The Woes of Hewlett-Packard
Hewllet-Packard Company (HP) began from very humble grounds.
Word has it that it began as a garage with Bill Hewllet and David Packard as the pioneers. As the company gained momentum, its governance was driven by a philosophy dubbed, the HP Way. The HP Way recognized the worth of every employee and was characterized by a decentralized, nonhierarchical and participative management system that encouraged innovativeness of individual engineers and scientists. For some time, HP seemed to be soaring high in the business world of technological innovation. However, in the twentieth century, HP’s success began to dwindle. This came with consequences like a stagnating share price and dwindling earnings.
The board, therefore, had to appoint a new CEO to take the famed HP back to its former glory. Consequently, Carly Fiorina came to the picture as the Company’s CEO. The Wrangles Even though she stayed at the zenith of HP, Fiorina seemed to have dropped in unchartered waters right from the beginning. She had to grapple with the Board which seemingly shot down her efforts to “shake things up” as the same Board wanted her to do. She began her tenure by altering the managerial structure of HP since shebelieved that the company’s woes were due to poor management.
This move was, however, strongly opposed since the HP culture subscribed to the idea of decentralization, allowing employees equal opportunities to share their innovativeness. She reasoned that as the CEO, she had the final say in decision making process and that everything had to pass through her. This commenced Fiorina’s assertion of authority since some board members did not welcome her way of running business at HP. Worse still, her by-the-book mentality and handling of matters to the very detail made her repugnant to key Board members. The aforementioned wrangling made the Board to lose focus of its mandate to the shareholders, perhaps, leading to the stagnant growth of the Company. There is no indication that they consulted with the shareholders while considering the merger with Compaq.
Besides, the Board never considered hearing from the shareholders concerning the decision-making stalemate they were facing; worse still, the Board made key appointments while sidelining the input of the shareholders and the CEO. Their vested interests to frustrate Fiorina and later on send her packing carried the day. Contrary to the Board’s behavior, Davies (2001) notes that any bottlenecks between the shareholders and the [Board should be] addressed by transfferring the decision-making process from the [Board] to the shareholders. He further notes that a Company ought to incorporate the shareholders in key decision-making process like when the Company is contemplating a merger. The manner in which the Company’s board dealt with Fiorina was unfair, unacceptable and unwarranted.
The Board failed to honor their fiduciary duty of loyalty and instead leaked confidential information about the merger with Compaq to the public and consequently delaying this quantum leap by HP. This affected investor confidence and made Fiorina, the CEO and the Company’s representative look bad and discouraged. This breach of fiduciary duty created suspicion and therefore affecting consensus at the management level (Abduljaami, 2011).Had any measure been taken to improve the functioning of the Board, all these hullabaloos could have been avoided. Moreover, having the bigger picture and co-operating with Fiorina while she dispensed her duties as the CEO, would have streamlined the thinking of the Board towards a holistic success of HP. If the Board would have stopped frustrating Fiorina, crucial Company decisions could have been tabled for discussion leading to a unanimous decision thus propelling HP to its former glory.