Why HP's Decision to Oust Hurd Was the Best One

Lora Bentley
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When HP's board showed former CEO Mark Hurd the door a few weeks ago, Oracle CEO Larry Ellison said the board had made "the worst personnel decision since the idiots on the Apple board fired Steve Jobs." But not everyone feels the same way.

 

IT Business Edge blogger Don Tennant, for instance, says Ellison's defense of Hurd is nonsense. Tennant writes that Hurd is:

just a guy who didn't lead very well at all, and who's nonetheless walking away from HP with millions upon millions of dollars, while thousands upon thousands of victims of his ruthless layoffs scrape to get by.

Beyond that, though, Yale School of Management senior associate dean Jeffrey Sonnenfeld goes so far as to applaud the way HP's board handled Hurd's ouster. In a New York Times piece, he wrote:

The HP board, with noteworthy courage, has emphasized long-term enterprise principles over short-term business performance. This is how great enterprises are built to last. The HP sequel may not be steamy potboiler, but it is a welcomed model of board governance after a steamy season of costly corporate cowardice elsewhere.

He points to the way BP's shareholders lost confidence when the company's board rose up to support the company's "shattered leaders" after the oil spill. The company's public relations machine kicked into high gear, trying to spin the news so that it didn't sound quite so bad. In the end, those efforts didn't help, and the CEO eventually made his exit anyway.

 


HP, on the other hand, didn't deny the bad news. Instead, the board undertook to complete its own investigation and then made the decision to dismiss Hurd, despite the fact that he had earned the company a ton of money in his time there. Simply put, he had lost the board members' trust, and The Corporate Library's Nell Minow said early after Hurd's dismissal, that executives that lose the trust of their boards struggle to be effective thereafter.

 

HP's decision in this case was indeed the right one.



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