On the money

You would not want to be in the space where the world of reputational risk
collides with public concern about privacy and individual rights, but that is
where the company has found itself thanks to a decision by chairman Patricia
Dunn to stamp out boardroom leaks.

She hired private detectives who then appear to have behaved illegally in the
techniques they used to gain access to the personal phone records of suspected
directors and journalists.

When the news broke, we had the unedifying spectacle of a board at war with
itself. Normally it is a rogue trader or a rogue employee whose behaviour drags
the corporate name through the mud.

This time it could almost be described as rogue behaviour by the board. Not
surprising then that the saga made the pages of every serious business paper
around the world.

What is fascinating is that for all the yapping of the dogs the caravan moved
serenely on ­ the Hewlett Packard share price which had been at a three-year
high before the eruption, continued to test new high ground throughout.

The share price said that the damage to the company’s reputation did not
matter as long as it continued to do good business.

It raises the question of whether boards worry too much about reputation and
its associated risks. It has become a cliche to say that reputation is the major
risk to today’s global corporation and this fear has fuelled a mighty expansion
in spending on public relations to put a suitable gloss on corporate behaviour.
Is it money which needed to be spent? The Hewlett Packard experience would
suggest not.

Anthony Hilton is finance editor of the Evening Standard

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