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BP vs. HP: The Downfall of Two CEOs

It's déjà vu.

Only last week, I discussed how stakeholder trust has been half the battle for PwC's new Corporate Responsibility Leader Shannon Schuyler, as she redefines the company's work culture. Now, a well-respected CEO has left technology company HP on allegations of unethical management.

After all the mudslinging BP has endured for the past months, it's natural to say that Mark Hurd's resignation was expected and perhaps, even deserved. But was it the unethical nature of the harassment charges or the financial fuddle of the inaccurate expense reports that tipped the balance against him from trusted stakeholders, i.e., the board?

Two sides of the coin:

Ethical Mismanagement

Mark Hurd
Getty Images
Mark Hurd

Let's assume that Hewlett-Packard's board of directors is an extremely conscientious group of people who prioritize ethical standards over profits.

When the sexual harassment charges became public, they waited. After all, Hurd has been responsible for turning around the tech giant from predecessor Carly Fiorina's expansive realm, and is well-regarded on Wall Street. However, when news of the expense reports followed, let's hypothesize that the board quickly came to a consensus that honest and responsible leadership has no room for actions like Hurd's. Their official statement, according to HP's General Counsel, Michael Holston, said Hurd had demonstrated a "profound lack of judgment that seriously undermined his credibility and damaged his effectiveness."

Now corporate responsibility experts and practitioners will justifiably agree with that hypothesis, because responsible leadership does not have any room for unscrupulous decisions. And Hurd isn't the first CEO to fall due to personal ethical lapses. He joins the ranks of lauded chiefs like BP's John Browne, American Red Cross' Mark Everson, Boeing's Harry Stonecipher, and former Wal-Mart chairman Thomas M. Coughlin.

However, what makes this hypothesis hard to swallow is its complete trust in the board's decision. Consider this: If we hadn’t spent the past four months lamenting BP's irresponsible actions and criticizing every speech CEO Tony Hayward made, would this lapse seem as significant? While media can change priorities and moral adjudication to developments (and people) in corporate America, there is a flipside that companies must keep in mind as well: Today's very public nature of corporate governance demands that reactions be quick and in keeping with brand reputation.

Brand management

Which brings me to the other side of the coin: Was Hurd's dismissal just a face-saving maneuver by shareholders wanted to avoid being in BP's shoes? Keep in mind the timeline of his departure. It took BP four months to announce Hayward's departure.

For the HP board, reactive measures became key: anything to avoid public mistrust from impacting their brand. So then was Oracle CEO Larry Ellison's outburst on target? In an email to the New York Times, he 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 interest of HP's employees, shareholders, customers and partners."

A reader commenting on CNBC's report on Ellison, perhaps, put it best: "Mark was EXACTLY what HP needed after the debacle of an organization structure that was put into place by Fiorina's post-merger management team which was bloated, dysfunctional, confused, and otherwise largely ineffective. Mark was superb. There must be more to this story, it just doesn't add up."

Yes, something doesn’t add up.

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Aman Singh is the Corporate Responsibility Editor at Vault.com and the author of Vault's CSR blog: In Good Company, where she discusses CSR, diversity practices and sustainability practices, and how they translate into recruitment and strategic development at companies. Connect with her on Twitter @VaultCSR.

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