Jobs Report: And Now a Word from Mr. Van Gorkom

Friday's unemployment report was gruesome. We have a jobs mega-crisis in this country — the yearly job loss is the worst since 1945, and the Conference Board today said that the economy could lose 2 million more jobs in 2009. So why in this context do I bring up a famous name out of the annals of governance?

Those who recognize the name Van Gorkom know it as a bombshell Delaware court case — Smith v. Van Gorkom. The case involved a CEO — Jerome Van Gorkom (pictured) — and his board who sold their company, Trans Union Corp., under circumstances alleged by the plaintiffs to be insufficiently rigorous in trying to get top dollar. Plaintiffs won. The 1985 ruling jolted boards as to the heightened degree of due process they now needed to go through to prove their fiduciary responsibility. 

I can attest that Jerry Van Gorkom was more than just the namesake defendant in one of the game-changing cases in governance history. He was a decent fellow. I got to know him a bit when I arranged for him to speak to an audience of CEOs at the Harvard Club in New York in 1988, shortly after he published in Directors & Boards a convincing defense of his and his board's actions in the sale of the company. (Van Gorkom was also a sponsor of Directors & Boards Publisher Robert Rock's doctoral dissertation at Harvard in the early 1970s.)

My mind turns to Van Gorkom now because I've always been haunted by something he once said about his upbringing. The following was recorded in Autopsy of a Merger, a saga of the Trans Union deal written by William M. Owen, a former in-house attorney for the company:

"Made a millionaire when his Trans Union stock holdings were cashed out at the merger, Van Gorkom had risen from abject poverty. When he was only seven years old, his parents separated. He lived with his mother, and they survived the bitter Depression years on odd jobs, welfare, and assistance from his aunts.

" 'My mother and I were in severe financial straits several times in my youth,' he once recounted to a newspaper reporter. 'It left a very deep impression on me, and my children accuse me, properly, of having a Depression complex. I never forgot reading about the hundreds of men sleeping on lower Wacker Drive with newspapers wrapped around them. I developed a horrendous fear of being unemployed. Without a job, you're helpless.' " 

I'm sure boards hate to sanction management's layoff decisions. My wish is that both management and the board feel the way Jerry Van Gorkom (who died in 1998) felt about the preciousness of having a job — and that they're not engaging willy nilly in what often seems to be a wholesale axing of employees. Most especially, my wish is that directors long for the day when they can take pride in how many jobs management has created. Let's get ready — sooner rather than later — to build that into the performance evaluation metrics to get this country on the move again.

Press On

Not many people would put Calvin Coolidge on a list of great Presidential orators. Although historians note that he was an effective public speaker, Coolidge was, after all, nicknamed "Silent Cal."

But he did put forward one of the most stirring principles of achieving success — his call to "Press On." Here it is:

"Press on. Nothing in the world can take the place of persistence. Talent will not; nothing is more common than unsuccessful men with talent. Genius will not; unrewarded genius is almost a proverb. Education will not; the world is full of educated derelicts. Persistence and determination alone are omnipotent. The slogan 'Press On' has solved and always will solve the problems of the human race."

I have a nicely calligraphic version of this slogan hanging in my office. I also give a copy of "Press On" to all my Temple University students on the last day of class — to send them out into the world armed with a piece of wisdom for succeeding in the workplace and in life. A rendition of this slogan can be found here. 

On this first work day of 2009, the view ahead looks 3D — i.e., a scale ranging from Difficult on the high end to Dismal in the middle to Dire at the far end. If there ever was a time to 'Press On,' this is it. It will take persistence and determination to emerge from the rubble of 2008. 

I'd like to see Silent Cal's counsel imprinted on every board book that goes out this year and at the top of the agenda handed out at every board meeting. Let this be your mantra as you get your businesses back on the up-and-up.

The Rule of Athithi Devo Bhava — Guest of God

The terrorist attack on Mumbai is an awful event. Here is an inspiring message coming from that shattered corner ... and it may be something that gives comfort to boards of companies doing business in India or contemplating entering the Indian market (India's Prime Minister Manmohan Singh pictured here). 

This is from Sunil Singhania, president of IAIP, the CFA India Society. I am a longtime member of the CFA Institute, the global association of investment professionals, and this message from the Indian unit head was circulated through the association. These are edited excerpts of the message:

"There is no doubt that the intention of the terrorists was to destabilize the commercial city of India and thus cause financial setback to one of the fastest growing and most resilient economies of the world ... However, the terrorists don't know the resolve of the Mumbaikars and Indians. We have bounced back immediately earlier and we will bounce back even faster this time.

"We Indians will rise from this temporary setback and work all the more harder to defeat the intentions of our enemies to weaken us in any way. We saw most of Mumbai return to work on Friday itself, while our brave soldiers were still fighting with the militants. The stock markets rose, almost yelling that do whatever one can, India will continue to shine.

"The events must have surely shaken the confidence of people who have visited India and, more so, stayed in one of the two hotels targeted. The spontaneous reaction would be to cancel all travel plans to India. By doing this, you will only be making the endeavors of the terrorists more successful.

"We Indians follow the rule of Athithi Devo Bhava or Guest of God. We assure all our international brethern that Indians will lay down their life to protect those of our guests."

Come to think of it, that kind of steely resolve is just what is needed to surmount the economic assault we're all facing — now that, ahem (see my post below), a recession has been officially declared. 

End of an Era

It's rare that an editor will have the opportunity during his or her tenure atop a masthead to write an "end of an era" commentary. But I feel that the Editor's Note I wrote for the Directors & Boards e-Briefing October issue is one such editorial.

Perhaps it's appropriate that I begin this new blog on an "end" note.