After taking over as CEO in 2005, Mark Hurd revived HP, turning around its performance, making strategic acquisitions and trimming the workforce. When other technology companies and the stock market faltered in recent years, HP’s performance kept rocketing upward.
Late Friday, we read the shocking news announcing Hurd’s immediate resignation from HP as the result of a sexual harassment investigation.
While Jodie Fisher, a former HP contract worker, has charged Hurd with harassment, reports seemed to indicate that Hurd did not have an affair or sexual relationship with her. Instead, HP reported that he covered up his activities with the claimant by filing inaccurate expense reports, and may have authorized payment to her for business services she did not perform.
For Mr. Hurd, with a solid business reputation as a buttoned-up, cost-conscious and results-focused leader, this is a tragic plunge in professional fortunes and an irrevocable blot on his career. His name is now linked with the scandalous circumstances that caused him to leave HP. He will be the ridiculed on late-night television, and more facts may surface in the mainstream and tabloid media. In ways we can’t yet anticipate, it will also affect HP’s direction as it unexpectedly begins searching for a new CEO.
Leaders Must Follow to Lead
Based on what we know, HP’s board had a clear choice: Either release Mr. Hurd for breaches of integrity or admit that at least one of its key values, in place since 1957, “trust and respect, either held no meaning or didn’t apply to Mr. Hurd and others in high positions.
In my opinion, HP made the correct decision, painful and gut wrenching as it may have been. Had other leaders and HP stewards ignored the issue, the company’s commitment to its values, code of conduct and “The HP Way,” part of the luster attached to its brand, would have been seriously tarnished.
Regrettably, executive lapses like these continue to occur. Yet, in today’s zero-tolerance, 24/7 news environment where no secret is secret (at least, not for long), leaders fall prey to the same penalties as others would in their organization. CEOs may get paid more in severance to leave.
But the more prominent their position, the steeper, faster and more humiliating their fall when they commit obvious ethical lapses. This is exactly the issue I wrote about five years ago in my book, Teaching Big Shots to Behave.
What can we learn from these tragic falls from fortune that continue to afflict leaders in business, government and the military? What practical lessons can we take away from the Hurd debacle?
7 Tips to Prevent Ethical Crises in Leadership
Here are 7 tips to help senior executives, HR and legal professionals (and all of us) avoid ethical crises like this one in their own organizations.
- Leaders need to be on heightened guard for the most basic rules of conduct – in contrast to obscure infractions related to arcane business provisions. Mr. Hurd is not the first executive to lose his post due to a personal indiscretion. In fact, most catastrophic executive blunders arise from violations of simple principles and rules. Assuming there’s no merit to the sexual harassment claim (which reportedly was privately settled for an undisclosed amount last week) against Mr. Hurd, the key principles here are to tell the truth, don’t fabricate records and don't use organizational resources for personal purposes.
- Senior executives must follow the rules – no exceptions. No matter how great their business talents, they cannot effectively lead if they violate the organization’s key principles and values. They must make a conscious commitment to act with integrity, to tell the truth, and to guard their words and actions in all professional interactions tied to business.
- The more prominent your position, the more vulnerable you are to claims and charges – whether true or false. Frequently, powerful leaders believe they are not bound to the rules that apply to everyone else. They’re paid more and get other perks and benefits, but they are actually more vulnerable to claims of improper behavior than those less prominent. Their misdeeds lead to greater public relations interest and claimant leverage than those of others in less visible or powerful positions.
- The lawsuit or harassment claim is not the most serious issue. The most critical issue isn’t the legal risk, but the harm done to an organization’s reputation, brand and credibility – not to mention the personal damage done to the career and reputation of the leader. Preventing that type of harm requires a different focus than simply lawsuit avoidance.
- Leaders need training and refreshers on ethics like everyone else. As I wrote in a recent post, leaders can’t be too busy themselves to learn the basic lessons on ethics, compliance and values. It's not enough to sit through a 30 minute lecture once a year or click through check-the-box training merely to build a legal defense in case of a lawsuit. Instead, the focus should be on providing annual refreshers on key principles and practical rules. It’s also important for all leaders to speak credibly to their colleagues to reinforce the need to apply the organization’s rules and standards to their own conduct.
- The organization must get the facts and if wrongdoing is found, hold people accountable. HP got this right. We don’t know all the facts, but we do know that HP promptly investigated the matter, brought in outside counsel, involved its directors, took decisive action after considering the facts, made a clear statement about what drove their decisions, and acted with utmost discretion. To its credit, HP did not reveal the name of the accuser or gone into great detail about what the investigation uncovered.
- Board leaders must make clear to executive teams that they will be judged on their actions and behavioras stewards of organizational values and brand reputation, not just on their quantitative business results. It makes perfect sense that board members should be responsible for delivering this message in clear and simple terms as executive misbehavior can do far more harm than a bad quarter or disappointing product launch.
These tips won’t prevent the next CEO from ending up as the punch lines for a late-night comedian’s jokes. However, remembering this situation and applying the key principles above (and others from my book) can limit the risk of similar problems in many organizations.
Whether we are a senior executive, aspire to such a position, serve as an HR leader, or work as a middle manager or line employee, we can clearly see the Hurd situation as a cautionary tale and absorb the lessons there for us all.