Perception
beats performance
Meet Mark
Hurd – Mr. Performance. During the CEO’s six-year tenure at Hewlett-Packard
(HP), the company doubled its stock price, increased profits for 22 consecutive
quarters and overtook Dell as the world's largest
manufacturer of personal computers and IBM as the world's largest
technology company. Hurd received praise
from all sides, was selected as one of Fortune
Magazine's 25 Most Powerful People in Business in 2007 and named one of Forbes Market's
Best Managers for 2009 – only to fall from grace ever so deeply. In 2010 he was suddenly ousted
from all his positions at HP. What had happened?
 |
| Former CEO of HP Mark Hurd |
Hurd lost
his job due to a poorly managed media scandal revolving around appalling
personal decisions he took: having hired a reality-TV starlet to woo her on the
company’s tab and eventually sexually harass her, the CEO couldn’t hold his
position against strong media criticism
Although
Hurd made a series of mistakes that show that management and good conduct need
to go hand in hand, it also highlights another fact: Our recently conducted study
sheds light on the utmost significance of top manager’s public perception. An in-depth
analysis of 45 German and international careers reveals that the
evaluation criteria for CEOs have changed since the 2000s. These days,
perception beats performance.
More than
70% of the CEOs analyzed in the study were ousted due to perception problems,
such as the stakeholders’ loss of confidence in the leaders’ vision and
strategy or a general loss of trust in the CEOs’ moral compass and integrity. Whereas
in the 1990s top managers got sacked primarily for poor performances,
perception has become increasingly important in
the course of the transformation of the media, the press and the public. Despite excelling in terms of
share price, profits and sales, CEOs can’t be sure of their jobs. The effective management
of their perception can be existential –
not only for them but also for their company. In the two years after Mark Hurd's departure, HP's market capitalization
fell from USD 107 to 40 billion.
Image credit: wikimedia.org
While with HP, Mark Hurd has certainly improved HP's bottomline and market value. At the same time he reduced HP's R&D spending drastically and lost the engagement of HP's creative employees due to extreme cost sqeezes. Another example of shortterm, non-sustainable Management.
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