Fiorina Schools Students on Corporate Ethics

The former HP chief executive visited MIT's Sloan School of Management to back her new book, telling students that corporate leaders must avoid scandals such as the ongoing stock option backdating controversy, and HP's own pretexting imbroglio.

CAMBRIDGE, Mass.—Speaking to a packed auditorium of graduate students here at the Massachusetts Institute of Technologys Sloan School of Management, former Hewlett-Packard Chief Executive Carly Fiorina told the group of future business leaders that issues of ethics will be among the hardest they tackle during the course of their careers.

On tour to promote her new book, "Tough Choices," which traces Fiorinas rise from her first job as a receptionist to her role as the leading executive at one of the worlds largest IT companies, the former CEO made the ethics of leadership a central topic in her presentation to students attending one of her alma maters.

At the beginning of her presentation, and the book, Fiorina elaborated on her very-public firing as HPs CEO in February 2005.

If she couldnt offer an authentic version of her perspective on the experience, the executive said she didnt believe people would take anything else that she said in the book seriously.

In addition to detailing her time at HP, and the challenges she faced in moving the company from its historic roots into its current business model, Fiorina repeatedly touched on the issue of executive ethics, specifically referencing the rapidly growing list of IT executives who have been accused of backdating stock options to increase their personal wealth.

/zimages/4/28571.gifTo read more about the HP stock and boardroom scandal, click here.

In reflecting on her time at MIT, Fiorina highlighted her studies in a class on the application of "Gaming Theory" in the corporate world, or a scientific attempt to define the reasons why people allow their personal agendas to lead them to make irrational business decisions. The backdating scandal is an example of the kind of ethical debate the class forced its students to consider, she said.

Fiorina contends that such greed is emblematic of the mistakes in judgment that executives often make when they become detached from lower-level employees and overlook their companies best interests in the name of growing profits.

"What this book is all about is that people are people, wherever you find them, there are people who will hold their positions with honor and people who will not, and if you doubt that all you have to do is think about the current scandal with backdating of stock options," said Fiorina.

"Here you have people in some of the most respected companies in America who lost sight of good judgment and good ethics, and who believed they could get away with something because there wasnt a clear rule that told them they couldnt."

In another Sloan course, "Readings in Power and Literature," Fiorina said she learned even more vital lessons about the need for strong morals in leading a business.

One of the primary tenets of good executive leadership is navigating each of the many opportunities business leaders are presented with through which they can abandon their ethics in the name of achieving some goal faster, she said.

Asked specifically about the now-notorious pretexting scandal that employed illegal investigative tactics to identify leaks on HPs Board of Directors, and led to the resignation of Chairwoman Patricia Dunn in September, Fiorina said that the situation was caused by a lack of open communication on the companys board.

In television interviews, including a recent sit-down on CBS televisions news program "60 Minutes," the former CEO has directly criticized former HP board directors Tom Perkins and George Keyworth, who were among those targeted by the investigation for leaking sensitive information to journalists, for undermining the efforts of both herself and Dunn.

"The only way you can deal with tough problems [like a boardroom leak] is straight talk face-to-face, you dont go off and do things under the table, you have a straight conversation about ethics, which is what I did," she said. "Im not there anymore—some people dont like straight talk."

/zimages/4/28571.gifClick here to read more about Fiorinas legacy at HP.

In framing her contribution to HPs current resurgence, much of the credit for which has been attributed to her successor, current HP Chief Executive Mark Hurd, Fiorina said it would be unwise to assume that the companys fortunes could be completely revitalized in the short period of time since her firing.

The business media, and other outspoken industry experts, have contributed heavily to the notion that Hurd, or any one executive, could be almost solely responsible for such a dramatic turnaround in the fortunes of such a massive company.

"The media in particular likes to create contests, but its not about Mark versus me or anyone else; an $80 billion company with 150,000 employees in 176 countries is a battle ship, not a jet ski, and a battle ship takes a long time to turn," said Fiorina.

"It takes a lot of time to transform a company from top to bottom, from a company that in 2002 was losing $900 million a year, to a company that made $3.5 billion in 2004."

"That takes a lot of time and energy, so I what I do know is that companies of this size dont turn in 12 to 18 months," she said. "The legacy of my successor we will know in a couple more years."

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