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Over 25 years ago, at Arnold Hiatt's urging, The Stride Rite Corp. became the first employer to offer onsite child care facilities.

Since then, the company has expanded its facility to provide intergenerational care for the dependents of its employees.

Mr. Hiatt, 70, became president of the Lexington, Mass.-based shoe manufacturer in 1968. Three years later, the company opened a day-care center at company headquarters, initially for nearby residents.

"I thought it would be an investment in the community," he said from his present office overlooking Boston Harbor. More than just a place where children could spend their day, the center offered medical services and teaching to prepare the children for school.

Within six months, the company expanded the center to include children of employees. Thus, the first onsite day-care center in the United States was born.

Company employees paid the cost on a sliding scale depending on their salary, with top executives paying the full amount and lower-paid workers paying nothing.

In 1990, Mr. Hiatt once again struck out into the unknown by creating the country's first onsite intergenerational day-care center at Stride Rite. The new center brought together both the children and parents of employees, as well as seniors and children from the community.

Following his retirement from Stride Rite in 1992, Mr. Hiatt became chairman of The Stride Rite Foundation. Also, he helped found Business for Social Responsibility, a Washington-based organization that develops policies that maintain corporate profits while being socially responsible.

Mr. Hiatt spoke recently with Associate Editor Michael Prince about dependent care services and corporate responsibility for certain benefits.

Why, as an employer, did you open the first onsite day-care center for employees?

About six months after the day-care center started I was stopped by the president of the union in the hallway at Stride Rite. The head of the union said to me, "If you can spend so much money on the day-care center, why can't we get a raise?" And I said, "That's a separate issue, but if you're interested in having children of employees come to the day-care center, that's another matter."

As a result of that discussion, we decided to expand the day-care center and to make it half employees and half community children. And eventually we had over 60 children in that center at any given time, generally 30 from the community and 30 from the employees.

So, while I'm being given credit for opening the first onsite employee day-care center in the country, I really opened it for the community, if the truth be known.

Did you have a vision on how the day-care center would work?

I'd like to tell you that I was omniscient and I knew exactly what was going to happen, but I didn't. I was interested only in providing space and support for children who seemed to need it. And I didn't think of all of the things that happened subsequently.

As I look back, if I were perhaps a visionary I would have said at that time, "If we invest in a day-care center for our employees, Stride Rite will become a rather unique company, would be able to attract more people and better people, will be able to reduce our turnover, will save money on training costs, people will feel that Stride Rite is the company that cares." None of that was conscious at the time, even though I wish you'd give me credit for it.

Did the center have the benefits you described?

It did have all those benefits, but they were not planned or calculated. We didn't say, "Let's make an investment and we're going to get a lot of return." That was not my motive.

It happened that we can attract much better people and it also happened that we never had to spend what is estimated to be $21,000 to advertise for a new employee, to train the new employee and to bring that new employee up to a level of productivity of the departed employee. These benefits accrued to Stride Rite.

After a year or two went by, we held bi-monthly seminars where we would invite heads of other companies both in Massachusetts and nationally after we became known for this. And the purpose of the seminar was to demystify the process because CEOs generally wouldn't consider opening a day-care center. They didn't think it was their responsibility, it was irrelevant, and it would increase their costs with a particular concern about their insurance premiums going up.

So by having these bi-monthly seminars we could say, "It is something you can do, it's much simpler than running a complicated company and it is a small investment with a very large return." And then we said our insurance premiums have not gone up.

We did not have many takers. I think in the course of the first 10 years we did this, we caused about 50 day-care centers to open up around the country.

Was part of your goal to spread the word about the center?

Very much so. Because I thought it was good for business, the community and employees.

You seem to emphasize that corporations possess a certain degree of social responsibility. Do you feel companies should participate in this type of corporate responsibility or is this a benefit that enhances the company's profits?

The answer is both.

I did feel that business is in a position to do something for their communities and their employees. And I also felt it was good business. My feeling is that businessmen and women generally had not recognized the extent of their influence and power to go beyond the narrow definition of a bottom line.

For example, Stride Rite had a family leave program 10 years before President Bush vetoed the legislation. President Bush, who knew more perhaps about being president than he knew about business, said it would make business less competitive in the global marketplace. He was saying this while companies like Stride Rite had a family leave program and Stride Rite had been and continued to be in the last six years of my tenure in the 99th percentile of financial performance on the New York Stock Exchange.

My feeling was that part of the success of our company was that we had employees who were our partners and not our adversaries and Stride Rite was in the business of high quality and high levels of service. You can't supervise thousands of people and maintain high standards on a consistent basis unless that supervision comes from within the employees themselves.

And people really cared about the product and the company. Part of it was people liked the idea of coming to work in the morning. They felt this was kind of an extended family and they liked that feeling -- even people who were not beneficiaries of child care or elder care or never used family leave.

What was the employees' response to the day-care center?

I think they loved the idea. They loved the idea of seeing kids in the hallway. They loved the idea of kids coming around during holidays, whether it's Christmas or New Year's, and serenading them. They were coming to work in the morning and they had their little kids on their hand and they knew their kids were in a safe place and their kids were not just getting custodial care but learning how to read, being looked after medically. They say you don't have to be more than a half-inch taller than a pygmy to be a giant. And we looked very good.

What changes were made to the program over the years?

My assistant Ellen adopted a child who was two months old. We did not have an infant care center. I believe that infants should be with their mother; so we took children from 2 years on. But Ellen needed to work. She said, "Why are you imposing your will on new mothers?" I realized ideally Ellen should be at home with her child, but practically she couldn't afford to be.

So, we expanded the range from infants through children who were ready to go to school. We did some informal tracking and it confirmed what we had read.

There were a number of studies that were done in a much more methodical and scientific way that said children who are given a head start tend to have less teenage pregnancy, there's less drug addiction, there's less alcoholism, they tend to finish school more than kids who don't have a decent head start. In terms of society, and it's proven at Stride Rite that the investment in child care is a very small one compared to the return.

It seems that the company's day-care center was benefiting society and in many ways the company was doing what in other countries the government does. What role should government play in these activities?

Well, don't forget by 1980 we had a president in the White House who was trying to downsize government, get government off our backs, who wanted the private sector to pick up a lot of the slack.

As a matter of fact, President Reagan established a new office of deputy to the president in charge of volunteerism.

Someone told President Reagan that there was a man by the name of de Tocqueville who came to this country in the 19th century from Europe and he was admiring the spirit of neighbor helping neighbor and I guess Reagan thought that was not only a good "B movie," it was also something his administration should adopt.

You seem to be saying the government has sort of abdicated its responsibility in this area?

I would say that's sort of true.

So is the only alternative for Corporate America to step into this void and take on this role?

Either that or Corporate America should say to the administration, Democrat or Republican, "Why don't you guys wake up? We're willing to make the commitment to public education when mothers weren't working and you started at age 5. And you said every child has to go to school and you never asked Corporate America to pick up the tab."

But America is no longer an agricultural economy, it's an economy in which both parents work and now it's time to extend downward the responsibility of government. What's the difference between paying for a 6-year old in the first grade or a 2-year old in preschool?

Do you see a day when the majority of companies will have onsite day-care centers?

Well, I think you see in the 1980s and 1990s a lot more day-care activity and companies are recognizing the importance of it. But there are no standards. One company might maintain a day-care center like Stride Rite did, where we didn't spare any expense. Another company might say we can only afford one staff person for 10 children instead of every five children, which is the recommended ratio.

So why not have uniformity and consistency and universality? Can you imagine what the fifth grades of this country would look like if government said we're not going to assume responsibility anymore for the fifth grade?

If we want Corporate America to take care of the fifth grade, some kids would go to fifth grade and some kids wouldn't go. And some would go to schools with a good fifth grade teacher and some with a lousy fifth grade teacher. Why should we penalize 4-year-olds or 3-year-olds?

In 1990, Stride Rite's day-care center became a multigenerational one. What was this in response to?

The day-care center I've been talking about did not change. That was the original day-care center in Roxbury and that continued to be a children's center. We then moved the corporate offices from Roxbury to Cambridge and we knew that parents were being squeezed, not just from below, but from above.

Parents were living longer and oftentimes the employee had to provide care for that parent as well as the child. That's called the "sandwich generation."

I had heard about a nursing home in Arizona that had done some controlled experiments in that a group of residents were given a responsibility for maintaining flowers in flower pots. After two years the mortality rate of the residents that had a responsibility started to drop compared to the normal mortality rates in the same residential home.

I also knew that in families grandparents were separated from children and many children of single parents did not have extended families.

I grew up in an extended family and that's what an intergenerational center is.