Fiorina's Lesson for Female CEOs

For HP's now-sacked chief, here's why gender mattered: Like so many women execs, she never got the necessary operational experience

By Diane Brady and Michelle Conlin

Before picking Carly Fiorina as CEO, the board of Hewlett-Packard (HPQ ) brought in a team of psychologists to determine one thing: Did she have the right personality to transform the company's egalitarian culture? By administering a 340-question test -- which seeks responses to statements like "I don't try to keep up with the Joneses" and "I seldom feel like hitting anyone" -- the corporate shrinks made the call that Fiorina and the icon of Silicon Valley were a good match.

But shortly after she accepted the position, an executive coach gave Fiorina a prescient warning. If she pushed for too much change, too fast, HP's "cultural antibodies" would attack her.

Turns out the coach was right -- but not for the cultural reasons one might have expected. From the day she took the top job at HP five years ago, Fiorina was steadfast in her refusal to discuss her gender as it related to her job. She declared there "was no glass ceiling" -- something that had the female masses of Corporate America murmuring in disbelief. She turned away any and all interview requests for stories related to her membership in a club so tiny -- the one of female CEOs of Top 500 companies -- that you could barely make two golf foursomes out of it.

CHARISMATIC SUPERSTAR.

  That's why the question continues to course through the Fiorina narrative: How much did her gender contribute to her failure? The answer isn't so easy. In one sense, she was replaced for the same reason male CEOs are replaced all the time -- an inability to show results. HP's stock price fell 32% during her tenure. But what doomed Fiorina's reign seems to have especially plagued other top-ranking female executives -- a lack of operating experience.

Gender certainly didn't hurt on the way up. The fact that Fiorina was an Armani-loving blonde garnered staid, old HP unprecedented media attention and helped it sell its turnaround story. Fiorina's style also drew massive critical scrutiny in her nasty proxy battle over HP's merger with Compaq.

Before she alienated workers with the private jet and the posse of security guards, HP workers loved the idea of the charismatic superstar and her bold plans for a shakeup. She took control at the height of the Internet bubble. Who didn't want a rock-star CEO? And who was easier to get on a cover of a magazine? Glamorous Carly or former HP CEO Lew Platt, who drove a Ford Taurus and wore old glasses with thick lenses?

A TOO-GOOD MARKETER.

  No one ever doubted that Fiorina was a master saleswoman. She read the company's "HP Way" five times, nailed solutions to what ailed the outfit, and knew how to put the pieces in place before anyone knew what the pieces were. She was a charming, funny, lightning-quick study.

She had one problem, though. Her background pretty much started and ended with marketing and sales. In fact, she may have been too much of a marketer for her own good, with her silver-tongued sales pitches winning the company more plaudits than it deserved.

Certainly, the evidence strongly suggests that she oversold the benefits of the fractious merger with Compaq, which has been a dud for shareholders. She also spent copious amounts of time glad-handing customers, politicians, and other CEOs when some of that energy may have been better spent on the operations. Fiorina was unavailable to comment for this story despite several efforts to contact her.

WRONG CHOICE?

  For all of the board's due diligence, they missed the obvious warning signs. Fiorina came from a different industry (telecom) and lacked the kind of manufacturing, engineering, finance, or research experience that would have helped her to execute her vision at HP.

Some insiders opine that she probably shouldn't have gotten the job in the first place. In fact, recruiters say it's rare that somebody without much operational experience would get a CEO job of such magnitude at such a complex company -- especially in an industry that was so new to the incoming exec.

Some blame the lack of broad-based operational expertise for Fiorina's missteps in setting unreachable targets for Wall Street, even as she pushed through a radical internal overhaul. During her tenure, the once-venerable computer giant missed expectations in 8 of 21 quarters-- more than twice the number of misses by IBM (IBM ) and Dell (DELL ) combined during a similar period.

MISSING KEY.

  Yet, Fiorina may have been emblematic of the issues facing her gender in one crucial way. She found out the hard way why women are in short supply as CEOs. Sure, some still face outright sexism from the whiskey-and-steak culture of the old boy's club. But the biggest problem may be that most women are never really groomed to run a major corporation -- often rising through the ranks of marketing, human resources, or other staff jobs associated more with female employees than males. The women often don't get broad profit-and-loss experience that exposes them to different functions in the company.

"If you look at what CEOs tell us, the key to rising to the top is being a good manager and getting line experience," says Ilene Lang, president of New York City-based women's research group Catalyst.

The figures bear Lang out. Though women make up half the managerial ranks in Corporate America, only 15.7% were corporate officers in 2002 (the latest year for which data are available), according to Catalyst. Of those, fewer than a third were line officers, or ones with direct operational responsibility. The large majority were in staff jobs. By Diane Brady and Michelle Conlin

CONTRADICTORY TRENDS.

  Yet, operational exposure is especially critical when you're a hotshot being handed a tough turnaround situation, as Fiorina and many other women often are. Add to this the sense that, in one former CEO's words, "as a woman in charge, you often feel utterly alone."

Following the money also tells the story: In a world where scorecards are made of paychecks, a tiny 5.2% of women are among the top-earning corporate officers.

When it comes to promoting women, two seemingly contradictory trends are at work. On the one hand, companies are often reluctant to put women in challenging senior positions for fear that they might fail in full public view. Yet, with so few women in the senior ranks, companies also have a tendency to pluck the hard-charging stars and plop them squarely in the spotlight before they're ready.

EXPERIENCE GAP.

  That's the best explanation of why the average age of female CEOs in the Standard & Poor's ExecuComp database, which tracks more than 1,500 small- to large-cap U.S. companies, is 51.5, vs. 55.4 for men. (The gap was even larger before Fiorina joined the tiny club of women top execs.) Many are sharp, accomplished CEOs with celebrity status. But when running a major corporation, four years of experience can make a big difference.

Consider the track record of Mattel's (MAT ) Jill Barad. Like Fiorina, she was a crackerjack marketer and was credited with boosting the Barbie brand. But she turned out to be a poor team builder and financial naif who overpromised to investors. In her three years as CEO, Mattel went from a well-run, profitable toy giant to chaotic, money-loser. Earnings tumbled. And Barad was finally forced to quit in February, 2000.

Long-time board member William D. Rollnick called her "the best marketing person I've ever met." But she had little grasp of the other functions critical to her job, such as manufacturing, finance, and building a team of effective leaders at the top.

EXECS IN SYNC.

  Fiorina might have studied another, more positive lesson from Avon's Andrea Jung. She's closely teamed with Susan Kropf, Avon's president and chief operating officer, who has extensive operating experience. Jung is the leader in marketing, strategy, and vision. Kropf is the master at execution and operations. The duo are remarkably in sync when it comes to what needs to be done at Avon -- to the point, Jung notes, where "we actually finish each others' sentences."

That said, Jung argues that her 15 months as chief operating officer -- a job the board gave her in 1997 because members felt she wasn't ready for the top job -- were critical in preparing her for the CEO role. "It gave me greater scope as a CEO and a better appreciation of all the parts and linkages of this business to make the right decisions," she says. Promoting the marketing star before testing her in that role was out of the question, adds former CEO James Preston. "She had not had an operating position," he adds. "That's a different set of skills."

For Fiorina, a stronger footing in operations might have helped to raise her performance on the job at HP. Instead, for years, she steadfastly refused to even consider hiring a COO, questioning why her critics wanted her to have one while male CEOs at other big tech companies didn't. It was a convenient defense. Unfortunately it belied the evidence: HP had recurrent operational problems, and those other companies did not.

We may never know the extent to which she was denied the opportunity to learn operations -- or failed to recognize the need to broaden her experience before reaching so quickly and dramatically the top. But her fall, like that of all fallen corporate leaders, ultimately lay in her inability to effectively manage the myriad factors that have an impact on the bottom line.

With Peter Burrows in Silicon Valley

Brady is a senior writer, and Conlin is an associate editor for BusinessWeek in New York

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