Tag Archives: Larry Ellison

HP's crisis management–right or wrong?

I’ve seen a lot of debate in the last while about HP’s decision to fire their impressively performing CEO Mark Hurd. The two lines of argument are thus:

Anti-firing: the guy’s a superstar, he delivered the goods, you’re going to toss a guy that can do that much for your company and shareholders under the bus for some minor expense reporting errors?

Pro-firing: Well there’s this thing about sexual harrassment and then the supposed victim went ahead and got an attention-grabbing attorney so you know whether he is innocent or not you are going to face a mud fight. So spare yourself the agony. And your famous PR agency says you should.

If that was the way the argument really went I’d have a hard time making a decision. After all, one of the prime rules of PR, like the Hippocratic Oath, should be to do no harm. Firing a superstar CEO just because some lawyer who loves to see her name in the paper makes sounds like she’s coming after you would cause a reverse PR problem of acting like chicken little. But, clearly that is not the problem here.

PRSA Chair Gary McCormick in this post provides a reasoned explanation for what really happened. While investigating the sexual harassment charges which turned out to be false, the board discovered other problems–inappropriate contractor payments and personal expenses recorded as company expenses. Certainly they could have not disclosed those items. The focus was on the sexual harassment and they could do away with that.

I don’t know if APCO, their PR firm, advised them to release Hurd based on fears of the celebrity attorney or based on the reality that the guy was being dishonest and a cheat. Larry Ellison’s defense of him is based on the idea that whatever tiny little cheating he may have done, it is absolutely nothing compared to the huge value he was delivering. Ah, there is the problem isn’t it. Turn our backs on little violations of company ethical standards if you perform well enough. If the guy isn’t doing his job, and he cheats a little drum him out. But if he is making us big bucks, then we’re stupid to lose him for a minor little infraction.

It’s the Ellison kind of thinking that contributed to the collapse in judgment we saw in the financial crisis. It’s the Ellison kind of thinking that destroys public trust in business. It’s the Ellison kind of thinking that contributes to an atmosphere of moral and ethical ambiguity–and to bad decisions that lead to much worse problems. If the HP board which has a significant legacy of integrity to live up from its founders, and whose actions in the past relating to previous CEOs and board members leaves much to be desired, had chosen to take an ambiguous position on Mr. Hurd’s discretion much would have been lost. If you can’t trust your highest leaders, what does that do for the boardroom? What does it convey to the organization? To shareholders? To the public?

Coming out of this event there seems to be the Ellison Way and the HP Way. I’m glad they chose the HP Way.