The Ethical Problem of Pretexting: The Hewlett Packard Case Study

The problem to be investigated is ethical issues that were raised by the Hewlett-Packard (HP) Board of Directors members' usage of pretexting during an investigation of information leaks (Jennings, 2010). Pretexting is a deceptive practice by which one individual pretends to be someone else in order to gain anonymous access to information or an individual (Jennings, 2010). In the HP case, pretexting was used by a private investigator in order to gain access to phone records (Jennings, 2010). While legal concerns about the use of pretexting were raised by multiple board members, no ethical concerns seemed to be raised when in fact they should have been.

The Drivers

Hewlett-Packard was facing multiple problems during the first six years of the 21^st century. One of these problems was that at least one board member was leaking confidential information to the press (Jennings, 2010). This information was not only putting the company's reputation at risk, but it was also putting the company's financial stability at risk by creating lower trade values for their stock (Jennings, 2010). In order to determine who was leaking information to the press the HP Board of Directors hired a private investigator in order to ferret out the leak.

The drivers that lead HP to even consider using pretexting in order to determine who was leaking information to the press included egocentrism, pressure to produce results and gray-area surfing (Jennings, 2006). Even a brief examination of the HP Board of Directors and their actions leads most people to the realization that egos played a large role in the unethical behaviors that the board members engaged in. This egocentrism led the board members to not only engage in name calling, confidential information leakage and other immature behaviors, but it also led them to engage in risky behaviors that approached illegal behaviors (Jennings, 2006; Jennings, 2010). The need for the board to be purified from those that would dare to put the reputation of the company and the individual board members at risk was used as a justification for making the risky decisions that were made.

Legal vs. Ethical Conduct

The issue of the legality of the use of pretexting by HP was eventually ruled to be a non-issue, meaning that it was not illegal (Jennings, 2010); however, this does not mean that the use of pretexting by HP was a good business decision. This activity did have negative repercussions for the many members of the board, e.g. many resigned and had their professional reputations tarnished (Jennings, 2010). The ethical dilemma that was produced by the staunch focus of the board members on the debate over the legality of the use of pretexting was the issue of the ethicality of pretexting. This is something that the board members neglected to think about, as their primary concern was whether the use of pretexting by the private investigation service would have negative consequences for board members involved (Jennings, 2010). As a result of their ethical oversight in this situation, the board members diminished the good will equity that it had spent years developing (Velasquez, 2009). This means that their unethical behavior hurt the company and the careers of the board members despite the fact that no laws were broken.

Missed Issues

A number of issues were missed by HP board members when they were analyzing the pretexting scenario. The first issue that was missed was how the use of deceptive practices, legal or illegal, would be perceived by HP employees, stakeholders and shareholders. This is something that never crossed the minds of board members (Jennings, 2010). As a result they failed to estimate how unethical behavior would impact shareholder and stakeholder behaviors. This oversight produced a response that lowered share values and that lowered the stakeholder support of the board. Another missed issue was the responsibility that the board members had to the company's shareholders and stakeholders. The board members failed to evaluate the situation based upon the best interests of the shareholders and stakeholders, and instead only focused on what was in the best interest of the board members (Jennings, 2010). Both of these missed issues led to the downfall of many of the HP board members.

HP Board Strengths and Weaknesses

The HP board had a number of strengths and weaknesses that contributed to the ups and downs of the financial performance of Hewlett-Packard. The board members strengths included boldness, willingness to take a risk and strong leadership skills (Stanwick & Stanwick, 2011). Their weaknesses, however, included egocentrism, short-sightedness, selfishness and unprofessionalism (Jennings, 2010). While the board members strengths were reinforced by the company culture, so too were their weaknesses (Stanwick & Stanwick, 2011). This explains why the company was struggling so much during the lead up to the pretexting ethical dilemma.

Conclusion

Hewlett Packard had organizational problems before the pretexting incident. This can be proven by the fluctuations in the company's net earnings during the ten year period that spanned from 1996 to 2005, as well as by the leadership problems and conflicts that also occurred in this time period (Jennings, 2011). These problems contributed to the risky and unethical behaviors that the board members engaged in during the pretexting incident. The result of their lack of ethical consideration during this incident produced stakeholder backlash that impacted both the company's performance and the careers of the board members. This demonstrates the professional importance of acting ethically, even when legal consequences are not impacting the decision making process.

References

Barnea, A. & Rubin, A. (2010, Nov.) Corporate social responsibility and a conflict behavior standards. Journal of Business Ethics, 97(1), 71+. Retrieved March 12, 2011, from http://proquest.umi.com.ezproxy2.apus.edu/pqdweb?index=1&did=2189201821&SrchMode=3&sid=1&Fmt=6&VInst=PROD&VType=PQD&RQT=309&VName=PQD&TS=1299968449&clientId=62546&aid=1

Jennings, M.M. (2006, Nov./Dec.) Why do smart business people do ethically dumb things? Corporate Finance Review, 11(3), 38+. Retrieved March 12, 2011, from http://proquest.umi.com.ezproxy2.apus.edu/pqdweb?index=0&did=1183250961&SrchMode=2&sid=1&Fmt=3&VInst=PROD&VType=PQD&RQT=309&VName=PQD&TS=1299964960&clientId=62546

Jennings, M.M. (2009). Business ethics case studies and selected readings, 6^th ed. Mason, OH: South-Western Cengage Learning.

Stanwick, P.A. & Stanwick, S.D. (2011, March). The role of corporate culture and the unethical activities at Hewlett Packard. Journal of American Academy of Business, 16(2), 43+. Retrieved March 12, 2011, from http://proquest.umi.com.ezproxy2.apus.edu/pqdweb?index=0&did=2210001051&SrchMode=2&sid=3&Fmt=3&VInst=PROD&VType=PQD&RQT=309&VName=PQD&TS=1299968217&clientId=62546

Velasquez, M. (2007, Nov.) Development, justice, and technology transfer in China: the case of HP and Legend. Journal of Business Ethics, 89, 157+. Retrieved March 12, 2011, from http://proquest.umi.com.ezproxy2.apus.edu/pqdweb?index=0&did=1960309901&SrchMode=1&sid=3&Fmt=6&VInst=PROD&VType=PQD&RQT=309&VName=PQD&TS=1299965766&clientId=62546