Saturday, 14 August 2010

To err is human; forgiveness is not an option

You may have followed the drama of Mark Hurd's exit as the CEO of HP; if you haven't, here's a good summary of what happened.

Hurd was very successful  at least in Wall Street's eyes, as HP's boss. All numbers, by which Wall Street judges companies were up and markets loved Hurd after the seemingly chaotic Carly Fiorina. But its rumoured that Hurd was despised by many of HP's employees, not least because while he was cutting costs brutally, he was awarded an annual compensation in the range of $50m. HP seems to be lurching from one disaster to another. After all the drama of the Compaq acquisition and the public ouster of Fiorina, sometime ago a scandal broke out over the investigation of press leaks from insiders that  led to the ouster of the then Chairman Patricia Dunn. Now Hurd is gone in another messy saga.

But this post is not about HP. Its about how even very smart people do very silly mistakes.Harvard Business Publishing carried this very good article of what makes people do such things. The amounts involved in Hurd's expenses fudging are sums like $ 20,000. He earned more than $ 50m. Why did he have to claim such petty amounts ?

We all make mistakes. We are, after all, human. Its so so hard to keep up to high standards of integrity. If you caught every person whose expense statements fell short of the highest standards of integrity, you probably won't have a single employee standing. But its incumbent on us, as professionals, to strain every sinew, to try the utmost. The biggest danger often comes if the amount is small. Its tempting to think that its only a small amount, so it must be OK. Think of the personal call made from the company's telephone. Think of the use of the company car to drop in to see a friend. Think of the lunches or dinners which are expensed, but in which no business is done. Think of the times a secretary is asked to do something personal. I could go on and on.

I've often felt that its the small things that matter. Most of us would not commit a big sin. Either we are scared, or our sense of right and wrong preclude us from doing so. But we let our guard down when it comes to small things. I submit that the guard should be much stronger precisely for small things. Its those that show the flaws in character and integrity.

In the business world, to err is human. To understand may be possible. Forgiveness is not an option.


Anonymous said...

hmm...somehow this incident more than shook me down..not tht i have any gud thots abt Hurd..whose regime of 5 years were the most employee unfriendly years seen in HP. but that gud company has been in news for one bad reason after another. it was a great place to work..and still the worst of hp is better than the best of the next available option. these buggers screwed it up. and the options whom they are considering for his replacement..!!!!...god save HP

Ramesh said...

@Anon - Nice insider's take. I have read in odd places that Hurd was hated inside, but loved outside. Perhaps there's some celebrations going on. HP is still a great company and I believe its not so easy to destroy it. As you rightly observed, the worst of HP is still something.

gils said...

thala..anony intha agnyaaniy aagia adiyen thaan :D had there been an opinion poll on whether that guy was gud or bad..the answer wud've been an unequivocal no...but was his decisions beneficial to the people who had their money on HP..the answer wud've been an resounding YES. may be to survive in current busi. env. such harsh decisions might have to been taken and he became the fall guy?? no me..he wud always be the person who spoiled the dream company

sandhya sriram said...

quite deep, especially the HBP article which you had linked on to!!

i guess you would remember the case study where a manager compensated an employee with a conveyance reimbursement as he could not give him overtime for all the hours he stretched. the intentions were probably noble, but knowing or unknowingly he crossed his line.

Therefore, these kind of stuff are not only cases when someone tries to make some small personal gain but also cases where one tries to achieve certain organizational objectives that requires much much more effort to do it the right way.

but an organization cannot be in grey space. it has to be black or white. the slightest grey element can kill its very foundation. as you beautifully summed it up - to understand is possible, but forgiveness is impossible.

Ramesh said...

@gils - Yes, I knew it was you. I don't know enough about him to comment, but I don't buy the concept that satisfying Wall Street has to be at the cost of employees.

@Sandhya - You know, I was always of the view that forgiveness should never be possible. But as I grow older, I am not so sure. We all make mistakes - I've had my share of stupid ones. If there wasn't a second chance, its a bleak life indeed. These days, I am not so sure of the black and white approach.

Vishal said...

More and more power bring more responsibility as is famously known. That is why I guess the stake is higher when the senior leader of any organization is found doing so. All of the explanations given by HB article for doing such things can be essentially avoided to further avoid bigger damages.

It would be nice to see grey approach working in action. As you rightly pointed out life would have been bleak for want of a second chance.

Ramesh said...

@Vishal - Yes, the more senior the person is, the more responsible he has to be. But then, he is also human !

Anonymous said...

An error by nature is unintended. It is possible though to commit an error (unintentially) through lack of due dilligence. Lack of due dilligence can result from ignorance, from carelessness or by intent.

So, in business a policy or standard can set out in black and white the protocols for dealing with breaches that account for intent and state clearly the responsibility for and level of dilligence to be taken.

All accademic though, as if your time is up, they will find a way to hang you, regardless of the type of rope. In fact, the labour laws of some countries do not allow for dismissal for a breach that the Employer knew about but chose not to act on at that time to prevent this behaviour. Effectively a sunset clause to stop Employers storing up breaches for a time when it is convenient to dismiss for other reasons.

Ramesh said...

@Anon - Thanks for a great comment. Indeed a carefully laid policy is essential. Its also very true that if your time is up, you'll be handed whichever way.

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