Fiorina Hurd and the Board at HP

Organizational Politics

Introduction

One of the main causes of the political behavior seen at Hewlett-Pakcard (HP) over the previous decades has been a lack of trust between the CEO and the Board of Directors. Types of political behavior have ranged from blaming others to trying to manage impressions. The ethics involved have been less virtuous and deontological and more centered on egoism. HP is a company that was once known for its innovative products and strong leadership. However, in recent years, the company has been plagued by infighting and political maneuvering among its senior leaders. This paper will examine the factors that led to this situation.

Background

From outsourcing its manufacturing, to cutting spending on research and development, to making several unwise acquisitions, HP lost sight of its core strategic value in the 21st century under a slew of different CEOs. Leadership was poor and often in conflict with the Board. Essentially, HP suffered from a decline in the quality of its vision, mission, strategy, and leadership. The lack of trust between the Board and its CEOs caused waves when Fiorina attempted to identify who was leaking information to the public (Kessler, 2006). By the time Meg Whitman took over as CEO in 2011, HP was hemorrhaging badly and layoffs were a given. The organizational culture was in a state of total disrepair, and HP was no longer synonymous with innovation. The new innovative leader in tech was Apple and HP was not even close in the running. The best that Whitman could do was try to cut costs wherever possible (Harwell & Paquette, 2015; Pearlstein, 2011; Veverka, 2011).

Discussion

Causes of Political Behavior

Lack of trust was a big factor in the organizational politics at HP. Individual and organizational factors of HP and its senior leaders led to the intense political behavior seen at HP from the 2000s onward. Leaks to the public (i.e., the press and investors) began after HP’s evident decline and loss of market share became all too clear to stockholders and the Board. The company had lost its way at the end of the 20th century, but it was not until the 2000s that this unwelcome fact became all to evident. By that time, CEOs were merely interested in maintaining face and not causing any more harm to their stock options or reputations. Fiorina was already looking ahead to a possible political run with the Republican Party (she ran in the Republican presidential primaries in 2016). But under Fiorina in 2001, HP acquired Compaq for $25 billion in stock—a move that would a decade later be criticized following HP’s billion dollar write-off from the personal computer acquisition. Under Fiorina, HP also found itself handcuffed by Apple after a deal between the CEOs of the two companies helped propel Apple forward while keeping HP behind. Fiorina did not guide HP well, but neither did her successors, and division between the Board, stakeholders, stockholders and the list of CEOs that followed showed that trust was missing all the way around. The Board, for instance, leaked internal issues to the press to put pressure on Fiorina, Hurd, and so on.

Types of Political Behavior

The Board eventually forced Fiorina out of her role as CEO in 2005, and Mark Hurd was brought in to replace her. However, he did little to guide the company back to its innovative roots. Hurd increased the company’s net income but only because he focused on cutting costs—not because he oversaw the company return to the development of new and innovative products. Leo Apotheker followed as CEO and HP’s stock price fell by half, and Meg Whitman took over in the post in 2011. Whitman tried to right the ship by dividing the company into two parts and focusing more on vision and innovation. However, growth lagged even still. Trust continued to elude major players, and no one felt that HP was really any longer in the driver’s seat in an innovative and fast-paced industry.

Types of political behavior seen during this time included casting blame on others and trying to manage impressions (save face). Under Fiorina’s leadership, for example, HP’s board members and executives were quick to try cast blame and manage impressions. In 2000, Fiorina oversaw the acquisition of Compaq, which was widely seen as a failure in the wake of the tech bubble bursting. As a result, HP’s stock price fell and many employees were laid off. In an effort to save face, Fiorina attempted to blame the problems on her predecessor, Gil Amelio. However, this strategy backfired, and Fiorina was eventually ousted from her position. Under Hurd’s leadership, HP experienced a period of stability and profitability—but only because of deep cuts and not because of any strong fundamental change. And in 2010 it was revealed that Hurd had engaged in an affair with a former HP contractor. Once again, the HP board attempted to manage the situation by casting blame on Hurd and forcing him to resign. In 2010, Leo Apotheker was named HP’s CEO. Although he had only been in the role for 11 months, Apotheker was widely blamed for HP’s decision to write down the value of its acquisition of Autonomy. As a result of this write-down, HP’s stock price fell sharply and Apotheker was fired—again, another attempt by the Board to manage what was by now a full-on dumpster fire.

When Whitman took over as CEO, she inherited a company that was in turmoil. In an effort to turn things around, she embarked on a cost-cutting program that included layoffs and the spin-off of HP’s Printer business. Although these measures were successful in stabilizing HP’s finances, they did little to improve its reputation with investors.

Ethics of Political Behavior

Regarding ethics, individual rights have to be considered, as does the welfare of those involved, along with the issue of distributive justice. It could be argued that the Board, for example, in leaking information to the press, was trying to take a utilitarian approach. However, an individual should have a reasonable expectation of privacy, and the Board surely violated the trust of its CEOs in doing so. Yet, one also has to consider the welfare of stakeholders, and if CEOs were not meeting expectations, putting public pressure on them is part of the nature of managing people out of their roles. It can be ugly at times, but from a duty ethics perspective, a Board could consider it as its duty to act in this manner.