IT Employment

The other reason Hurd got ousted: Discontent among HP rank and file

There could be more to former Hewlett-Packard CEO Mark Hurd's ouster than just a hit to his reputation over a sexual harassment probe. He was not well-regarded among the HP rank-and-file, and it may have come back to bite him.

There could be more to former Hewlett-Packard CEO Mark Hurd's ouster than just a hit to his reputation over a sexual harassment probe. He was not well-regarded among the HP rank-and-file, and it may have come back to bite him.

Hurd (right) resigned as the company's chief executive last week under pressure from the HP board of directors over an investigation of alleged sexual harassment and fudging expense reports.

The whole saga turned a bit bizarre as Hurd settled with the alleged victim, an HP contractor who expressed sadness that Hurd lost his job. Then, Oracle CEO Larry Ellison publicly defended Hurd and basically called the HP board cowardly and idiotic for firing him.

The primary motive being ascribed to the HP board is their fear of media fallout once the press got a hold of the Hurd story, especially since the former HP contractor had hired high-powered attorney Gloria Allred.

But, there may have also been other forces at work. Although Hurd was reportedly in negotiations for a new contract before the sexual harassment allegations came to light, there has been growing discontent with Hurd inside HP.

After taking over for Carly Fiorina as HP CEO in 2005, he helped the company get its financial house in order and in the process grew revenue by 30% and tripled HP's profits. But, Hurd did it with a brutal scorched-earth policy of cost cutting and consolidation that demoralized many of the company's 300,000 employees.

According to the non-scientific polling of employees at Glassdoor.com, Hurd had the lowest employee approval rating of any of the CEOs of big public technology companies (see chart below).

You can't blame HP employees for feeling anger and resentment toward Hurd. Beyond his sweeping layoffs, much of the bad blood stems from Hurd's duplicitous salary cuts in 2008. As The Street explained, Hurd and the HP management team "mandated that year that all Hewlett-Packard staffers would take a 5% pay cut for the year, and they boasted that they -- as executives -- would stand shoulder to shoulder with the staff by taking 10% pay cuts. They forgot to say that the executive cuts would be only on base salary and that they would more than make up for that on options, restricted stock units and other bonus goodies."

In fact, the HP management team actually increased their compensation in 2008, according to The Street:

- Mark Hurd's total compensation for 2008 (when the global economic crisis reached its nadir) was $43 million, making him the fourth-highest-paid CEO that year, even though HP's shares lost 29% that year.

- CIO Randy Mott's total compensation jumped 400% that year to $28 million.

- Imaging executive vice president Vyomesh (VJ) Joshi's total compensation increased 83% in 2008 to $22 million.

- Personal Systems EVP Todd Bradley's total compensation went up 263% that year to $21 million.

- Technology Solutions' EVP Ann Livermore's compensation went up 31% that year to $21 million.

- Now-interim CEO Cathie Lesjak got a 49% bump in total compensation in 2008 to $6 million.

This should serve as a cautionary tale to business and IT executives. Great leaders don't deceive or sell short their workers. For good advice and best practices, take a look at TechRepublic's Career Management blog and IT Leadership blog.

About

Jason Hiner is the Global Editor in Chief of TechRepublic and Global Long Form Editor of ZDNet. He is an award-winning journalist who writes about the people, products, and ideas that are revolutionizing the ways we live and work in the 21st century.

22 comments
gnorton100
gnorton100

This should be a wakeup to all the world's stockholders. Executive's pay should NEVER increase in a year when the company value drops even 1% and especially not with a loss of 28%. Unfortunately, this happens frequently because the CEOs of various companies sit on the Boards of each other's companies. Then they scratch each other's backs by signing juicy contracts that ensure the CEO receives huge compensation whether they grow the company or drive it into the dirt. Research Carly Fiarino's fall from grace. She made millions in severance pay AFTER driving HP into the dirt.

wwgorman
wwgorman

You can be the most benevolent employer----ever, and some emplyees, if not most, will profess dislike for you. It is human nature. Don't forget the the HP employees didn't like Carly either. After we sold our company and then retired after running it for 3 years for the London holding company we sold to, we were basically told "good riddance." We still had consulting agreements and had to show up for meetings and we still owned the building so we maintained contact. After about three years after leaving the employees had a different attitude toward us. A few wanted to know when we would start our own company so they could join us. Some others openly asked if we could return as the management. The new management had neglected sales and sales promotion and had a hands off approach. The CEO even got his MBA while working "full time." The holding company moved the operation into another one and ousted management in the move. Only a few of the employees were retained and moved---none in management. The employees at HP better think about what they pray for.

jkameleon
jkameleon

"This should serve as a cautionary tale to business and IT executives. Great leaders don?t deceive or sell short their workers." Cautionary my ass. Hurd made $43 million in one year, about as much as you and I make in a couple of hundred years. Who cares whether he was a great leader or a lousy leader. With compensation that big, he doesn't have to give a shit about what he really deserved either.

mike_patburgess
mike_patburgess

Yes, the C level people look after themselves; ALWAYS. If someone gave any one of us millions of dollars to go away I really don't think that any one of us would refuse. It is absolutley criminal that HP would ask the employee to take a 5% pay cut and then stuff their pockets with cash from their incentive bonus package. We all know what any C-Levle person should do; don't we? Like that's going to happen; RIGHT? The kings and queens of old that we thought we got rid of in the middle ages have been replaced by the C-Level executives and we don't think that is going to change soon!

HowardKawazoe
HowardKawazoe

Since when does the opinion of the rank and file have anything to do with what the board does? He upset someone in the boardroom, what the factory floor.

josh.krischer
josh.krischer

Very well written, good research. Matching my experience from talking to hp people

Colinza
Colinza

One thing you forgot to mention Jason - while HP execs were spreading the cash amongst themselves, the HP staffer worldwide had no increase for up 7 years in some cases. In areas where inflation has been high they were particularly hard hit. So yes, Mark grew the profits for the shareholders but the company (the workers) suffered. Hardly a corporate visionary - more like a big business gangster.

dbrez
dbrez

Bill and Dave are turning over in their graves. HP's image today is a far cry from their initial vision when they founded the company. Not the bureaucratic entity it has now become.

oldbaritone
oldbaritone

True in the 19th century. Sill true in the 21st century.

mcswan454
mcswan454

Yes. It would be wise. And you can quote me on this: Sometimes, you get what you deserve. Sometimes, you deserve what you get. Let's see what HP's direction will be here in a quarter or two. M.

bboyd
bboyd

Here to stay, wage slaves instead of serfs and peasants. Axemen and middle management instead of sheriffs and fieldbosses. All sponsored by democracy gone bureaucratic. Human natures defies intellect at these times. Its too easy to fall in your groove and vote for a man based on his party. Laws protect theses business monstrosities from competition so there really isn't a free market. C levels are just the "cream of the crop" rising to the heap of humanity. Unwashed masses like myself gain no traction from our morals and ethics. All the freedom in the world traded for entertainment, drugs and comfort. Time to reread brave new world and pray for a world without families and communities. Ah for a great world community. /sarcasm off

rni302
rni302

The board may have been upset partially because key rank and file where up and leaving the company -- many of these people are the ones making the sales, closing the deals and bringing in the money.

harveyalt
harveyalt

It was during Mr. Hurds' tenure that the HP Customer Service organization was turned into something worse than useless. They are anti customer, and they don't care. Several contacts with them on printer driver issues and quality related failures caused me to decide to never buy, or recommend any HP product ever again. From reading the forums, I know I am not alone.

VEH
VEH

The thing is, these guys aren't trying to be leaders. They're parasites, sucking out what they can and then they leave the carcass. I'd say that karma caught up to Hurd except for the juicy severance. I should be fired with that kind of package!

gatorgal615
gatorgal615

Obviously, Hurd was not a candidate for the TV series "Underground Boss". What I don't understand is where is the BOT on all of this? I'd love to understand why Boards go so overboard on compensation?

hamguin
hamguin

Bob Sutton's great book about jerks who can ruin a company and its culture, "The No-A$$hole Rule", makes the point that, the higher the a$$hole climbs, the worse for the company. Hurd was openly known for his contempt for the rank and file, often dismissive, rude, and simply a jerk to the people below him. The gang he brought in once he was running HP came to be known as "mini-Marks" because they exhibited the same attitude. The first challenge for the person given the CEO role on a permanent basis will be to rid the upper management of the company of this poison.

cheetah_1971
cheetah_1971

a long time ago when he tried to equate his salary cut and that of the other executives with the rank and file employees. The rank and file employees don't receive the bonuses, stock options, and other perks that make up so much of the executive compensation packages. He lost the trust and respect of many HP employees when he made such disingenuous statements.

LouCed
LouCed

Hurd continued the trend of offshoring and getting rid of knowledgeable people. This shows in the significant drop in quality and usability in their products and their horrible suport. The poor sucker in the seat when it crashes is going to fry for all the past issues. Think Dell writen even larger.

Fregeus
Fregeus

Board members are composed of CEOs from other companies. So a board member B of company A that has CEO A will decide on his compensation well, because CEO B of company B has Board member A in its team. Its all a big boys club up there. They grease their own pocket by greasing the pockets of other CEOs. Nice scam actually. TCB

pghammer21
pghammer21

Actually, neither the planned lawsuit or hte discontent were the real reason Mark Hurd got whacked. The real reason Hurd got whacked is due to HP's board (in fact, most corporate boards) falling victim to the "CEO as Corporate Face" rule (that started when then-GM CEO Waggoner was forced out and replaced with Ed Whitacre). In terms of responsibility, the CEO is *not* the public face of a public company (and definitely not the case if the position, as is usual, is also not the job of the board chairman). The CEO (if neither company president or board chairman) is the overall board member the president and COO report to; the CEO is their conduit to the board. The board *chairman* is the public face of the company (more often than not, he is, or represents, the largest shareholder or shareholders); the CEO is the day-to-day operations boss for the company (at the board of directors level), typically, the chief operations officer is *not* a board member, unless dual-hatted with a board position (in most public companies, the company president is dual-hatted with either CEO or COO). However, as of late, the CEO is also expected to be the public face of the corporation (as opposed to the chairman). The last real *chairman* to remain the corporate *face* is AT&T's Ed Whitacre (and you think that Hurd or Carly was mean for slashing the HP payroll, Whitacre swung a bloody axe; at SBC, then again at AT&T, and yet again at GM). Would you rather have Whitacre as HP CEO?