A Question of Ethics- The IDRR Approach and Duties of Directors and Officers. Hewlett-
Packard Company (HP) hired detectives to secretly monitor the phones and e-mail
accounts of its directors to finds the sources of leaks of company information to the
media. When the government learned on the monitoring, criminal charges were brought
against HP’s then-chairwoman and general counsel. Mark Hurd, HP’s chief executive
officer, was found free of wrongdoing. The scandal had the effect of bolstering Hurd’s
reputation for integrity, and he became both chairman and CEO. In congressional
testimony, press releases, and investor briefings, Hurd proclaims HP’s integrity and its
intent to enforce violations of its corporate code of ethics, the Standards of Business
Conduct (SBC). Hurd’s statements concerning HP’s commitment of ethics and
compliance with the SBC reassured investors and the public, and kept HP’s stock prices
from falling.
Meanwhile, an independent contractor for HP accused Hurd of sexual harassment. An
investigation by HP’s board found no harassment, but revealed that Hurd lied about
person relationship with the woman and falsified expense reports to cover it up. Hurd
resigned, causing the price of HP stock to drop. A group of shareholders sues HP
claiming that Hurd’s unethical behavior while promoting HP’s commitment to ethics
constituted fraud.
1. Using the Discussion step of the IDDR approach, consider whether Hurd’s
conduct constituted an ethical violation against HP and its shareholders.
2. Using the Review step of the IDDR approach, evaluate HP’s decision to monitor
its directors’ phones.
Answer:
Inquiry, Discussion, Decision, and Review (IDDR) Approach - The IDDR approach
stands for Inquiry, Discussion, Decision, and Review.
Inquiry is the initial stage in the approach. The purpose of inquiry is to look into the
problem, the true stakeholders, and the ethical implications. Hurd was accused of
sexual harassment in this case, and he was the subject of an investigation based on
an independent contractor's accusation. Hurd is in a relationship with a woman, and
he fabricated the entire story by manipulating facts. After the inquiry proved that
the claims were true, Mr. Hurd resigned from his position as CEO, causing the share
price to plummet significantly.
The second approach is Discussion, which entails analyzing specific steps to address
the situation. The different aspects, such as the strengths and weaknesses of
activities, which have cumulative effects on stakeholders. Mr. Hurd's incident has
harmed the company's brand and image in this case.
Decision is the third approach. A wise choice will improve a company's image and
reputation. The decision to allow a fair examination at a later date is critical for the
corporation. There may be a severe drop in share price, but the corporation will
emerge from this problem in the long run.
The final approach8is to conduct a review. Review is the process of determining the
success or failure of a course of action that was proposed at the Inquiry stage.
Some shareholders sued HP for breaking the company's code of conduct and ethics.
