Friday, September 25, 2015

A Question of Qualifications: A Closer Look at Carly Fiorina

by Nomad

When it comes to GOP candidates, like Donald Trump and Ben Carson, isn't it fair to ask: what kind of minimum qualifications necessary to be the Republican nominee in 2016? 

In the case of Carly Fiorina, her only qualification is her tenure as CEO of Hewlett-Packard. That's actually a liability.

When Carly Fiorina announced her decision to be a Republican candidate for 2016, many insiders questioned her thin qualifications to become president of the United States. 
For the better-informed voter or former HP employees, it was perhaps startling to hear point to her corporate business history as evidence.
It was exactly that subject - her tenure as CEO of Hewlett-Packard (HP) from 1999 to 2005 that her Democratic opponent, Barbara Boxer, used against her in the 2010 California Senate race. It proved to be more than enough to make voters think twice about Fiorina.

Putting aside the particular details of the Fiorina business history, we need to be asking: 
Is running a corporation really the same as being president?     

Certainly any successful venture is something a candidate could legitimately point out. Indeed, management skills required overlap to some degree. 
However,  there are some crucial differences too. 

Exponentially Harder

First of all, as hard as it might be to run a corporation, running the most powerful nation in the world is exponentially harder. The present political system is many times more dysfunctional than HP ever was when Fiorina took the helm.

The president - no matter how clever- cannot be expected to be omniscient and requires teams of advisors and 15 Cabinet appointees.  Some of these advisors may be substandard. Some may be self-serving or many may maintain opposing agendas. Your advisors may not get along or swayed by religious or ideological extremism.
They may not even be honest. 

In addition, the president receives input from a variety of  quasi-governmental agencies (those supported but not directly managed by the government) like the Environmental Protection Agency and the Federal Reserve Bank System. So naturally there will be conflicts which must be resolved. 

That's where the temperament and judgment of the president come in. The tenure as a CEO could be a proper qualification if- and only if- the history offers a record of wise judgement, some degree of ethics and sense of inclusiveness or fairness and at least a hint of morality.
A candidate that insults others loses his/her cool, fumbles, all provide clues to what might be his failings as a leader of the nation. 

The Stakes

That's important because of the stakes involved are so much greater. The misjudgments of a CEO generally cause a loss of profits and eventually, the downfall of the company.
Misjudgments of a president can, as the Bush administration amply demonstrated, lead to an unnecessary and expensive war and the thousands of deaths of innocents. It can lead to economic collapse, as the Bush administration also demonstrated, and the destitution of millions of citizens. 

A CEO may feel hemmed in by erratic stockholder's demands and the petulance of the board of directors, but compared to Congress, that's nothing. 
For this reason, a president must attempt to have a good working relationship with people who may violently disagree with his/her agenda. In other words, a president cannot- like Mr. Trump- shout "You're FIRED!" to Congress and slam the door.

The head of a corporation may issue a decree and watch as the underlings scramble but that is certainly not how government works. Quite the opposite is true. 
Say what you want about Lyndon Johnson and his Vietnam debacle, but no president knew more about the finer points of realizing his agenda. The art of negotiation, compromise and applying pressure under Johnson allowed the president to pass  his Great Society legislation which included the Civil Rights Act, Voting Rights Act, OmnibusHousing Act, Air and Water Quality Acts.

On this scale, how did Fiorina rate at the ability to work as a leader? The story of her final days at HP provides us with a pretty definitive answer.

People Skills and Trust

Even a CEO has to show some people skills, if only to the board of directors and the managers. However, Fiorina's confrontational attitude apparently won her few friends and, some say, eventually became one critical factor in her ouster.

In the months leading up to that, the board sought ways to reign in the CEO by limiting her power, presumably in an attempt at damage control. As one source reports that she was told "point-blank"at a meeting that she would have to change her style. (During this time, she was still telling reporters that her relationship with the board was "excellent.")
"The board told her in no uncertain terms that she needed to open up the office of chief executive and share operational responsibilities," said Rob Enderle, principal analyst with the Enderle Group, a research firm in San Jose and a longtime Hewlett observer. "She adamantly refused and drew a line in the sand."
This led to the directors scouting for her replacement. Ms. Fiorina was a persona non-grata at those meetings and come Monday, much to her astonishment, she was asked to step down. She had calculated, say, insiders, that she was too important to be let go, a fatal misjudgment for any manager.

In the end, the board agreed to a shamefully top-dollar severance package just to see the last of her. A $21 million kiss-off.  According to Fortune magazine,  it was much much more than that. Fiorina collected over $100 million in compensation during her short tenure at HP

It was their own fault too. Though there was much fanfare at the time, much glorifying the fact that HP had a female at the helm, Fiorina, in fact, had no CEO experience and no interviews with the full board were allowed before she stepped into her position. 
In other words, the "Palin vetting Syndrome."

In an essay, Jeffrey Sonnenfeld, a senior associate dean for leadership studies at the Yale School of Management,
“Experience can be a badge of honor or a badge of shame."
Sonnenfeld compared Fiorina to the captain of the ill-fated Costa Concordia.
“He will never be trusted with a public leadership role. Captains of industry must also be accountable.”
That didn't stop the Wall Street Journal (Rupert Murdoch-owned) from glossing over all that history, by declaring her as
"an alluring, controversial new breed of chief executive officers who combine grand visions with charismatic but self-centered and demanding styles."
In the modern Republican party, no amount of failure and disgrace is sufficient to disqualify one from running for high office. 
It's all part of "name-recognition."
Of course, the same can be said for Jeffery Dahmer and John Wilkes Booth.

Respecting the Public

There are other problems with equating running a corporation with being president. As CEO, Fiorina felt that the opinions of the company employees counted for next to nothing. Cajole them into making sacrifices and make some effort to keep them happy if you can. 
However, it is by no means a crucial factor. Unions no longer have the input they once did in CEO decision making. When it comes to employees, today's CEO can get away with a lot more- at least, in the short term- than a couple of generations ago.

During Fiorina's tenure, a total of 30,000 HP employees in the US were laid off.  She oversaw "the biggest reduction in the company's 64-year history."
These jobs were not actually lost, however. By the time she left- meaning was forced to resign, the company reportedly had more employees worldwide than before she took over.
The conclusion is that, after laying off, after asking for pay cuts and vacation pay cuts and then, after all that, she shifted the workforce outside of the US. That's not a policy that any president (except a president like George Bush, perhaps) would endorse.

Why not? Because unlike a CEO, a US president is - at least, in theory- an employee of the people. All of the voters -every last one of them- share the roles of boss, and corporate shareholders and finally employees. If you lie to them, treat them disrespectfully, demand them to make sacrifices you as the leader would not, then you cannot expect anybody to follow. 

To say that HP employees couldn't stand Fiorina is a colossal understatement. Her radical shift in company egalitarian culture led to a backlash among the employees. Wikipedia points out:
Employee satisfaction surveys at HP—previously among the highest in America—revealed "widespread unhappiness" and distrust, and Fiorina was sometimes booed at company meetings and attacked on HP's electronic bulletin board.
As a CEO, employee opinion can be dealt with or it can be ignored. Not so with the presidency. Ask the ghost of Richard "Sock it to me!" Nixon. Widespread distrust eventually led to his resignation.
It wasn't so much what Nixon did as what he was capable of doing. He simply lost the trust of the American public.

It was more than just distrust. Had she actually been half as successful as she claims today, she certainly would not have been forced to resign. In the end, it was about money and performance. As one analyst noted:
Sure, she doubled revenues—through a massive, ill-conceived, controversial acquisition of Compaq Computer in 2002 [spending $24.7B worth of company stock]—but Fiorina did nothing to increase profits over her five-year term, with the S&P 500 showing net income across enterprises concomitantly up 70%. Furthermore, shareholder wealth at HP was sliced 52% under her reign against the S&P, which was down only 15% in that bearish period.
One article noted at the time that leading publications titled her "one of the worst technology CEOs of all time." 
 According to CNN, as news of her departure from the company hit the headlines, HP stock  added almost three billion dollars to the value of HP in a single day. That's not what anybody would call a glowing recommendation of her leadership skills.

The New York Times didn't hesitate to call out Fiorina's mismanagement, calling her resignation "ignominious end to a six-year run."   
Today, Candidate Fiorina is running for high office, based on- and only on- her rather dubious history as a CEO. You would think it would something the candidate would spend a fortune trying to hide.

And there's something even more peculiar about Fiorina's run.
Oddly enough, Fiorina herself noted in an interview that running a company was simply not an accurate qualification for being president. 

Fiorina and the Palin Selection

Despite her fabulous failure as CEO of HP, Fiorina found a home in the Republican Party. Only a year after her resignation, she began working for Senator McCain's campaign. She excelled in fundraising for the party, which always grabs attention with the GOP leadership. 
Her name was even mentioned back then as a possible candidate in her own right. It was too soon after her HP escapade and questions about that severance package was too fresh in many people's minds. Time has a way of smoothing painful memories and sharp corners.

On September 3, 2008, formally stepped into the limelight some three years after that HP fiasco when she addressed the Republican National Convention. That very day, she defended the selection of Sarah Palin, and called any criticism of McCain's selection "sexist attacks."

On that day too, Robert D. Novak in a Washington Post column sang Palin's praises. McCain and the Republican party need not worry about their criticism of the selection  The choice  "satisfied the people he needed to please."
Novak went on to describe how the conservatives were Republican conservatives  at the party's national convention were "ecstatic" over the choice.
That is not only because Palin appears to be an outstanding candidate but also because McCain in his first test as party leader came through with a unique and responsible decision.
The party faithful had feared the worst, in view of McCain's long record as a maverick who enjoyed violating Republican dogma.
Sarah Palin, Novak said, was "an ideal running mate."
Fiorina played no small role in affirming McCain's selection of Palin, which as it turned out, was a catastrophic blunder for his campaign. 
The reason for that blunder was obvious to everybody on the outside. Palin did not have the qualifications, the political skills nor the fundamental intelligence to hold high office. But especially she did not have the sense of empathy we expect from our leaders.
In the end, Ms.Palin's inability to reign in her personal ambitions proved to be the unraveling of the McCain campaign.
This begs the question whether Fiorina isn't more of the same?

Since the 2008 campaign, conservatives privately (and in Cheney's case, not so privately) have rued the day, Palin ever stepped onto the national political stage. She has proved to be a thorn in the GOP side and unable to take the hint that nobody wants to hear her opinions.
Are we seeing a new Palin in the making? It shouldn't surprise anybody: Republican leadership cannot learn from past mistakes.

A Different Set of Things

Now here's the most remarkable twist of all.

Fiorina was asked in a radio interview in September 2008 whether she felt that Palin had the experience to run a major company like Hewlett-Packard.
Fiorina hesitated and then said "No. I don't."
But then she added,
"But that's not what she's running for. Running a corporation is a different set of things."
It would have been miserable enough had she stopped there but she didn't. McCain, she claimed, was also not qualified to run a major corporation. In fact, she said, none of the candidates in either of the parties had the necessary experience to run a large corporation.

Her remarks did not sit well with the Republican establishment. It was Fiorina's unraveling. The worst interpretation of the statement was that Ms. Fiorina was implying that she was better qualified to be president than McCain and Palin.
Clearly she wasn't saying that. She was telling the truth about the differences between CEOs and elected leaders. (Something she apparently dismisses today.)

In any case, the private reactions to her remark were immediate. All of her previously-planned television appearances were abruptly canceled. She was returned to the behind the scenes fund-raising and away from microphones.
The rising star of the Republican Party suddenly slipped below the horizon.

Today, Fiorina thinks very differently about what it takes to be president. Her rocky tenure at HP- something that she hopes few people will examine too closely- is her only qualification to run for president. 

And yet that dismal history still glistens like fool's gold when compared to a person like Ben Carson.

Update: In 2009, Michael Hiltzik of the the Los Angeles Times also dissected Fiorina's HP history and comes to pretty much the same conclusions as Sonnenfeld.
Here's an excerpt:
Fiorina was the antithesis of HP's self-effacing founders. She was caught up in her own mythology and enveloped herself in clouds of McKinsey & Co. consultants. Her slashing of 10,000 employees during the 2000 high-tech crash dimmed her appeal to the rank and file, and when her quarterly financial projections proved consistently over-optimistic, she lost credibility on Wall Street too. 
Her 2002 acquisition of the stagnating computer maker Compaq represented a doubling down of HP's bet on the low-margin PC market. It also provoked a ferocious battle with some of the founders' children, a mortifying and very un-HP development. Nor did the deal do much to fire up HP. Its shares kept lagging the Nasdaq index and barely kept pace with the S&P 500 index. Amid widening disaffection with her management, the board sacked her in February 2005. The bottom line: HP shares declined about 60% during her tenure. 
For the full article click here.