As I See It: The Once and Future HP Way

Published: August 23, 2010

by Victor Rozek

It's a human sign when things go wrong
When the scent of her lingers and temptation's strong
--Sacrifice

Who knew Elton John was singing about Hewlett-Packard? Yep, things are going terribly wrong at old HP, where temptation was apparently strong enough to cost yet another CEO his job. Think of it as the venerable "HP Way" adjusted for narcissism. Once highly regarded for its progressive leadership, the company is now a place where maladjusted CEOs go to commit career suicide.

More than a half-century ago, Bill and Dave set off on their most excellent adventure and, in the process, pioneered people-centric management methods that came to be known as "The HP Way." They set a standard that--for decades--steadily improved the way workers were treated. But as Corporate America began to view employees as liabilities, the company abandoned its roots, hiring a series of one-trick managers for whom every problem had a solution and that solution was always the same: throw more people overboard.

It began with "Me-First" Carly Fiorina who, from the start, cared more about power than people. Her proposed layoff frenzy, coupled with her demand that HP pay to have her yacht moved from the East coast to the West, should have served as a cautionary flag to HP's board of directors. But, they swung at her pitch and whiffed. Pushed out the door after a near-ruinous reign, Fiorina showed early signs of political acumen by passing accountability and going directly to blame. She claimed that The HP Way was an excuse for not doing things The Fiorina Way.

She then tried to fail upward, hoping to become John McCain's running mate. But when it became apparent that the avaricious behavior of Wall Street had demolished the economy, McCain was forced to hop on the anti-greed bandwagon. He could hardly defend the candidacy of a woman who walked off with $45 million for the grand achievement of being fired.

Fiorina is now trying her luck in California. And you can bet she's not running for Congress because she's suddenly developed a soft spot for the yacht-less classes.

Next, chairwoman Patricia Dunn was forced to leave after it was disclosed that she ordered HP's general counsel to hire private investigators to spy on board members and journalists. Strategic leaks had appeared in the media, and the gumshoes used pretexting (the digital word for lying) to obscure their identities and their purpose while tracking the leaker. The double standard was probably not lost on employees. Corporations routinely spy on their workers, from hidden cameras to captured keystrokes. It must have been great fun to hear how shocked, shocked, the board was to be the object of the snooping. But in the process, The HP Way took another hit.

Enter Mark Hurd. His temptation came in the, ah, form of Jodie Fisher, a 50-year-old former naughty movie maker, who got $5,000 a pop to greet people at HP events. Call me jaded, but at $5 grand, she must give one hell of a greeting. In any event, the outcome of all this high-end greeting (at least as Ms. Fisher tells it) was a sexual harassment complaint against Mr. Hurd. But an internal investigation cleared Hurd of those charges, although it was reported that he came to a personal financial settlement with Fisher. His downfall came as the result of something seemingly absurd for someone who made over $24 million last year: falsifying expense reports. Yes, a man who engineered the layoffs of 14,500 people and cut salaries across the board, while living a life of privilege and excess, falsified some $20 grand in expense reports to cover his (supposedly non-sexual) dalliance with a contractor. Brilliant.

Excusing his deficiencies in elemental math, Hurd took a page from Fiorina: when the jig is up, blame others. According to the Associated Press, "a person close to the case" said that Hurd claimed the errors in the reports may have been entered unwittingly by an assistant. Sure, because executive assistants are notoriously bad at math.

There are many unanswered questions about Hurd's abrupt resignation. One avenue of speculation suggests that HP was ready for new leadership and grabbed an opportunity to get it. Hurd, like Fiorina, was not well liked, and although he was a successful cost-cutter, he had not put the company in a good position to prepare for growth. Among other things, he had slashed the R&D budget (the lifeblood of a technology company) and consolidated the company's 85 data centers down to a mere six. He had applied his one solution over and over again, and was running out of things to cut.

Trouble is, throwing employees under the bus in order to show a profit is like the classic IT dilemma: whether to centralize or decentralize. Some set of problems will be solved by either decision, but new problems will be created. It just takes about five years for them to become intolerable. Likewise, massive layoffs solve some short-term problems by showing a temporary financial spike, but they weaken the company. How do you even begin to replace the energy and expertise of 14,500 departed people? Hurd had his five years, the company was skeletal, he was out of tricks, and the board was probably wondering, what's next? When the opportunity to part ways presented itself, the board was comfortable with moving on.

For her part, Fisher claims she never intended for Hurd to lose his job. Well, sure. Why kill the golden ink-cartridge when it can go on printing money. Once Hurd leaves HP, her leverage is largely gone. But if there was no inappropriate behavior, why falsify expense reports, and why resign? And if Hurd was quitting anyway, why the private payoff? It's a muddle to be sure, but the rarity of the situation must be acknowledged: in a potential he said/she said standoff, the male in the power position took the hit. Who says gallantry is dead?

At the end of the song quoted above, there is a refrain: It's no sacrifice, no sacrifice, no sacrifice at all. Again, Elton was right on the money. No need to feel too sorry for Hurd. Quitting his job wasn't much of a sacrifice at all. Not unlike Fiorina, he walked away with a severance package reportedly worth in the neighborhood of $50 million. Of course, Mrs. Hurd hasn't weighed in on the matter, and she's probably better at simple math than her husband, so Mark had best not count his $50 million chickens just yet.

If you find it offensive, in the midst of double-digit unemployment when, in Bob Herbert's words, "widespread economic suffering [is] the new normal in America," that a company should squander nearly $100 million to get rid of two CEOs, you're not alone. HP's employees and shareholders must be weary of the revolving parade of selection errors populating their executive suite.

The problem, however, is not one of sex or money, or even power. It is management's betrayal of HP's values. And once an individual or institution is out of integrity, a state of internal discord will prevail.

There are a handful of universal values; behaviors and ways of being that work anywhere, any time, in any culture. Respect, integrity, kindness, honesty, appreciation, gratitude; these were the values Bill Hewlett and David Packard wanted to imbue in their fledgling company. Those values were not intended to be dependent on the state of the economy, or the judgment of shareholders. They were important because the company's founders believed that's the way people should treat one another--regardless of circumstance. It was, they believed, more important to behave honorably than to gain economic advantage by abandoning their values based on changing circumstances.

Which is why values are important: they are behavior generators. Two companies will behave differently if one believes employees are a liability and the other believes they are the only resource a competitor cannot precisely duplicate. One set of decisions and outcomes will come from seeing workers as expendable burdens; another set will follow the belief that employees are valued partners working for mutual benefit in support of a worthy vision.

Somewhere along the line, HP forgot what made it great. And, as the company discovered, you cannot keep your values by hiring leaders who do not share them.

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