HP management: Hewlett-Packard may find a silver lining in Mark Hurd’s resignation. The loss of its chairman and chief executive over alleged expense fiddling and sexual harassment will hurt, especially given all the good he did for the tech company. Investors fretted, sending the shares down 10 per cent in after-hours trading on Friday night after the news was announced. But the board could use this as an opportunity to split the chairman and CEO roles, and set HP on an even better course.
The company needs someone strong to focus on day-to-day management. HP is amid integrating important acquisitions, including networking company 3Com and smart phone maker Palm. True, having Chief Financial Officer Cathie Lesjack around will help in the meantime. But she doesn't want to make the top job permanent. It seems prudent to fill this role relatively quickly and with assurance, so an HP insider makes the most sense.
HP also could use a strategic guide. Although Hurd was widely acknowledged to be an operational guru, it took him too long to see the increasing influence of consumer-based technologies on the corporate world. The company has been an also-ran in cell phones, for example. The purchase of Palm could yet make HP a player, but the decision came rather late - after Apple's iPhone and handsets running Google's operating system solidified market positions. An outsider may be better suited for this role.
Splitting the roles has another benefit — increased accountability. This would especially help HP and its tarnished record of corporate governance. Before this latest scandal, Hurd's predecessor in the chairman role, Patricia Dunn, was forced to step down after contractors hired by the company used questionable methods to spy on HP directors, employees and journalists. Combining the chairman and CEO roles invites imperiousness, and can remove a check on executives acting badly. Indeed, the board's desire to atone for its history appears to be a factor in their demand for Hurd’s resignation.
Of course, separating the jobs is no panacea. Dunn had Carly Fiorina as her opposite before both were forced out. Bad hiring decisions can't be so easily fixed. But it also doesn’t obviate the benefits of shrewd governance. HP should take this latest ugly situation and make some good of it.