Opinion

The Great Debate

HP’s hot, steamy mess

August 10, 2010

HP/The following is a guest post by Patrick Dailey, a senior human resources executive, who worked for Hewlett-Packard as vice president of global talent management during the time period when Compaq was being integrated into Hewlett-Packard. The opinions expressed are his own.

A hot, steaming mess was kicked to the curb late on Friday.

Messes like this are intentionally dumped on Friday afternoons following the closing bell to avoid notice. They are supposed to cool down over the weekend and hopefully be taken over by something new come market open on Monday.

But there was no way that this mess would go unnoticed, even after a late Friday afternoon announcement.

The executive responsible for creating it acted stupidly and was justifiably removed from his post.

But, the real story here is the back story.

Arguably the most sensationalized female plaintiff’s attorney, Gloria Allred, has been hired by Jodie Fisher, a 50-year-old single mother who made a sexual harassment complaint against Mark Hurd, the CEO of Hewlett-Packard, and has her own sensational profile, appearing in provocative reality TV shows and movies. After HP curtailed Fisher’s lucrative marketing services agreement with them, Allred was hired and expected to advance the sexual harassment complaint.

But why has Allred accepted the case when the plaintiff has publicly stated there was no sexual intimacy between her and Hurd and has indicated she did not want Hurd to be fired over the matter?

HP’s board has completed its internal investigation of the sexual harassment charge and found no substantiation of the sexual harassment accusation. Yet, Hurd has resigned over an expense account malfeasance — a matter that was largely off the radar screen until the 11th hour of HP’s internal investigation. Was this a simply a convenient story line for getting rid of Hurd?

Malfeasance can cause a CEO to loose his job, especially in this current climate of heightened corporate governance standards and more rigorous monitoring. Malfeasance and moral turpitude are often stated in senior executive employment agreements as justification for a termination with cause.

Having a reason, or “cause,” to fire someone typically allows companies to not have to pay the benefits stated in senior executive employment agreements. Normally, the executive walks with nothing. Yet, Hurd was sent packing with a fortune—estimated to be $40 million—as a result of settlement discussions. That number is incremental to the $15 million to $40 million Hurd earned in each of his five years of service to HP.

HP brought in a specialized marketing and public affairs firm, APCO, with expertise in assessing brand damage due to crises. HP was eager to avoid the same damage BP has recently earned for itself. According to various stories on the matter, APCO predicted that the stock value of HP would plummet, which it has – down to $42.60 at Monday’s close from last Friday’s close of $46.24  — and that this would likely throw HP back into malaise it found itself in replacing two former chief executives, Carly Fiorina and before that Lew Platt.

There is even speculation by sector watchers that the HP board had felt that Hurd had accomplished all that a leader of his profile might achieve. Hurd is tough minded, bottom line focused, nuts and bolts, but not a blue sky technologist born and raised in the rarified air of Silicon Valley. According to some accounts, Hurd did not have the same leadership qualities as the legendary founders of HP, David Packard and Bill Hewitt, and the board felt it was time to move back to leadership more aligned with HP’s values of research, innovation and inclusive culture.

Clearly, there is no bona fide emergency succession plan. Responsible boards make responsible choices in replacing a CEO and their interim choice is, at best, a buy time tactic. So far, the HP board has moved rapidly but clumsily. This is not the first time the HP board could be accused of clumsy governance: it all-too-publicly aired its displeasure with Fiorina and subsequently her termination.

As for handling its current predicament, HP’s board has proven how hapless it is by making relative newcomer Marc Andreessen its most visible member. The 38-year-old has only been on the board since 2009.

The hearts and minds of great people and an epic-center of global technological greatness deserve better than the HP board seems able to provide.

Comments
2 comments so far | RSS Comments RSS

What “hot, steaming mess”? What is the “back story”? That the HP board needs improvement? All I see is a meandering, pointless article. What is to be Greatly Debated about this article, except perhaps why it is here at all?

Posted by igiveup | Report as abusive
 

“Malfeasance can cause a CEO to loose his job”
At least he didn’t lose it!
“incremental to the $15 million to $40 million”
Incremental? I don’t think that word means what you think it means.
“epic-center” – what on earth is an epic-center? Is that some kind of super cool epicenter?

Spellcheck is no substitute for reading it before you publish it.

Posted by jf518 | Report as abusive
 

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