Re:Balance -- Jim Peterson

Sheep Dogs and Stewardship -- Why Groom the Next Generation?

Reader reaction indicates that I touched a sensitive subject, when I suggested on November 10 – here – that there was a mis-alignment in the compensation models of the large accounting firms, who distribute immediate profits to their current partners while the potentially devastating impact of related litigation takes years to befall the succeeding generations.

Which suggests the broader personnel picture and the range of attitudes and strategies involved in obtaining, maintaining and retaining the staff necessary for an enterprise to thrive and survive.

Among the large accounting firms, the topic of cut-backs, lay-offs and treatment of subordinates is under-reported but acutely felt – scrutinized by the bloggers and their exploding audiences (see Re:TheAuditors and Going Concern), if mainly ignored by the mainstream media.  

As a way to measure corporate management’s behavior in the areas of governance, incentives and sustainability, consider a couple I know well, who in their “retirement“ are ranchers in southwestern Oregon. They tend the largest flock of Soay sheep in America – one of the oldest domesticated breeds known to human history – for which they have the indispensable aid of one spry border collie and a quartet of massive Anatolian sheep dogs.

This fall, as they do every other year, they made a two-day round trip to fetch a new puppy from their specialized breeder – bringing home an already formidable bundle of energy, who will quickly grow to 125 pounds and demand enormous quantities of both food and training. 

With a quarter-ton of canine appetites already deployed around their pastures, why do they add this burden to their back-bending task of hauling dog food by the truckload of hundred-weight sacks?

Because eagles and coyotes find special allure in the scent of baby lambs, and predators are kept at bay only by the imposing presence of a four-footed guard force on 24/7 postings at their fences.

The demands on the recruiting directors of the banks and law firms and accountants are not different. They manage their personnel pipelines because, as a senior Big Four partner put it in a moment of candor, “the only reason we hire new staff is so we can re-stock our need for managers.”

There is a crucial difference. An Anatolian has an average ten-year life span. And when the inevitabilities of age or accident claim one of their veterans, the ranchers cannot just drop into the nearest Pups-R-Us and charge a replacement to their Amex card. “Staff maintenance” is not just a slogan, when safe-guarding the inventory is quite literally a matter of life and death. 

But whereas it takes about the same length of time to train a sheep dog as it does to convert a university graduate into a decent staff accountant or associate lawyer, there are a whole lot more of the latter on supply, and the sources are numerous and diverse.

I’ve largely been of the view that the world’s anxious regulators should resist intrusion into corporate hiring and compensation structures – there being almost nothing in fragile and volatile business environments that cannot be further distorted or broken by the tinkering of an over-eager bureaucrat.

But all interested parties – employees and shareholders and, yes, the public overseers of taxpayers’ bail-out funds – should at least evaluate whether a company’s bonus arrangements and staffing strategies extend over the length of a business cycle or are focused only on this year or this quarter.

How else could anyone assess the credibility of pious recitals about the importance of preserving and maintaining morale, tenure and talent? 

So it is not a cynical observation that – unlike the coddled shepherd puppy whose specialization makes him uniquely difficult to replace – rookies in the professional services firms should both sign up and stay on with the open-eyed expectation that their tenure is likely to be limited.

A strategic suggestion for the realistic perspective of both new hires and young partners at the large firms, then, is that all concerned should investigate and share a common understanding -- whether promotion and retention prospects and decisions will be made over time spans of the length used by a careful shepherd.

Well and good, if so.

And if not, there are always greener pastures.

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What To Read: Catch 22 -- The Ultimate Management Manual

Always stimulating, Francine McKenna last week posted at Re:The Auditors her advice to young professionals, "Recommendations: Great Books to Read at Any Stage of Your Career."
Her list being of recent vintage, my own preferences tend to sources that have withstood tests of time -- Niccolo Macchiavelli's "The Prince," published in 1532, for example, or perhaps Sun Tzu's "The Art of War" (c.400 BCE) -- and for pedagogic purposes, I also favor the wisdom available from sources outside the field under scrutiny.
So -- slightly updated from the original as it ran in the International Herald Tribune for January 24, 2004 -- if you had only one guide on corporate behavior and management strategy:

“It's a Catch-22 situation.” Those words, spoken by a French banker at a conference for European business leaders and received with understanding all around, reminded me how deeply Joseph Heller's 1961 novel has penetrated the global business environment.

I have long relied on Heller, and his vision of a military comprising equal parts corrupt self-interest and naïve idealism, as an extended guide to life in any complex system, including business. Periodic re-readings have had more value for me than any of the so-called team-building exercises and mission statements that pass for motivational management these days.

For those unfamiliar with the story of Yossarian the bombardier and his World War II comrades on the Italian island of Pianosa, Catch-22 goes like this: Only a crazy man would fly the murderous late-war missions demanded of the pilots, and flight surgeons had to ground anyone who was crazy. But asking to be grounded showed proof of sanity, which required denial of the request and continued flying.

Caught in an endless loop of twisted logic and bloated bureaucracy, Heller's characters cope as best they can. A testimony to the universality of their experience is that to this day, the same characters can be found at business enterprises, university faculties and professional partnerships the world over:

•    Major Major, the persistent but hopelessly mediocre administrator, promoted by those eager to be rid of him. Once made squadron commander, he loses access to his mess hall and basketball buddies, and then makes his isolation complete by ruling that visitors wait outside his office while he is in and be allowed in only when he is out.

•    Doc Daneeka, the flight surgeon who refuses to ground anyone who is sane enough to ask for it and who keeps up his combat pay by forging entries in flight logs. After being listed erroneously as a casualty of a plane crash, he lurks unacknowledged outside his own medical tent, losing his pay, his PX privileges and his wife, whose grief at his untimely loss is tempered by full collection of his GI death benefits.

•    Colonel Cathcart, pumped with aggressive insecurity and conceited ambition. He indulges his taste for power by continually raising the number of missions that must be flown - often just before a pilot has attained them.

•    General Peckem, the noncombatant expert at turf expansion, whose successful ambition to bring bombing operations within his purview at Special Services turns to ashes when command changes to the sycophantic General Scheisskopf, who was promoted from lieutenant on the sole strength of his meaningless memos announcing the postponement of Sunday parades.

Even more than Heller's personalities, the bizarre interactions replay endlessly in corporate corridors and boardrooms - and find eerie echoes in recent events:

The questionable Cayman bank balances of Parmalat or the non-existent securities of a Madoff or the kerfuffle of "mark-to-market" would have been child's play to Milo Minderbinder, the entrepreneurial mess officer who could make a profit on fresh eggs bought in Malta for 7 cents each and sold to the mess halls for 5 cents. (Message to Bob Herz at the Financial Accounting Standards Board: the lowdown on how he did it can be found in Chapter 22.)

The debacles at AIG or Bear Stearns or Long-Term Credit Management could easily have been Milo's operations. The demise of the latter was a hedge fund set up by its Nobel Prize-winning managers, running their highly touted models into the ground with a wrong-way bet on Russian debt. That tracks the universal acclaim the military heaps on Milo's business acumen - until he corners the market in Egyptian cotton that nobody wants, bringing his black-market syndicate to the brink of ruin.

The antics of the equities analysts through the bubble years of the 1990's or the sub-prime mortgage originators of this decade are echoed in the treatment of Chief White Halfoat and his Oklahoma tribe, who have such an affinity for petroleum products that everywhere they seek to settle, the oil companies hit oil, requiring the forced relocation of the tribe. At some point geologists and engineers begin to guess where they will settle next and drill before they arrive, kicking them off the land before they can unroll their blankets.

Heller's characters, at least some of them, survive the insanity by finding ways to stay alive until the end of the war. Corporate managers seeking to cope with a dysfunctional organization may not be so fortunate. But they can at least save the huge fees inflicted by outside gurus and facilitators just by going away for a weekend, each having read "Catch-22" as a homework assignment, and recasting the novel's plot and characters out of the people and events well known to all.

I've done it. It works. As a way of placing the absurdity of the workplace in perspective - and as a starting point for finding solutions - "Catch-22" is an indispensable tool. Or, in the words of Doc Daneeka, "It's the best there is."

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Independence Day: On The Freedoms to Choose, Use and Abuse Great Personal Wealth

The national celebration this weekend in the United States, and the coming Bastille Day celebration in France, serve as platforms for scrutiny of issues of public policy and private conduct.

Two recent personal experiences provide the context for this question: As a society how should we judge, concerning the balance between private wealth accumulation for personal consumption and its deployment for the public good?

The issues are emotion-laden and politically divisive, not least around the regulation of executive compensation. There, a pigs’ breakfast of policy choices includes salary limitations, bonus caps, use of bail-out funds, and director and shareholder responsibility – and the loftier themes of norm setting and coercive codes of conduct.

(For helpful background on the current state of play in Washington, the always-informative Edith Orenstein had this post last week on her FEI blog.)

Last Saturday I was curbside in search of a taxi when accosted by a waif-like beggar. The dollar I peeled off generated a persistent plea from the wrinkled crone, that she needed eight dollars for a bed in the shelter that night.

Influenced by reasons shortly to be told, I handed over a fistful of small bills – and was rewarded by a rainbow smile and effusive thanks when she realized that her daily quota was made. For the price of a stop at the nearest Starbucks, I had enabled a poor woman to spend a night in the safety and security that her life otherwise lacked.

The stimulus to my altruism was the party we had just left: the conclusion of what had been the most elaborate and costly family ritual ever to cross my vision. We had declined and not attended the main events -- a week of feasting and partying in a far distant venue -- said by guests to have set back the patriarch on the order of $ 8 to $ 10 million.

Recalling all the weddings and bar mitzvahs and sweet sixteen parties that at the time seemed over the top -- on the scale of this extended festival, they reduce in comparison to tea at the Ritz.

To transport the guests, private jets had filled the trans-oceanic skies. Public buildings had been closed – private castles had been opened – platoons of hostelers and caterers and entertainers had exceeded their annual revenue goals. Couturiers and florists and photographers and heavy-weight security guards had all worked overtime. Even on the pale evidence of the slideshow and videos, the maligned notion of “trickle-down” had been a frothy and multi-colored cascade. 

Thinking of the number of homeless shelters that could be supported by the cost of this extravaganza, it would be tempting to point the bony finger of self-righteous indignation – to turn up a censorious bluenose at the questionable morality of such an ostentatious display of personal consumption. 

All the more, since the paterfamilias ranks in the low digits on the Forbes scale of his country’s self-made wealthy. Only exceptional naïveté could believe that he had moved in one generation from pushcart and sweatshop to chateau and polo grounds, unless with the considerable application of both grease and muscle.

And yet: he is a reverent and devout practitioner of his religious faith, generous and philanthropic at a level beyond common contemplation. His annual benefactions are many multiples of the one-time cost of this family celebration, even at its lavish scale. As a percentage of his wealth, the outlay for this week-long party was several orders smaller than the impositions willingly incurred for a typical middle-class wedding or baby shower or graduation ceremony.

And in the end, the entrepreneurship by which he achieved the status to stage such a display of largesse would be untouchable by the debatable constraints of “say-on-pay” or narrow bonus limits – exercises in small-bore legislative vision that are of doubtful effectiveness but only stimulate hypocrisy, evasion and misdirected incentives.

The evidence of society’s broad range of behavior is far too complex and ambiguous to support facile condemnations – that the ownership classes are unexceptionally venal and corrupt, or that every bonus payment is an incentive to greed and over-reaching. Neither, symmetrically, is there any necessary correlation of virtue or magnanimity with the poverty of the ghetto or the favela.

More importantly in the quest for guidance, skepticism is certainly indicated about the potential for leadership from the politicians. In the degraded atmosphere that extends from the tawdry antics of a Berlusconi or the soap opera of a Palin to the expense fiddles of the British parliamentarians and the parade of Republican “affairs of state,” restraint is indicated in expectations for legislated morality.

Does a tithe for the poor excuse the gaudy display of the other ninety percent? Must the owner of two coats yield one to the unclothed? And is it the business of the state to compel the answers? Or if not, then whose?

Those wrapped in the luxury of this extraordinary celebration enjoyed hospitality at an unmatched level. How well they’d have slept in their silks and linens, if mindful of the beggar scratching out the price of a bare cot, is more ambiguous.

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Michael Jackson: Please Get Off the Stage

A diversion from the usual topics -- because Saturday we had the privilege again to hear the exquisite Diana Krall in live performance – maturing and better with each tour.

Unannounced, in the middle of the set, came a sonorous and dirge-like instrumental of “I’ll Be There” – a touching tribute to the late Michael Jackson, and a rare example of taste and restraint in this post-death period of media-driven frenzy.  

It may be churlish to suggest – in a time when the world’s adult challenges include on-going violence and epochal turmoil in the Middle East, financial dislocation around the globe, and political opportunities not seen for a generation in America – that the editors and producers of the channels of news should get over and beyond their voyeuristic fixation with Jackson, and get back to serious business.

All this is for what? The Neverland comparison does a disservice to Peter Pan – who exercised leadership and earned loyalty from his band of boys without drugs, inducements or molestation charges – and who faced pirates as adversaries rather than hiring them as a squad of goons and hangers-on.

The better comparison is with Benjamin Button, the eponymous, reverse-aging hero in Scott Fitzgerald’s story: Brad Pitt in the movie – manifest by Jackson in life, first as the boychild performing grown-up choreography and adult lyrics, who then did not mature but aged instead into adolescent behavior and infantile judgments.

And if there were virtue or ennobling in the pitiable story's end, wrought by physical and emotional family violence and indulgently enabled substance abuse, it would be no more for a talented escapee from the underclass shacks of Gary, Indiana, than for the less fortunate multitudes who suffer and die of the same causes without escaping those oppressive venues.

As for the career. Somewhere at least, there was surely business genius in securing control over the Beatles’ songbook. Less clear is the weight of all that against decades of profligacy and waste.

I plead a generational gap that impedes my “getting it” on Jackson’s music. Under the blazing arc at the end of the ‘60’s that extended from the Beatles and the Rolling Stones across the Atlantic to the post-Woodstock generation, the Jackson Five looked to be a bubble-gum machine, engineered to prop up Berry Gordy’s Motown after the best years of Smokey Robinson, Diana Ross, Stevie Wonder and Marvin Gaye.

In that context, even “Thriller” had its weirder side, foreshadowing – but who knew – the Wacko Jacko to come.

Members of a news-deprived minority who would plead “enough” will have their own candidates for the moments of gag-me excess in this week’s saturation coverage. My own -- so far -- is the self-promoting sycophancy of Larry King’s photo op with Jackson – reminiscent of Richard Nixon’s nausea-inducing drape over the slight but accommodating shoulders of Sammy Davis, Jr.

Relief, for God’s sake! There are serious and real subjects to address. This is, not least, the week we are to learn the sentence to be given to Bernie Madoff. Let’s keep things in perspective.

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Teed Off at Bernard Madoff? His Character was Provable on the Golf Course

Bernard Madoff was observably crooked, and his long-running swindle could easily have been stopped, early on. Except that those in the know either didn’t care, or had their own interests to be served.

Calling a halt to his scheming did not require a wake-up call at the soporific SEC, so thoroughly outed after the fact by whistle-blower Harry Markopolis, or performance of the due diligence that the feeder funds promised their customers, for which they and their gatekeepers will now pay the litigation cost.

Instead, it was as simple as the questionable honesty of Madoff’s golf game – and the mutually corrupted readiness of his country-club set of investors to subvert the integrity of that ancient sport.

Deep in “Madoff’s World,” Mark Seal’s delicious piece in the April edition of Vanity Fair, Seal observes that in the catalog of Madoff’s obsessive-compulsive mannerisms, his golf game was as tightly managed as the rest of his life. He quotes Donald Trump: “Out of hundreds and hundreds of rounds, he never shot lower than 80 or more than 89.”

Although the Donald may not top everyone’s list of character witnesses, there’s an unmistakable clue to Madoff in his throwaway line, “Experts say he’s either the most consistent golfer in the world or he’s cheating.”

In golf as in most other endeavors, whether recreational or professional, there is simply no way to avoid the occasional bad day. A weekend duffer with no hope of approaching par will still have the rare round where the gods smile, drives are straight and every putt drops. Still, there are two tails to every bell curve. Symmetry teaches that there are days when the sand traps eat up approach shots and the cup seems to have a lid – and an honest scorecard shows it.

So the only way Madoff could have shown his reputed consistency would have been through all the available manipulative devices: improved lies, do-over shots and disregard of the whiffs and the penalties for landings in the water.

Golf being an activity where integrity relies crucially on self-reporting, that brings up the role of Madoff’s interested enablers -- the playing partners who would have seen his doubtful conduct in the bunkers and on the greens – but who if they called him, stood to lose their privileged access as early beneficiaries of his Ponzi scheme.   

Regular readers know that I have neither aptitude nor appetite for golf (here), choosing instead to keep the game safer for everyone by staying in the clubhouse. For its culture and protocols I rely on my friend Joe, who played scratch in college and still posts a handicap in the single digits.

He tells of a now-retired professional athlete of epic dimensions, who receives a guest's celebrity welcome on courses worldwide, but who will never be invited into serious club membership – because he is known to fiddle his scores, stiff his caddies and welsh on his bets.

That measure of the seriousness with which the game’s code is taken, and the apt phrase from the fractured Latin of the law schools – falsus in unum, falsus in omnibus – point the finger of accountability at Madoff’s companions. Facing the disrepute of Madoff’s violations, they evidently elected to accommodate their source, lest the promised stream of their investment returns be closed off.

Joe taught me that the dour Scots who invented the game called it “golf” because the more pungent four-letter words were already taken – “hell” or “damn” or the stronger alternatives, muttered or shouted in exasperation at the shanked drive or the malignly placed tree branch.

Would that Madoff’s blind-eyed followers had had the honesty to call “foul.”

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Happy Thanksgiving -- and Thank You

A brief note to advise that until mid-December it will be quiet around here -- if nowhere else in the financial and accountancy world -- while I will be traveling, largely beyond the reach of e-mail and daily news.

Thanksgiving is a special holiday in the United States, and with the arrival of Advent as well, this is an excellent time:

     To pause in grateful reflection -- in the midst of widespread turmoil, need and strife -- on many reasons to be thankful.

    To translate a spirit of gratitude into actions by which energy, commitment and compassion can better a troubled world.

So reach out. We can bring some peace -- do some good -- share some loving -- with family, friends and communities.

My thanks for your interest and support -- I'll be back with you soon. 

The Carnival of Trust: November Edition

“Credere”: verb (Latin), “to trust.” From which we have creed, and credibility. And importantly, credit. As in “credit markets” – where recent events have seen trust erode along with the bail-out, collapse or take-over of a roster of venerable institutions once believed to be fortresses of durable integrity. 

A central theme on this site as it approaches its first anniversary is the trust on which strength and reputation are based – hard won, demanding to maintain, and easily lost. Trust lies at the heart of the enterprises of trade, commerce and finance, as well as their gate-keepers – management and directors; lawyers, rating agencies and accountants – and all branches of government alike.

It’s my pleasure to host this month’s Carnival of Trust, at the kind invitation of Charlie Green, who writes on trust related matters at Trusted Advisor. The Carnival is a traveling review of the month’s best posts on aspects of trust. (For prior editions, see here.)

With my thanks to Charlie for the opportunity, and to Ian Welsh for his support, here for your consideration are ten selections, made with some difficulty from a deep and stimulating set of offerings. Please share with us and the authors your reactions and comments.

Coming just after the American presidential elections and the world’s anticipation of new approaches to governance and diplomacy, George Ambler’s compact checklist of “The behaviors that create or break trust” is a handy guide and reference with broad applicability to all those engaged in, as he titles it, the Practice of Leadership.

Here are two studies on the direct relationship of trust to the state of an economy: the Greater Good Blog, arguing for a regulatory structure that prefers trust-worthy financial institutions to the providing of bailouts and subsidies, concludes that “When trust declines, so does the economy”; while Simon Djankov, at the Doing Business Blog, introduces a paper that queries “Regulation and Trust: Substitutes?” -- examining the extent to which the level of government regulation is correlated with measures of cultural trust.

And for tight focus on a specific example, Natasa Kovacevic’s article in the Harvard International Review, “Risky Business: Microcredit in Argentina“, examines the inhibitions on trust-building in a country suffering from lack of faith in both government and lending institutions, and the techniques for success of micro-lenders seeking to serve borrowers mainly among the country’s poorest women. 

Hard pressed to think of an area that generates more jargon and blather, I rely on Lucy Kellaway at the Financial Times as an old-media source of fresh air and incisive analysis – no reference here, just a recommendation. Meanwhile John Strande at the Business Evolutionist strips out great quantities of needless verbiage by working a single anecdote into this persuasive case: “Work is Personal … Trust Matters.”

By putting a plaque on your office wall with the four concisely-stated elements of trust-building aimed by David Newman at "Small Business Marketing – The Power of Trust" -- a proposition no less applicable in enterprises of any size and scope – you could open a lot of bookshelf space and spare a lot of trees.

And yet, appreciating a classic that has stood the test of time, Richard Parkes Cordock’s recommendation of a book by Richard Lomax invokes the classic Ogilvy on Advertising in order to “train your workforce to become your salesforce” – highlighting the importance of current customers and employees in the success of business growth.

A theme to these three offerings is the scrutiny of trust-building into the future, where a key is the establishment of authority and expertise:

John Bell treats the challenge of retail banks in marketing to customers in very scary times, “How Banks Must Regain Trust (hint: Not Via Advertising)”.

Chris Wright’s blog Magic and Lies takes up “Influence and Authority in a Web 2.0 World” – an inquiry that should be dear to the heart of bloggers and other aspirants to success as internet-based enterprises.

And appropriately as a way to conclude, Ford Harding provides a provocative exchange on the value of LinkedIn to the selling of professional services – Liking LinkedIn? – opening the door on a discussion that will no doubt evolve as rapidly as tomorrow’s new modes of communication themselves.  

Thanks for joining in this dialog – and please do let us have your views.

And as a note for next month’s Carnival of Trust, Stephanie Westallen of Idealawg will be the host. Articles on trust can be submitted for consideration here.

 

Ethics in Corporate Leadership -- Teachable or Not?

Last week it was my pleasure -- and challenge -- to be a guest speaker in a top business school’s MBA class in leadership. The students’ energetic focus on corporate “tone at the top” suggested that with some minor fixes to the dates, this column retains its currency today. 

Ethics Training Needs Reality

Originally published in the IHT on July 28, 2006

This column is dedicated to an honest and hard-working couple who lived across the street from where I grew up.

The husband had retired after a hard blue-collar career for one of the pipeline companies that became Enron. When the company failed and he lost his pension and health care, they were forced onto the dole and died in penury.

In July 2006, the month that the bell tolled for Kenneth Lay, Enron's disgraced chief, this important question came up on my radar: Can personal ethics really be taught in the corporate environment?

A large professional trade group, whose members deal with financial information for investors, was rolling out a major new ethics training effort. Yet it remains apparent that the teachability of ethical behavior is still an important challenge. Companies take on an annual crop of new and inexperienced employees, even while virtue has remained in short supply - from Enron's downfall in 2001 through the 2006 uncovering of widespread backdating of stock option prices.

On the plus side, this project is large, competent and high-minded. It features leading university academics, the latest in snazzy video and graphics in a CD-based curriculum and flexible delivery from self-teaching to small- group seminars.

But here's the rub: In the history of corporate training, no one has ever flunked an ethics course.

With such obvious and squeaky- clean training scenarios as the bonus- driven salesman putting pressure on his credulous client and the agonized junior staff member blowing the whistle on a morals-challenged superior, not even the Lays and Jeff Skillings could miss earning honors marks.

Could it be otherwise? It's baby steps for baby feet to announce and administer a course flagged by unmistakable signs and guideposts. You might as well put pilot trainees in a simulator programmed for level flying in clear sunshine, and then expect them to land a jumbo jet with a double engine failure in a midnight thunderstorm.

Two suggestions could move the instruction beyond the novice level.

The first - based on the reality- driven models actually used for pilots, firemen and emergency room doctors - would embed issues of fraud, irregularity and dubious ethics on an unspecified and unannounced basis, directly into the mainstream training on which global companies spend fortunes annually. Trainees would then have the stimulus and the satisfaction of teasing out the problems for themselves.

Just as physical training issues are calibrated for complexity, so could those in a corporate setting. Important issues abound: Where is the line between good client service and an inappropriate incentive? How far can accounting rules be bent before they are broken? What is the balance between the benefits of booking a contract in an early fiscal quarter and the incompleteness of the paperwork needed to satisfy the auditors?

These and dozens of other real-world issues comprise the case-by- case experiences that arise every day. But there they come with the pressures of market performance and individual career development, and not beribboned in lofty conclusions delivered by highly compensated fly-by consultants with their soft-science doctorates.

Second, in addition to the challenge of shaping the classroom to something like quotidian reality, a company that is truly committed to doing well by doing good must deliver the right tone at the top.

And that in turn means that the true educational moments come from both the formal and the casual messages coming out of the executive suites. No amount of preaching from a human resources department can realign a company's meandering moral compass.

From the misplaced vision leading to Arthur Andersen's collapse in 2002 to the dubious stock sales by senior executives at EADS while the Airbus 380's delivery timetable was deteriorating, staff and management can and do, for better or worse, evaluate with clarity and precision the truthfulness quotient embodied in the messages being sent by their bosses.

If, instead of a fatal heart attack in the luxury of Aspen, Lay could have pulled off a modest but conveniently disabling illness, he might have finished his felonious career by cheating even his jailers. But despite Enron's reputation for coming up with uniquely creative deals, St. Peter at the Pearly Gates had the harsh message that at least one earthly futures contract can be neither hedged nor laid off to an undisclosed third party.

Despite Shakespeare's plangent reminder that "we owe God a death," the misery wrought by Lay's cupidity on my neighbors and thousands of others leaves my sympathies for him no deeper than my belief in his protestations of both innocence and piety.

Only when ethics training is properly framed by the principles of leaders consistently delivering both the walk and the talk, will all the expenditure on courses and software and fancy diplomas be justifiable. Of course, at that point, if the messages were credibly delivered as part of everyday business life, the extra spending would be redundant, unnecessary and more productively directed elsewhere.