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HP wins suit on strength of weak standard

This week a Federal judge ruled that HP won't have to pay lawsuit damages after a CEO violated a code of conduct for the company's workers. The alleged harrassment by Mark Hurd was not studied as closely as that code of conduct for Hewlett-Packard.

Pink-DumbbellThough HP's standards brochure contained provisions like, "We are open, honest, and direct in all our dealings," District Judge Jon Tigar found that such comments aren't material statements. The wording in the code was vague enough that some major shareholders, led by the Cement & Concrete Workers District Council Pension Fund, don't get to collect damages in a lawsuit because the judge called the HP code "puffery."

It's not shocking that a sexual harassment case, one that been broadcast in a lurid story, wouldn't end in jail time for Hurd, or a fine against HP. Those are big players with great legal representation. Hurd's amorous advances earned him a spot at Oracle selling Sun servers, so well that the Business Critical Systems division hasn't had a good quarter since he left HP.

It's probably not even surprising that a current HP code has a vague wording. Somehow, it took more than 18 months to decide that in a District Court matter. What is genuinely surprising is that any corporation code would be considered a cut above a prayer or an advertisement. The old Hewlett-Packard -- the company that current CEO Meg Whitman says remains in the new HP's DNA -- would see a code as a promise. It worded the copy of the HP Way clearly enough that it could defend its practices. Corporate-level creeds such as standards brochures are low bars to clear. Nothing as concrete, so to speak, as "profit is the best single measure of our contribution to society and the ultimate source of our corporate strength. We should attempt to achieve the maximum possible profit consistent with our other objectives."

That's the old HP, considered benevolent and collegial, talking there in the HP Way. Profit was the biggest goal. Today HP takes its commitment to green manufacturing and the environment more seriously than corporate officer accountability. This is important to remember when choosing a systems vendor for a migration project.

The District Court ruled this week that "Adoption of the [shareholder] argument would still render every code of ethics materially misleading, whenever an executive commits an ethical violation following a scandal." Scandal has no impact on a code of ethics in 2013. A shareholder cares more about this than a customer, unless the scandal leads to a weaker pipeline of products and services.

One of the things that can weaken a pipeline is a stronger competitor. Nobody will argue Oracle isn't stronger than it was in 2010, when Mark Hurd was testifying about his romantic advances. (He said he didn't have any, that it was all a misunderstanding.)

HP tried to block releasing the letter of allegations that attorney Gloria Allred filed about those encounters. Whether they are true in their entirety, or just in parts, there's a lot of detail in an account that asserts "You told her to be quiet because there were bodyguards in a room next door [to your hotel room.]"

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Accountability from a corporation is a matter of trust. An IT director can be pragmatic, even a cynic, and say you'd better not expect much from any entity that's said for more than 50 years, "We should attempt to achieve the maximum possible profit consistent with our other objectives." So long as those objectives are carrying you to the next IT platform, HP's a good choice for a partner. Just beware of the puffery. It can show up in places like a corporate speech or a conference, as well as in a Code of Ethics.