Governance, Risk Management, and Compliance: It Can't Happen to Us—Avoiding Corporate Disaster While Driving Success

Setting the Tone at the Top: Hewlett-Packard

We sometimes read in governance literature that responsibility for the tone at the top of an organization rests with the board of directors. Well, ultimately everything in an organization can be said to rest with the board, but that's neither realistic nor accurate. The board has the authority to delegate the everyday management of the company to the CEO, and invariably that's the case. So, it's the CEO, supported by his or her senior management team and cascading through the management ranks, that sets the tone of the company through his or her words and actions.

With that said, there's no doubt that a board of directors itself must provide effective oversight to the culture, including tone at the top, and to the ethical behavior of the company and its people. The board must receive relevant information, question and challenge it as necessary, and ultimately decide whether modification might be needed. More about that in Chapter 15.

Also relevant here is the fact that a board's own actions can and often do directly affect the culture and tone of an organization. And in some instances, the effect is profound.

A good example of a board's impact on a company's culture and ethical values is what occurred recently at Hewlett-Packard and the actions taken by its board. To refresh memories: Mark Hurd, the hard-charging chief of HP—who through acquisitions, layoffs, and cost cutting raised the company's fortunes—was fired by the board. The ...