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Will HP Do the Right Thing?

The stench continues to emanate from the boardroom of Hewlett Packard. At the same time, expressions of shock and denials of responsibility are flung from that redoubt onto the company and the public in general.

I have rarely seen such a poor and hapless example of leadership inside a major American corporation. I want to ask the question What were they thinking? except that I am afraid that they knew exactly what they were thinking, and doing. Here is why that is bad.

Secrecy is a deeply flawed concept. Any information exchanged between two people should be considered to be public knowledge. That is not a reflection on individuals' ability to keep secrets, but rather a reality that information cannot be held under wraps. Any belief to the contrary is pathologic. And if the cat is out of the bag, it does no good to expend corporate resources to assign blame. It is simply stupid and vindictive, and a waste of those resources.

Hear no evil, see no evil is not a management strategy. It is an excuses strategy. It is an especially bad strategy for a corporate board of directors in the Sarbanes Oxley era. Bad in a legal sense, certainly, but also bad in an ethical sense. If the highest level of a company cannot take responsibility for illegal behavior performed in the course of the execution of its strategy, then those individuals consider themselves a law unto themselves.

I have read that there are calls for the resignation of the nonexecutive chairman, Patricia Dunn. I disagree. CEO Mark Hurd, who is a newcomer and probably blameless in the fiasco, should demand, and receive, the resignation of every other board member. There is a culture in the governance of HP that has to be killed off right now.

The stockholders of HP deserve better. The tens of thousands of employees of HP deserve much, much better. Should this board of directors be allowed to continue, the culture and reputation of this great technology company will be irreparably damaged.

The problem is that a corporate board of directors has the ability to entrench itself. It can simply ignore the consequences of its actions, and continue as though nothing has happened.

We all need to stand for something in our lives. The board of one of the most important companies in our industry stands for secrecy and deceit. How they can live with that is beyond my comprehension.

We all deserve better.

Posted by Peter Varhol on 09/09/2006

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