"Joe, when you set off the fire alarm, I make myself feel scared."

Jim Hughes, a burly machine operator at a Louisiana-Pacific Corp. wood-products mill a few miles from the Canadian border, is choosing his words with care. By using the construction "I make myself feel," Hughes explains that he has taken responsibility for his emotions. And his longtime co-worker, Joe Charette, said he does not feel blamed for accidentally tripping the alarm.

"Jim, I heard you say you make yourself feel scared," said Charette, sitting to Hughes's right in a conference room just off the plant floor. "Is that correct?" Having echoed Hughes's concern and affirmed that he was listening, Charette shakes Hughes's hand. A potential conflict is defused.

This is not a common form of conflict resolution among Maine millworkers. But to top managers at Louisiana-Pacific, it is a path to better productivity, perhaps to even saving the mill from being shut down. Social customs at this old-line timber firm have been rewired as part of the company's "enriched business environment program." The program teaches employees to take "responsibility for their feelings" and practice "the 2-for-1 rule of criticism," which dictates that any accusation of fault be leavened with two pieces of praise.

"Culture change" is a hot notion among management experts, and it's not confined to makers of computer chips or high-end retailers. Faced with the breakdown of global trade barriers and the availability of cheaper labor overseas, as at L-P's sleek new mill in Waterford, Ireland, some U.S. manufacturers are embracing elaborate measures to cut costs and stay viable. They are rejiggering the most ingrained interpersonal dynamics of their workplaces: Hierarchies are folded into "teams" and employees are renamed "partners." At L-P, co-workers are addressed as "customers."

As businesses strive to do more with less, a prevailing theory behind these overhauls is that they can foster better teamwork among employees and, in turn, unlock new efficiencies from entrenched organizations. Do they actually work? This is hard to measure, and management experts differ on how valuable these methods are, especially since they often involve long meetings and training sessions. What's clear is that the teaching of "team-building skills" and "emotional intelligence" has gained favor at many U.S. firms this decade, said Erik Brynjolfsson, a productivity expert at Massachusetts Institute of Technology's Sloan School of Management.

None of these revampings has been more radical than at Portland, Oregon-based Louisiana-Pacific, the world's biggest producer of plywood substitutes. Without change and fluidity, L-P chief executive Mark Suwyn said, "old-line businesses can calcify real fast."

As a DuPont Co. executive in the late 1980s, Suwyn helped pioneer Rapid Change Technologies (RCT), an industrial-culture philosophy rooted in altering the "technologies" of human transactions to bring better work dynamics. While Suwyn was at DuPont, he met Magaly Rodriguez, a consultant who specialized in conflict resolution in violent schools and gang-ridden neighborhoods. "Magaly gave me real insight into how dysfunctional organizations could be in conflict situations," Suwyn said. "I kept asking myself how much we could save if we applied this."

Suwyn brought the new approach to his next job, at International Paper Co., and eventually to Louisiana-Pacific in 1996. But Suwyn's caring-sharing teachings don't preclude hardheaded actions. He has shuttered half of L-P's 40 wood-products mills in his 3 1/2 years, and the Houlton mill's small size makes it a fat target.

For L-P Houlton's 116 employees, the margin for error is splinter-thin. The plant is already running at 200 percent capacity, and the bosses in Oregon keep pressing mill officials to tweak their efficiency rates even higher. "Every December I worry about where the heck we're going to cut more," Joe Charette said. "If we slow down, we're wide open," adds his brother Melvin Charette, an L-P electrical supervisor. "I worry about this plant closing all the time."

L-P's Houlton's mill produces "oriented strand board," a plywood substitute preferred by many home builders. Employees rarely leave their jobs here--turnover is less than 4 percent a year--and a "No Employee Applications Accepted" sign is posted at the front gate.

For most of the 18 years the plant has been in operation, its culture was traditional and command-style, said plant manager Gerry Nason, an Army veteran. He said he used to lead by screaming.

But that would never do in the changed L-P. The top-down organizational structure is like "putting people in a cage," Suwyn believes. "What we're doing is freeing up the human spirit."

One of Suwyn's corporate mandates is painted on the wall of a break room in Houlton, a cartoon lizard with a slash through it. Message: Reptiles are dangerous.

"When the human mind is in a reptilian mode, safety and productivity suffer," Suwyn said. The "reptilian mode" means primitive thinking, he said, the fight-or-flight instincts that engender defensive, suspicious and inefficient behavior. This harms the collective organism, the business.

"The reptilian mind," Suwyn declares, "is simply not useful."

L-P's reengineering is designed to foster freer dialogue between employee and boss. Recently, for example, a frustrated plant engineer at a plant in Two Harbors, Minn., confronted Suwyn over an equipment problem. He was this trembling hulk of a guy, Suwyn recalled, and it took him time to compose himself.

Finally, he told the chief executive, "I make myself feel really mad when I think about how I've been trying for two months to get a new scale." Suwyn repeated the man's concern, thanked him for speaking up and shook his hand. A new scale arrived in three weeks. "We've created a safe haven for this man to speak up," Suwyn said.

Fond of animal parallels, Suwyn compares well-run businesses to beehives and anthills. "All these bees and ants are going like mad, but they're not running into each other," he said in a phone interview. "That's the efficiency we're striving for."

Management specialists said these programs tend to be most effective when introduced with technologies that help disperse information through an organization, encouraging flatter management structures. "The companies that introduce these social engineering programs with new investments in technologies tend to see measurably better results," said Brynjolfsson, who has studied data from of 600 large U.S. firms in the past decade.

In conjunction with Rapid Change Technologies, Suwyn instituted a program called Business Process Improvement, which deploys advanced computer software to collect and process key information. The data are then distributed through the organization, and employees are assembled into "teams" to isolate productivity drains.

Houlton is on pace to save $1.5 million this year, Joe Charette said, a windfall he credits largely to Rapid Change Technologies. "We're saving this company a ton of money," he said.

Nason admits that his first reaction to RCT was that "the bosses have totally lost it." But he ha's since been converted, and he thinks the new speaking patterns and social rules have "created a greater sense of ownership" at his plant. Nason wears a green polo shirt that says "Record Production Week, Jan 1999, 5,423,592," signifying the number of panel board-feet the plant generated.

One day recently an employee noticed that a stack of panel was slightly lopsided--"an alarm point" that could become a problem--and Nason swung into action. He assembled a "wedging team" of eight employees and supervisors "facilitated" by Joe Charette, who is now the plant's "business process improvement facilitator."

Charette convened a meeting in a conference room that overlooks a trout pond. He began with a "light check-in," in which everyone stated their name, then shared something personal, such as how many fish they caught the previous weekend. Charette then stood at a flip chart and listed possible causes and solutions for the imbalance. His brother Melvin Charette joked that it was "too close to deer season to worry about this."

"I make myself feel mad when I bring you out back and kick you" in the rear end, Joe Charette responded. The last "wedging team" assembly lasted two hours, and the question of whether anyone enjoys them brings smirks. "No," production supervisor Skip Cleary said. "I mean yes."

The group considered solutions. "We have to eliminate variables and narrow things down," maintenance supervisor Scott Shaffer said. Joe Charette wrote "action plan" on the easel, and the group decided the problem was not serious enough to justify a shutdown of the production line. This would hurt the "uptime" measurement, the rate at which the plant is churning wood. Houlton is operating at 95 percent "uptime" this year to date, an impressive figure that everyone here can recite.

"We take our downtime personally," Melvin Charette said. "Everyone in here knows exactly how much downtime they have overseen this year." And the plant keeps precise data on how much the downtime is costing the company. Less than 2 percent of this year's downtime has been "unplanned."

But is it good enough? The mill's precarious position is never far from the daily course of business. News of a recent L-P closing--a sawmill in Annette, Alaska, in August after 20 years--hangs next to a pie chart of on-time shipments (99.44 percent) on a production-floor wall.

"Sure," Suwyn said, when asked if Houlton plant was at risk. "You can't pretend the size doesn't make them vulnerable." While the timber industry has recovered this year from a two-year slump, the sector is as cyclical as the housing market it supports, and many firms have tried to cushion future lags by shaving costs. But Suwyn said the key is how these cuts are executed. "If you give workers the chance to talk about their vulnerabilities, you're in a better position," Suwyn said. He calls Houlton a model of efficiency and says everyone is doing a "superb job," although he has never visited the plant.

Whatever Houlton's fate, the impact of L-P's cultural rejiggering has transcended plant grounds. It has colored the fabric of a community whose local paper, the Houlton Pioneer Times, bills itself "The Only Newspaper in the World Interested in Houlton, Maine." The Maine-accented language of RCT can be overheard at nearby Grammy's Country Inn over deep-fried pickles, and even in people's homes.

If Jim Hughes, who has worked at L-P Houlton for 17 years, needs to criticize his 13-year-old daughter, he'll follow the "2-for-1" rule. "I like the way you've been helping with the dishes and setting the table," he'll say to his daughter. "But I'd like you to spend more time at your homework."

This enhances self-esteem and creates a "safe environment to share feelings," said Hughes, adding that his wife, who works in the local schools, wants to integrate Rapid Change Technologies into her job.

Late on a recent Tuesday, Joe Charette was crisscrossing the plant floor and noting how many employees had radios. Radios were not allowed at the plant until recently. But Charette said it was decreed that music can "stimulate the employees' mammalian brains," a more nurturing cognitive center that's far preferable to the reptilian. He pumped his fist and sang along to a work-station tune, the 1980s hit "The Final Countdown."

"Can you feel your mammalian being unleashed?" he said.

CAPTION: Millwright Arden Foster, left, and project manager Mike Hare go over plans in the production shop at Louisiana-Pacific's Houlton mill.

CAPTION: Louisiana-Pacific mill workers Gary Scott, left, and Tom Boulier at the plant in Houlton, Maine.