All you have to do is wait a week and we'll lose them and we'd save the ten thousand. In addition to that, we have damages that we can't calculate. You've got people looking through desks to see how things were being done, where things stood . . . you have no continuity, no orderly transition. And the rest of them are busily looking in the paper seeing what jobs they can get elsewhere. So what you've done is a great big loss and I refuse to participate in it.'

"Charles asks me with a sort of a twinkle, 'Does that mean that thirty-five people will leave next week too?' I said, 'Yes.' He said, 'How do you know?' I said, 'Because we keep turnover figures in this company, but nobody pays attention to them.'"

That week there was such demoralization in the office over the previous week's bloodletting that more than thirty-five people left, Ronner says. He went to the art department and had a giant invoice made up in the amount of $1,500,000 for "labor turnover for the year," addressed to Revlon and stamped PAID. He sent it through the regular inter-office mail to Charles.

"I got called again to come see Charles," Ronner says. "It made an impact on him because he understood advertising. That was the only way you could communicate with him, through some kind of dramatic thing. And you had to stand up to him. I learned very early about him.' He was like a tiger. If he was in a cage with you and he smelled your fright, he'd jump you. That was the end of you. But if you stood up to him, you gained his respect. I had pretty free reign after that."

Ronner instituted a security system under which one couldn't be dismissed unless he was given a warning first, and unless the dismissal was agreed to by a three-man security board. Turnover, he says, abated dramatically. But before the security board system had been devised, in 1949, and after it faded from the scene with Ronner's departure in 1952, people were being fired like popguns. A beauty consultant had to go because, in Charles's words, she had a smelly .... . Receptionists were chosen to match the décor -- and since the decor of the reception area was changed at least twice a year to match each new shade promotion, the average receptionist was fortunate to last six months. To Charles, she was the central character in what was really one enormous walk-in window display. But rather than have Personnel line up a dozen prospects for him to audition, Charles would just requisition "a blonde" or "a brunette." Then, in passing through the reception area, he would decide that the woman was no good -- she wasn't a natural blonde, or her complexion was too dark, or she wasn't tall enough -- get rid of her. By the time the right girl had been installed, a new promotion would be on its way, and the call would go out for a redhead. Personnel tried to transfer used receptionists into other jobs, but most of them were aspiring actresses or models who would have no part of, nor skills for, secretarial work. (So stories about turnover of Revlon receptionists, chosen to match the decor, are true. But some of the women, at least, knew in advance they were signing on for limited engagements.)

Longevity with the firm was inversely proportional to proximity to Charles. You get close to the fire, you get burned. With a few notable exceptions, like Ruth Harvey, Charles went through secretaries like a leper through a crowd. One of his secretaries had a mustache of sorts. Get rid of her. Another was the "Secretary of the Year" before he hired her. It was a disaster. Here she was, all efficient and organized and professional; and here was Charles, always running late, keeping his records in his head, and expecting her to take his shirts and his dirty handkerchiefs to the laundry. He virtually never dictated a letter and virtually never wrote -- or read -- memos. If his secretary gave him mail that had to be answered, he'd say, "Give it to So-and-so . . . find somebody to take care of it. "The letters that did go out over his signature were all written by her. Besides sorting his dirty laundry, she would go down to the kitchen three times a day and prepare his special tray of food-which he would sometimes just push away in disgust.

One of his secretaries had a law degree, great secretarial skills, and a knowledge of several languages. He hated her with a passion. But as he never fired anyone himself, he called Mickey in to do it. Mickey supposedly walked up to her desk and said, simply, "Get out of here." See how easy it is to communicate with people?

You would think that a secretary would require very little urging to leave such a boss, despite the money and status that went with the job. But it was difficult to get a secretary for Charles Revson who would not fall in love with him. However inconsiderate or abusive he could be, he had that tremendous magnetism.

 

At Revlon, fear was the dominant emotion, particularly among those whose intercoms might crackle at any time with a call from Charles. The tension started at the top. Each of the brothers was strong-willed and outspoken, even if Charles was clearly dominant. Their battles were frequent and bloody. To quote Carl Erbe, their public-relations counsel of many years, and a close friend of Martin's: "There was a tremendous emotional clash among the brothers. They would fight and not talk for three or four days. But the end result was good, because what they were fighting for was a better business." (It was a situation Charles would not tolerate forever, however.)

Physically, the fraternal summit meetings were extraordinary. Joseph was a sniffler. He had allergies. Martin had a nervous cough and kept a spittoon nearby. And Charles, who had digestive problems, belched a great deal. Together, they sounded like a sputtering Model T Ford.

To deal with the fear and tension in the Revlon organization, Erbe initiated a series of comic films, slide shows, and theatricals. The idea was to improve morale by demonstrating that the Revsons could laugh at themselves. A thirty-minute film called Inside Revlon included a shot of Lester Herzog whipping a Revlon sales manager, stripped to the waist and bloody. (Casting Charles in this role might have hit a little too close to home.) A spoof called Breath of a Salesman, staged partly to counter the negativism of Death of a Salesman, which opened on Broadway in 1949, and which Martin, particularly, deplored, had a scene where the man playing Joseph Revson was to enter the strong room, dust off the money, laugh maniacally, and then wheel the money back into the safe. Erbe chose a man named Eli Davidson for the part, but fear of the Revsons was such that Davidson refused it. He was certain he would be fired. No manner of verbal assurances could persuade him. Joseph had to write out an affidavit guaranteeing his job before he would take the part. His performance turned out to be the hit of the show-which, Erbe says, "created a marked difference in the atmosphere in the company for a period of time." The problem was, it wasn't a terribly long period of time.

Charles wanted the fabric of his organization to be tight. If a girl went to the ladies' room, she was goofing off. "You treat your secretary like a sister," he often chided executives. He told Jerry Juliber, for a long time his personnel manager and number-one snitcher, "The thing that has ruined companies is when looseness sets in. You got to keep tight at the ass. The day we get soft, we'll go down fast." He spent his own money lavishly and was generous with salaries, but he was also capable of saying to a woman who tossed a paperclip into the ashtray of his conference table, "I paid for that paperclip!" And mean it.

He had a great fear of being taken. He would go to any expense to get an ad perfect, yet he hated to let his creative people shoot ads on location. Locations tended to be in rather sensational vacation spots, and Charles was afraid he was being taken. At one meeting up in his skyscraper office with a bunch of advertising and agency people, he stopped in midsentence when a passing jet plane caught his eye. "There goes another art director," he said ruefully. A New York photographer's studio once had to be transformed into a Caribbean paradise, palm trees and all, at enormous cost, because Charles refused to have three or four of his people fly down to shoot the ad.

Not only were people "fucking on the company," as Charles put it; they weren't coming in to work on time. This may have had something to do with the fact that Charles himself never arrived at the office much before eleven or twelve, but it was no less deplorable. (Charles knew about the lateness of others through his network of informants.) At various times in the company's history, therefore -- and as late as 1971, when Revlon was supposedly a modern corporation -- everyone was required to sign in in the morning. Everyone. Even Charles signed in. One day, when Revlon was in the process of moving from 666 Fifth Avenue up to the General Motors Building, in 1969, Charles sauntered in and began to look over the sign-in sheet. The receptionist, who was new, says, "I'm sorry, sir, you can't do that." Charles says, "Yes I can." "No sir," she says, "I have strict orders that no one is to remove the list; you'll have to put it back." This goes back and forth for a while with the receptionist being very courteous, as all Revlon receptionists are, and finally Charles says, "Do you know who I am?" And she says, "No, sir, I don't." "Well, when you pick up your final paycheck this afternoon, ask 'em to tell ya."

If Revlon was a difficult place to work, particularly in the forties and fifties, it was not without its rewards. George Hastell, Revlon's most senior employee, got his first Christmas bonus after only three or four years with the firm. He was making $28 a week by then, when Joseph called him in and handed him an envelope; George thanked him and started to walk out. "Aren't you going to open it?" Joseph asked. "All right, I'll open it," George said, "but whatever it is, I'm happy." He opened the envelope and found $150 in cash inside, it was more money than he had ever seen in his life. "I'm flabbergasted," he said.

He had been with the company twenty-three or twenty-four years when Charles, Joseph, and Charlie Lachman took him to lunch at the Savoy Plaza and presented him with a gold watch for twenty years' service. "I felt very ill at ease," he remembers. "I had never been in their company socially; they were the bosses. I'm sure they felt awkward, too."

And on his fortieth anniversary with the company, in 1973, by which time a full-scale personnel department had professionalized much of the haphazard employee relations of the early days, they surprised him with a free trip anywhere in the world. He and his wife chose the Orient, and Revlon paid for everything. (Not all long-time Revlon employees were by any means as fortunate.)

 

Upper-echelon executives were treated to stock options along with their salaries; but particularly before Revlon went public, and afterward as well, the Christmas bonus was used as the chief expression of appreciation. Charles never praised anyone's work. But the fact that an executive was still on the payroll meant he was doing okay, and the size of his Christmas check signified just how well. Joseph would distribute the checks promptly to the operations people who worked under him. Charles would keep his batch of checks in his vest pocket for months. People were standing around with their tongues hanging out. Christmas went by, New Year's went by, Washington's Birthday . . . Then Charles would pull out one of the crumpled checks, with the ink practically worn off, and he'd say, "Here, kiddie, here's a check for you." By the time the guy actually got the bonus, he'd lost his taste for it. But Charles looked on these bonuses as gifts. Nobody should tel1 him when they were to be given. If they were required of him, they weren't gifts. This way, he had everyone on a string.

The clerical and factory workers, at first, got no Christmas bonuses. They got Thanksgiving turkeys. A choice: kosher or non-kosher. Anytime anything came up, no matter what, Charles and Joseph would say to Ronner, the personnel man, "Look at these goddamn people. We give them turkeys and look what they do to US."

"I was getting kind of tired of hearing about turkeys all the time," Ronner says, "and Dave Livingston, the head of District Sixty-five, knew it. He said to me one time in the middle of our negotiations, 'You know, Ronner, we only have to eat those turkeys once a year. You've got to eat them all year round. Why don't we discontinue the turkeys? We don't want them.'"

The next time Charles said something about the turkeys, Ronner told him that the union had requested that they be discontinued. "You mean they don't want them?" Charles asked. "Why not? .... Because they don't think they should sell their soul for a turkey," Ronner replied. "Would you?"

Unions made Charles very uneasy. When Eli Tarplin was first interviewed for a marketing job in 1949, Charles noted that he had taken a course in labor relations. "Are you a Commie?" he asked Tarplin. "Are you an agitator? I don't want any agitators: we have a lot of labor problems and I don't need that." Charles never dealt with unions himself, leaving that first to Mickey Soroko, and later to his personnel managers -- Ronner, succeeded by Jerry Juliber, succeeded by Jay Bennett.

The first attempts to organize Revlon workers came in the late thirties, while the company was still on Forty-fifth Street. The union organizers had gotten some Revlon employees along with some noncompany people to form a picket line. Mickey Soroko arranged to have all the nonstrikers meet at the Bloomingdale's subway exit and drive across town to Revlon's offices in cars he had hired, walk through the jeering picketers and into the building. "Mickey made a real thriller out of it," says one who was around at the time, "and the funny part is, he really didn't have to." The people who missed the cars just walked calmly up the street and into the building. After about a week, the picketers threw in the towel. In the midforties, however, Revlon was organized by District 65 of the Distributive Workers of America, then a very left-wing outfit.

Mickey's dealings with the unions ranged from the heavy hand to the glad hand. During a strike in 1947, he came down with the flu and had the entire union negotiating committee bussed up to his home in Larchmont. Someone suggested to Charles that this might not be so smart, bringing the workers to posh surroundings to tell them the few cents an hour raise they were demanding was excessive. But Charles supposedly said, "What are you talking about, posh? His home is a nothing. It's a piece of junk." As, by Charles's standards, it was. But the workers were impressed. They liked the swings in the yard -- just the kind of playground they wanted for their kids -- and they were delighted to find a bartender in a white jacket waiting for them inside with an open bar, hors d'oeuvres, and the like. Indeed, rather than feel any great sympathy for Mickey, who came down in his pajamas and bathrobe for the negotiations, some of them began to feel nine feet tail from the drinks.

Still, even if it cost a little more than it might have to settle the strike, Revlon could afford it. And it was worth the money to get those workers to stop slipping little "fuck you" notes into the compacts, the way in later years disgruntled automotive workers would toss a loose bolt into the deep recesses of the odd Cadillac or Continental.

Subsequently, Jerry Juliber somehow befriended the head of District 65 -- became, in fact, his best friend and neighbor, Juliber says -- and there was relative harmony between Revlon and its union for the next twenty-five years.

(The ex-president of one of Revlon's former subsidiaries, who makes no attempt to conceal his hatred of Charles Revson, claims that Revson and Revlon were forever paying people off, including labor leaders. He says that one day he agreed to a 3 percent wage increase for the workers in his company, and that that evening he got a call direct from Charles ordering him to rescind the raise. The next day, he says, one of Charles's men arrived at his place with a bag full of money for the union leaders, but that he refused to go along with the attempted bribe.)

Charles himself never attended labor negotiations and rarely visited the factory. He was much more interested in the laboratory and in the marketing end of his business -- the creative side. Joseph was at least nominally in charge of overseeing Operations.

Joseph would arrive at the 134th-Street plant every Tuesday for inspection. Knowing Joseph's routine, the workers, who arrived at the plant at eight, would spend the morning cleaning and sweeping and dusting until Joseph came. They would not run any of their production lines, because there was no way to do so without messing things up. Management cooperated in this farce because management's neck was on the line, too. As Joseph's car pulled up to the plant, the word would go around to get ready. And as soon as he approached a work area, the conveyer belts would be started up. Joseph would go through and see everyone working and everything spotless, just the way a plant should be. No boxes on the floor, nothing out of place.

Joseph would not tolerate smoking anywhere in the plant. A hazard. So on Tuesdays no one smoked until after he had left. There was an elevator operator, an Italian, who used to afford himself the luxury of a single cigarette every day after lunch, down in the basement by the oil furnace. One day Joseph decided to inspect the boiler room, which he had never done before. He catches this elevator operator smoking, next to the raging furnace, and fires him on the spot. The union (not District 65, a different one) threatened to shut down the plant if this man was not reinstated, which would have crippled the company right in the middle of a successful promotion -- for a lipstick shade, if you can believe the neatness of the story, called Where's the Fire? Charles was apprised of the situation and reason prevailed.

Joseph was forever being countermanded by his brighter, brasher, younger brother. "You idiot!" Charles would say in front of others as he launched into criticism of something Joseph had done. Or else he might just come in and make a broadside attack: "Joseph," he would say, "do you know what's going on in that factory of yours? Do you know?" And then he'd turn on his heel and leave. This tended to have an unsettling effect.

Poor Joseph. His speech was extremely hesitant and riddled with even more "in turns" then Charles's was. His two next most frequent phrases were, in turn, "by executive directive" and "in that sense there."

"He was dull," says Irving Botwin. "You couldn't get two words out of him. I could never figure him out. When I first met Charles, Joe was in the Quartermaster Corps, stationed in Virginia. Lester Herzog told me once that Joseph wanted to donate a swimming pool for the camp, because it was very hot there, and that the army wasn't permitted to accept it. Joseph was the weirdest guy."

But great on the small stuff. "Joseph would come down and argue with me about the way I lettered the file cabinets," Eli Tarplin recalls. "One time I was sitting in a room arguing with him about spray cans. It was one of our first hair sprays -- I think Satin Silk. I was inexperienced and I hadn't ordered enough cans, and I came back to him and said I wanted to increase the order. He said, 'You can't.' I said, 'What do you mean I can't? We're sold out!' He said, 'If you go to school and you fail your examination, you can't, in turn, take the examination over again, can you?' I said, 'No.' He said, 'Well, in that sense there, that was your projection, and, in turn, you can't do it again.' I said, 'But, Joseph, this is business!'

"So I had to go to Charles to get the extra spray cans. But in that conversation with Joseph I had said, 'Joseph, you can't do that, you'll reap a hardship.' Meaning that we'd lose sales if we didn't get the cans. And Joseph said to me, 'Eli, what are you trying to say? Were you being insulting?' He apparently thought I meant 'reek,' not 'reap.' We went and got a dictionary and looked up the word 'reap,' and he said, as he sniffed -- he always put one finger on the side of his nose -- he said, 'That's a new word. In the future, don't use words that. I don't understand.'" In that sense there.

So Joseph's method, if you made a mistake, was to make you live with it (or fire you). Martin's philosophy was frequently articulated this way: "Kiddie, I'm running a bank. You make deposits, you make withdrawals -- you're human. You got enough deposits to cover your withdrawals? You got an account." Once he called in a man who had really blown it and was expecting big trouble. Martin walked over and put his hand on the man's shoulder and said, "Kiddie, you've got the deposits; don't make no more withdrawals." And that was the end of it.

Charles could take an equally broadminded view of mistakes if they were made honestly and were admitted openly. But Bill Mandel, who worked head to head with Charles for fifteen years, makes an additional point, regarding Charles's sense of proportion: "I've often said," he says, "that I could come up with a product that would sell twenty-two million dollars' worth. And the next night I could go to dinner with Charles, and if I order the wrong champagne -- that's one for me, the twenty-two-million-dollar product; and one against me, the champagne. They're equal. That's my description of Charles."

It was Joseph's conservatism combined with a clash of stubborn brotherly pride that led to his departure from the company in 1955, shortly before the public offering. Joseph thought it might be risky to take Revlon public and was against the move. His partners were for it. Furthermore, Charles had decided he had had enough of arguing. There could only be one man in charge. If his partners wanted to stay in the company, they would have to enter into a voting trust agreement, assigning the voting power of their stock to him. Joseph refused. He offered to buy Charles out. But he couldn't afford to buy out Lachman as well -- and Lachman, wisely, was not about to entrust the company to Joseph. So it was agreed that Revlon would buy back Joseph's stock.

Harry Meresman was sent up to Joseph's place in the country to try to mediate and persuade Joseph to sign the voting trust agreement so that he could remain in the company, but he still refused. Meresman recalls asking Joseph how he would feel if, after the company went public, the stock proved to be worth much more than he would be getting for it from the company. Joseph said that sometimes a man had to put principle ahead of money. And so he sold his 30 percent share in Revlon back to the company for $2,528,000, leaving his brothers and Lachman with all the stock.

Revlon went public on December 7, 1955, at $12 a share, six months after The $64,000 Question debuted. Within weeks it hit $30. By mid-1956 it had split two-for-one (as it did again in 1961, and three-for-two in 1969) and by the end of 1956 it was listed on the New York Stock Exchange.

That Charles, Martin, and Charlie Lachman had not expected this kind of instant success was evidenced by their selling 101,833 shares as part of the public offering. Thirty-four Revlon employees, meanwhile, were permitted to buy an average of 3,000 shares each at $11 a share, $1 below the opening price. Those who held on for just four years realized a 1,000 percent gain, or something more than $300,000 apiece -- which was separate and apart from the stock options they were soon granted.

Had Joseph waited four years, his Revlon stock would have brought $35 million. Joseph later said that if he had known Charles wanted him to stay in the company, and that it was Charles who had sent Harry, he would have stayed. Meresman asks, dryly, "Who did he think was sending me?"

But unlike Charles, Joseph could live easily off the income from $2.5 million. He led a very quiet, lonely life after leaving Revlon. It was not long afterward that his wife, Elise, separated from him, leaving him even more isolated. He spent much of his time in his apartment at the Carlton House, on Sixty-first and Madison. He liked to paint.

A friend saw him sitting stiffly in the dining room of the Savoy Plaza Hotel, lunching one Saturday afternoon with his young son. On Monday, he called Joseph, and asked if he might make a suggestion: "Wouldn't it be better to take your boy to a ball game or something?" Joseph thought that was an excellent idea and thanked him for suggesting it.

Joseph would walk, alone, along Central Park South or down Fifth Avenue, wearing an overcoat sometimes even in July. One evening in December 1971, Carl Erbe saw him walking down Fifty-seventh Street. "Joe, for Christ's sake, you don't look good," said Erbe. "Have you been to the doctor?" Joe said: "I'm going now." He died of a heart attack the next day. Charles attended the funeral but did not speak.

Joseph's estate was valued at $2,531,873, almost exactly what he had received for his share in the business sixteen years earlier. This was divided among his wife, Elise, and his three children, Joanne, Thomas J., and James A. Revson.

***

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