(FORTUNE Magazine) – IN THEIR OCCASIONALLY feverish effort to become more competitive, American businessmen have grabbed for one restorative after another, some of them quite strange. None seems stranger than the human potential movement, which for years has offered the ordinary citizen a vaguely defined ''breakthrough experience'': In a weekend or so, change your life forever. Now prophets of the movement have begun to argue that they can fundamentally change companies the same way, by appealing to emotions rather than reason. The gurus have adapted their standard programs to suit business clients and are finding a fast-growing market among corporations still searching for the answer to productivity problems. A few examples: -- Werner Erhard, 52, has abandoned his Erhard Seminars Training, or est, a program famous in the 1970s for the draconian ways it used to teach people to take charge of their lives. But in 1984, Erhard started a management + consulting operation called Transformational Technologies Inc. -- A related movement called MSIA (pronounced Messiah) offers seminars to individuals, some sent by their companies. MSIA is led by the Mystical Traveler Consciousness in the person of John-Roger, 53 (who doesn't use his last name, Hinkins). -- The Church of Scientology, a full-blown cult that believes it has simple cures for high cholesterol levels, radiation sickness, low productivity, and just about anything else that ails society, now has two subsidiaries that specialize in consulting to corporations. Recently even mainstream management training in the U.S. has moved a long way from standard classroom instruction. Otherwise conventional companies send their people on white-water raft trips, or to rappel down cliffs, or to act out corporate concerns in games or skits (see ''Wanted: Leaders Who Can Make a Difference,'' FORTUNE, September 28). Sometimes the dividing line between what's conventional and what's daft is hard to pin down. The line might be found at the 2,000-acre Pecos River Learning Center on a ranch near Santa Fe, New Mexico. It's owned by Larry Wilson, 57, the founder of Wilson Learning Corp., a well-known and relatively straightforward training company. In 1982 he sold Wilson Learning to John Wiley & Sons, a New York publisher, and put $6 million of the proceeds into building a center designed to give managers an unforgettable experience. Among other things, they are invited to launch themselves off a cliff, hanging onto a pulley that races down a so-called zip line stretching to the other side of the Pecos. Each new arrival at the bottom gets a big welcome from his colleagues, who crowd around, jump up and down, and shout, ''Hug, hug, hug.'' With clients such as Dow Chemical, General Motors, Hewlett-Packard, the Lutheran Brotherhood insurance group, and Sears, Wilson clearly has established his appeal to big business. The ranch's revenues jumped from $1.8 million in 1986, its first year, to an estimated $4 million this year. Even companies over the line have attracted mainstream clients. After two years Erhard's Transformational Technologies has licensed 58 small consulting firms for a fee of $20,000 plus 8% of the gross. They are selling his techniques to dozens of FORTUNE 500 companies. At the extreme of human potential training, the Church of Scientology finds most of its business clients among small companies and, remarkably, medical group practices. - The human potential outfits that cater to business like to play down their past, styling themselves as part of the mainstream today. But they bring with them some of their old medicines, even if watered down. They may, like Wilson, use simple group dynamics to get people pumped up. But some go far beyond this, using psychological techniques that can induce ordinary people to suspend their judgment, surrender themselves to their instructors, and even adopt new fundamental beliefs. PEOPLE who take the Scientology course in communications find themselves the subject of ''bullbaiting'' and ''confronts.'' In bullbaiting sessions, a student must try to remain expressionless while classmates badger him with taunting jokes and insults. In a confront, two people sit and face each other squarely, staring fixedly without movement. Both exercises are classic ploys in brainwashing, or thought control: They create a sense of powerlessness to rid the subject of old patterns of behavior. Groups also try to subjugate students with nit-picking discipline, demanding perfect punctuality and accepting no excuses for missing a session. Handsome, seemingly powerful instructors wrap themselves in mystery with jargon often bordering on the meaningless. HUMAN POTENTIAL GROUPS all have a common aim: to alter people -- or corporations -- radically by unleashing energies that purportedly remain unused in most of us. They seek to liberate the mind, they say, by breaking the chains of habit and passivity. Training is designed to be a powerful emotional experience. To chief executives seeking breakthroughs to new levels of quality, say, or productivity, the potential kick from all this unchained energy seems just the ticket. Many observers of the human potential movement don't share this enthusiasm, however. Carl Raschke, an expert in religion and society at the University of Denver, sees in the groups' outreach to business an attempt to transplant cultism and mysticism from the counterculture of the Sixties and Seventies to the corporate world. ''It puts people in a more mellow mood and makes them more compliant,'' he says, ''but it certainly doesn't make them more productive. It robotizes them.'' Whether or not the training makes people more productive, it certainly raises troublesome questions. Says Robert Tucker, head of the Council on Mind Abuse (COMA) in Toronto, an organization that helps people break away from cults: ''It's one thing if an individual walks in off the street and signs up for a course, but quite another if your boss sends you. Then there's a level of coercion. Does my boss have the right to put me through training that conflicts with my religion and my world view?'' Margaret Singer, a psychologist at the University of California at Berkeley, has studied what she calls ''coercive thought reform'' for over 30 years, since the Korean war. She points out that putting people through intense psychological pressure without good therapeutic reasons, and without knowing their family history, can have shattering results. Forcing someone terrified of heights into a precarious position in a high place can create that pressure, especially with the boss looking on. Singer, Tucker, and organizations such as the American Family Foundation in Boston and the Cult Awareness Network in Chicago report an increase over the past few years in the number of people needing psychiatric care as a result of corporate training programs. RICHARD OFSHE, a colleague of Singer's at Berkeley who as a freelancer won a 1979 Pulitzer Prize for his investigative reporting on another cult, Synanon, believes that corporations are building ''an enormous potential liability'' with such high-pressure training. ''Assuming these organizations transfer the methods they use with private individuals to the corporate side,'' says Ofshe, ''there will be a significant casualty rate.'' People who believe they have been psychologically damaged have successfully sued human potential groups in the past; now they will be able to sue their employers as well. The casualties and the lawsuits are probably still few; it is hard to fix their exact number since cases remain shrouded in medical and legal confidentiality, and employees are reluctant to criticize what their bosses have embraced. Trainees just coming out of a human potential course are characteristically on a high -- the courses are designed to produce that euphoria -- and will give the most glowing testimonials. Only rarely does a critical firsthand account emerge. The best-documented case of employees in revolt against human potential training came earlier this year at Pacific Bell. After the breakup of AT&T, Pacific Bell, a subsidiary of Pacific Telesis, decided that it needed to overhaul its corporate culture, which had been standard Bell. To help, it hired two associates of Charles Krone, a trainer who for years has served the likes of Scott Paper and Du Pont. Krone, who often veils his ideas in impenetrable language, claims to make people rethink the way they think and hence arrive at new ways of solving problems. The Krone consultants worked with Pacific Bell for two years and obviously made an impression on corporate culture: This year's corporate statement of principles was worded in a manner even Krone might find indecipherable. It defined interaction, for example, as the ''continuous ability to engage with the connectedness and relatedness that exists and potentially exists, which is essential for the creations necessary to maintain and enhance viability of ourselves and the organization of which we are a part.'' When the mounting resentment inside Pac Bell was revealed by the San Francisco Chronicle in March, the California Public Utilities Commission investigated and asked a consulting firm, the Meridian Group, to survey the utility's employees. Guaranteed anonymity, employees by the hundreds complained furiously. They hated the jargon and obscure language, the perceived threats that those who didn't adopt the new-think would have no future at Pac Bell, the ''facilitators'' who sat in as ''thought police'' at meetings to make sure the Krone procedures about agendas and note-taking were followed, and the implication that anyone who didn't get the new routine was stupid. There were, admittedly, also some pluses. Company meetings became more purposeful, and managers got to know each other better. The commission found, too, that the Kroning of Pac Bell was enormously expensive. It recommended that $25 million of the $40-million cost of the program in 1987 be charged to the stockholders, not the rate payers. Pac Bell suspended further training and ordered its own study. The company's president, Theodore Saenger, took early retirement, and his heir apparent, Executive Vice President Lee Cox, the chief supporter of the Krone program, was demoted to the presidency of a subsidiary, PacTel Corp. THE CHURCH of Scientology, while not yet as much of a force in corporate training, has developed a reputation in the press for its extravagant claims and affinity for lawsuits. Its founder, L. Ron Hubbard, a hugely successful science fiction writer, created the movement in the 1950s with the claim that he had come through incarnations for 74 trillion years and had learned that man's ills and shortcomings can be attributed to ''engrams,'' or painful memories, that can be erased by a purification process he developed. It involves the use of an ''E-meter,'' an elementary galvanometer, or lie detector. Hubbard died last year, after living in seclusion for many years. He had previously turned the keys of the kingdom over to the Reverend Heber Jentzsch, 52, a practicing Mormon who believes that Scientology cured him of fatal radiation sickness. Scientology's many legal troubles have included the 1983 jailing of Hubbard's wife and eight other Scientologists for burglarizing the IRS and other government offices, several suits involving the church's tax-exempt status, and a $30-million suit by Larry Wollersheim, a San Francisco businessman who charged that Scientology left him psychologically damaged and drove his novelties business into bankruptcy. Several of these cases are wending their way toward the U.S. Supreme Court. These tangles haven't slowed Scientology's growth, claims Jentzsch. He puts membership at 6.5 million souls. The Los Angeles-based church has moved into management consulting through WISE, a nonprofit organization, and Sterling Management, a consulting firm. According to Jentzch, Volkswagen is a client of WISE. Waving to a massive collection of gilt-edged volumes on his office shelves, Jentzsch says Scientology has developed ''brand-new technology'' that provides answers to business and economic problems that no one else has. On his computer, fitted with a Plexiglas screen containing lead particles to block radiation, he can call up 6,000 graphic representations, he says. Just what the books and the graphics will do is something of a mystery, but people who have taken Scientology courses say they do offer excellent material on subjects like handling work flow efficiently. Loretta Garrett, 27, head of the sales department at a 65-employee phone- answering service called Megaplex in Atlanta, was persuaded by her boss, John Stewart Jr., to take a Scientology course this year. At first it seemed to her like straightforward management training. But after a couple of sessions in what was called a communications course, she found herself deep into Scientology -- the obscure language, the bullbaiting, the confront. ''They tried to get us to admit guilt because sales were poor,'' says Garrett. ''They wanted to get us past the analytical brain to clear the inner brain, where the poor sales were caused.'' Another employee, who has since resigned, said the training was ''one of the most traumatic experiences of my life. It was essentially brainwashing.'' After Garrett refused Stewart's invitation to go to the local Scientology mission to have her personality ''audited,'' she concluded that people who didn't go along with Scientology wouldn't get anywhere at Megaplex. She quit; Stewart responded by telling her that she was fired. Garrett, who is black, filed a complaint with the Equal Employment Opportunity Commission. Stewart says the quarrel is really over vacation pay and that he will countersue. He also says his business's performance figures have ''gone up phenomenally,'' and that he will continue to urge his employees to take the course, and pay their tuition. ''At $60 a head, I'm happy as hell about it,'' he says. Werner Erhard's Transformational Technologies Inc., John-Roger's MSIA, and John Hanley's Lifespring -- all California organizations -- are gradually moving deeper into the corporate world. Hanley and Erhard both came out of the Leadership Dynamic Institute, a training organization dissolved after its leader, William Penn Patrick, died in a 1973 plane crash. Former members have accused the institute of bizarre and brutal cultish practices used to force paying students to face their fears. In much modified form, some of these practices continued in the successor organizations. For example, Erhard's est locked its students in seminar rooms for hours without the right to go the bathroom. MSIA, an offshoot of Lifespring, still enforces a strange discipline: Students are forbidden to be late, but cannot wear watches; they must abstain from alcohol, coffee, and sex during the six-day course. For some ominous reason, vomit bags are placed on the backs of the chairs where training is conducted. THE LEADERS of these groups, especially Erhard and John-Roger, have the knack of attracting Hollywood stars, society celebrities, and some CEOs. MSIA, for example, has been boosted by Barbra Streisand, Leigh Taylor-Young, and Arianna Stassinopoulos Huffington, who capped a brilliant social career in London and New York by writing a best-selling biography of Maria Callas and marrying a Texas millionaire. She promoted MSIA by writing about it and introducing John-Roger to her friends. Philip Lippincott, CEO and president of Scott Paper, was captivated by John-Roger's seminars at the beginning of the Eighties and offered them at company expense to all employees.

These three organizations dominated the human potential movement a decade ago. Their goals and methods were vague, expressed in words such as alignment, commitment, breakthrough, breakdown, and coaching. An analysis of Lifespring training published in 1983 by Psychiatry, an academic journal, found that graduates usually endorsed the experience enthusiastically with comments like, ''It changed my life.'' But they could not specify exactly how. The article's authors argued that the sense of well-being is short-lived and deceptive, because in a sense the graduates regress into childhood, becoming more dependent on the organization. Now that they have moved to the corporate world, Erhard and the others have tried to put some distance between themselves and their past. Erhard owns Transformation Technologies Inc. outright, but it is run by his friend and est graduate, James C. Selman, 45, a former Touche Ross partner. Selman says there is no est left in the training, but then it isn't easy to figure out just what the content of the training is. When he describes it, Selman uses sentences like this: ''When we talk management technology, what we are talking about is a rigorously tested and challenged body of distinctions for having access to whatever the phenomenon of management really is.'' Transformational Technologies' licensees can design their own programs, using Erhard material as they see fit. David Spiwack, co-founder of one of the firms, JMW Consultants Inc. of New York, explains that his people tackle a company with a combination of workshops, interviews, and individual coaching of managers and engineers to help speed new-product development, for example. He might work with a team of 25 executives for a year for a fee of $250,000 plus expenses. Clients of Transformational Technologies' licensees include Allstate and Sears, General Dynamics, the Federal Aviation Administration, IBM, Boeing Aerospace, and Lockheed. MSIA has been selling its courses, Insight I, II, and III, to individual and business clients since the late 1970s. Insight I and II are offered as fairly innocuous ''intensive growth experiences'' for individuals, but Insight III gets heavily into the mystical teachings of John-Roger, the carrier of the Mystical Traveler Consciousness and enemy of the Red Monk (the devil). Russell Bishop, who designed the Insight courses, has moved on to form his own firm, Insight Consulting Group; he says its work has no connection with John-Roger. The company began by selling an elaborate $145 diary called Time/Design and now offers a fairly prosaic business course called MAP (for Managing Accelerated Productivity), which deals with time management -- handling office work flow and reducing interruptions. John Hanley's Lifespring has followed a similar path, giving regular courses to corporate employees, including Pac Bell's, and adapting its teachings to business. A loosely affiliated consulting firm, Sen-Delaney of Los Angeles, offers what Larry Sen, a Lifespring graduate, calls ''fairly conventional management consulting.'' Maybe so, but Hanley serves as a director of the firm. Hanley, who was convicted of mail fraud in 1969 long before he established Lifespring, says he has been wrestling for ten years with the problem of applying to corporations his methods for showing individuals how to open up new possibilities and achieve peak performance. But he says he is still an amateur in dealing with business. Larry Wilson winces at the thought of his courses being lumped together with training by more cultlike organizations. But there are similarities. Businessmen at Pecos Learning Center start off apprehensive and cold, just as if they were at a meeting at the office, but after a day riding the zip line and climbing a telephone pole, they are transformed, whooping, cheering, and hugging. Hugging is important at the Pecos ranch. There's little physical danger in the outdoor activities because safety harnesses keep trainees from falling more than a few inches, but fear rides with them. The idea of the program, says Wilson, ''is to create a powerful intervention to make them what they need to be today.'' After the exhilaration of overcoming fear, they can sit down together for the next three or four days at the ranch and talk with an openness and confidence they have never achieved back at the office. With Wilson's encouragement, they often reveal intimate, even painful things about their personal lives. The whole experience, Wilson says, bonds company executives together. Some of the companies that recently have sent groups of up to 100 senior executives at a time to Pecos report significant results. According to Wayne Townsend, GM Canada's senior administrator of sales programs, his company conceived its business vision for 1990 at the ranch last spring: ''Easy to buy, a pleasure to own.'' Now Wilson is setting up a temporary Pecos camp in Ontario for 335 GM middle managers. The Sears merchandise group, which runs the retail stores, put its top 200 people through the ranch this year. While there, they agreed on an important change: to raise the status of part-time | salespeople. Part-timers account for at least half of the company's employees, but have been treated as second-class workers. Sears executives are now considering giving them a better benefits package. Obviously Sears and GM Canada think it was well worth the $1,500 fee to send each manager to the ranch for five days. Con S. Massey, Sears VP for employee relations, says one senior executive came to him with tears in his eyes to say that Pecos was one of the greatest experiences of his life. But some Pecos veterans, who prefer to conceal what they think from their bosses, came away with entirely different feelings. Although the outdoor exercises are voluntary and no stigma attaches to the person who gets only half-way up the telephone pole, these veterans felt pressured into doing things that frightened them. They found the personal confessions intrusive and the hugging and games ridiculous. Responds Wilson: ''I'm pushing on the leading edge of training, but I'm not far out. Companies feel safe with us.'' But should they?