Monday, November 23, 2015

Oracle: Questionable Personnel Choice (2010)

Oracle logo

Oracle recently promoted Mark Hurd, former CEO of HP, as their new CEO. This decision raises the issue of is it a fair practice towards HP for their competitor to hire one of their executives who has important information regarding HP's operations. Additionally, Hurd was forced to resign from HP for violating their code of conduct. In 2007 while working at HP, Mark Hurd was accused of sexually harassing a coworker over a two year period. He had invited her to various events in an effort to impress her and on multiple occasions would invite her to his hotel room where he would make advances towards her. She made it clear to Hurd that she did not approve of his advances but they continued until 2009. While this was going on, Hurd was filing inaccurate company expense reports to pay for his personal relationship with the contractor. While he was not found guilty of sexual harassment, he was forced to resign from HP for violating the company's code of conduct. When Hurd resigned from HP he was forced to sign a confidentiality agreement that prevents him disclosing any insider information he has about HP; which is the same type of agreement Oracle executives are required to sign. When he was forced to resign from HP and was being criticized for his actions, Oracle's CEO publicly defended him and praised his skills as a businessman. Oracle proceeded to hire Hurd as a member of the board of directors. In 2013 HP sued over violations of the confidentiality agreement. The case was settled shortly after and as part of the settlement they agreed to allow Hurd to work for Oracle as long as he would honor his confidentiality agreement. In 2014 when Ellison decided to step down as CEO, he promoted Hurd to the position. This is something that could prove difficult for Mark Hurd since he has to do what is best to maximize profits for Oracle while protecting insider information about HP. Oracle seems to have made a risky, and possibly unethical, decision by placing an unethical leader who has insider secrets of a competitor in charge of their company.

Mark Hurd, CEO of Oracle

The main stakeholders in this situation are Oracle, its employees and its shareholders. They have the most to lose if their CEO was to act unethically like he did while CEO of HP. If he did something that caused the stock prices to fall the company and its shareholders could potentially lose a lot of money. Any damages to the company could affect the employees and they could be in danger of losing their job. They want to ensure that the company acts ethically so that their jobs will be secure. HP also has a stake in this because Hurd has insider information about them that could be used for Oracle to have an unfair advantage over HP. HP wants to make sure that its competitors operate in a way that promotes fair competition and insider information could result in an unfair advantage to the company which could cost them a significant amount of money. Oracle, its employees, its shareholders, and HP all are stakeholders who have been affected.

The individualist theory considers an action ethical if it maximizes profit for a company while staying within the constraints of the law. Oracle is maximizing profits by hiring Hurd because he is an expert in his field with a proven track record of growing companies. Choosing a CEO who will maximize profits for a company is perfectly aligned with the goal of individualism. The company also settled its lawsuit with HP regarding Hurd and was now legally able to hire Hurd as long as he did not release any trade secrets of HP. Oracle is acting ethically according to the individualistic theory because it is seeking to maximize profits and is doing so within constraints of the law.

The utilitarian approach focus on maximizing the overall happiness for all stakeholders. To examine this from a utilitarian view, one must first look at the stakeholders; which are Oracle, its employees, its shareholders, and HP. Choosing Hurd as the new CEO will maximize happiness for Oracle because it will help them generate more profit and expand their business. Similarly, the shareholders will be happy because the more money the company earns, the more their shares are worth and the more they can earn in dividends. The employees will be both happy and unhappy because as he grows the company they could be presented with new opportunities, but if he acts unethically and hurts the company then their jobs could be in jeopardy. HP would be unhappy by this act because the leader of one of their biggest rivals knows their trade secrets. They fear that Hurd’s knowledge of HP could give Oracle an unfair advantage over them. Looking at the stakeholders affected, it can be seen that more people will be made happy than sad by this action, so it would be ethical according to the utilitarian theory. Oracle is seeking to maximize overall happiness by promoting Hurd to CEO.

Oracle headquarters in Redwood City, CA

To examine this case through Kantianism, one would use the formula of humanity which essentially says that you cannot use someone simply as a means to an end. To apply the formula of humanity to this situation one would determine if Oracle is using Hurd as a mere means, or also as an end. When Ellison hired Hurd, he talked about how he was not concerned with his past and simply admired him as a businessman. This shows that the company is not concerned with who Hurd is as a person, but instead they only care about how he can help their company. Oracle cares about Hurd’s ability to make them more money and not about his previous misconduct or private life. It appears that Oracle is using Hurd as a means to earn them more money and not as an end. Another way to examine this case through Kantianism is to see if it is a rational decision and there are no contradictions. Looking at Oracle’s policies for who they allow their employees to work for after leaving the company, a contradiction becomes clear. Oracle forces their employees to agree to not work for any of the company’s competitors; an idea they contradicted when they hired Hurd. They would not allow their employees to work for competitors but they appeared to have no reservations about hiring employees from competitors. This was not a rational action by Oracle and it violated the formula of humanity, so it would be considered unethical under Kantianism.

Virtue Theory
There are four main virtues of character that must be present for a person to be ethical. They are honesty in all business dealings, courage or the willingness to stand up for what is right, temperance which means having fair and appropriate expectations of others, and justice or fair practices. Oracle is not acting ethically by hiring Hurd because they lack justice and courage. They are not standing up for what is right because they are defending his misconduct at his former job and are looking past that because of his skills in business. Oracle is not standing up for fair competition because they now have a leader who knows the trade secrets of a competitor. It will be very hard, if not impossible, for Hurd to fulfill his duties as CEO of Oracle while at the same time honoring his confidentiality agreement with HP. Oracle also lacks justice because hiring a competitor’s leader is not a fair practice. As previously stated, Hurd is supposed to compete with companies such as HP but not use any of the insider information he has. Oracle has put Hurd in a position where it will be hard for him to do what is best for them while honoring his agreement with HP. This is an unfair practice towards HP because Hurd’s knowledge of HP could give Oracle an unfair advantage. Oracle’s action of hiring an executive from a competitor is not ethical because it lacks courage and justice.

Justified Ethics Evaluation
In my opinion, it was not right, or wise, for Oracle to hire an executive from one of their major competitors. Executives have valuable information about how a company operates, which could be used to give another company an unfair advantage. Although Hurd has agreed to honor his confidentiality agreement with HP, I believe it will be difficult, if not impossible, for Hurd to not use that information when his goal at Oracle is to maximize growth and profits. Additionally, Oracle seems to be violating their own beliefs by hiring a competitor’s CEO. They require all of their executives to sign an agreement that they will not work for a competitor if they leave the company. Oracle is against their employees working for competitors but saw nothing wrong with hiring employees of competitors. This is a major contradiction in Oracle’s beliefs of where an employee can work after leaving the company. Another issue with promoting Hurd to CEO is although he is know as an expert in his field and at cutting costs, his conduct is not always ethical. He was accused of sexually harassing an employee and found guilty of inappropriately using company money to pay for his personal relationship. While Hurd did help grow HP, his actions ultimately had a negative impact on the company when the situation was discovered and stock prices fell drastically.

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