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Richard A. Moran: Let Go By Leakage -- How Not To Fire A CEO

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By Richard A. Moran

Last week it was Carol Bartz. This week it is Leo Apothakar at Hewlett-Packard. Governing bodies just do not know how to fire CEOs and they don't seem to be learning anything. Each situation gets worse.

With Carol the dirty deed took place over the phone. She didn't like that method too much and let her feelings be known. Many are predicting that Twitter will soon be the preferred method for delivering the bad news. It won't even take up all the allotted characters. "Turn your badge in at security on your way out" still leaves room for a nice sign-off. Carol was fired by a surprise phone call.

With Leo, everyone knew he was going to be terminated before it actually happened. Leo was fired by revelation. The problem was he was not making any revelations, the "revealers" were all anonymous sources "close to the situation." There must be a lot of those close sources. Wall Street was so sure he was going to be let go that the share price went up 10% before the board even met. Guess how that made Leo feel.

The information surrounding Leo's termination was not a leak; it was a torrent of information with lots of details. Among other things we learned what a poor choice he was and that the board should have never hired him in the first place. Since most of the board never even interviewed him, I don't know how they can be blamed. Leo will do fine and I am sure his exit package is one that we can all envy. And, we learned that Meg Whitman was selected to replace him. All this before the directors even met.

I am a huge HP fan and I believe Meg is a good choice under the circumstances. I wish her and the company all the best. But the process of how all this happened raises a few questions:

• How did the board tell Leo? Was it one of the directors who opened the chat by saying, "Leo, by now you may have heard...."

• Was it really a sudden decision? I am a believer that people, especially senior executives, are usually very self-aware. If it was coming for a while, why wasn't the process planned better?

• What if the board never really wanted to fire him? Since the share price went way up just on the thought that he might be gone, it was now a fait accompli whether the board wanted to do it or not.

• What about all those big changes Leo made? In a short amount of time he made dramatic changes to an institution not known for its ability to change quickly. Were the changes approved and supported? What happens to all those strategy changes now? What are the people working on those projects supposed to do now? Wait and see?

• What about all those very talented people who resigned because they couldn't deal with Leo? Or vice versa?

• Meg was not announced as an "interim" CEO, but is she? What if she decides to run for governor of California again?

• How did the board collect data to make the decision? Was it just based on results? Did they finally discover the man they were really dealing with?

• How did Leo first get drift of what was happening? Did his executive assistant pull him aside and whisper, "You should know there is a rumor going around that you are toast." Was Leo fired de facto by his EA?

HP is such a big company that the wheels will keep spinning and Meg will get them spinning faster. She is an effective communicator and will inspire the troops. But in the short term, lots of tech people inside and out of HP are rolling their eyes over how this all happened. To the board's credit, at least they moved fast once the decision was made -- but why did they hang him out to dry like that with leaks and revelations? I have no inside information, and I wish Leo the best.

The HP Way was a code of ethics that focused on how to operate and treat employees and customers. It was a great way to run a company. Too, there is a "way" to make leadership transitions. Firing the CEO over the phone or through major information leakage is not the way.

Richard A. Moran is a San Francisco-based venture capitalist, social scientist, author, and evangelist for organization effectiveness. To buy his latest book, Sins and CEOs: Lessons from Leaders and Losers That Will Change Your Career, and to read his blog, visit him on Red Room.