John McCain’s New Economic Advisor Is an 'Innovator' at Hurting Workers

John McCain has been taking quite a bit of flak on the economy of late. McCain, critics charge, doesn't understand how the real economy operates. Carly Fiorina, the former CEO of computer giant Hewlett-Packard and the first woman ever to run one of the nation's 20 biggest publicly traded companies, is having none of that. Fiorina is now serving as McCain's lead public voice on matters economic, and she couldn't be more tickled with her new role.

McCain, Fiorina feels confident, gets it on the economy. Says the superstar CEO: "He understands innovation."

We may have a bit of irony here. As CEO at Hewlett-Packard, Fiorina didn't exactly display much of an innovative streak. In fact, she followed standard, raze-and-reap CEO operating procedure chapter and verse. She merged. She purged. She walked off with a fortune.

Actually, Fiorina came into Hewlett-Packard with a fortune already assured. She began her CEO stint at HP with a four-year contract worth $90 million. Less than six years later, in 2005, that CEO stint would end with a kick out the door and $42.5 million in severance.

And, in between, what did Hewlett-Packard get for all those millions? A textbook display of how CEOs routinely operate in contemporary Corporate America. Sadly, that display came at a company with a corporate culture that once stood tall as a counterpoint to corporate business as usual.

That culture, nurtured over the years by company co-founders Bill Hewlett and Dave Packard, went by the name of the "HP way" and gave Hewlett-Packard something close to mythic status among Silicon Valley's technorati. Alone among the nation's computer giants, HP stood for something more than getting rich quick.

The company, for instance, had avoided layoffs in the hard times of the late 1970s by cutting pay 10 percent across the board, executives included. The company's CEO, even into the 1980s, worked out of a cubicle and not an opulent corner office. HP top executives did make good money, but nowhere near the magisterial sums pulled in by executives elsewhere.

This "egalitarian" Hewlett-Packard, to be sure, had faded considerably by the late 1990s. But the final insult to the "HP Way" would start with Fiorina's 1999 hiring. The company would welcome its new CEO superstar with $66 million worth of shares, the biggest no-strings stock grant up to then in U.S. corporate history, and assorted other pay goodies worth another $24 million.

A small price to pay, the HP board figured, for a CEO who could rev up Hewlett-Packard's fortunes -- and Fiorina would quickly reveal a plan to do that revving. To jump start the company, she would ask HP's 93,000 employees worldwide to accept voluntary cutbacks.

Employees would be able to pick their poison, either a 10 percent pay cut, a 5 percent pay cut and the loss of four vacation days, or the loss of eight vacation days. Workers could also choose none of the above.

Remarkably, 86 percent of HP's workforce picked one of the three cutback options. One company spokesperson credited this willingness to sacrifice to the legacy of the HP Way. The voluntary cutbacks would save HP $130 million.

Less than a month after HP employees made this noble collective sacrifice, Fiorina rewarded them for it. Management, in a surprise announcement, revealed plans to lay off 6,000 workers.

But the voluntary pay cuts and the massive layoffs would produce no upsurge in HP's fortunes. Fiorina proceeded to the predictable. She brokered a $19 billion merger with rival Compaq Computer, then moved to make her new enterprise profitable -- by eliminating over 15,000 of the merged company's 150,000 jobs.

Fiorina and her Compaq CEO counterpart, Michael Capellas, had made sure, of course, that their newly merged company would have plenty of room for them, Fiorina as chief executive, Capellas as president. They would work under two-year contracts worth a combined $117.4 million.

Capellas would go on to leave the new Hewlett-Packard a half year after the 2002 merger, with $16 million in severance. That exit left Fiorina in full command, but she was running out of options. Cutting jobs and benefits hadn't jumpstarted HP. Nor had swinging a huge merger deal. Nor had reshuffling HP's internal corporate bureaucracy, another well-worn trick in the standard contemporary U.S. CEO playbook.

By early 2005, a majority of the members on HP's board had had enough. They dumped Fiorina. The CEO they brought on to replace her, Mark Hurd, would win cheers from employees in his very first speech as HP's top exec.

"Building a great company isn't all about a CEO," Hurd inspiringly proclaimed to a workforce worn down by years of superstar grandstanding. "It's a team sport."

Alas, Hurd would soon display not much more team spirit than Fiorina. Shortly after his debut speech, HP workers learned that Hurd had been awarded a welcome package worth over $20 million. Four months later, he ended HP's traditional pension, for younger employees, and announced plans to cut another 15,000 HP jobs.

Not to be outdone by his predecessor, Hurd also reshuffled the HP bureaucracy, essentially undoing the reshuffling that Fiorina had wrought.

In Corporate America, that's called innovation.