Hewlett Packard Spying Scandal Essay

Corporate misconduct, (or peoples misconduct so to speak) is an issue that has been dominating headline news in the Ameri corporation occupancy world in recent years. Theodore Roosevelt, champion meter U.S. president was probably right when he said, To organise a some(a)one in mind but non in morals is to educate a menace to society (Platt, 1989). The American society has continued to give birth from incarnate filths, despite the fact that people argon now disc each(prenominal) over educated because behind each grunge and crisis is a possible drop of morals in the educated people running those corporations (Low et al, 2006). It should be note that un honest behaviour is not a new phenomenon in US business nor it is an issue of the US alone.Research Questions and ObjectivesThe year 2002 witnessed the collapse of giants akin Enron, Tyco, Arthur Anderson, WorldCom and less known cases like Morgan Stanley, Dupont and Prudential Financial amongst others all told convolut ed in one form of scandal or the other. Such widespread corporate mis expressions maintain left many people (including this writer) to wonder where things are going wrong. Should blame be placed on perceived weaknesses of regulation and accounting standards? Or is it that education is not producing the type of business graduates compulsory to pr take downt such scandals? (Low et al). Do the misdeeds simply involve a hardly a(prenominal) bad apples a smattering of corporations that make the rest of American business count bad? Or is the problem much broader than that? Further, if it is a widespread issue, what postulate to be done? (Clement R. May 2006). Such are the tolerant of questions this field of battle is forbidden to seek answers to in light of the Hewlett Packard Spying scandal of 2006.Conceptual FrameworkThis section explains what the literature on business moral philosophy suggests for achieving ethical behavior in an organization. It is hoped that this will l ay a hind end for the analysis of the recent corporate misdeed of Hewlett Packard. logical argument moralsBusiness ethics, Black J. (2002) is the branch of ethics that studies what standards businesses should observe in their dealingss over and preceding(prenominal) residence with the letter of the law. This covers questions such as fair dealing with their labour force, customers, suppliers, and competitors, and the impact of their activities on public health, the environment, and animal welfare. If a uncorrupted account seconds to gain and retain business, ethical conduct need not necessarily conflict with profit, but there are bound to be cases where it does. Particularly difficult questions of business ethics arise in transnational firms, where practices such as gifts to officials, which are essential to doing business at all in some countries, are regarded as criminal in others.previous research works on business ethics have pointed come in some measures that can be ta ken indoors an organization to help foster a stopping point of ethical behavior. Many of these studies highlight the usage that top discernment commitment plays in developing an ethical organisational culture. Weaver, Trevino and Cochran (1999) raise that the commitment of top management is essential for ethical finis making to be integrated into a firms culture in other words, managements decisions and actions in promoting the program are more effective than making sure that the program addresses a want list of ethical issues.Trevino and Brown (2004) found that top executives essential manage ethical conduct proactively by means of explicit ethical leadership and conscious management of the organizations culture. To this end, they suggest that top managers should study the cultures of their organizations to see what ethical messages are being sent. The researchers likewise assert that executives should advertise the importance of ethics, reward ethical behavior, and mode l that behavior themselves.Holmes et al (2002) found that employees are more likely to engage in ethical behavior if top management is firm in its expectations of ethical behavior of all employees, including themselves (p. 97) go Harrington (1997) concluded that, to achieve ethical behavior, top management needs to gain social consensus through changes in organization culture and by encouraging employees to live up to their responsibilities.What constitutes unethical behavior?It is important to correspond the types of corporate behavior to consider unethical, and to decide on the time degree over which the data on that behavior should be gathered. Some types of behavior may seem unethical to certain individuals but not to others (Clement R, 2006). He however identifies three conditions that seem to signal unethical behavior A plea of guilty by a firm to pushs of misconduct by coquets or reignment agencies against a firm as solid say of corporate misconduct, even if the firm is still appealing the ruling. agreement by a firm to check charges, often by paying a fine or agreeing to other restrictions on telephoner behavior even if the firm is not required to admit guilt.The Hewlett Packard (HP) spying scandalOriginsIn a Newsweek report by Kaplan D, (2006), the confrontation at Hewlett-Packard started innocently teeming in January 2006 when online technology site CNET published an article ab bulge the long-term strategy at HP and other education that could only get laid from a film director quoting an anonymous HP source. HPs chairwoman, Patricia Dunn, federal official up with the ongoing leaks told another director she wanted know whom it was. consort to an internal HP e-mail, Dun then took the extra ordinary beat of authorizing a team of independent electronic-security experts to spy on the January 2006 communications of other 10 directors not the records of calls (or emails) from HP itself, but the records of phone calls made from personalized accounts. That meant calls from directors home and their private cell phones were intercepted. Dunn acted without informing the rest of the board and this caused a boardroom fury at the worlds largest technology company.In a related story by Sakuma P. (2007), the HP boardroom-spying scheme erupted into a national scandal , September 2006, subsequently the company disclosed that detectives it leased obtained the private phone records of directors, employees and 9 journalists in an effort to ferret out the source of media leaks. The scandal also introduced the world to pretexting, a shady play in which detectives used other peoples Social tribute leans to fool telephone companies into divulging detailed call logs. In an audience with Newsweek, Dunn said she didnt know that the investigation would reach such heights.ConsequencesIn two separate press releases, HP announced a number of moves that was an outcome of 2 days of teleconferences among the board. Patricia Dunn was to step down as chairwoman. chief operating officer Mark Hurd will replace her. George Keyworth, the longest serving director and one who leaked information to a CNET reporter that led to HPs investigation was to resign immediately. Richard Hackborn, who served on the board since 1992 would become lead independent director. A criminal investigation against Patricia Dunn, Kevin Hunsaker, HPs former ethics chief who allegedly directed the probe, and 3 private investigators was started on 4 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 carried a fine of up to 10,000 dollars and 3 years in prison.How and wherefore HP successfully overcame this scandalTestifying before a congressional in September 2006, Dunn said she was repeatedly reassured by HPs lawyers about the legality of its detectives subterfuge. In a Business Week report, November 2006, a state judge Cunningham in California dropped the above charges against ex-Hewlett-Packard Chair Patricia Dunn after she pleaded guilty. The lawcourt however did not accept the pleas of the other three defendants and offered to fire the charges against them if they met two conditions by Sept. 12 2006, they must serve 96 hours of fellaship service and complete any court-filed restitution requests made by victims.In a related story by CNNs Katy Byron, (September, 2006), the court discharged Dunns charge because of her cancer battle, according to the attorney planetarys office. The dismissal came not because shes innocent but because she is sick, attorney generals spokesman Barankin told CNN. Dunn had breast cancer in 2000 and melanoma in 2002 and was diagnosed with ovarian cancer in 2004 and is still battling it. She also underwent extensive surgery cash in ones chips year after doctors discovered a malignant tumor in her liver.In a CNBC news report (september 2006) Hewlett Packard agreed to pay $14.5 million to settle the lawsuit brought by California Attorney ordinary blame Lockyer, whose office accused the company of unfair business practices in its attempts to expose the source of boardroom leaks.HP also implemented changes to its corporate governing policies to ensure that future internal investigations are conducted legally.There was no conclusion of liability against HP. The settlement includes an injunction and agreement that the California Attorney General will not pursue civil claims against HP or against its genuine and former directors, officers and employees.The vast majority of the settlement $13.5 million will stock state and local investigations into privacy rights and intellectual property violations, Lockyer said in a statement.The personal efforts of new HP chairman and CEO, Mark Hurd also contributed greatly to HPs successfull exit from the scandal. He says We are blithesome to settle this matter with the A ttorney General and are committed to ensuring that HP regains its standing as a global leader in corporate ethics and responsibility.The company shareholders rejected a proposal that would have given investors the right to nominate directors to HPs board. About 39 percent of HP shares entitled to vote at the companys annual shareholder meeting favored the measure, which was supported by currency including Calpers, the largest U.S. pension fund, and the California State Teachers Retirement System, the No. 3 fund.The above factors culminated in a slight stock price increase of HP in September 2006 despite the fact that September 2006 was a flint month for the company. Its stock actually rose a bit that month, end at $36.69. It has since climbed to nearly $40 as HP continues to perform potently in the PC and printer markets. HP today has regained its leading couch as the worlds number one technology company.The Role of Business Ethics in this SuccessThe conceptual framework of thi s study laid some guidelines on how to identify when a company behavior should be considered ethical or not. In the context of the widely publicized Hewlett Packard spying scandal discussed above, there is no plea of guilt by the firm nor by Patricia Dunn and the other defendents to charges of misconduct, we havent seen a ruling against either the Carlifornia court that handled the case nor the Securities and Exchange Commissions against HP for unethical behavior.However, HP agreed to settle charges of $14.5 million to close the case and save the goodwill of the Silicon valley icon. The payment, by ethical standards could be considered a fine, which is an evidence of unethical behavior, by a firm. HPs intention, perhaps, as we have seen was to save the companys image and probably in compliance with a court injunction or lawyers advice.Taking a look at HPs Standards of Business Conduct, (SBC) , we find that it embodies the fundamental principles that govern ethical and legal obligat ions to HP. They pertain not only to conduct within the company but also to conduct involving HPs customers, add partners, suppliers and competitors. (www.hp.com).As a business, remaining profitable and viable is a must for Hewlett Packard though this is not the only concern for the company. HP seeks uncompromising rectitude through what each individual can contribute to its customers, co-workers, company and communities. HPs business success is dependent on trusting relationships. Its reputation is founded on the personal integrity of the companys personnel and its consignment to the principles of (www.hp.com) Honesty in communicating within the company and with its business partners, suppliers and customers, while at the uniform time protecting the companys confidential information and trade secrets. Excellence in its products and services, by striving to translate high-quality products and services to its customers Responsibility for its words and actions Compassion in its relationships with employees and the communities affected by company business Citizenship in observance of all the laws of any estate in which the company does business, respect for environmental concerns and service to the community by improving and enriching community life. Fairness to our fellow employees, stakeholders, business partners, customers and suppliers through adhesion to all applicable laws, regulations and policies, and a high standard of behavior. Respect for fellow employees, stakeholders, business partners, customers and suppliers while showing willingness to solicit their opinions and value their feedback.ConclusionFrom the above, we can say that Dunns investigation into the leak was simply in compliance with the first principle (Honesty) of the companys code of ethics. Her intentions were clear from the low gear to probe into an alleged boardroom leak while at the same time respecting the principles of respect and fairness (last two principles) in the investi gation. That in itself shouldnt have been a scandal. It is the methods of the investigation pretexting that raised controversy and finally erupted into a scandal. Patricia Dunn was able to prove before congress and the courts that such an act was carried out without her knowledge, though she acknowledged that an investigation was going on, which in itself complied with company ethics.