(FORTUNE Magazine) – WITHOUT A SCRIPT or any rehearsal, Mike Walsh, CEO of Union Pacific Railroad, holds the stage for 5 1/2 hours as employees from 24 sites across the country fire questions at him via satellite. With disarming candor, Walsh, 48, answers queries on everything from job security to workplace safety. Mattel's CEO, John Amerman, whose belief that employees should have fun has helped turn around the toymaker, wants to announce quarterly results with a splash. The 59-year-old executive puts the message into a rap routine, which he delivers to his assembled workers, backed up by a group of secretaries called the Rappettes. At UNUM Corp., CEO James F. Orr III invites all 5,500 employees to sound off to him through the insurance company's ubiquitous electronic mail system. Every night he sits down with that day's messages. Sometimes he answers with a personal phone call the next day. Meet three exemplars of effective intracorporate communications. They have already learned a key lesson for the Nineties. The lesson: Internal communications -- talk back and forth within the organization, up and down the hierarchy -- may well be more important to a company's success than external communications, what PR types loftily used to style ''dialogue with major constituencies.'' It's the free flow of information inside the company that enables you to identify and attack problems fast, say, when customer service representatives first get an earful about some quality glitch, or salesmen in the field encounter a new competitor. To promote such communications, these managers walk the halls at headquarters, meet often with small groups below managerial level, and hit the road for frequent visits with the troops. They will learn another language if a large portion of their work force speak it. They will even employ the wonders of technology -- video or satellites -- though they prefer to meet face to face so people can really talk with them. Robert Lefton, president of the Psychological Associates consulting firm in St. Louis, estimates that only 10% of corporate chiefs are effective communicators, talking candidly with employees, encouraging them to contribute ideas. While other experts think that estimate is too low, almost all suggest that the average executive can learn much from the skillful minority. Walsh, for one, has used his communication skills to transform Union Pacific from a fat, sluggish hierarchical company to a lean, progressive one. Since he became chief in 1986, he has crisscrossed the country dozens of times to confer with his vast unionized work force. Before Walsh, employees routinely addressed each other with the formal Mr. or Mrs., and teamwork between departments was almost nonexistent. Now, first names prevail, cross-functional work teams are common among the 29,000 employees, and morale is high, despite the fact that about 6,000 workers lost their jobs after Walsh took over. Says Dick Davidson, executive vice president of operations and a 31-year veteran of the railroad: ''I was incredulous when he first accused us of being bureaucratic and militaristic, but he was right. We're all more relaxed now.'' The foundation for many of these changes was laid in so-called town hall meetings throughout the 19-state rail system, where the CEO met with 300 to 1,000 employees per session. Walsh, a lawyer with no previous railroad experience, explained company strategy and recent industry changes and how they would affect people. More important, he asked employees to pitch in with their ideas. Walsh still has such meetings, plus frequent sessions with smaller groups of 15 or 20 workers. Says he: ''A CEO must be visible, vulnerable, and willing to put himself on the line. It is also essential to tell the truth and demonstrate that you share employee concerns, even when you can't do much about them.'' His efforts are paying off. Profits have surged, and customer satisfaction levels are way up. Radical changes have also transformed Mattel since John Amerman became CEO of the California-based toy company in 1987. The second day on the job, he told employees he was letting in some ''fresh air'' and that the new watchword at Mattel was to be ''fun.'' At the time Mattel was an out-of-control money loser that had spent big to introduce a series of toys that bombed. Morale was low. Amerman asked his work force to help him turn the company around and assured them it could be done with a minimum of chaos if they worked in teams and tried to enjoy themselves. The cheerful, white-haired CEO began wandering around the place, eating in the cafeteria, and meeting regularly with employees. The results were gratifying. For example, when he asked for suggestions on how to eliminate some layers in the organization, to his surprise many employees recommended that their departments be pruned or totally scrapped. Taking their advice, he cut out six layers from the hierarchy. Some people took early retirement, others were transferred to new departments, and a few were laid off. Amerman often speaks without a written script. But he develops ''a structured format'' in his mind and rehearses what he's going to say while driving to work. Says he: ''Everyone is so sleepy on the freeway, they don't pay attention to me talking to myself.'' MATTEL REBOUNDED from a loss of $113 million in 1987 to record earnings of $91 million in 1990. To announce earnings results to the work force in 1989, Amerman put together a rap routine: ''Supersonic motivating toys we're creating / Everybody knows that Mattel's devastating,'' grooved the CEO, his backup chiming in. It brought the house down. Recalls Amerman: ''All of the employees came up and hugged me. It was like I hit the home run in the ninth inning of the seventh game of the World Series.'' The next year the CEO spruced up his stage act. He recruited his top two lieutenants to put on a Las Vegas-style revue. All three executives donned tuxedos and glittery top hats. Dubbing themselves the ''Toy Boys,'' they pranced and sang new lyrics to old tunes, like ''There's No Business Like Toy Business.'' They concluded the show by announcing that all 1,100 rank-and-file headquarters employees would receive a bonus of two weeks pay that was to come out of senior management's bonus pool. A good idea, say the communications experts: Acts like sharing bonuses validate management's claim that it is working together with employees toward a common objective. Bob Crawford, founder and CEO of fast-growing Brook Furniture Rental (1991 estimated sales: $50 million), puts great emphasis on two-way communications. In particular, he has strived to create an atmosphere where employees speak openly, without fear of reprisal. ''People will put every effort into advancing the business if they can communicate their ideas freely,'' argues Crawford, 52, who began his career at Procter & Gamble 25 years ago. Communications consultant Richard Bevan of Towers Perrin agrees: ''It's nuts if you don't involve employees; they are the only people who can fix the business.'' When Crawford walks through his company's huge warehouses, he greets every worker by name and chats about work or personal matters. Newly hired salesmen are shocked to find Crawford leading many of their training sessions and soliciting their ideas to improve the company. Crawford even finds time to accompany members of his 150-odd sales force when they call on accounts. He still gets a charge from the reaction of customers who tell him that he is the first company president to call on them. ''In this impersonal society, people want a personal touch,'' he reasons. Listening is Crawford's most powerful communications tool, he notes, and he urges his staff to attend carefully to what both customers and employees have to say: ''The secret of good human dynamics is a balance between talking and listening. You need to absorb data before imparting information.'' Listening does not come easily, he warns. Even now Crawford concedes that he must constantly remind himself to concentrate. Remembering names is especially difficult, he admits. J. Stark Thompson, CEO of Life Technologies, a supplier of tools to life sciences researchers, has found that putting the word out doesn't mean that you have gotten it across: ''I've learned that just because you think it, write it, or say it doesn't mean employees hear it or believe it,'' says Thompson, 49. What may be required is a graphic picture or image, or what Towers Perrin consultant James C. Shaffer calls a ''behavioral portrait'' of just what you're looking for, maybe one tailored to a particular constituency. So instead of general exhortations to achieve better quality, Thompson will hammer home to shop-floor workers the importance of sending precisely correct amounts of chemicals in every vial that leaves the factory. Boiling down the message this way, Thompson says, encourages employees to ask tough questions and listen to tough answers. He is pleased that more employees are taking advantage of his open-door policy. A worker recently burst into the CEO's office with a plan for improving his own productivity: new wheels for his cart, which transports empty bottles used for research. He got the wheels, and indeed his productivity shot up. Thompson's success in obtaining feedback from employees stands in stark contrast to the experience of many companies. Fewer than half the employees polled in a 1990 study by Towers Perrin believe management is aware of the problems they face. And in the Hay Group's research covering one million employees in over 2,000 organizations, only 34% responded favorably to questions about how well their company listens to them. ENLIGHTENED corporate chiefs are working harder and trying different techniques. Mike Walsh at Union Pacific is stepping up training for lower and middle managers, and has made a rule that their compensation will now be based partly on improving communications with their employees. Says he: ''We've worked so hard at the senior level that we may have inadvertently relieved the middle level of some of their responsibility. Now we're trying to do a better job closer to the work.'' According to the Hay Group's findings, Walsh is on the right track: Most employees look to their immediate supervisors as their chief source of information. In the climate surveys at UNUM, employees have indicated that communications have consistently improved since Jim Orr became CEO in 1987. He, too, has focused on lower and middle management, where, he thinks, communication tends to break down most frequently. Orr, 48, developed a one-week training program that included communications for his managers; about 20 sessions are scheduled every year. He always spends at least one day at each of the sessions, answering questions and encouraging the managers to put forward ideas. One of Orr's handiest communication tools is electronic mail. Every employee at UNUM's headquarters in Portland, Maine, as well as those in the 100-odd offices around the U.S. and England, has a terminal, and Orr invites inquiries over the system. In response to what he learned this way, he has done such things as start a company program to subsidize employee child care expenses. Employees consistently say they want to hear more from management. The best communicators spend up to 40% of their time in face-to-face encounters, and many don't have any more hours to give. So even they are supplementing in- person meetings with technology. Orr and Thompson of Life Technologies are investigating systemwide videoconferencing. Walsh of Union Pacific now sends videos of excerpts from the 5 1/2-hour session directly to the homes of all employees, and he has recently been sold on satellite conferencing. Says he: ''I was a skeptic, but the truth is I'll be old and gray before I reach as many people face to face as I can by satellite.'' Robert B. Horton, CEO of British Petroleum, stresses that technology is only a support mechanism, not a substitute for in-person contact. Horton spends 50% of his time on communications, both internal and external, but with 120,000 employees, he needs the range that communications technology can offer. BP's videoconference network links 19 of its offices around the world, and employees at most levels of the company use it. Says Horton: ''Videoconferencing is very efficient for business meetings, and it helps save the health of executives because it cuts down on travel.'' Welcome to the electronic future, where technology will make it ever easier to communicate. If -- and this remains a big if -- an executive has the will to avoid the all-too-comfortable isolation of the corner office.