At first blush, the Carly Fiorina story seems like that of a highly visible female CEO perceived to have failed. But her firing as head of Hewlett-Packard sheds some light on how business is changing, no matter what the gender of the person in the corner suite.
Indeed, the executive turmoil at HP shows that corporate boards, in a post-Enron world, are becoming more active overseers. This means close scrutiny of the wheeling and dealing, the acquisitions, the corporate culture, even the pay package.
And CEOs under the microscope, such as Ms. Fiorina, are finding they have less time to produce results. In fact, a CEO's tenure at the top is starting to look a lot like a politician's term in office with a small group of voters sitting around a boardroom table.
"We now live a world of transparency, responsibility, and action," says David Kotok, chief investment officer at Cumberland Advisors in Vineland, N.J. "The old country-club board of directors is now past."
Indeed, while pundits and press try to put their own spin on Fiorina's ouster and what it means for women executives, tricky mergers, or celebrity CEOs, "what it actually means is that the board did its job," says Rosabeth Kanter, a Harvard Business School professor and author of "Confidence," a book about leadership. "The performance hasn't been good, and they were concerned about the performance in the future."
As boards step up, the heat is being felt in the top office. In January, Challenger, Gray & Christmas, the Chicago-based outplacement firm, reported a near record 92 CEOs got the boot or retired. This is the highest figure since February 2001 when 119 CEO changes took place.
"The CEO is on the hot seat," says John Challenger, who heads the outplacement firm. "Your mistakes aren't forgiven. They pile up, and, eventually, they outweigh your gains, unless you have an unbroken string of wins."
Mr. Challenger sees this as both positive and negative. "We have fewer CEOs who are worlds unto themselves ... but the shorter tenures also have their own complications," including a lack of continuity and job security, and frequent changes in direction of corporate strategy.
Such change is especially noticeable when it involves female CEOs. Before Fiorina was ousted there were only eight women CEOs of Fortune 500 companies.
Now there are seven. "When one of them leaves, a great percentage chunk of women in power is gone," says Larraine Segil, a partner at Vantage Partners.
Yet Ms. Segil, like many others, believes the HP action was "gender neutral." "I don't think it had anything to do with Carly being a woman. I think any male CEO could have been fired in the same way, and that's probably good thing for women."
Other female executives thought the change showed that women can fail just like a man. "It's all part of playing the game - it doesn't mean you always win. You have to have the opportunity to lose too," says Davia Temin, the president of Temin & Co., a New York marketing firm.
In fact, some female CEOs believe the industry is past making gender a part of negotiations. "Women at [high] levels compete with men equally, so I don't think it's a male-female issue, but an internal matter to companies," says Joan Myers of the North Carolina Electronics and Information Technology Association in Raleigh.
Last summer, Catalyst released a survey that found that 55 percent of women and 57 percent of men in senior corporate positions aspired to be the CEO.
That raised the question why so few actually make it to the top as Fiorina did. When Catalyst asked the corporate women what were the challenges they faced to advancement, the top three responses dealt with culture and the workplace environments that create a glass ceiling, says things Paulette Gerkovich, senior director of research at Catalyst. They include exclusion from informal networks, gender-based stereotypes, and a lack of role models.
"Almost half of the women surveyed said they faced those things, and they acted as barriers as they rose up the ranks," says Ms. Gerkovich. "Very low percentages of men, comparatively speaking, face those things."
Because of Fiorina's unique position as a CEO, she also had to face a more intense media spotlight than most men in her position. That is a double-edged sword, according to experts in women in business.
"That creates an extra media challenge for the CEOs and their companies, which is unfortunate," says Nan Langowitz, director of the Center for Women's Leadership at Babson College in Wellesley, Mass. At the same time, she notes that the average tenure for CEOs is usually three to four years, and Fiorina was at HP for six. "You could say she had more staying power than the average CEO, and she certainly took on some bold moves."
In that way, many women believe Fiorina is a crucial role model, who will continue to influence America. "She's strong, focused, and forceful. She has a lot of qualities that are more often attributable to men," says Sigel. "The good thing about this is that these are qualities that can also be attributed to women. The gender neutrality of the whole thing is an enormously positive step."
Beyond the gender issue is the matter of celebrity CEOs, such as Martha Stewart, now in jail, and Bill Gates, one of the founders of Microsoft. "I don't think the days of the celebrity CEOs are past, because almost as soon as Ms. Fiorina's departure, the next candidate being talked up was Michael Capellas, who's similarly a star CEO over at MCI," which Verizon is now eyeing to buy, says Paul Hodgson of Corporate Library, a governance organization.
Her ouster could be a reminder of the risks of turning to outsiders. A survey by consulting firm Booz, Allen, Hamilton finds that CEOs hired from outside a corporation, such as Fiorina, face a high rate of forced turnover. They tend to "do extremely well for investors in the first year or two," says one of the study authors, Chuck Lucier. Then things often go badly. "She fits the pattern very closely."
Among the survey's other findings:
• The rate of CEO dismissals incresaed by 170 percent from 1995 to 2003. The rate of involuntary turnover eased in 2003, however.
• As CEO turnover rises, companies are often feel forced to turn to outsiders. The track records suggest they'd be better off cultivating qualified insiders.
• Prior experience at the company they are leading is a better indicator of CEOs' success than whether they have been a chief executive before.
Fiorina's exit also reflects the trials of high-tech mergers. The pivotal event of her tenure was the rocky effort to unify HP with Compaq, a maker of personal computers.
"The real lesson is how very hard it is to integrate two very different companies into something that really pays off," says Management expert Michael Hammer. "Post-merger integration is one of the hardest problems in business, and most companies get it wrong. HP didn't get it as bad as some, but they didn't do as well as they would have hoped."