Is anyone else bothered by the recent sacking of Mark Hurd from HP?
The company had being in free fall before he arrived. He turned the place around, making HP the leader in both desktops as well as laptops. In a flat stock market he nearly tripled the value of the stock. He was named many times as one of the top CEO's in the world.
And he gets sacked for fiddling his expense reports and "having an inappropriate (although non-sexual) relationship" with a supplier.
The stock lost US$9 billion (let me repeat that: US$9 billion) in market cap the day his firing was announced.
So whose interests were served? Couldn't the HP board have come up with a better response?
Here's a suggestion. A curious thing about American companies is that they allow the same person to be both CEO and chairman. Hurd carried both titles. Many other countries ban this practice. It is wrong and in fact dangerous for many reasons.
The two job functions are entirely different. A CEO runs the company day to day. He is responsible for sales and profits and every major decision affecting the company's short- and long-term strategy.
Carrying such a heavy load is burdensome. Everyone needs someone they can talk to; off whom they can bounce ideas. That role is one of the many responsibilities of a chairman. He is there to listen to the CEO, offer counsel, steer him, and generally look after (and look over) the CEO to ensure his actions represent the best interests of the company.
When one person carries both titles, the company suffers.
That's what happened in the case of HP, and the board, rather than sacking Hurd, should have taken the chairmanship away from him. This would have been a serious punishment for the errors he made, but one that would have benefited the company and prevented the loss of $9 billion in market cap - not to mention the loss of a great CEO.
I have been a CEO, and am now chairman of several companies. I recognise the difference between the two roles. As CEO I always asked my chairman for advice, and as a chairman I always guide, but ultimately support, my CEOs.
How about your company? Are these two roles separate? If not, they should be.
Remember the famous quote: "Power tends to corrupt, and absolute power corrupts absolutely".
Eric Rosenkranz advises chief executives and chairmen on how to develop long-term strategy and build their businesses. Follow his "Creating Success" series in Hi! Managers every fourth Friday of the month.