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Date Posted: 19:23:07 09/02/04 Thu
Author: schwabra
Author Host/IP: dialup-4.225.151.130.Dial1.Cincinnati1.Level3.net / 4.225.151.130
Subject: Re: Jewish Management
In reply to: schwabra 's message, "Re: Jewish Management" on 19:21:00 09/02/04 Thu

3. Don't Trade Embarrassment for Shame

THE CABBAGE HAT

The followers of Rabbi Menachem Mendel of Kotsk were known for their extreme poverty and devotion to the truth. One of his Hasidim, Rabbi Shlomo, was so poor that he could not afford to buy a hat. He would keep his head dry with a cabbage leaf when he walked in the rain.

His father-in-law saw this public display of poverty.

"Aren't you ashamed to be seen wearing a cabbage leaf for a hat?" he asked Rabbi Shlomo.

Rabbi Shlomo was puzzled. "Why should I be ashamed? I didn't steal the cabbage leaf!"

There's no shame in wearing a cabbage leaf for a hat, so long as you came by it honestly.

Rabbi Shlomo's father-in-law has confused embarrassment with shame. Rabbi Shlomo might be embarrassed by his poverty, and feel chagrin when he sees other families with more financial stability. But Rabbi Shlomo has no cause for shame -- after all, he has done nothing dishonest which might bring him disgrace.

In business, a manager who achieves financial success, advancement or fame can feel justifiably proud. By contrast, managing an unsuccessful enterprise can be embarrassing.

But remember that there is no shame in failure if you gave the attempt your best try. Resist the seductive temptation to achieve success via dishonest means. You will find yourself simultaneously proud and ashamed, fearful of the disgrace that will come when your dishonesty is discovered -- and, as the past few years' business headlines demonstrate, a great deal of dishonesty is eventually discovered.

IN TODAY'S WORLD

Enron's executives were masters at converting embarrassment into shame. The energy giant ran up billions of dollars in debt, certainly an embarrassing performance. Rather than face an unpleasant reality, they embarked on a shameful campaign of deception, overstating income and hiding the astronomical debt from shareholders and employees via a labyrinth of phony partnerships, shell companies and fabricated subsidiaries.

In the short term, they avoided embarrassment, as they bolstered the price of their stock and continued to attract new investors. In the long term, they brought shame and ruin upon themselves, destroyed the jobs and retirement savings of their 11,000 employees, and toppled America's seventh largest company.

* * *

Enron's auditor, Aurthur Andersen LLP, fared no better in resisting the temptation to convert embarrassment into wealth via subterfuge.

Enron paid their accounting firm $52 million per year for both accounting services and consulting services. As accountants, Andersen had an ethical obligation to objectively examine the company's balance sheets. But as well-paid consultants, they had a vested interest in their client's appearance of success. Andersen officials became committed accomplices to Enron's fraudulent practices.

As the scandal emerged, Andersen's lawyers instructed their employees to shred thousands of pages of documents that would have shed light on Enron's crimes. This attempt to cover up shameful behavior via even more shameful behavior backfired. Andersen was found guilty of obstructing justice, their customers fled to more reputable accounting firms, and the venerable accounting firm closed its doors in 2002.

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