Uncertainty at HP over Hurd's successor

August 9, 2010 6:41:53 PM PDT
In Palo Alto, Hewlett-Packard is in full-scale damage control trying to fill the top position, after the CEO resigned in scandal. Mark Hurd was forced to quit last week because of expense reports he turned in as they related to Jodie Fisher. She worked as an outside contractor for the company.

The decision to have Hurd resign has business leaders arguing whether it was the right decision. Oracle CEO Larry Ellison, who is a friend of Hurd's, said the HP board made a big mistake, while others say it was the right thing to do.

HP clearly was thinking of its image as its board wrestled with how to handle the situation. A highly visible CEO of an iconic technology company is expected to set an example for its 300,000 employees.

Kirk Hanson is executive director of the Markkula Center for Applied Ethics at Santa Clara University.

"If you have a falsification, there's no way you can keep that person in office. They have to be an example for the company and if the CEO cheats on his expense reports, why not everybody else?" said Hanson.

Hurd's demise also may have been a result of his success. HP's stock had more than doubled during his five years at the top.

Jeffrey Pfeffer, Ph.D., is a professor of organizational behavior at Stanford's Graduate School of Business.

"Had he not done as good a job as he had done at Hewlett-Packard, they wouldn't have felt as willing and able to let him go over what is basically a relatively minor thing," said Pfeffer.

With the Hurd era over, HP's pressing issue is finding a successor. It doesn't appear to have an heir apparent.

"You want to talk about looking for the best candidate, this is after all a very large and economically significant company, and so you want to talk about looking at both insiders and outsiders," said Pfeffer.

One of the outsiders mentioned is Michael Capellas, the former CEO of Compaq, which HP took over. CEO candidates likely will face intense scrutiny.

"It's impossible to reduce all the ethics risk when you hire someone, even for a CEO. But you do have to try to identify that person's both past performance is and what their character is," said Hanson.

HP shareholders got their first chance to weigh in on the Hurd resignation. At the close of trading, HP's stock price fell almost 7.5 percent.


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