Real Reason for Ousting H.P.’s Chief
By JOE NOCERA
Published: August 13, 2010
Justin Sullivan/Getty Images
Here’s a guy who walked into a very troubled situation, replacing Carleton S. “It’s All About Me” Fiorina, and oversaw what appears to be a magnificent turnaround. In his five years at H.P., every metric Wall Street uses to judge companies had gone in only one direction: up.
Its 2009 revenue was $115 billion, up from $80 billion when he took over. Four years ago, H.P. even leapt past mighty I.B.M. in revenue, making it the country’s biggest technology company. Its average annual 18 percent profit increases were remarkable given the company’s mammoth size. And the stock price more than doubled on Mr. Hurd’s watch.
Stories about Mr. Hurd lavished praise on his no-nonsense style. H.P. under Mr. Hurd has “become the benchmark for efficiency in an industry known more for its whiz-bang appeal than its operational excellence,” wrote Adam Lashinsky of Fortune in 2009. Four months ago, Forbes put Mr. Hurd on its cover, attributing H.P.’s success to “dramatic cost-cutting” and “a brutalizing culture of accountability.” Even Mr. Hurd’s temporary replacement, the chief financial officer, Cathie Lesjak, who seemed to go out of her way to diss him, said in the press release announcing his resignation that “our ability to execute is irrefutable.” That could never be said during the reign of Queen Carly.
And then, on Aug. 6 — poof! — he was gone, brought low by a sexual harassment scandal.
Or was he? In the press release, H.P. noted that while a claim of sexual harassment had been made, an investigation had cleared him of the charges. Instead, the company alluded vaguely to “violations of H.P.’s standards of business conduct.”
When pressed, H.P. said that Mr. Hurd had fudged some expense reports. (It also said that his relationship with the woman, a small-time H.P. contractor, was a conflict, even if no sex was involved.) On his way out the door, the board handed Mr. Hurd a severance package said to be worth between $40 million and $50 million, which would seem to undercut the notion that he had done something bad.
H.P. says its board should be applauded for not letting Mr. Hurd off the hook. But this is just after-the-fact spin. In fact, the directors should be called out for acting like the cowards they are. Mr. Hurd’s supposed peccadilloes were a smoke screen for the real reason they got rid of an executive they didn’t trust and employees didn’t like.
The stand-up thing would have been to fire Mr. Hurd on the altogether legitimate grounds that the directors didn’t have faith in his leadership. But of course Wall Street would have had a conniption if the board had taken such a step. So instead, it ginned up a tabloid-ready scandal that only serves to bring shame, once again, on the H.P. board.
Mr. Hurd’s sudden departure from H.P. can be traced, in truth, to the last time the H.P. board did something shameful. That was the infamous “pretexting” scandal, which burst into public view about a year and a half into Mr. Hurd’s tenure. The essential allegation was that the company, led by its board chairwoman, Patricia C. Dunn, had gone way over the line in investigating a series of damaging leaks, including hiring investigators who used false pretenses to obtain phone records of people suspected of being the leakers.
According to “The Big Lie: Spying, Scandal and Ethical Collapse at Hewlett-Packard,” an authoritative account by the former BusinessWeek writer Anthony Bianco, Mr. Hurd was very involved in H.P.’s efforts to hunt down the leakers. After the scandal broke, he hijacked H.P.’s internal investigation, hiring an outside law firm and ordering it to report directly to him, instead of the board, which is the normal practice.
“There is plenty of evidence from H.P.’s own documents that he had a much bigger role in starting the investigations and carrying them out than he ever let on,” Mr. Bianco said. “H.P. security had a SWAT team to root out the leakers. They were clearly trying to please him.”
Ms. Dunn, according to “The Big Lie,” knew about the effort to finger the leakers, getting regular updates from H.P. managers. But she wasn’t the driving force. She wound up taking the fall because the board member who revealed the pretexting, Thomas J. Perkins, the former venture capitalist, had it in for her. So the allegations were skewed to make her look bad.
Ms. Dunn stepped down as chairwoman, replaced by Mr. Hurd. Then, Mr. Hurd forced her off the board entirely, threatening to resign if she stayed. In October 2006, Ms. Dunn, who was also being treated for cancer, was indicted by the California attorney general on identity theft and fraud charges, only to have them tossed out of court five months later.
“There was a residue of mistrust because of the pretexting scandal,” said Mr. Bianco, who added, “I conclude in the book that he lacks the moral character to be C.E.O.”
Then there were the company’s employees. The consensus in Silicon Valley is that Mr. Hurd was despised at H.P., not just by the rank and file, but even by H.P.’s top executives. (Perhaps this explains why Ms. Lesjak was so quick to denigrate him once she took over.) “He was a cost-cutter who indulged himself,” was one description I heard. His combined compensation for just his last two years was more than $72 million — a number that absolutely outraged employees since their jobs were the ones being cut.
Rob Enderle, a well-known technology consultant, noted that in recent internal surveys, nearly two-thirds of H.P. employees said they would leave if they got an offer from another company — a staggering number. “He didn’t have the support of his people,” Mr. Enderle said. Although he was good at “holding executives’ feet to the fire, he seemed to be the only one benefiting from H.P.’s success,” Mr. Enderle continued. “He alienated himself from the people who might have protected him.”
After Mr. Hurd’s resignation, an anonymous H.P. employee wrote on the Internet: “Mr. Hurd cares about one thing, how much money is in it for him. As an H.P. employee I see it every day. We don’t have the tools to do our job, but he isn’t doing without anything, and doesn’t care.”
Charles House, a former longtime H.P. engineer who now runs a research program at Stanford University, openly rejoiced when he heard that Mr. Hurd was leaving. “I think the sexual harassment charge was a total red herring,” Mr. House told me. He didn’t care. “I was delighted,” he said.
Mr. House’s brief against Mr. Hurd went well beyond his outsize compensation and penchant for cost-cutting. As Mr. House saw it — indeed, as many H.P. old-timers saw it — Mr. Hurd was systematically destroying what had always made H.P. great. The way H.P. made its numbers, Mr. House said, was not just cutting any old costs, but by “chopping R.&D.,” which had always been sacred at H.P. The research and development budget used to be 9 percent of revenue, Mr. House told me; now it was closer to 2 percent. “In the personal computer group, it is seven-tenths of 1 percent,” he added. “That’s why H.P. had no response to the iPad.”
Mr. House was also offended by Mr. Hurd’s dictum that H.P. executives had to resign from all civic boards, as well as his decision to cut off many of H.P.’s philanthropic activities. “H.P. has always been a model corporate citizen,” Mr. House said.
Plus, he said, Mr. Hurd was “incredibly rude and demeaning, and relied on the fear factor.” Mr. House summed up the Hurd era this way, “He was wrecking our image, personally demeaning us, and chopping our future.”
Are any of these firing offenses? They probably should be, but they’re not, not in the culture we live in. That is especially true when the leader who is busy chopping the future is also posting fabulous short-term profits. And, to give Mr. Hurd his due, H.P. after Ms. Fiorina was a place where the executives’ feet needed to be held to the fire.
Ah, but if you just whip up a personal scandal — make sure it has a little sex in it! — then you can get rid of your failed leader on the grounds that he “violated the company’s standards.” The world is full of imperfect people; if everyone who ever fudged an expense report or flirted with an outside contractor were fired, there wouldn’t be many people left in the American work force.
This is not to say that Mr. Hurd should be let off the hook for, in his words, failing “to live up to the standards and principles of trust, respect and integrity that I have espoused at H.P.” (Note, by the way, that he doesn’t concede that he violated H.P.’s standards of business conduct.) But a firing offense? Really?
On the other hand, putting up dazzling short-term numbers that have the effect of enriching himself while robbing H.P.’s future — isn’t that what a C.E.O. should be fired for? Firing Mr. Hurd for that reason, however, would have taken courage, something that has always been in short supply on the H.P. board.
One thing I found surprising this week was learning that to many H.P. observers Ms. Fiorina no longer seemed quite so bad. It was actually her strategic vision that Mr. Hurd had executed, I heard again and again. Her problem was that while she talked a good game, she lacked the skill to get that big, hulking, aircraft carrier of a company moving in the direction she pointed. Mr. Hurd was a brilliant operational executive, but had the strategic sense of a gnat, and knew only how to cut costs.
What H.P. needs in its next leader, Mr. House told me, is “someone with Carly’s strategic sense, Mark’s operational skills, and Lew’s emotional intelligence.” (Lewis E. Platt preceded Ms. Fiorina as C.E.O.)
That is a tall order, but not an impossible one. It is certainly plausible that the H.P. board can find such a person. Given its recent track record, though, don’t hold your breath.-----
中科停工事件 /綠委批沈世宏 應負最大責任
立 委田秋堇則批評沈世宏「態度傲慢」，今年一月要求環保署勒令停工，但沈世宏不聽。沈世宏表示，他只是想講清楚法令，並沒有授權環保署可以宣布停工。另外行 政程序法一一七條信賴保護條款，廠商利益也要顧及，他認為高等行政法院對「行政訴訟」官司，完全躲避「行政程序法」是有問題的。
前者經50年的演進已經是沒有靈魂 忘了主旨 為不學無術的少數學界所壟斷
消基會及經濟部標檢局5月抽檢28件玩具，發現有21%（6件）不合格。其中兩款玩具可塑劑含量過高，超過標準126倍，其中一款玩具同時被測出重金屬含量超標2.8倍。 可塑劑含量嚴重超標的玩具，分別是玩具反斗城、家樂福內湖店所販售的韓國風芭比娃娃，以及富邦momo購物網的海洋 ...
Despite H.P.’s Efforts, Spectacle of a Chief Goes On
By ASHLEE VANCE
Published: August 16, 2010SAN FRANCISCO — Even after a former actress in erotic films had accused Hewlett-Packard’s chief executive, Mark V. Hurd, of sexual harassment, the company’s board stood behind him.
Danny Johnston/Associated Press; Bryan Bedder/Getty Images
Times Topic: Hewlett-Packard Company
The directors had often talked with him about taking the world’s biggest technology company back to its roots as an innovator after the big-ticket acquisitions of 3Com and Palm. They doubted that Mr. Hurd, ever meticulous and boastful of his integrity, could commit such unscrupulous acts, according to people with knowledge of the board’s thinking.
But when he settled the woman’s harassment complaint in a late-night meeting before the board’s investigators had a chance to speak with her, the directors deemed his behavior just too troubling.
H.P.’s board rushed out Mr. Hurd’s resignation the next day, on Aug. 6. What has followed is a stream of leaks from both sides resulting in a very public imbroglio. The drama between staid H.P. and equally staid Mr. Hurd continues in a fashion quite unlike executive departures of its kind.
The company has uncovered communications between Mr. Hurd and Jodie Fisher, the occasional H.P. contractor who accused him of sexual harassment, that seemed cordial, even after a last meeting in a hotel room in Boise, Idaho, a person with knowledge of Mr. Hurd’s e-mails said.
But the board was increasingly troubled that Mr. Hurd had been so willing to put Ms. Fisher, whose job was to introduce Mr. Hurd to customers at H.P. marketing gatherings, in front of top customers at upscale company events. Nor could they fathom how Mr. Hurd could authorize more than $75,000 in payments and expenses, including first-class travel and stays in luxury hotels, for Ms. Fisher when the company’s employees traveled under more austere conditions, according to several people with knowledge of the expenses.
Mr. Hurd has been portrayed as engaging in increasingly questionable behavior as H.P. examined his relationship with Ms. Fisher. The directors could not grasp how he could defend having a close personal relationship with an expensive contractor and play down her background in sexually charged films like “Intimate Obsession” and “Body of Influence 2.” She also posed partly nude in Playboy while in college in the early 1980s.
Simply put, he lost the board’s trust, said people with knowledge of the board’s thinking.
A person close to Mr. Hurd counters that H.P. officials are trumping up a version of events in conversations with reporters.
“Mark Hurd is shocked and enraged by allegations from an H.P. board source that by settling an unfounded sexual harassment claim he was impeding the board from learning the truth,” said this person close to Mr. Hurd.
Mr. Hurd had been encouraged by the directors to settle the claims for weeks, the person said.
People close to Mr. Hurd have argued that certain board members overreacted to the sexual harassment charges and the possible negative publicity if word of them leaked.
Company officials, meanwhile, have publicly stated that Mr. Hurd’s behavior ran far afoul of company policy. In particular, Mr. Hurd has been accused of trying to hide an inappropriate relationship with Ms. Fisher by altering his expense reports.
An H.P. spokeswoman, Christina Schneider, declined to comment on the matter.
Regardless, the company is getting exactly what it had hoped to avoid. It hired Kent Jarrell, a crisis management expert from the public relations firm APCO Worldwide, soon after the board received the harassment complaint at the end of June. Mr. Jarrell wrote a mock news story for the board, saying it could expect headlines about H.P.’s having a soft-core pornography star working its events, people with knowledge of Mr. Jarrell’s work said.
“This history here is important,” said Scott Stern, a business professor at the Sloan School of Management at M.I.T.
Federal regulators are keeping a close eye on the H.P. board’s behavior after a scandal several years ago when factions of H.P.’s board spied on other members of the board, journalists and employees in an attempt to stop leaks. “This is a very proud company with a great history,” Mr. Stern said. “The fact is that you could understand that the board would be trigger-shy about public controversy.”
Mr. Hurd, according to those close to him, found it baffling that the company would disclose the sexual harassment case after a company investigation turned up no wrongdoing.
The accusations linking Mr. Hurd to improper spending resonate because he had built up a culture of severe financial accountability at H.P. A former H.P. executive said that Mr. Hurd’s meetings were known internally as “rectal exams” because of the fierce questioning.
“If you put up a slide with lower financial forecasts, he would spot it right away,” the executive said, requesting anonymity because he still deals with H.P. “Then, he would demand that you fix the situation.”
Stories abound of Mr. Hurd’s slicing into marketing costs and making employees fight for every dollar in the budget (although Mr. Hurd often found marketing money to sponsor tennis events, uniting his love of the sport with H.P.).
It’s this history that made Mr. Hurd’s recent behavior stand out to the board.
The situation was made worse after H.P. discovered that Mr. Hurd had viewed some of Ms. Fisher’s racy acting on his work computer, signaling that he was aware of her past.
Mr. Hurd has told people that he did a brief Google search of Ms. Fisher in April or May of 2009, nearly two years after she started contract work for H.P.
Lawrence J. Ellison, the chief executive of Oracle, called H.P.’s board cowardly in an e-mail to The New York Times. And plenty of pundits went on to say that H.P. should not have let Mr. Hurd go simply because he left Ms. Fisher’s name off some expense report filings.
A number of outsiders have complimented H.P.’s board for its decisive action, noting that the company’s board has operated under a microscope because of past transgressions.
William W. George, a professor of management practices at the Harvard Business School, said H.P. had made the right decision and that Mr. Hurd needed to move on. “I think once it’s settled, you need to walk away,” Mr. George said. “If he comes to grips with this, he is going to come back and have great leadership roles.”