Business news is slow coming off the long Labor Day weekend, with just one headline clearly dominant: former HP CEO Mark Hurd has resurfaced. He was forced to step down from his post due to a sexual harassment suit with a contractor in conjunction with filing mislabeled expenses. He had quite a soft landing. Just one month later, we now learn he will be hired as the president of Oracle, the second largest business software company. This should raise the obvious question: do business ethics really matter?
When the Hurd resignation news struck in August, Atlantic Correspondent Ben W. Heineman Jr. wondered: "How could he do something so stupid?" Indeed, his missteps were incredibly dumb decisions. Yet, they didn't relate to his business savvy. Even though they were stupid, they didn't change firms' perception of his potential value to their bottom line through his leadership.
Bloomberg explains the value that Oracle likely sees:
At HP, Hurd more than tripled profit by cutting costs and expanding beyond the company's core business of computers and printers. He oversaw an acquisition spree of more than $20 billion, letting the company branch out into services, networking equipment and smartphones. Oracle, which also has bulked up through takeovers, would draw on Hurd's background blending software and hardware as it expands into server sales.
While the accusations against Hurd sounded pretty bad, they boiled down to ethics. Ultimately, HP's sexual harassment probe found that he didn't violate the company's policy, but did violate its ethical standards. Oracle has responded to Hurd's poor judgment in areas other than management with a resounding -- so what? The company thinks Hurd's talent for business decision-making trumps his poor decision-making elsewhere.
Yet, in other situations, business ethics clearly do matter. It's easy to think of examples of businesses and individuals that don't recover, like Bernie Madoff and Enron. These ethical violations show something very different from Hurd's problems, however. Instead of using their superior talent and expertise, such firms or individuals must rely on fraud to bring in profits. The business community has no use for mere thievery as a means to make money. Anyone can do that; it's the brilliant minds that matter in the long-run.
So perhaps the lesson here is that business ethics only matter when they jeopardize business. Of course, sometimes these go hand-in-hand. A perfect example is Arthur Andresen. With an auditing firm, integrity is everything. If you lose that, you have no business, as the firm quickly found out. But in other businesses, where the profit motive is less connected to good ethics, that's not the case. Then, so long as poor decisions don't compromise profit, they will eventually be forgotten.
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