* See update below
Those who remember my blog when I was Editor of Workforce Management and Workforce.com know that there are certain subjects that set me off on a good rant.
Well, here’s one of those that popped up again today: our 21st Century Divine Right of Kings, or why unemployed CEOs seem to never have trouble finding a new job.
Mark Hurd, the former CEO of Hewlett-Packard who was pushed out of his position last month by the HP Board of Directors under mysterious circumstances, celebrated his Labor Day by accepting a new position as co-president of tech giant Oracle.
Pardon me if I don’t send warm congratulations along to Mr. Hurd.
Why do former CEOs quickly land in a new job?
Yes, it’s wonderful when someone out-of-work can quickly find a job in this mediocre-to-crummy economy, but why does it seem that the only people getting snapped up so quickly are former CEOs who just walked away from their old job with a multi-million dollar severance package?
I can’t tell you the number of Labor Day stories I read over the long weekend that focused on workers who previously had well-paying job who now couldn’t find anyone who would pay them to do just about anything. Many focused on the plight of the so-called “99ers,” the people who had run through the maximum of 99 weeks on unemployment insurance without finding a new job.
With U.S. unemployment running around 10 percent, and states like California (at 12.5 percent) and Nevada (at 15 percent) a lot higher, it’s clear that we have a lot of Americans who really need a job.
That’s why it rubs me the wrong way to see a guy like Mark Hurd get unceremoniously pushed out of one executive position, under mysterious circumstances and with millions of dollars in hand, only to land in another big ticket job a month later without hardly breaking a sweat.
If I’m Mark Hurd, I’m thinking: Is this a great country, or what?
The CEO fraternity takes care of its own
I know that Mark Hurd gets lots of kudos for his work in rebuilding HP. By many, many accounts, he is a strong, operations-oriented CEO who builds value for shareholders. But, Hurd was also described by many accounts as a tyrant and a bully who was profane, rude, arrogant, and demeaning as HP CEO, and I wrote here last month that given the circumstances of his departure, Hurd was damaged goods who didn’t deserve a second chance.
Fortunately for Mark Hurd, he has friends in high places – like Oracle CEO Larry Ellison. Not only did Ellison publicly rage about how the HP Board treated his pal Mark Hurd, but he went the extra step and hired him to be co-president.
Some think Ellison’s defense of Hurd was wrong, but in my mind, it’s just another example of how the CEO fraternity goes out of its way to take care of their own.
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There is a revolving door when it comes to CEOs because there is this overblown notion in this country that CEO skills are something handed down from God and are incredibly rare and hard to find.
That’s complete and total nonsense of course, and one only needs to look at the track record of all-too-may recycled CEOs (like the guy who ran Circuit City into the ground, or much of Bob Nardelli’s tenure at Home Depot and Chrysler).
The revolving door world of CEOs
But in the revolving door world of CEOs, none of this matters. Although most junior executives and rank-and-file employees would have a hard time quickly finding a job if they had departed under similar circumstances as Mark Hurd, life is very different once you have been anointed and ordained as a CEO.
An essay in The Atlantic got to the heart of it:
When the Hurd resignation news struck in August, Atlantic Correspondent Ben W. Heineman Jr. wondered: “How could he do something so stupid?” Indeed, his missteps were incredibly dumb decisions. Yet, they didn’t relate to his business savvy. Even though they were stupid, they didn’t change firms’ perception of his potential value to their bottom line through his leadership…
While the accusations against Hurd sounded pretty bad, they boiled down to ethics. Ultimately, HP’s sexual harassment probe found that he didn’t violate the company’s policy, but did violate its ethical standards. Oracle has responded to Hurd’s poor judgment in areas other than management with a resounding — so what? The company thinks Hurd’s talent for business decision-making trumps his poor decision-making elsewhere…
So perhaps the lesson here is that business ethics only matter when they jeopardize business. Of course, sometimes these go hand-in-hand. A perfect example is Arthur Andresen. With an auditing firm, integrity is everything. If you lose that, you have no business, as the firm quickly found out. But in other businesses, where the profit motive is less connected to good ethics, that’s not the case. Then, so long as poor decisions don’t compromise profit, they will eventually be forgotten.
Business savvy trumps ethical issues
Yes, Mark Hurd’s business savvy trumps his ethics and poor decision-making, as seems to be the case for all-too-many CEOs who get shown the door. Would you get the same treatment if you were the run of the mill Vice President, or Director, or department head, or assistant manager who departed under similar circumstances?
Of course not. It’s more likely you would join the ranks of the 99ers then get another chance to exhibit poor ethics and judgment anytime soon. And, I repeat what I wrote last month about why Hurd is damaged goods and doesn’t deserve another chance:
The bottom line is this: The revolving door of CEOs under-performing (or failing) at one company and then getting booted out only to land at another has got to stop. The notion that CEOs like to perpetuate – that only a few, special people with incredibly hard-to-find skills can serve as a CEO – is as ludicrous as it is silly. It’s the 21st Century equivalent of the Divine Right of Kings, and equally indefensible.”
UPDATE #3: Leave it to The Washington Post to get into the soap opera elements of the Mark Hurd story. Their lead: “An executive’s sex scandal. His ouster. A bombastic billionaire competitor who redeemed him. And now a possible court battle over high-tech secrets.” But the real money quote comes at the very bottom of The Post’s report on this saga:
Any time the big Silicon Valley elephants go tusk to tusk, it’s always exciting,” said Eric Goldman, a technology law professor at Santa Clara University. “But it also points to the competition for talent.”
UPDATE #2: Well, Mark Hurd’s new job with Oracle has a few complications; mainly, that HP just sued him, claiming that “Mark Hurd agreed to and signed agreements designed to protect HP’s trade secrets and confidential information,” HP spokesman Hani Durzy said in an interview. “HP intends to enforce those agreements.” ZDNet has the best details of Hurd’s HP contract, and Adam Lashinsky of Fortune the best analysis:
HP, at best, will be able to delay Hurd’s joining Oracle. But it’d be a mistake to think Oracle wants Hurd either for his vision or his knowledge of HP’s game plan, which HP has been telegraphing for anyone who’s listening. (Exhibit A: HP’s pricey acquisition of 3Par.) Oracle already had vision. Larry Ellison has more vision than any five other Silicon Valley executives. Sometimes he may even have too much vision for his own good.
No, the real reason for the stock pop is precisely what Hurd’s hiring means for Oracle when the day comes that Ellison isn’t around. Investors always have fretted that there is no true successor to Ellison at Oracle and hasn’t been since Ray Lane left a decade ago. Assuming Hurd can adjust to being a second banana — and to sharing power with Catz — Oracle now has a plug-and-play heir to Ellison should one be needed.”