Алистер Смит - The Dictator's Handbook - Why Bad Behavior is Almost Always Good Politics

Perhaps in an effort to shore up the support of remaining old hands on the board, or perhaps coincidentally, there also was a notable shift in board compensation. Just before Fiorina became HP’s head, board members earned compensation (that is, private benefits) that ranged from $105,700 to $110,700. With Fiorina in office and the board diminished in size, this amount dropped slightly to $100,000–$105,000 and remained there in the years 2000–2003. But in 2004, according to HP’s 2005 proxy statement, board members received $200,000 to $220,000. During the same period, dividends remained steady at $0.32 a share annually and HP’s shares significantly underperformed the main stock market indexes. Clearly something was up: HP’s stock price performance was poor; dividends were steady; and directors’ pay doubled.

Fiorina’s board shuffling and their improved compensation seem aimed at getting the right loyalists in place to help her survive. Although the Compaq merger resulted in the board growing from ten to eleven, what is most noteworthy is that this net growth of one member was achieved while adding five new members (one of whom stepped down at the end of the year). So, the old members constituted only about half the board, shifting the potential balance of power toward Fiorina. Presumably that is just what she hoped, although it is not how things turned out.

Expanding the board was not, and generally is not, the optimal response to a threat from within. To her credit, in terms of political logic, she significantly expanded the size of the interchangeables by adding Compaq’s shareholders to HP’s list of shareholders. This normally helps to induce strengthened loyalty, but declining share value could not have been good for new HP board members, who had been heavily invested in Compaq since their economic well-being was now tied to HP’s share performance. Nor could Fiorina mollify HP’s large shareholders on the board with better board compensation, since their welfare depended on producing the “public good” of greater returns to shareholders. Those grey board members who owned lots of shares made the seemingly small board of eleven actually pretty large in terms of shares they could vote.

Under enormous pressure, Carly Fiorina stepped down. She was replaced by Patricia Dunn as chairwoman, with HP’s Chief Financial Officer (CFO), Robert Wayman, emerging again as a significant HP player. He was made interim CEO. Wayman, unable or uninterested in translating his interim position into a full-time job, stepped down a month later while continuing in his role as a member of the board and an HP employee. Mark Hurd in turn replaced him as CEO.

In the immediate aftermath of Fiorina’s ouster the board separated two key positions, CEO and chairperson, presumably in a good Montesquieu-like effort to promote the separation of powers and protect themselves against future adverse choices by the CEO. If that was their intention, they certainly failed. Following Hurd’s ascent to the position of CEO he successfully brought the two posts back under one person’s control: his own.

Within a year of Fiorina’s ouster, all the leading coup makers who acted against her were gone. Mark Hurd had risen to the top and, as suggested by the quote from Italo Calvino, he had to watch day and night to keep his head. Four years later, despite stellar HP performance, Hurd was, in turn, forced out amidst a personal scandal. This is the essential lesson of politics: in the end ruling is the objective, not ruling well.

The Perils of Meritocracy

One lesson to be learned from Mark Hurd’s ultimate removal at HP is that doing a good job is not enough to ensure political survival. That is true whether one is running a business, a charity, or a national government. How much a leader’s performance influences remaining in office is a highly subjective matter. It might seem obvious that it is important to have people in the coalition of key backers who are competent at performing the duties associated with implementing the leader’s policies. But autocracy isn’t about good governance. It’s about what’s good for the leader, not what’s good for the people. In fact, having competent ministers, or competent corporate board members, can be a dangerous mistake. Competent people, after all, are potential (and potentially competent) rivals.

The three most important characteristics of a coalition are: (1) Loyalty; (2) Loyalty; (3) Loyalty. Successful leaders surround themselves with trusted friends and family, and rid themselves of any ambitious supporters. Carly Fiorina had a hard time achieving that objective and as a result she failed to last long. Fidel Castro, by contrast, was a master (of course, he had fewer impediments to overcome in what he could do than did Fiorina) and he lasted in power for nearly half a century.

The implications of this aspect of political logic are profound, particularly in small coalition governments. Saddam Hussein in Iraq, like Idi Amin in Uganda and so many other eventual national leaders, started as a street thug. Autocrats don’t need West Point graduates to protect them. Once in power, people like Amin and Hussein wisely surround themselves with trusted members of their own tribe or clan, installing them in the most important positions—those involving force and money—and killing anyone that may turn out to be a rival.

Saddam Hussein came to power after compelling his predecessor (and cousin) Ahmed Hassan al-Bakr to resign in 1979.5 Before that, however, he had carefully laid the groundwork for his control over Iraq. In 1972, for instance, he spearheaded the nationalization of international oil interests in Iraq. Oil, of course, was and is where the money is in Iraq, so he had fulfilled the essential ingredient to come to power: he knew where the money was. Once in power, he ruthlessly pruned his support base.

Just six days after President al-Bakr “resigned,” Saddam Hussein convened a national assembly of the ruling Ba’ath Party’s leaders (the Revolutionary Command Council). The assembly was videotaped at Saddam Hussein’s insistence. During the session, Muhyi Abdel-Hussein, secretary of the Revolutionary Command Council, read out a confession that he plotted against Saddam Hussein, and then sixty-eight more “enemies of the state” were named as coconspirators. Each, one at a time, was removed from the assembly. Twenty-two were sentenced to death by firing squad and summarily executed by members of the Ba’ath Party, each branch of which was required to send a delegate with a rifle to participate in the executions. Hundreds more were executed within the next few days. Saddam Hussein’s biographer asked Saddam about the decision to eliminate these people, most of whom had risen in the ranks of the Ba’ath Party with Saddam’s support. He reports, “The answer was that as long as there is a revolution, there will be a counter-revolution.”6 As we said before, those who can bring a leader to power can also bring the leader down. It is best to shrink the ranks of those who represent a threat and keep those who are most trusted to be loyal.

How competent were the approximately 450 Ba’ath leaders who were executed as part of Saddam’s consolidation of power? It is difficult to say from this remove, but we do know that among their ranks were professors, military officers, lawyers, judges, business leaders, journalists, religious leaders, and many other well-educated and accomplished men. For good measure, Hussein also threw in leaders of competing political parties who, after all, might have conspired to replace him.

Survivors included people like Saddam’s cousin, “Chemical Ali,” Ali Hassan al-Majid. Chemical Ali most notably demonstrated his loyalty in 1988 when, under orders from Saddam, he launched a successful campaign to commit genocide against Iraq’s restive Kurds. Long before that al-Majid had established his commitment to Saddam Hussein. In the infamous videotape mentioned earlier, al-Majid is seen speaking to Saddam, saying, “What you have done in the past was good. What you will do in the future is good. But there’s one small point. You have been too gentle, too merciful.”7 Unlike many who were executed following the July 22, 1979, party assembly, al-Majid, previously a motorcycle courier/delivery boy, had little formal education. Although he held the posts of defense minister, interior minister, and head of Iraq’s intelligence service, it seems his main area of competence was murder.