The fact that USA Inc has expressed regret over the resignation of Mark Hurd as the CEO of Hewlett Packard reflects the level of amorality that has afflicted American business over the past decade-and-a-half. The general drift of comment that Mr Hurd has attracted from his fellow IT CEOs is that a hugely successful manager has had to pay the price for what was ultimately a minor infraction. But no one has thought to praise the tough ethical choice that the company made in easing him out. The subtext: HP has sacrificed a high-performing asset on the altar of corporate governance.
It is true that the original complaint of sexual harassment was eventually whittled down to what the company officially termed “a conflict of interest” that cost the $115-billion IT major only a few thousand dollars. Seen in that light, it is possible to argue that the company had over-reacted — though Mr Hurd’s $28-million severance package is hardly an expression of institutional ingratitude. Investigations revealed that Mr Hurd, 53, had no sexual relations with the contractor concerned, a fact she confirmed. The complainant is a 50-year-old former reality TV contestant-turned-“marketing consultant” who, between 2007 and 2009, acted as Mr Hurd’s escort for CEO executive summits in the US and overseas, introducing him to customers and dining with him afterwards. For her services, the contractor was paid between $1,000 and $10,000 per event, and she sued for sexual harassment when HP stopped hosting these events in 2009. Mr Hurd also allegedly made two trips to interview her, a practice that was not considered typical for a CEO. In all, Hurd’s misdemeanours amounted to conducting personal relationships on company money, an error compounded by inadequate disclosure. Or, as HP’s official statement put it, he “failed to maintain accurate response reports, and misused company assets”.
Set this against Mr Hurd’s performance. When he took over the company from the flamboyant Carly Fiorina in 2005, HP’s top and bottom lines were under siege and people were leaving in droves in the aftermath of the acquisition of Compaq. Mr Hurd not only stabilised things but his five-year stint saw HP’s earnings and shares double, and its market share overtake Dell. HP also overtook IBM as the largest IT technology company on his watch. Mr Hurd’s transgressions were small beer compared to, say, the depredations of Kenneth Lay at Enron or Bernard Ebbers at WorldCom. Even so, should HP have winked at its CEO fudging expense reports, no matter for how small the amount? Given that CEO actions, personal and professional, set the tone for an organisation, the message this would have sent down the line would hardly have been desirable. HP has had to face more than its share of public controversy in recent years, not least with the egregious spying scandal of 2006 that saw the exit of HP chairman Patricia Dunn — a controversy that, in a sense, blooded Mr Hurd in his early years as CEO. So, his resignation was only in the fitness of things. But, has the trauma of crisis contributed to a weakening of the ethical code for corporate America?