After the Hurd

By Reuters Staff
August 10, 2010

HONG KONG-ITU/The following is a guest post by Kerry Sulkowicz, a psychiatrist and psychoanalyst who is the managing principal of Boswell Group LLC. He advises CEOs, investors and politicians on the dynamics of leadership, corporate culture and governance. The opinions expressed are his own.

 

 

 

About the only thing that’s clear in the story of Mark Hurd’s downfall last week as CEO of HP is how much we don’t know. Statements issued by HP, by Hurd, and by Hurd’s accuser reveal remarkably little about what was unquestionably a bad week for everyone involved.

Yet there are some meaningful clues if we read between the lines.

Mark Hurd

A highly successful CEO who took the helm at HP following the disastrous rein of Carly Fiorina, Hurd was well on his way to establishing himself as one of America’s best and brightest business leaders. Given his accomplishments at HP over the course of his tenure, I still think he may qualify. Notwithstanding the denials of a sexual relationship between Hurd and Jodie Fisher, the consultant and occasional actress who accompanied Hurd on “high-level customer and executive summit events,” we don’t know much about what actually happened between them.

Why would Hurd, a married man in a high profile job, whose every move was scrutinized under the electron microscope that comes with CEO territory, risk his reputation, not to mention his career, by spending so much time with Fisher? We’ll probably never know the entire story. But as an advisor to CEOs around the world, I see that the one thing they all grapple with is the isolation and loneliness that are inherent in the role. Because of the nature of power dynamics in all organizations, CEOs often have no one in whom they can confide inside their companies, and they naturally need – and seek – confidants on the outside.

Most of these relationships are healthy, adaptable and, in my view, necessary for CEOs to deal with the stresses of the job. But the boundaries of these relationships can occasionally get murky, especially with a CEO whose intimate personal relationships aren’t providing the kind of emotional sustenance they need, or who are drawn to the excitement of being with someone who might fill a certain void, either in the imagination or in reality.

The anxiety and emotional vulnerabilities that come with being a CEO, along with an increasing but dangerous feeling of being able to get away with anything as CEO, makes for a destructive confluence of events.

Whether this has anything to do with Hurd’s situation — a man I’ve never met — I can’t say, but it wouldn’t surprise me, as he certainly wouldn’t be alone in these circumstances.

The HP Board

Did the HP board overreact in forcing Hurd out? Unless there’s a lot more that they’re concealing about what Hurd did, they reacted excessively punitively, and perhaps self-destructively. I’m not interested in making excuses for what he did, or suggesting that he shouldn’t suffer some serious consequences for lying about his expenses. But I would imagine that the HP board may have been feeling extremely sensitive and perhaps a bit trigger happy, given their turbulent ride with Carly Fiorina, which also cast the board in a terrible light.

Boards are highly susceptible to “group think,” in which the voice of one member, particularly an especially anxious or moralistic one, can have a disproportionate influence on the entire board, and lead to worse, rather than better, decision-making. The HP board was presumably feeling sensitive to being viewed as hypocritical, having recently upgraded the company’s ethics policy. But greater openness and honesty with the public, combined with a more measured and thoughtful set of responses to Hurd’s actions, might have been even more convincing.

One of several tidbits of information that makes me suspicious of pathological group dynamics in the HP board is their official comment: “One thing changed in this company on Friday and that was the CEO left,” Cathie Lesjak, the CFO and interim CEO, said on a conference call with the media. “The rest of the company has not changed.” Does that sound like circling the wagons or what?

While factually true, Lesjak’s comment denies the enormous impact of the CEO — especially one as influential as Hurd — on the culture and performance of the organization.

Boardroom denial may also be in evidence in the statement that “it has received an ‘extremely supportive’ response from investors following the ouster of Hurd, one of the most widely admired CEOs in the world.”

HPQ stock has dropped more than 11% since the announcement about Hurd on Friday. Investors may say one thing on the phone with the CFO, but speak more loudly with their feet, as it were.

Jodie Fisher

There’s denial all around in this story. Just as Hurd was seemingly in denial of playing with fire by spending so much time with Fisher and by falsifying his expense records, and the board may be in denial of how their boardroom culture may have contributed to Hurd’s downfall and to the impact of his loss on the company, Fisher’s denial that her charges of sexual harassment would cost Hurd his job appears either naïve or blatantly misleading.
Through her lawyer, Gloria Allred, the notoriously aggressive defender of women scorned, Fisher claimed to be “surprised and saddened that Mark Hurd lost his job over this. That was never my intention.”

While of course it’s possible that more happened than meets the eye between Fisher and Hurd, there’s a wide gap between the official accounts of platonic dinners and consulting work on the one hand, and sexual harassment on the other. The board’s investigation determined that Hurd hadn’t violated the company’s sexual harassment policy. Presumably all is well with Fisher now that she has gotten her settlement from Hurd.

All in all, the Hurd affair is another sad chapter in the history of a storied Silicon Valley institution, but one that provides ample opportunities for learning about the perilous dynamics of leadership and boards.

2 comments

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Your well-written post should be contemplated by a wider audience and discussed thoroughly.

The HP-matter was the subject of discussions at a Sunday barbecue where opinions were split.

Most leaned towards an assessment of limited willingness to assume board responsibility of a matter deviating obviously only slightly from rigid corporate guidelines at the Valley juggernaut. Previous spying initiatives within HP a couple of years ago may have bolstered paranoia….. eventually winning the battle of minds.

Hurd goes, board stays and everything will be forgotten in a couple of months may have been the rationale for keeping the hands of the board “clinically” clean, but “operational” dirty.

The overall query looms: Has HP become so negatively institutionalized in a legalistic American perspective / lingo of the day, thereby eradicating the board’s understanding of what it takes to steer the boat through often stormy waters and in a fast changing market place where new, hungry and able competitors are waiting?

Considering the significant surge in HP’s operating profits the recent 4 to 5 years and the broader, yet competitive products’ offering through well-pitched acquisitions under the Hurd stewardship, the board story for axing an operatively gifted CEO is at best thinly shaped. Most likely, it may turn away potential CEO candidates with the right skill set to keep or better the position.

Next to Hurd, staff, business partners and shareholders may suffer while the value of HP-brand diminishes. Not to say that Mark Hurd is without faults in the dimly presented scenario of what really happened.

It appears that each board member personally may be tainted more so than Mark Hurd when the market is assessing each person’s capability in the future. We have noted the names of each board member placing them on a list for further scrutiny.

And finally. How sad many American companies cannot find a practical solution to internal as well as external matters of some controversy. Lawyers of limited substance and no understanding of running a business appear to be the de facto decision makers in many major American companies, often because of board weaknesses and outright stupidity. Most likely also within HP.

My operations in countries such as Germany, the Netherlands and the Scandinavian countries have taught me that the Hurd-HP board dilemma would have been solved quietly there and to the benefit of all parties involved. Lawyers, if any involved, have a totally different mind set and business competences than those in America, making shareholders careful investments less careful and prosperous.

Posted by HuckleberryFinn | Report as abusive

You seem to slight the board’s decision and this may due to the fact that neither you nor any of us know enough of the details on Hurd’s systematic and intentional misconduct.

With due respect to your psychic abilities – one thing is evident from this and history that the only thing “scientific” about business is – financial accounting. This is what got AlCapone in trouble and so did Mark Hurd.

Posted by Mott | Report as abusive