When it Comes to Corporate Values, Larry Ellison is Flat Out Wrong

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Aug 13, 2010

Oracle’s Larry Ellison is flat out wrong. On Monday, he publicly declared that HP made an epic blunder in releasing CEO Mark Hurd following an investigation triggered by allegations of sexual harassment.

In an impassioned e-mail to The New York Times, Ellison wrote:

The HP board just made the worst personnel decision since the idiots on the Apple board fired Steve Jobs many years ago…In losing Mark Hurd, the HP board failed to act in the best interests of HP’s employees, shareholders, customers and partners. The HP board admits that it fully investigated the sexual harassment claims against Mark and found them to be utterly false.”

Ellison, recently ranked as the most richly compensated American CEO of the decade, is a gifted businessman and entrepreneur. He is certainly entitled to his own opinion.

It is understandable and admirable that Larry Ellison would want to defend his friend Mark Hurd. It is also fair game for Ellison to question the decision to jettison such a high-profile executive. After all, Hurd rescued the company from mediocrity. His financial track record and restoration of HP’s position as a market leader are the stuff of contemporary business legend, and his dismissal was jarring and unfathomable.

But Ellison fails to address HP’s rationale for the decision. While HP concluded that Hurd had not violated its harassment policy, it found that Hurd had not been forthright in reporting expenses and lost its trust during the investigation. Based on what we know, HP’s board had a clear choice: Either release 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 Hurd and others in high positions.

Sticking with values even when it’s painful

HP’s action demonstrates that it will stick with those corporate values even when doing so will exact a painful and potentially expensive cost, such as the dramatic loss in share value following the announcement.

What Ellison is really saying is that HP should have made its decision based solely on shareholder value and Hurd’s contribution to the company’s turnaround – not on the values of integrity and trust.

In my view, it was the HP Board’s choice to determine how it will run its business or apply its values – not Ellison’s or mine. It decided that it could no longer continue to run its business with Hurd at the helm.

Here, HP is saying, in effect, “No matter who you are, no matter how outstanding your financial contribution, you are a citizen of the company. Basic rules apply and neither rank nor value will insulate you from being bound by our standards.”

Will values be consistently applied to all?

Now, the real question is whether those standards will be applied with the same consistency going forward.

Surely, there are facts that none of us know, presumably Ellison as well. But what we do know is that we’re living in an era where it’s increasingly obvious that financial performance is a vital, but not exclusive, driver for effective leadership. Each organization must choose what its values are and how, especially in tough cases, they will be applied.

From a different perspective, is Ellison saying that, if as CEO of Oracle, he misstates his expenses or commits some other breach of trust and integrity that he should not be released as long as he hits the numbers?

If so, that may well be what Larry Ellison chooses to be the Oracle Way. However, HP is obviously concluding that its Way is different.

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