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Decoding Hurd's move to Oracle

Once a CEO, always a CEO. That's the route most executive career paths tend to take once they reach that lofty level. But it's especially true for those whose careers reach the stratospheric heights of leading a corporation as large as technology giant HP.

So the news that Mark Hurd will be joining Oracle as one of two co-presidents, but not CEO, comes as quite the surprise for anyone who watches the goings and comings of Corporate America's reigning class. Hurd's reputation may have taken a serious hit from his resignation from HP over a personal relationship with a contractor that led to expense account irregularities. But for someone who received as many glowing accolades as Hurd, taking a No. 2 spot at a company with smaller annual revenues than his former employer is almost as stunning as the circumstances that led to Hurd's ouster.

Unless, of course, he's been told he will succeed Larry Ellison, Oracle's founder and CEO, who has been at the helm of the company for 30 years, and who defended him throughout the recent scandal. Or, perhaps, he has a taste for revenge. Either way, it looks like HP's board will suffer even more consequences for their decision than they already have.

The expected course for Mark Hurd would have been to leave the public company limelight altogether and camp out running a private equity owned technology firm. He'd rake in millions in the process, on top of his already lucrative severance package, and the press would forget all about Jodie Fisher, the contractor at the center of the scandal. Then, a few years from now, some public technology firm would be on the search for a corporate savior, at which point Hurd could ride back into Wall Street's spotlight, make a quick turnaround, and be the hero once again.

Instead, he's staying right in the thick of things. With Hurd's arrival, Oracle announced that its former co-president, Charles Phillips, will be departing the company, leaving Hurd and longtime Ellison right hand Safra Catz in the No. 2 spots. Hurd will be both co-president and a director running sales, marketing and software support. Despite Catz's experience and power at Oracle--one former company insider said in this profile she makes 98% of the decisions, checking in with Ellison 2% of the time--she has said she's not interested in Ellison's job. Given Phillips' departure, Catz's reticence, and Hurd's experience running an even larger company by annual sales, it's hard to believe that the carrot of running Oracle someday was not explicitly dangled in front of Hurd.

But the promise of a future CEO job--and the riches that come with one at a company like Oracle--may not be Hurd's only reason for taking a step down the corporate ladder and remaining in the harsh spotlight. While HP and Oracle have traditionally been partners--HP sold the hardware customers use to run Oracle's software--Oracle's acquisition of Sun Microsystems pits the two hardware makers against each other. Hurd will have the chance to compete against the board who ousted him.

The public sparring between the Hurd and HP camps was on display following his departure, as "those familiar with the board's [or alternatively, Hurd's] thinking" leaked story after story to the press. The HP side claimed that Hurd settled with Fisher before a mediation session the board had scheduled with Ms. Fisher, while Hurd--through friends, of course--denied that. The tension between the two sides was mirrored in the public debate over Hurd's ouster, with some writing the board used Hurd's peccadilloes as a way to oust an unpopular leader, while others argued that the board rushed to judgment and lost a good CEO.

The latter are likely to be right, in ways they did not know until now. By joining Oracle, Hurd could hurt HP, which still has not named a permanent replacement, in ways far greater than the potential impact of code of conduct violations on the company's culture ever would have--or the hit to HP's market valuation ever did.

Of course, the board can be forgiven for not envisioning this scenario. Not only did Hurd take the highly unusual route of opting for a No. 2 job at a public company instead of the business world's more traditional form of exile, but he agreed to a two-year confidentiality agreement as part of his severance package. While there was no non-compete clause in the contract because they are hard to enforce in California, his new job would presumably have him disclosing sensitive information to a competitor, something HP, The Wall Street Journal reports, will probably sue to stop.

Is Hurd simply eager to step back into the game at a technology powerhouse that's not a private equity backwater? Or is he so ambitious to hold the pinnacle of corporate power again that he'll take a step backwards to reach his goal? How much does revenge against HP play a role in his latest move?

It's impossible to tell without talking to Hurd where his motivations lie. But whatever the cause--and it's likely some combination of all of the above--it's a reminder to boards of the very human emotions that are in play any time leaders' careers are at stake. And that you can never guess what they're going to do next.

By Jena McGregor

 |  September 6, 2010; 11:01 PM ET |  Category:  CEO watch , Corporate leadership Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   Del.icio.us   StumbleUpon   Technorati  
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Comments

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Carly Fiorina, Mark Hurd. HP has some management track Record.

Posted by: adrienne_najjar | September 8, 2010 11:27 AM

Very hard today, to find a CEO worth anything. If Hurd was good for HP, I seriously question, the wisdom of its board of directors. If Oracle picked him up, they must know something, HP's board doesn't.

Posted by: dangreen3 | September 7, 2010 5:31 PM

People make different choices both because of the circumstances the encounter and because of their personal needs. The company I used to work for actively managed empoyees careers. That means they identified newer younger employees with a potential for management or technical leadership positions and encouraged them to make the effort needed to build a successful career. It also means that they managed the downward part of people's careers too. They pushed older people aside to make room for younger people and gave former leaders the chance to fill lower level roles. Some people were more comfortable with this process than others. But, it was not uncommon to see people who had been third or fourth line managers occupying second line positions or even some level of non management job. Presumably, Mark Hurd likes to work and this job is just the most interesting one available to him.

Posted by: dnjake | September 7, 2010 2:13 PM

"He'd rake in millions in the process, on top of his already lucrative severance package, and the press would forget all about Jodie Fisher, the contractor at the center of the scandal. Then, a few years from now, some public technology firm would be on the search for a corporate savior, at which point Hurd could ride back into Wall Street's spotlight, make a quick turnaround, and be the hero once again.

Instead, he's staying right in the thick of things. "

...which, as a member of the press, really burns you, because it indicates a near-total lack of concern for what the press thinks.

Posted by: tokenwhitemale | September 7, 2010 12:55 PM

...because there's lots of money in it, "genius"?

Why the hell do you think that he's doing it?

Posted by: tokenwhitemale | September 7, 2010 12:53 PM

"Since this writer has never run a company, this colume is pointless."

Speculative, maybe, but pointless? Does that mean that all those historians wrote pointless books about Lincoln, Churchill, Hitler, etc.... since clearly not one of those historians had run countries? Interesting restriction, there.

Posted by: fdrew | September 7, 2010 11:46 AM

Isn't the fact that it pays better than playing golf or the public wearing of a hair shirt enough of a reason to return to work. Beside that, running Oracle as long as Larry Ellison still breathes is not that shiny of a prospect.

Posted by: edbyronadams | September 7, 2010 11:41 AM

Since this writer has never run a company, this colume is pointless.

Posted by: sgilligan1 | September 7, 2010 9:52 AM

The comments to this entry are closed.

 
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