Milton L. Rock, The Late Governance Icon's Insights

January 29, 2018

Robert H. Rock, Chairman of MLR Holdings, and his father, the late Dr. Milton L. Rock, Former Directors & Boards PublisherDr. Milton L. Rock, the publisher who led Directors & Boards into the activist and M&A-fueled decade of the 1980s always pointed leaders in the right direction, passed away on Jan. 27.

(Here’s a link to Rock’s obituary.)

Rock, armed with psychology degrees from Temple University and the University of Rochester, joined Edward N. Hay & Associates in 1949. It was a one-office firm founded in 1943 in Philadelphia that was doing pioneer work in the formative field of job evaluation and salary administration. Over the next three decades Milt Rock, as managing partner, led the firm’s growth into the world’s largest human resources consultancy, with 100 offices in 30 countries.

Hay Associates acquired Directors & Boards in 1980, and the journal continued under his private ownership upon the consulting firm’s sale in 1984.

The following are passages from his “Letter from the Publisher,” which appeared in the journal during the years when he held the role at the top of the masthead and provided his distinctive leadership advice to directors and senior executives. The passages were compiled by James Kristie, the former editor of Directors & Boards.

To be chosen as a member of a board of directors is the highest accolade for anyone who wishes to make an important contribution to American business. [Summer 1981, his first Publisher’s Letter]

Boards must realize that their individual investors, while relatively faithful, are not naive. Their loyalty has its limits. [Fall 1981]

The board is responsible for reviewing and approving or rejecting the strategic plan — not for creating it, nor for its evolution from idea to reality. Those roles, I believe, are reserved respectively for the CEO and the committees of the board. The truth of a strategic plan is in the eyes of its beholder, and to see that plan in depth the beholder can have only two eyes — the CEO’s. The board’s many eyes can never conceive a clear vision of the corporate future. [Winter 1982]

Many a CEO cannot see his own company culture, and perhaps that is just why he needs outside directors, and why CEOs and other officers want to serve on other boards. It’s not to learn the ins and outs of this or that industry — if you’re in the chemical business, do you really need to know how a retail operation is run? — but to learn something about those beliefs and expectations that make other companies, and more important, one’s own, tick. [Fall 1982]

Is there a CEO for all seasons? Can any one CEO be effective in all situations and business environments — be it a go-go or a go-slow era? One of the perennial qualities that makes a CEO effective in all situations is the capacity to listen and learn. The CEO who has a strong and balanced core of management to turn to will be the CEO who can help the company weather all climates and take advantage of all opportunities. [Spring 1983]

The compensation professional of the future — whether he be in management or on the compensation committee — can no longer afford to be an administrator who reacts to short-term pressures or who makes decisions by following national averages. End the era of undisciplined reaction and “me too” policies. Be a pacesetter. Take risks. Act as though the right compensation decision can have a profound impact on your business. Because, rest assured, it will. [Spring 1984]

Management’s duty is value creation for all shareholders. That responsibility cannot be allowed to be taken out of management’s hands. To look for value creation in the market movements caused by greenmailer greed is not healthy, is not credible, is not in the long-term interests of management/shareholder-run enterprises, and is truly the road to the destabilization of American business. It’s time to end the bullying power of the greenmailer. Enough is enough. [Summer 1984]

The board’s primary purpose, it should never be forgotten, is to elect a competent chief executive and to advise, counsel, and support that person in the efficient running of the business. [Fall 1984]

In this period of reevaluating director accountability, the time is right to acknowledge the need for more formal assessment of a director’s performance. [Spring 1985]

More than ever we need innovations to pour forth from our major corporations — the kinds of large-scale, complex, big-risk advancements that only they can deliver to keep this country on the leading edge of technological achievement. This means research and development, and this means pressure on the board to make sure management is maximizing its R&D dollars and staff. [Summer 1985]

In a world that is integrating economically, planning strategy for the new global order is what chief executives and boards need to focus on now. We need managements who understand the unfolding global trends and who educate themselves and their staffs to the new competitive realities. We need boards with members experienced in the global arena, be they experts in international business, diplomacy, political affairs, economics. And taking on a global character doesn’t stop at the top. It means getting the message about the new realities down to the shop floor. As one CEO told us recently, “We need unions that think globally too.” [Fall 1985]

Conditions have gone from bad to worse in the D&O insurance market. Fear and uncertainty pervade the boardroom. This is the absolutely worst kind of environment for encouraging the bold action that directors and management should be taking to foster innovation and global competitiveness. No more important objective faces leaders concerned with the health of American enterprise than that of reinstituting a boardroom environment conducive to service by the best and brightest of independent directors. [Winter 1986]

As the case law on board liability evolves, a school of thought suggests that where boards will be put to the fire is not so much in matters of operations — approving the building or closing of a plant, for example — but in matters of ownership, i.e., actions that directly affect the value of a shareholder’s property claim (stock certificate): mergers, acquisitions, buyouts, buybacks, etc. The implication is that directors will need to work longer and harder at those issues that impact the shareholder as owner. [Spring 1986]

Proxy power. Those two words embody a challenge to every major U.S. corporate boardroom. The era of the passive investor is coming to a close. [Summer 1986]

The board’s role in a crisis has been enhanced. In the past, crisis solving often meant simply replacing the CEO. But thanks to hostile takeovers as an everyday event and social and political pressures, there is a premium now on the value and stability a good board can contribute during a corporation’s darker days. [Fall 1986]

There is much wailing and gnashing of teeth in boardrooms about the destructive force of the “corporate entrepreneurs,” as the raider-types like to call themselves. But consider this: Have boards themselves, through deliberate or benign neglect of shareholders, created the hostile raider? Here is a suggestion for directors that some might regard as heresy: Develop a “raider” mentality. Start looking at your company the way the raiding crowd does. Put some real vigor into analyzing its short- and long-range management, and the financial measures that really mean something in terms of use of shareholder capital, such as return on investment and return on equity. [Winter 1987]

The Tower Commission report on the secret arms sales to Iran brought into critical focus the role of the advisers to the President. Said former Sen. John Tower upon the release of his investigation into the Iran-contra White House activities, “I believe that the President was poorly advised and poorly served.” This examination of the advisory systems and people supporting the President has some timely parallels to events in the corporate sector. One fundamental is forever: As a director, never leave yourself open to the charge that your CEO “was poorly advised and poorly served.” [Spring 1987]

One of the measures that will mark the outstanding chairmen/CEOs in the coming years will be their ability to be sensitive to the group dynamics of the board, to correct any element of it that gets out of kilter, and to harness the dynamics to achieve a high level of strategic thinking. The relationship between leadership and group dynamics is an area that I have had a personal and professional interest in for almost four decades. There are volumes of research that have been written on group dynamics, which I have contributed to over the years. Don’t be overly enamored of or intimidated by the concept of group dynamics. Do study it, do be sensitive to it, and let it work for you — and it will! [Summer 1987]

What does make executives want to serve on a board? In our judgment, the core reason in that the boardroom is a unique arena of continuing education. Being a director is a privileged way for senior executives to keep learning new ideas, new technologies, new competitive strategies and struggles, new interpersonal relationships, and new ways in the art of management. And the beauty of the director’s position is that it is a two-way learning and benefit process: The director learns from his association with the company, its affairs and its people, just as the company managers can learn much from the board member. [Spring 1988, his last Publisher’s Letter]