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Industry Insight

Speaking of the Moral Compass

In yesterday’s post I talked about people who have a moral compass that doesn’t point due North.

By Elizabeth Gooding
Published: May 17, 2011

Captain Jack Sparrow from Pirates of the Caribbean: The Curse of the Black PearlIn yesterday’s post I talked about people who have a moral compass that doesn’t point due North. In some cases it is like the compass in the “Pirates of the Caribbean” movies carried by Captain Jack Sparrow which points to what his heart most desires. Well, apparently there is one of those funky compass folks at Hewlett Packard (you know who you are) who leaked an internal memo that made its way to a reporter at Bloomberg .

The leaked memo was from CEO Leo Apotheker to his top executives in which he warned that “Q3 is going to be another tough quarter, one in which we will be driving hard for revenue and profit.” He goes on to say, “We have absolutely no room for profitless revenue or any discretionary expenditures.”

I don’t think that it would be shocking to find similar statements in a memo from any CEO in print manufacturing, or many other sectors of the economy today, yet it caused an immediate stock plunge of HPQ when reported by Bloomberg under the heading of “Hewlett-Packard CEO “Expects Tough Third Quarter.”

I doubt that whoever leaked this memo truly got what their heart desired, but they certainly caused a lot of heartburn and possibly heartache for others. This may have cost the jobs of some of their colleagues or impacted the pension funds of people they don’t even know.

According to a regulatory filing yesterday (also reported by Bloomberg) Paulson & Co., the $36 billion hedge fund founded by John Paulson, bought 25 million shares in Hewlett-Packard, valued at about $1 billion. Paulson is counting on a successful restructuring of HP – that’s his overall investment philosophy anyway. It suggests that HP’s memo-related stock issues may be short-term.

Regardless of the short-term play of the stock, HP’s employee loyalty challenges are a concern. And, like the statements of their CEO, I would not be surprised to hear of similar employee loyalty issues at any of the other major print manufacturers. One foundational aspect of a brand is the company’s relationship to its customers. Another is the company’s relationship with its employees. At some companies there appears to be mutiny afoot. Loyalty should be a code, not just a guideline. Without it, one pirate can scuttle the ship.



By Mark Robinson on May 20, 2011

When you speak of the “Moral Compass” of corporations that are public traded companies, ones that behave badly by cutting employees, taking short cuts on safety, defining themselves by corporate greed with large bonuses for the CEO’s, is it any wonder that employees strike back with leaked memos that hurt the overall image of the corporation.

Employee loyalty died with this last recession, good men and women lost their livelihoods at the stroke of a pen. Many are still unemployed, or under employed. Some have given up entirely looking for work.

Was their intention to harm, perhaps, but morally speaking maybe they’ve been beaten down, abused by the corporations that have been disloyal to them


By Elizabeth Gooding on May 20, 2011

Mark - you are right that the loyalty issue generally stems from a crisis in leadership. It is rare these days to find a major corporation where employees feel that their employer has their best interests at heart. The problem is that when employees leak these kinds of documents (except in the case of true "whistleblowers" who risk a great deal to stop corporate corruption)it is rarely the senior leaders who pay the price. When this type of thing is done in a way that damages consumer confidence or investor confidence it usually results in layoffs at the bottom - not the top. Self-defeating from an employee retaliation stand point.

With that said - I believe that many companies need to take a hard look at their policies towards employees. Benefits are shrinking, pensions are non-existent and corporations ask their employees to pick up and move at the drop of a hat. Particularly in these days of $4 gasoline, a "local" relocation can be more of a hardship than moving your home to another state for a job. Unhappy employees in turn have an impact on customer service and customer loyalty.

So, just as employee disloyalty often backfires, employer disloyalty in the quest for higher profits is equally misguided.


By Tisha on Jun 24, 2011

Well put, sir, well put. I'll certnaily make note of that.


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