Taking Stock / Idan Ofer Breaks the Code

Rani Rahav has been handling public relations for Idan Ofer for five years, yet he can't get a handle on the man's style.

Most of Rahav's clients obediently stick to his PR texts, and obey the codes of the business sector. Not Idan Ofer.

In fact, Ofer doesn't say much. But when he does open his mouth, he has the oddest tendency to say just what he thinks. And when Ofer opened his mouth on Sunday, shivers ran down the backs of the managers on his payroll, not to mention down the backs of salaried managers up and down the Holy Land.

A week after Carmel Vernia surprisingly resigned his position as chairman of Tower Semiconductors, Ofer revealed his view of the affair. Vernia didn't deliver the goods. He didn't meet sales forecasts. Rival companies presented better results. In short, Tower had a management problem, Ofer summed up.

Vernia went into shock. "They cornered me," he admitted in an interview with Haaretz, and fired back. "I failed in my attempt to correct the mistakes that Idan Ofer had made," he said, obliquely pointing out that Ofer himself had chaired the company until a year and a half ago.

One's instinctive reaction to the barrages would be, Idan Ofer was trying to turn his hired manager into a scapegoat. Instead of accepting responsibility, he's blaming his underlings.

True, but the really interesting story is something else. Why don't managers pay with their heads for their mistakes?

Why is it so rare for blame to be bluntly cast? Are Israel's managers really an exclusive club of exquisitely mannered gentlemen, with wild-child Idan Ofer being the exception?

Rats in the ceiling

It could be said that Idan Ofer doesn't understand the Israeli method, in which there are only two possibilities. One: If the company is flourishing, then the credit (and bonuses) belong to the genius management. If the company is floundering, or its share price is, then the blame belongs to "the market", "the competition", or rats in the ceiling, anything but the management.

And along barrels Idan Ofer and presents a revolutionary idea. Not every failure is the market's fault. Sometimes managers are responsible too; perhaps they even deserve most of the blame. And that blame belongs not only to Carmel Vernia, but to Ofer, who hired him in the first place.

Ofer's public slaughter of Vernia was a rare sight in the local arena. Israel's management club prefers not to discuss the real reasons when companies fail. Sometimes the desire to conceal the trouble is so overriding that it protects dreadful managers from the sack.

There is another reason for the culture of silence: We have each other by the short hairs. We both know unpleasant things about one another. I'll keep my peace and when I leave, you give me a giant golden parachute, praise my talents to the skies and I'll tell them what a fantastic chairman you are.

Feeling for Vernia

A lot of managers felt for Vernia this week. What Ofer did was not nice, they told the press. Undignified, even. Not done. One can understand their anger at Ofer's uncultured behavior, but one cannot ignore its upside.

Israel has copied the American practice of lavishly rewarding executives, but it forgot to copy the practice of making them pay for their mistakes.

Three years after the credit scandal at the banks exploded, not one single banker has paid with his head. Many of them are still on the job and can shortly resume handing out credit to their friends in the uppermost centile. Why is that? Because it was in nobody's interest to name names and cast blame. They protected one another, waiting for the storm to pass.

When dirty laundry gets aired, managers may lose sleep. But it allows the glare of sunlight to wash over the policy practices at the giant companies managing other people's money.

Investors, borrowers, lenders, depositors, shareholders and workers can all gain a better understanding of the working practices at the top of these companies, instead of settling for the usual story: when things work, it's the management. When they don't, it's the market.