(FORTUNE Magazine) – MANAGING/COVER STORIES 44 WHAT COMPANIES AND EMPLOYEES OWE ONE ANOTHER Loyalty? Job security? They're nearly dead. But employers that deliver honesty and satisfying work can expect a new form of commitment from workers. by Brian O'Reilly

57 THE PERILOUS NEW WORLD OF FAIR PAY In the last, most difficult step in many companies restructuringrevamping Fifties-style employee compensationa mistake can be devastating. by Jaclyn Fierman

68 WHAT HAPPENS TO LAID-OFF MANAGERS Yes, its becoming easier to find work again. But job insecurity is a new fact of life for managers. Heres how victims of downsizing get back on their feet. by Susan Caminiti

SELLING 82 HOW TO ESCAPE A PRICE WAR You can't win simply by slashing prices or whittling costs. The only way to rise above the battle today is by reconceiving the way your company does business. by Andrew E. Serwer

POLITICS & POLICY 95 WHY CLINTON MAKES THE MARKETS EDGY The Fed's fourth interest rate increase has eased market jitters, but the President has more work to do to keep the recovery rolling. by Ann Reilly Dowd

BEST PRACTICES 99 RAISING CAPITAL FOR A NEW VENTURE To get your business going, you've staked your savings, mortgaged the house, and tapped your friends. Where do you go next? by Anne B. Fisher

INFORMATION TECHNOLOGY 104 IS GOING ON-LINE WORTH THE MONEY? Millions are signing up with Prodigy, CompuServe, and America Online. But the reality of life on-line doesn't yet come close to the hype. by Rick Tetzeli

CORPORATE PERFORMANCE 113 THE PROPHET OF ZERO WORKING CAPITAL By paring inventories and operating on a shoestring, American Standard's CEO has steered the once debt-ridden diversified manufacturer to robust health.

by Shawn Tully

114 GROWING TO MATCH ITS BRAND NAME Coleman is capitalizing on its sturdy reputation to expand from coolers, tents, and lanterns into power tools. by John Labate

118 IN THE FAST LANE IN A SLOW MARKET The only profitable major tiremaker in Europe, Germany's Continental is demonstrating how to respond to recession. by William Echikson

121 COMPANIES TO WATCH Marketing company Dimark helps customers get their message out fast, while keeping an eye on the bottom line. by John Labate

ASIA 124 JAPAN: IS IT CHANGING FOR GOOD? The long recession in a land where economic growth is almost a national religion is prompting the Japanese to question every aspect of their society. by Brenton R. Schlender

DEPARTMENTS 6 EDITOR'S DESK 8 INDEX 12 NEWS/TRENDS Tourists and bargains galore, Ford's next CEO, leasing reaches golf clubs, new bedfellows on the infobahn, no break for coffee prices, and more.

19 FORTUNE FORECAST Don't let the expanding economy raise your inflation fears. by Joseph Spiers

Economic Intelligence: The pay gap closes, and more.

27 PERSONAL INVESTING The smart way to play the epidemic in health care takeovers. by Richard S. Teitelbaum

Also: Whether it's time to buy bonds, the new appeal of convertibles, and Portfolio Talk with Stanley Nabi of Bessemer.

40 LETTERS TO FORTUNE

147 PRODUCTS TO WATCH

148 BOOKS & IDEAS Clashing visions of Japanese competitiveness; playing for airtime at the Harvard business school; and John Kenneth Galbraith writes again.

151 KEEPING UP Talking back to the inspector, rewards for bad behavior, and other matters. by Daniel Seligman

154 ENTREPRENEURS How does septuagenarian Jeno Paulucci frost the competition in supermarkets? Attention to detail and low overhead. by Andrew E. Serwer

ABOVE: At Chevron, which has cut its work force nearly in half in the past decade, CEO Kenneth Derr (right) meets periodically with employees to explain how the new business environment is affecting careers and job security. Photo by Philip Gould.

Cover photograph by Comstock

FORTUNE (ISSN 0015-8259). Published biweekly, with three issues in October, by Time Inc. Principal office: Time & Life Building, Rockefeller Center, New York, NY 10020-1393. Reginald K. Brack Jr., Chairman; Don Logan, President; Joseph A. Ripp, Treasurer; Harry M. Johnston, Secretary. Subscriptions: U.S., possessions: one year (27 issues) $52.95; Canada: one year (27 issues) $53.73. Second-class postage paid at New York, NY, and at additional mailing offices. Authorized as second-class mail by the Post Office Dept., Ottawa, Canada, and for payment of postage in cash. Member, Audit Bureau of Circulations. POSTMASTER: Send address changes to FORTUNE, P.O. Box 30604, Tampa, Fla. 33630-0604. Customer inquiries: FORTUNE, P.O. Box 60001, Tampa, Fla. 33660-0001. Phone: 1-800-621-8000. ) (c) 1993. Time Inc. All rights reserved. FORTUNE is a registered mark of Time Inc. For subscription queries, call Customer Service at 1-800-621-8000. Time Inc. GST R122781974.