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Yash Gupta
Business School Dean

Yash Gupta

Yash Gupta is Professor and Dean of The Johns Hopkins Carey Business School.

HP needs a leader who is a role model

Q: In forcing out its successful chief executive, Mark Hurd, did Hewlett-Packard directors over-react to what, given his overall compensation, appears to be a modest abuse of his expense account? Or did the board under-react by allowing Hurd to resign with his full contracted severance package rather than firing him for cause?

In the wake of Mark Hurd's resignation, the discussion of the episode seems to be focused on his compensation. Will it be $35 million or $40 million? How will HP's strong recent performance affect Hurd's stock options? Will medical and dental coverage be thrown into the deal?

All this talk has the ring of some post-game sports show in which the announcers recount the big plays and dissect the key statistics.

But this isn't fun and games, and the core issue isn't money. This is a matter of ethics.

The focus shouldn't be on how Mark Hurd will be compensated as he leaves one of the world's top companies but rather on how he behaved while he ran HP. Leadership is about being a role model for the entire organization; it's about leading your people with character, compassion, competence, and constancy of purpose. On this score, Hurd has come up empty, even if the abuse was only "modest." (I would argue, however, that falsifying expense reports is never merely a minor offense, particularly when the falsifier is the CEO).

A leader has to demonstrate consistently that he respects the institution, the people who work for it, and the people who are served by it. An essential way of showing such respect is to be honest and above-board in all your dealings. If you're not, then how can you ask anyone else to hold himself to a high ethical standard? You can't, and once you've betrayed that code of conduct, your standing as a leader is ruined.

No amount of compensation, including medical and dental, can buy that back.

By Yash Gupta

 |  August 9, 2010; 5:05 PM ET
Category:  CEOs , Corporate leadership Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   Del.icio.us   StumbleUpon   Technorati  
Previous: HP resignation: A breach of trust | Next: Mark Hurd exits speaks for itself

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"An essential way of showing such respect is to be honest and above-board in all your dealings."

Step one is to admit that non-white immigration is genocide is a math theorem in population genetics. Business schools and universities are engaged in genocide. That is what they should admit.

http://www.pubmedcentral.nih.gov/picrender.fcgi?artid=1213928&blobtype=pdf

"We investigated various cases of the island model with stochastic migration. If the population is infinite, the immigrants have a fixed gene frequency and the alleles are neutral, the gene frequency on the island converges to that of the immigrants."

Genetics. 1979 January; 91(1): 163–176.

The Island Model with Stochastic Migration

Thomas Nagylaki

Department of Biophysics and Theoretical Biology, The University of Chicago, 920 East 58th Street, Chicago, Illinois 60637

How about the universities and business schools admit non-white immigration is genocide and that they are part of it as is H-1b? Isn't genocide of the White Race more important a crime than expensive account pilfering?

Posted by: OldAtlantic | August 10, 2010 11:04 PM
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Mark Hurd made the very difficult decision to cut thousands of jobs from HP in the wake of Carly Fiorino's failed tenure. He did so in order to reduce costs and make the company more profitable for its shareholders. His compensation package was, in all likelihood, pegged to using such reductions in staff and operating expense to pump up the bottom line. Nothing wrond with that,per se, as that has become the modus operandi of manhy corporations fixated on EPS and quarterly results.

I will bet somewhere in the memos and public statements made by Mr. Hurd during this corporate bloodletting there are phrases such as "hard but necessary choices to guarantee the company's future" and "difficult decisions to assure the company's continued viability." That is CEO speak for I am going to ruthlessly cut costs to hit my numbers and make a lot of money. Nothing wrong with that either in our system of capitalism. That is why men like Hurd are hired: to maximize sharholder value.

His action in using the corporate expense account which is a cost center for purposes we can only imagine is a direct violation of the principle he used to justify jettisoning employees. Whatever he paid this woman and whatever personal satisfaction he achieved was done at shareholder expense and under false pretenses. There is something very wrong with that! If he wanted to have dinner with a beautiful woman it should have been on his own dime. The morality of whether or not he should have been doing so as both a married man and the role model for an entire corporation is a subject left for another discussion.

Most of us believe there is a lot more to this story than in being admitted by anyone involved, particularly now that both Mr. Hurd and the "consultant" he paid for out of company funds have clammed up, likely with legally binding economic incentive to do so. But the fact remains the HP Board terminated Hurd for one simple reason: he acted hypocritically and against the interest of the shareholders. He ended up firing himself by his own actions. A just end to a man who made a conscious decision to stroke his ego and libido at company expense after asking those under his command to make even greater sacrifices.

By the numbers Mark Hurd made a lot of money for HP and himself during his tenure. It is likely/probable he used his expense account to steal, at least, some more. Wonder if the Board has a forensic accounting firm going over his spending for the past couple of years to see whether or not there were other abuses?

Posted by: bobfbell | August 10, 2010 6:16 PM
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