Mark Hurd's Termination a Warning to Other Executives

In the Internet age, privacy is a scarce commodity and even the appearance of impropriety can be a major problem.
Posted August 10, 2010
By

Rob Enderle

Rob Enderle


There is a “he said, she said, they said” storm surrounding the ouster of HP’s CEO last week. The good news for HP is that the firm beat market expectations with its financial results, and it has two people internally, Todd Bradley and Shane Robison, who have the needed breadth and experience to step into the job quickly.

Todd is an ex-CEO himself and would be ideal if the Palm acquisition is to help drive HP’s future valuation. Shane has the deepest knowledge of all the business units and knows where the existing bodies are buried. In addition, the interim CEO, Cathie Lesjak, is well respected and has a long history at the company, unblemished by controversy. Hurd leaves HP in very strong shape.

However, Hurd should have been one of the most secure CEOs in the valley, likely third behind Steve Jobs and Larry Ellison in terms of his ability to defend his job against almost anything that came up. Yet he appeared to have lost his job as a result of some relatively small bad judgment calls, at least compared to what other CEOs did to get fired.

His experience sends a warning to other CEOs: “Watch your butts, in a reality show world the rules have changed.” Let’s explore that.

CEO Abuse of Power

From mistresses to the use of private jets for personal purposes, the abuse of power by those that have a lot of it ranges from CEOs to politicians. Particularly with respect to mistresses, the perk often seems to come with the job at some companies, with the only caveat that the CEO be discrete and avoid “dating” subordinates.

This tends to create an environment where the person in power is testing the limits of what they can do on the company dime and on company time. Overseeing these executives is their respective boards, but many CEOs have learned that if they take over the Chairmanship that oversight can be dramatically reduced.

Historically CEOs didn’t have that much of a public profile. And while their antics were often the subject of water-cooler talks throughout their companies, it was rare that they became the subject of public discussion. In pre-internet age, even extreme instances didn’t seem to get any real coverage, like the CEO who used to chase Pizza delivery boys in his restored Sherman tank, or how the coup between a CEO’s mistress and next in line was foiled because the analog telephone conversation describing it was accidentally rebroadcast over the firm’s PA system. Up until Hurd’s issues most of us were worried they were simply getting meaner. Historically containment was relatively easy and if someone tried to tell the story the firm would deny it and the publication wouldn’t publish without some type of credible corroboration. Yes, it was kind of like Mad Men. And yes, it has been going on for some time.

Unanticipated Impact

However what most of these men (and it is generally, though not always, those of my gender that does this) don’t seem to fully grasp is the implications of getting caught. No matter how weakened the board is, if the activity puts the board and company at risk they will replace the offending executive.

If it is an affair that became public, even in a no-fault state, the additional cost can be the marriage and the emotional stability of the children. Having been the child of an executive that had issues with fidelity myself I can attest to the fact that the result can be extremely damaging to the children, who may have everything from substance abuse, trust, or anger management issues as a result. And the spouses of these have a tendency to get rather vindictive and physical. Recall that Tiger Woods’ wife beat the living stuffing out of him with a golf club before he ran into a tree.

The divorce fight, custody fight, fight for the house, fight for the pets, fight for their life battles that can result are epic in both scale and pain. If I were to have an affair I know my wife would just shoot me, and given her aim is really bad, I’d have a lot of collateral damage on my conscience.

So regardless of whether it looked like they wouldn’t get caught, many don’t seem to think through the fact that the cost, no matter how remote, is likely not worth the related benefits. And with the Internet and reality TV the risks just went up astronomically.

Living in a Reality TV Show World

The “other woman” in this tale, Jodie Fisher, is a onetime reality TV show participant, and she hired one of the leading publicity-seeking celebrity attorneys, Gloria Allred. It was likely the risk that Allred represented that caused the HP board to force Mark Hurd to resign.

The lesson and the warning for those that seem to have both power and the lack of natural constraint with respect to using it (which is probably about 90% of us) is this: In a world of reality TV, where citizen journalists have cameras in their phones, and celebrity attorneys are numerous, stuff that previously could have been contained can make it to the Web before any notification is received.

This means that no one calls the company for a denial before the story goes live. Few do fact checks anymore. Even if they use an “unnamed resource,” it’s a valid source now, when previously it wasn’t. And there are apparently a lot of people who will go on the record on a subject if they don’t have to share their identity. The truly sad thing about Hurd’s situation is that his wife, apparently a very private person, now is being sought for comment about an affair that actually may not have happened. Mark Hurd is likely learning that it is really hard to prove you didn’t do something that you didn’t do if, in fact, he didn’t do it. My heart goes out to his children who are likely having, or will have, uncomfortable school conversations and his direct staff, particularly his assistant, all of which are being hunted for comments and may not have jobs for much longer.

Wrapping Up: Mark Hurd’s Lesson

Mark Hurd’s lesson is that we now live in an Internet, reality TV show age. Containment may be impossible. This means that thinking that the rules don’t apply to you -- whether you’re a first line manager or a CEO of a multi-national -- is thinking foolishly. Getting caught is not only no longer remote, it is increasingly becoming a sure thing.

Finally, and this may be directly related to Hurd and brings to mind some advice my grandmother gave me, “avoid even the appearance of evil.” Proving you didn’t sleep with an attractive colleague you’ve been hanging out with may be impossible and may have the same impact as if you did.

I’ve known a lot of executives who frequent strip clubs and partake of extra marital activities paid for by their companies. These folks apparently believe they’ll never be caught. Mark Hurd should be a reminder that in this Internet world that this is no longer the case and the fallout from getting caught may be more than they, their spouses, their children and their support staff may be willing to pay.

Finally, if you are in one of these groups, particularly the support staff, you might want to recognize that this behavior could cost you your job. You might consider either helping correct it or moving someplace where you’ll be safe when it blows up. Either way, just pretending it has nothing to do with you is no longer the safest path. Live like you are on stage in this Internet World -- because you are.




Tags: YouTube, Web, HP, CEO, Hurd


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