Tuesday, August 17, 2010

Never Discount the Grumbling Workers

By Eric Jackson
RealMoney Contributor

8/17/2010 7:30 AM EDT
Click here for more stories by Eric Jackson

The whole Hewlett-Packard (HPQ -commentary - Trade Now) affair continues to make the business pages look like Us Weekly, with new details having emerged over the weekend. It seems former CEO Mark Hurd settled his sexual harassment case with his one-time dinner companion and HP marketing person the day before HP's outside counsel was set to interview her for the first time. As a result, Hurd lost the trust of the board, which felt as though he was acting to limit what details they could learn from her.

Setting aside these more salacious details, I thought the most interesting new information came from Joe Nocera of The New York TimesFriday. In his column, Nocera suggests the real reason Hurd was shunted aside was that he'd lost the trust and respect of the HP employees, and that charges of sexual harassment and inflated expenses merely masked that fact. Nocera illustrates this with some damning faint praise for Hurd from analysts and HP employees, both former and current:

  • "He was a cost-cutter who indulged himself."
  • "Mr. Hurd cares about one thing, how much money is in it for him. As an HP employee I see it every day. We don't have the tools to do our job, but he isn't doing without anything and doesn't care."
  • "He didn't have the support of his people. . . . he seemed to be the only one benefiting from HP's success"
  • "I was delighted [to see Hurd go] ."
  • " . . . he lacks the moral character to be CEO."

I believe these latest revelations show board did lose trust in Hurd, thus providing reason to suggest he move on. However, I also believe Nocera has put his finger on a critical point: namely, the depth of HP employees' resentment toward Hurd for well over a year. About a year ago, for instance, I wrote about my belief that Hurd was not such a great CEOas what was portrayed by Wall Street analysts and investors -- and I remember being very surprised at the immediate and strong reaction I got from then-current HP employees. They were all united in their antipathy for Hurd.

They complained about how he'd cut the business to the bone but didn't have any ability to grow the company's revenues. They talked about his hypocrisy in forcing 5% across-the-board paycuts while doubling, tripling, or quadrupling senior executives' total compensation in the same year. Most of all, they complained of Hurd's total inability to connect with HP employees and a disregard for the vaunted "HP Way" of the past.


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