Undoubtedly you have read about the scandal at Hewlett-Packard relating to the company’s Three Stooges-like investigation into leaks from its board of directors. I won’t repeat the details, but have you thought about the HR implications of the scandal and what actions need to be taken by HR in your organization in its aftermath?
The inaction, or mis-action, by HR during and after a corporate scandal can have a greater financial impact than the scandal itself.
Every corporation has two distinct brands. The most obvious one is its product brand, but another one critical to recruiting and retention is a firm’s employment brand. In case you didn’t know, HP invented the modern concept of becoming an employer of choice when it crafted an image of a company that was a fun but also ethical place to work.
In the 1960s, as a business major, I read with fascination about this company that encouraged individual innovation, allowed one to "dress down" and, much to my amazement, encouraged employees to play volleyball at lunch. Through the years, they continued their image-building process by publicizing the "HP Way" and by being recognized numerous times on Fortune’s list of the best places to work. In the ’60s and ’70s, HP and its world-class HR department were my corporate heroes; in fact, I couldn’t wait to move to Silicon Valley to work with them.
Obviously that image is tarnished now, but hopefully not forever. That hope raises the question: What have HR and Hewlett-Packard done to be transparent and rebuild the company’s employment brand? To start, look at HP’s corporate Web page, which still touts its great ethical standards with statements like "Every member of the HP community (including directors, executives, managers, employees and business partners) must adhere to the highest standards of business ethics and comply with all applicable laws."
Nowhere on the Web page (at least that I could find) or on the company’s HR jobs page do they even mention the scandal, much less respond to it. Is the once great HR function at HP living in a dream world where it hopes potential job applicants haven’t read about the scandal, or hopes those candidates don’t have questions about it that must be answered before they are willing to apply for a job? And why hasn’t its HR department done more that is publicly visible to begin rebuilding HP’s image as an employer of choice?
Much has been written about the need to outsource services, but in this scandal most of the illegal activity was undertaken by an outsourcing provider. HP directors have said that they had no knowledge or control over the outsourcing firm’s activities—and that’s precisely the problem. Companies and HR departments must realize they are liable for the actions of outsourcing providers, and ignorance is no excuse.
The lesson to be learned by HR departments is that they should be reluctant to outsource in areas that could negatively affect their ability to hire, retain or develop the very best. When they do outsource, HR departments must put in rigorous performance standards and precise monitoring systems to ensure that this type of damaging behavior does not occur.
Although HR has no power to directly manage its own board members, HR professionals should see this as an opportunity to find a way to influence their board to ensure there is better monitoring of potentially illegal and unethical behavior. HR should also encourage board members to have their compensation tied to the expected behaviors in these legal, values and ethical areas.
Because the selection and payment of the vendor appears to have been handled through normal corporate business processes, it reminds us that HR in every organization needs to encourage its employees to speak out whenever they see even a hint of unethical or illegal activity. To ensure openness, HR should change the compensation system to ensure that all manager and employee compensation is partially based on whether they act ethically.
HR should also consider developing systems that allow employees to anonymously speak out, as well as offering bonuses to whistle-blowers who speak up when they become aware of any sleazy activities like those that occurred at HP.
I call on HR professionals in every organization to see this scandal as an opportunity to be proactive, and the time to act is now.
Workforce Management, September 25, 2006, p. 50 -- Subscribe Now!