NEWSMAKER #5 Patricia Dunn

By Jeremy Smerd

Dec. 29, 2006

Patricia Dunn will be remembered this year for being at the center of a scandal in which no one in the executive suite or boardroom got rich. There was no rogue CEO, corrupt financial officer or hidden payouts for board members. Instead, it was the desire to right a perceived wrong—boardroom leaks Dunn believed was undermining Hewlett-Packard’s strategic position—that culminated in spying on reporters, directors and employees. Nonetheless, Dunn resigned as nonexecutive chairman in September and is under criminal investigation.

    What observers have noted is that despite the shake-up at the executive level, HP’s reputation—both among employees and shareholders —remains strong.

    “The culture will triumph over its leadership problems, and that’s a great testimony to the resilience of the HP culture that was built,” says Jeffrey Sonnenfeld, president of Yale University’s Executive Leadership Institute. “A lot of companies without that sort of fortitude built into the culture would not have been able to survive these last two years.”

    Sonnenfeld is referring not just to the spying scandal that occurred this fall but to the stormy tenure of HP’s former chief executive, Carly Fiorina. Dunn, he argues, had been the recipient of bad legal advice from HP counsel on whether the company’s methods of investigating the leak were legal. The lesson: Don’t expect honest management to be able to scrutinize the board any more than one should expect a subordinate to deliver unbiased advice to the boss.

    Much credit for stemming the negative effects of the spying scandal has gone to CEO Mark Hurd, an executive who is seen as the anti-Fiorina: unglamorous, self-effacing and beloved by Wall Street.

    The company seems to have survived the scandal in large part because it has tapped into reserves of employee trust amassed over the years. HP says it has no difficulty recruiting or retaining workers.

    There are many ways, of course, to read those tea leaves. It could be that employees feel that Dunn inflicted no great lasting harm on the good name of the company. Or perhaps HP’s resilience is a reminder that the company exists independently of the bosses who happen to occupy the seats in the corner office and the boardroom.

Background: Patricia Dunn, who stepped down as nonexecutive chairman of Hewlett-Packard on September 12, began her business career as an aspiring journalist working a temp secretarial job for Wells Fargo Investment Advisors in 1978. Born in Las Vegas to a showgirl and a vaudeville actor, Dunn rose to become global CEO of Barclays Global Investors. Dunn, a longtime HP board member, took the chairman post after Carly Fiorina’s ouster in 2005.

Workforce Management, December 11, 2006, p. 24Subscribe Now!

Jeremy Smerd writes for Crain’s New York Business, a sister publication of Workforce Management.

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