Oracle Hires Mark Hurd. Will Ellison Regret This?

Last Updated Sep 7, 2010 1:32 PM EDT

It didn't take long for Mark Hurd, ousted CEO of Hewlett-Packard (HPQ), to land on his feet as co-president of Oracle (ORCL). Given his previous statements about HP's dismissal of his friend Hurd, Oracle CEO Larry Ellison is undoubtedly certain that snapping up Hurd makes perfect sense -- and there are a few reasons you'd have to agree with. But on the balance, it's a foolish move.

There are some clear reasons beyond personal loyalty that Ellison would have hired Hurd:

  • When Oracle acquired Sun Microsystems, it gained a hardware business that was out of its expertise. Hurd understands that industry and has experience running a much larger computer company.
  • Despite his questionable performance over the last few years, early on, Hurd demonstrated that he understands a turnaround situation, as he's the guy credited with bringing HP back to life.
  • It's easy to forget that Hurd was head of data warehousing company Teradata (TDC) before HP, and so he understands databases, which will always be Oracle's major focus, at least through the medium-term.
  • On the surface, Hurd would be a good person to have in house as part of a succession plan. He's already run a company larger than Oracle with a mix of different businesses, so the transition would be relatively easy. Plus, Wall Street is relatively well-disposed toward him.
All these reasons would seem a sound basis for hiring Hurd. However, they are outweighed by strong negatives that make the move a risk at best and, at worst, an action that will create a lot of regret on all sides.

The Sun hardware division is in a completely different situation from HP. Hurd was able to rescue the latter because it was mired in waste and poor operational management under previous CEO Carly Fiorina, but it was strategically sound. Sun had been losing customers and strategic direction for years. What the hardware division needs is someone who can reconstitute its product lines and make it relevant. This means the equivalent of a corporate computing Steve Jobs, and Hurd hasn't come close to that.

As strong an executive as many think Hurd to be, he also showed himself to be greedy, unfeeling, and divisive. In bad times, he cut employee pay but raised compensation for top executives, including himself. (Yes, technically the board would set his compensation, but, already getting millions, he was capable of saying that it was too much in the face of what most everyone else had to give up.)

In addition, under Hurd, employee morale and satisfaction sunk to an all-time low, with two-thirds of employees ready to jump ship if they could have even found an equivalent position elsewhere. Another source of information is Glassdoor, which has opt-in ratings for CEOs and no way to absolutely verify that people providing them actually work at a company. Not statistically sound, but it will do in a pinch. Based on 563 ratings, 78 percent of people approved of Oracle's Ellison. Although Glassdoor no longer lists Hurd as CEO, a search on the Internet Archive Wayback Machine turned up cached copies from 2008 and a 46 percent approval rating, based on 287 reviews. Hurd has shown the potential to materially disrupt culture and employee goodwill, which could prove a competitive disaster for Oracle.

In terms of performance, HP's last quarter under Hurd showed a company that advanced on necessary corporate upgrades and not on new directions in services and innovation to avoid the dangers that hardware commoditization and cloud computing present a server and PC company. Hurd is more someone who can lead Oracle into the past than into the future.

Even succession becomes a questionable reason, though more on Oracle's side than Hurd's. Ellison and the board should have been grooming internal candidates all along. You'd think that's why the company already had co-presidents Safra Catz and Chuck Phillips. Only now, Phillips is gone:

"Charles has evolved our field culture toward a more customer-centric organization and improved our top line consistency through a period of tremendous change and growth," said Oracle CEO Larry Ellison. "When Charles approached me last December and expressed his desire to transition out of the company, I asked him to stay on through the Sun integration which has gone well. We will miss his talent and leadership, but I respect his decision."
So good of him to stay on this long. Right. Sounds like a corporate execution to make room for a pal. Want to bet whether Catz -- or anyone else that Ellison and the board should have been preparing as part of a prudent line of succession -- has already dusted off the resume and sent it off to make the rounds? You don't bump off one person to bring in another and not tell people that they're unwanted. So what do they do about the lost talent? Is Hurd supposed to do all their jobs? And that doesn't even get to the issue of ego clash that will inevitably happen between Ellison and Hurd. Nor does it address the signal sent when the company has a woman and an Afro-American man as co-presidents and then cans the latter to make room for an old white male crony. Of course, it wouldn't have been any better firing the woman.

Oracle's hiring of Hurd will become one of those classic mistakes, in which a company does what seems to be smart only to find that it's waist-deep in a mud hole.

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Janus Image: Flickr user quinn.anya, CC 2.0. Editing: Erik Sherman.
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    Erik Sherman is a widely published writer and editor who also does select ghosting and corporate work. The views expressed in this column belong to Sherman and do not represent the views of CBS Interactive. Follow him on Twitter at @ErikSherman or on Facebook.