I spent last week on Mark Hurd’s firing, er involuntary resignation, and watched the backstory develop, and it isn’t pretty. Hurd was likely the third-hardest guy to fire in Silicon Valley behind Steve Jobs and Larry Ellison — and yet, at least initially, he seemed to be fired as a result of a false accusation of sexual harassment leading to a global WTF moment.
Larry Ellison, the next guy up on that invulnerability list, clearly concerned about his own potential executive mortality, wrote a flaming letter to The New York Times and inadvertently seemed to remind folks that with Hurd gone, both he and Steve Jobs could be vulnerable. I’m sure Larry had a lovely chat with Steve after Steve had his own WTF moment and reminded Larry that suicide is a solo sport.
While I initially thought Hurd might have been tricked into playing a role on what could become the “Mistress Undercover” reality TV show, my perceptions changed as more and more information came out about the event and Hurd’s troubled term.
Increasingly, it appeared that there was a lot more smoke under this fire, and that Hurd had repeated many of the mistakes that got his predecessor Carly Fiorina fired — and effectively vindicated Patty Dunn, whom he helped unfairly force off the HP board after she helped hire him.
I’ll explore that today and close with my product of the week: a little tablet from Dell that attempts to prove that bigger is better, especially when it is a blend between a smartphone and a tablet.
Terminal Employee Disrespect
One of the first things I learned in business was that if you take care of your people, they will take care of you in a good way, but if you don’t, they will eventually bury you. In Vietnam, the only “managed war,” it was called “fragging,” and it meant actually shooting your own officers. It seems that whatever training most failed CEOs got, this part was left out.
Both Hurd and Fiorina showed little regard or loyalty to their people, and both seemed to treat layoffs as a tool to maximize their own bonuses, which seemed increasingly excessive to folks outside the company. To folks inside who were taking salary cuts or getting laid off, this sense of excess and unfairness had to be a morale killer.
We’ve certainly seen studies that indicated that excess compensation leads to bad behavior by top executives, particularly toward employees, but this was the first time we saw an internal survey appear to tie employee morale destruction to the result.
Apparently in HP, more than 60 percent of the employees (many who apparently now refer to Mark Hurd as “Mark Turd”) indicated that they would leave if given the opportunity. We look at presidential approval ratings at 50% levels and call them bad. How bad would it be if more than 60 percent of U.S. citizens were looking to move out of the U.S.? That would be a much scarier number — yet that is what HP’s board was looking at.
In fact, based on what has come out after Hurd’s termination, he actually appears to have been worse in this regard at the end than Fiorina was, which doesn’t signify a good trend.
Controls Over CEOs Are Important to Everyone – Including Those CEOs
In government, there is a check-and-balance system for the legislative, executive and judicial branches. In most U.S. corporations, the internal balance is between the board and the CEO, with the CFO effectively reporting to both.
One of the causes of Hurd’s problems was that he opportunistically got rid of the board that hired him and replaced it with one he could lead effectively as chairman, repeating a mistake that Fiorina herself initially made. In fact, he basically undid the controls that were put in place to rein in Fiorina.
This gave him an inordinate amount of power and little oversight. This is similar power to what Larry Ellison and Steve Jobs have, and both have had issues. Steve’s issues came from bypassing the board to allegedly increase his own compensation, and Larry’s have run the gamut from offering cars to employees to sleep with him to the recent charges of fraud by the U.S. government. So far, both executives have dodged jail time, and only one was once fired, although the other had to step down. Both recovered, but Hurd’s departure is a warning that no one is irreplaceable.
While a strong board is clearly a pain in the butt — much like having an involved manager — that strong board can help prevent the kind of thing that gets a CEO fired for cause, or fire the CEO before a legal line is crossed that could lead to jail time.
The reality is that very few people — and we’ve certainly seen this with celebrities and public figures — can get the kind of power and wealth that comes with a typical CEO job and not lose perspective. In addition, few people are actually trained to be CEOs, and a strong board, which is typically heavy in current and ex-CEOs, can be invaluable in helping a new one avoid terminal mistakes.
Fiorina was fired because she wouldn’t take direction from her strong board (after she was forced out of the chairman position for poor performance), but you can only imagine what she would have done to HP had she continued with a weak one. Hurd saw the strength of the board as a problem, not a protection, and ended up in similar trouble.
No Empathy Results in Bad Karma
When Fiorina left, she blasted her board (covered in her book Tough Choices) for what she felt was unfair treatment. Comments from people who appear to represent Hurd — including Ellison — are doing the same.
Neither Fiorina nor Hurd appears to have understood that the people they laid off and fired likely felt exactly the same way about their situation. In other words, even when undergoing a similar experience, neither showed any empathy for those they treated similarly or any regret for having done so.
For Fiorina, that could have been golden, a big help in her struggle to overcome her image as a heartless executive who sacrificed her employees’ careers and families for bonus money.
A little “I get it now and would have done things differently” would likely have removed her biggest impediment to getting elected here in California and might have actually made her more effective in getting McCain elected (McCain has actually stood by her).
Karma seemed to play a big role here, particularly for Hurd, who threw Patty Dunn to the wolves in order to get the board he wanted (this is covered in The Big Lie by Anthony Bianco). That was one of the big wrongs done in our industry over the last decade or so, and Hurd’s termination seems particularly poetic as a result.
Wrapping Up: HP Is Better Off and Lessons Learned
Power and money corrupt if there aren’t protections in place to keep a person — man or woman — on the right path. Chances are, they will do stupid things to get fired or end up in jail. Over the last few years, we’ve seen more than a few top executives achieve both.
It is far worse to be very wealthy and then lose that wealth, power and freedom than it is to not have it in the first place — and while it may be poetic, this kind of thing can play hell with families and children.
I went through something similar myself when I was a child, and my heart goes out to Hurd’s family, who didn’t deserve any of this. The last lesson that I’m reminded of daily is that when we make bad choices, it is often those we care most about who pay the highest price.
If it isn’t enough of a threat to recognize the risks of not taking care of our people, getting caught diddling an employee, or getting on the wrong side of poetic justice, maybe we can at least remember to protect those we care most about.
We’ve learned that HP is far better off without Hurd or Fiorina, though we should also remember that both contributed strongly to that company’s success as well. For HP’s board, the goal should be to put in place a person and a system that will enable the good that both Hurd and Fiorina did, while more effectively preventing the bad.
With two back-to-back failures — people who were better at the beginning than at the end of their terms — the HP board (you could argue that HP did as much damage to these CEOs as they did to HP) may want to consider a better system for CEO management, and make it a policy to keep the role of chairman separate.
The board may also want to channel the success of the initial HP founders, and better protect the rank-and-file HP employee.
Product of the Week: Dell Streak
I’ve been using the Dell Streak for several months now and I like it better than an iPhone. Now core to this is I’m not a fan of iTunes, and I typically hate all screen phones because I can’t see enough of the display when I’m typing, and I type a lot.
The Dell is the first screen phone large enough so I feel comfortable typing on it, and its display is big enough so that if I leave my beloved Kindle behind, I can use the Kindle reader on the Streak and actually get an adequate reading experience. By adequate, I mean I can still read and not overly strain my eyes.
I also don’t like having the same thing that everyone else has. In private school, I was constantly in trouble for being out of uniform (and had the swat marks on my butt to prove it). I like being different and I even carried the HTC Advantage for a year as my primary phone, largely to prove that I could.
The only downsides for me with the Streak are that I had to make my own belt pouch for it (because they weren’t out yet), and it uses AT&T (I’m on T-Mobile), and AT&T really sucks where I live.
The bigger screen makes video better, browsing better — and if I could find an Android-based game I loved, it would likely make that better too (I don’t do many games on phones because of the drain on battery life).
I’m a fan of devices that carve out their own space and don’t try to be poor copies of popular products like the iPhone. The Dell Streak is different, and it is different in a way that appeals to me, so it is my product of the week.
Rob Enderle is a TechNewsWorld columnist and the principal analyst for the Enderle Group, a consultancy that focuses on personal technology products and trends.