Who says business news is boring…I have truly enjoyed following the hijinks at Hewlett Packard over the last month or so. In the latest installment, Mark Hurd, HPs ex CEO, gets hired by Oracle on Monday, and HP sues Mr. Hurd yesterday, seeking injunctive relief. More to come!
Aside from its entertainment value, why does this story matter? Because it shows us once again how difficult it is for a company to excel in the environmental, social and governance spheres, and the balancing act we must manage when choosing companies for SRI portfolios.
Hewlett Packard has long been a company that shines in E and S, but has a hard time with G.
Mark Hurd, the former Chairman and CEO of Hewlett-Packard, once stated, “Environmental responsibility is good business. We’ve reached the tipping point where the price and performance of IT are no longer compromised by being green, but are now enhanced by it.” Last year, when Newsweek ranked America’s top 500 corporations on environmental issues, Hewlett Packard was first although cooler heads at Greenpeace put it right in the middle of the electronics pack. HP has garnered enough awards and accolades that it is commonly accepted that they are a leader on the environmental front.
On the social side, HP has a commitment to human rights, and has long been renowned, pioneered by Bill and Dave, for having one of the most people friendly workplaces. The HP Way was a management philosophy that put people ahead of products or profits.
However, when it comes to Governance….
From the time that Carly Fiorina became Chair (and CEO) in 1999, the Hewlett Packard board has been in trouble. Characterized as dysfunctional, primarily due to a clash between the HP Way and the Fiorina Way, the Board nonetheless managed to keep it together enough to fire Fiorina in 2005. This was followed by criminal charges against new Board Chair Patricia Dunn for engaging in illegal monitoring of other Board members, and insider trading allegations against Mark Hurd and other senior executives and directors of HP.
And now, the Boards removal of Mark Hurd as Chair and CEO, although quick and efficient, lacks transparency. Michael Schrage, writing in the Harvard Business Review suggsts that “HP's directors may have been absolutely right to force Hurd's departure. But the firm's fiduciaries wrongly missed a world-class opportunity to simultaneously respect the best interests of its stakeholders and expand the boundaries of good governance.“
And I’ll give the last word (for now) to Oracle CEO Larry Ellison. "Oracle has long viewed HP as an important partner. By filing this vindictive lawsuit against Oracle and Mark Hurd, the HP board is acting with utter disregard for that partnership, our joint customers, and their own shareholders and employees. The HP Board is making it virtually impossible for Oracle and HP to continue to cooperate and work together in the IT marketplace."
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