Time for a New Attitude

It's a new month. Times are as tough as ever, and in some measures, such as today's jobs report, getting tougher. But enough! It's time to take on a new attitude.

Here is just the attitude worth emulating. It's one that Tom Robertson (pictured), dean of the Wharton School, expressed as he opened the proceedings for the 5th Annual Wharton Restructuring and Turnaround Conference, held a week ago.

Taking the dais to welcome a huge crowd squeezed to the gills in the Lincoln Ballroom of Philadelphia's Union League Club — a crowd said to be the largest outside group ever hosted at the club in its 147-year history — he set a constructive tone:

"We're beyond saying, 'Things are bad.' It's time to say, 'How do we take advantage of the situation? ... How do we come out of the backside of this stronger than we went into it.' "

Right on! The shells are still flying, and one may yet land in your lap. But I'm in the dean's camp, and I know many corporate leaders are, too. It's time to rise up out of the bunkers and start mounting a forward-moving assault on your competitive marketplace.

Dean Robertson can count on one prominent business executive who studied at Wharton to buy into this new attitude thinking. Steve Wynn, the casino company mogul, expressed this "I will survive" attitude, albeit a bit more colorfully than the dean's measured tone, in an interview with Wall Street Journal reporter Tamara Audi: "Are we all supposed to go buca buca buca and fall dead on the floor? Or are we supposed to have the ability to survive and do well? ... The hell with Wall Street. I'll be here after this is over."

Just so. And here is a thought: For those who read tea leaves, the fact that this restructuring conference drew such a record-busting crowd might signal some kind of a top — or is it bottom? — in today's troubled times.

On Line: Great Depression vs. Great Recession

As the AP reported today, employers eliminated 598,000 jobs in January, the most since the end of 1974 and far worse than expectations. The unemployment rate now jumps to 7.6% — which has to be vastly understated. "This is a horror show we're watching," said Lawrence Mishel, president of the Economic Policy Institute in Washington, in the New York Times upon the release of the Labor Department report.

I've read that we haven't quite come up with a name yet for this period of economic travail that we are in. We have a name for the 1930s economic collapse — the Great Depression, often shortened as the Depression, with a capital D. We seem to be still just calling this a recession, with a small r.

But it feels more than just a recession, doesn't it? Especially for those of us with a little gray hair who remember the 1973-74 deep downturn, the early 1980s and its raging inflation, the early 1990s banking and real estate troubles, and the 2000 tech meltdown. All were quite bad. But this feels more like a way-of-life changing event, much as I suspect the Depression was. 

Thus, I have a name to put forward for this period of economic decline — the Great Recession.

The iconic image I picture in my mind of the Great Depression is the soup line. The iconic image that may hold for this Great Recession might well be the job fair line.

We need to start creating jobs to mount a recovery. Speaking of which, Directors & Boards Publisher Robert Rock has written a compelling essay for the First Quarter 2009 edition of the journal. Its title is "Job One Is Jobs Won." I implore all board members to read this — and to get primed to act on it, for the good of the economy and the nation.

Better that this be called the Great Recession than the Great Depression II.

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.