On October 5, 2006, CBS/AP reported that “Hewlett-Packard Co. ‘s ousted chairwoman [Patricia Dunn] agreed to surrender to authorities …and was ordered to appear in court on felony charges tied to the company’s ill-fated attempt to uncover the source of boardroom leaks to the media. ” Former HP Chief Ethics Officer Kevin Hunsaker was also charged, along with three investigators — Ronald DeLia, Matthew DePante and Bryan Wagner.
Each faces four felony counts: use of false or fraudulent pretenses to obtain confidential information from a public utility; unauthorized access to computer data; identity theft; and conspiracy to commit each of those crimes. Each charge carries a fine of up to $10,000 and three years in prison. The situation at HP lends itself very well to a study of ethical issues at many businesses.
In a time of scandals ranging from Enron to WorldCom and now to HP, a company known for its high ethical standards and professionalism, it should be recognized that more monitoring of public corporations is needed, and the board of directors is not always the best choice for that monitoring. At HP, the board itself created the ethical dilemma that HP and its leaders faced, and it is the board that failed in its duty. Background In an attempt to find the source of media leaks on the board of directors, HP conducted an investigation earlier this year and in 2005.
Recently, HP disclosed that detectives it had hired obtained the private phone records of directors, employees and journalists. Using a shady tactic known as “pretexting,” the detectives obtained the Social Security Numbers of the people they were investigating. They then tricked telephone companies into giving detailed call logs of those people, which included former HP CEO Carly Fiorina, before she was fired last year. Fiorina said she also went after people who leaked, but she says she never went as far as Dunn.
“I was shocked to hear about the depth and range of some of those tactics. And shocked to hear that I might have been the subject of some of them,” Fiorina told CBS News. At a recent news conference, California Attorney General Bill Lockyer said, “One of our state’s most venerable institutions lost its way as its board sought to find out who leaked confidential company information to the press. ” Ethical Issues On an individual level, one ethical question that emerges is whether Patricia Dunn should be held accountable.
She claims that she was assured repeatedly that nothing the investigators were doing was illegal. That still remains to be seen from the investigation and ensuing trial. However, should Dunn have considered the issue from an ethical standpoint? In 1995, David Packard, co-founder of Hewlett-Packard, released a book called The HP Way: How Bill Hewlett and I Built Our Company. Interestingly, chapter 9 is entitled “Trust in People. ” Throughout the book, Packard describes the history of the company, as seen through its dedication to its people and to society at large.
One can only wonder what Packard, who died in 1996, and Hewlett, who died in 2001, would think of the ethical reality of today’s HP. Organizationally and societally, there are many ethical questions to be asked. What duty did the board have to the organization members to go to any lengths to find the media leaks? Should the good of the organization be viewed as requiring any means necessary, or should the good of the organization be viewed as requiring high ethical standards of its management team and overseers, the board of directors?
Does society have the right to demand higher ethical standards for a public organization? If no laws were broken, does the organization owe society anything? In Images of Organization, Gareth Morgan relates organizations to, among other things, a system of political activity, consisting of interests, conflict, and power. The power plays at HP started before Carly Fiorina was removed from her CEO position. It was Patricia Dunn who informed her that the board had decided she should resign.
Fiorina refused, so she was then fired by Dunn, who proceeded to be named by the board for the vacant position. It is not a surprise that Dunn is now trying to shift some of the blame for her current dilemma back onto Fiorina, her predecessor. Morgan defines interests as, “predispositions embracing goals, values, desires, expectation, and other orientations and inclinations that lead a person to act in one way rather than another,” (Morgan, 1997, p. 161) So, what were Dunn’s interests?
Why would she agree to have board members and employees investigated, using shady tactics or otherwise? From the teleological standpoint, we should examine how design, purpose, directive principle, or finality in nature or human creations caused Dunn’s and the others’ actions. Can you state that the market required the investigations? Did the fact that there was a media leak create a situation where HP had to investigate its own people by any means necessary in order to protect the organization from further leaks to the media?
Did the harm done really justify the actions? Do we, as a society, really believe that the good of the many (HP and its stockholders) outweighs the good of the few (the victims of the identity theft)? From the deontological standpoint, the branch of ethics that deals with duty, moral obligation, and right action, we can ask if Dunn and the others had a moral obligation to do “the right thing. ” Each individual has her/his own moral standards. Are not those sufficient to determine what the “right thing” would be in each situation?
How much weight do you place on the ideals of the founders, and how much do you place on the perceptions of morality of the current leaders? In Reframing Organizations, authors Bolman and Deal discuss, among other dimensions, how power and politics play a central role in organizations. They posit that, from a political perspective, organizations are coalitions of various individuals and interest groups. They state that enduring differences exist among coalition members. Those differerences are in values, beliefs, information, interests, and perceptions of reality,” (p.
163). From this standpoint, you can imagine how the various groups at HP, the “insiders” and the “victims”, could have been at odds. This can lead you to understand how this whole situation may have gotten out of hand, to the final act of committing felonies. Ethical Alternatives It is easy to stand in judgment, from an objective standpoint, of others and try to tell them what they should have done differently. In this case, however, one must remember that the perspective of each individual involved makes great changes to the options available.
One could say that Dunn should never have approved any activities that could be construed as unethical, especially in the light of the standards set by Bill Hewlett and David Packard. One could also say that she could not have done anything differently, as she was repeatedly assured that none of this was illegal, which implies that none of it was unethical. However, legalities do not equal ethics. This is actually a very difficult situation to try to come up with the “right” solution. I believe that Dunn should have examined the ethics involved and determined that the actions proposed were not a good course to take.
She could have then, possibly, involved the government in an investigation, and left the legalities to “the powers that be. ” She may have taken the steps she did as a way of keeping HP out of the news, but it backfired on her. Dunn could also have tightened the reins in terms of who had access to what information, to eventually ferret out where the leak was coming from. Alternatively, she could have fed misinformation, which could have accomplished the same thing. Under no circumstances would I consider it to be all right to steal personal identity information from others, or to participate in activities that did.
My preferred alternative would have been for Dunn to feed misinformation to ferret out the leak. I think the public, and the stockholders, would be forgiving more of misinformation that was later recanted and explained, than they are of identity theft. Summary In summary, this essay has viewed the current HP scandal from the standpoint of trying to understand where Dunn may have been coming from, how the public views the situation, what ethical imperatives Dunn and HP had, and what alternatives may have come from a higher ethical standard.
It is only fitting to end this essay the same way David Packard did in his book. There are countless ways in which a business enterprise, as a corporate body and through the individual efforts of its people, can make important contributions to its community and to the larger society in which it operates. The betterment of our society is not a job to be left to a few; it is a responsibility to be shared by all. (Packard, 1995, p. 189) References Bolman, L. G. & Deal, T. E. (1997).
Reframing organizations: Artistry, choice, and leadership, 2nd ed. Jossey-Bass: San Francisco. CBS/AP. (2006, Oct 5). Ousted HP chairwoman to surrender: Patricia Dunn, charged in spying probe, says she will fight charges in court. Retrieved October 21, 2006 from http://www. cbsnews. com/stories/2006/10/05/business/ main2068862. shtml? CMP=ILC-SearchStories Morgan, G. (1997). Images of organization, 2nd ed. Sage Publications: Thousand Oaks, CA. Packard, D. (1995). The HP way: How Bill hewlett and i built our company. HarperCollins: NY.