What happened to Mark Hurd at HP was the stuff of Hollywood. Michael Moore or Oliver Stone to the fore?
There was no upside to HP's reputation from ridding itself of Mark Hurd. The Economist described HP as Hurdless chickens. Wall Street pulled the rug on the share price. Shareholders looked on bewildered as, as the FT reports, transparency turned to opacity as the Board lost its nerve. Now let's review how this might make a movie.
Married and slightly nerdy CEO gets obsessed with an events contractor, B-movie actress and former soft-porn star. He buys her dinner more times than he ought. She claims she was sexually harassed and hires a top lawyer with a nose for publicity.
The CEO gets cleared of the charge by the company. But he has difficulty explaining the more than $10k (perhaps $20k) he claimed on expenses to entertain her. He gets told to jump ship. As a result, HP's share value drops by around $13 billion. That would be the opening scene. Then would come the flashback.
Mark Hurd's predecessor knocks billions off HP's share price after her fraught merger with Compaq proves nigh on disastrous. The Board that once backed Carly Fiorina decides to ditch her, but the news leaks. Yet only fellow Board members were in the know. So she orders private detectives to spy on the Board to uncover the traitor. Before they can report, Carly's fired.
However, the chairman of the Board continues with the investigation (widened to include senior executives), which stoops to lies and deceit and unethical borderline legality. When the rest of the Board discovers how the culprit was identified, members resign in protest and the chairman is forced out. From then on, whenever somebody knocks on their front door, they fear that they're being bugged by a colleague (the film would portray their spouses' paranoia).
Carly's merger antics alone mean that from day one, Mark Hurd is CEO of a company with a psychologically damaged and neurotic Board. The breaking of the spying story and near-implosion of the Board, just deepen his problems. But against the odds, he restores HP's fortunes, winning widespread praise for the turnaround.
To top it all the temptress in the story proves to have a heart (surely that's a heart on her sleeve?). She weeps and says she never wanted him fired. She backs up his defence and says that they never had intercourse. The audience weeps with her on behalf of their fallen hero.
What can we learn from this mess?
Above all, the scandal at HP is more about a failure of corporate governance, team-building and trust, than it is about Mark Hurd's peccadilloes. The major issue for the Board was trust, and the issue of Hurd's seemingly falsified expenses.
Contrary to popular opinion, corporate governance is not about CSR and personal ethics so much as about improving corporate performance. It is about making the right operational choices. It is about protecting shareholder interests and about assessing strategies to ensure that corporate assets are used properly to achieve corporate purposes. As Larry Ellison has pointed out, HP's Board has clearly failed to do its job.
The PR consultants at APCO recommended, rightly, that the Board should proactively make a full disclosure of the "scandal". However, they wrongly advised that Hurd should be sent packing. They produced mock scandalous headlines of what the media might say if Hurd was not ousted. This scared the risk-adverse, emotional Board. In APCO's favour, however, they probably knew better than anyone else just how broken were the internal relations at the top of HP (leadership requires trust to function). This was no ordinary crisis.
The Board was like a rabbit caught in headlights. It first froze, then panicked. Not for the first time it collectively put personal feelings before the company's interests.
Meanwhile, Wall Street punished the Board and the company for firing Hurd.
But what about Mark Hurd's role in all this? His comment about his resignation (cue $40 million pay off) was revealing. He said:
"I did not live up to the standards and principles of trust and integrity that I have espoused at HP"
So, he knew that he broke the bonds of trust at HP, and that he was guilty of hypocrisy on the morality front. So here's my guidelines for how to avoid such moral hazards in future:
• Don’t let PRs sell the politically correct narrative of your personal life.
• Don’t use personal virtues as a shield to promote your professional ones.
• Headlines about your personal virtues are hostages to fortune.
• Avoid the temptation to indulge in moral outbursts on any topic.
• Don’t bring your personal life to work or include it in your PR.
• Those who live by the sword die by it.
• Don’t lecture anyone (especially not your staff) about personal morality.
• Always assume that everything always gets into the media in the end.
• The public love sinners and winners. It loathes saints.
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