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HP and Mark Hurd, Five ways to communicate ethics to your board

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The Mark Hurd story has caught us all by surprise. He is/was, CEO of HP, the huge technology company, and has just had to step down for ethical reasons.

In case you missed it, the Wall Street Journal’s headline summarises the story well:

Mark Hurd Neglected to Follow H-P Code

HP discovered that Hurd submitted inaccurate expense reports to the tune of around $20,000, and asked him to leave as a result.

The backstory is a little murky, but does not sound particularly serious. I won’t speculate on Mr Hurd’s private life here, that’s his business, but it appears HP felt the ethical break of their code of practice was too great to overlook, and has booted him out.

The surprise I suppose, is twofold for me. Firstly, Hurd elevated to chairman (alongside being CEO, I always marvel at the productivity of US bosses!) on the back of an ethics scandal . So he should have been well-aware of the rules.

Secondly, he has proven himself, in the last five years, to be a tough but effective leader, with his eye firmly on the ball. From what I gather, he was no celebrity CEO but someone who ground out results and re-made HP into the force it is today. Not your average Conrad Black or Jeff Skilling.

More details of what happened will emerge soon, one imagines. Not least the answer to the question: “why would a CEO on millions per year just not claim the money back/pay costs himself?”.

The important lesson here for other companies though, is a process one. All and any leaders are vulnerable to ethics breaches. Some, a lucky few, will never be tempted by them, or get confused as to the rules. Most will suffer from dilemmas on a regular basis (as in the 2005/6 HP scandal and Patricia Dunn).

But who helps CEOs to work through such dilemmas? Certainly there are many books on the topic, and expensive consultants available to help. However CEOs and other board directors are very busy people.

And, as in this case, what starts as a tiny issue, an expenses claim/report, can escalate to eventually become a full-blown crisis. So small details, like code of conduct contents, are important.

Clearly there is a role here for the responsibility director, the head of ethics, the head of sustainability, CSR, whatever, to provide some assistance.

How might they do so?

Here’s a few options that I have heard of, from CR directors over the years:

1) An annual, quarterly, or six monthly ethics/sustainability briefing, on paper, or better still, face to face. I’d suggest monthly in PDF/email, and face-to-face meetings quarterly, on the big issues, and those smaller, but still dangerous ones.

2) An annual, or bi-annual sustainability retreat where issues can be raised and debated. This could be as short as a half day if needed. Or as long as two days, with external experts.

3) Non-executive director training. This can be based on setting non-execs ethics/sustainability related tasks to report back on, or priming them generally with ethics issues they should be aware of and question the board about.

4) ‘Seeing is believing’ trips and tours. These are usually where CEOs and board members are taken either down the supply chain to see conditions, or into their communities, to be reminded of social or environmental problems that need tackling.

5) Dilemma solving sessions with peers. Even CEOs can use mentoring, and the value of external discussion cannot be overstated, particularly for bosses who can live in plush offices, aeroplanes and posh hotels. Figures the CEO/board respects, from outside the company, can be used in this example.

I’ve undoubtedly missed a few, or more, potential options here. I’d value your comments, as I think would many of the 500 or so readers of this blog.

Thanks in advance. Toby

1 Comment

  1. hi Toby, i read somewhere that Mark Hurd said he left his aides to prepare his expense reports and didnt even notice there were discrepancies. Well. If we believe that, my response is exactly what I tell people when I run ethics workshops: "Not knowing is no excuse." His expenses. His responsibility.

    What the Hurd case reinforces is that even the best of the apparently most ethical employees, at whatever level in the organization, have their lapses. No amount of workshops or briefings will stop this. When someone decides to beat the system, they will try anyweay. However, I agree with you that a solid practice of regular training and briefings on ethics is important to ensure that no-one can ever say they didn't know, and so that those who observe unethical behaviour will be bold enough to speak out. One of the most difficult things in organizations is is to get people to speak up when they know someone is doing wrong. Didn't Mark hurd's aides know ANYTHING about the expenses they were preparing? Didn't ANYONE see what was going on ?

    elaine
    http://www.csr-reporting.blogspot.com

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