Hp at Cultural Crossroads
Looking at the problems faced by the company due to changing business environment and looking at the potential of the organization, she adopted some aggressive steps towards the organization stabilization and was interpreted to be going way against the Organization culture, known as the “HP way”. The low performance of the organization during her tenure adds up to the apprehensions of people against her. However business experts were divided in views regarding her management style. Some considered it against the core values of the organization while others mentioned that the later success enjoyed by HP was the after effects of her efforts.
However Carly was made to step down from her position in 2006 and her stand in still a point of debate for the analyst and the business fraternity. Q. 1 Analyze the evolution of HP’s culture over the years leading to the HP way. 1. Open culture- Both the founder members of the organization believed in open door management techniques. There were many steps taken towards the same, some of them are as follows: * Open cubicle for work force. * Open gates of Mangers offices, so as to encourage innovations and suggestions. * Discussion of work related and job related problems with seniors. * Encouraging both upward and downward communications. . Management by walking around- Packard practiced this technique to mix along with the employees with techniques likes impromptu get-togethers. He believed in the ideology of importance of individual’s motivation for increasing the ability of the employees. 3. Stakeholder benefits- HP gave great importance in managing the stakeholders with fairness and integrating. It always laid stress on recognition of individual importance with respect and trust. 4. Employees motivation techniques- All the employees were participant in the profit sharing programs like stock options and received add on bonuses during high performance of the company.
HP top management believes in the empowerment of the low level employees. This includes assigning competent assignments based on their capabilities added with proper training and support. Other measures taken were as follows- * Scholarships for the employees’ children. * Promotes creativity and initiative. * Promotion of people within. * Job enrichment and job enlargement. 5. No layoff policies- The company avoided hire and fire policies even at the time of crisis, the best example of it is during the 1974 US economy crisis and adopting four day work-week policies. All this and more practices led to the development of the “HP WAY”
Discuss the key components of HP’s culture and evaluate its contribution to the company’s success. Key Components of HP’s Culture Hewlett Packard is legendary for its culture. Headquartered in Palo Alto in California HP is a multinational technology company. As is the case with most entrepreneurial companies, HP’s culture and values have been influenced by the founders. They are expressed in the “HP way,” the company’s philosophy of management. The HP Way consists of the following components: The Corporate Objectives Profit Profit was an integral part of the HP way. All the activities were to meet this end.
The founders recognised that any product that HP was to create should have value, so that these products can command a good price in the market. Passion for customers Customers first in anything that HP does. The relationships with customers were given an immense importance. Customer loyalty was the focus. The founders importantly expressed the need to treat the need to build positive and long term goals with the customers and to be courteous towards them. Fields of Interest HP concentrated on only the areas which it felt was its core competency i. e. technology. This meant that HP did not branch out into diverse fields of business.
The Founders believed in dealing with only those companies that were built upon technology, competencies and customer relationships. Growth Growth was imbibed in HP’s culture. It was believed that growth for the sake of growth is not appetising. Growth was important and should happen to capitalise on the global market through the size of the organization and the global presence of HP People HP valued the people who worked for it. HP used to share the profits with the employees. HP gave importance to internal relationships and believed that for the company to grow the immense pool of talented employees must be tapped.
As an extension of this policy, HP also had internal training programs; HP hired (promoted) a lot of people internally. Management HP enforced the concept of Management by Objectives among its employee workforce. HP stressed that communication, coaching, constructive, feedback and promoting mutual understanding, etc; Citizenship Showing good corporate behaviour was rated very highly in HP’s culture. It was almost required of every employee to be responsible towards the social issue plaguing the country where he was stationed. Organisational values
HP’s mission statement listed 5 core values that shaped the HP way. * To have trust and respect for the individuals * To focus on a high level of achievement and contribution * To conduct business with uncompromising integrity * To achieve common objectives through teamwork. * To encourage flexibility and innovation. How the HP way contributed to HP’s success HP had developed an ideal breeding ground for innovators. HP laid great emphasis on servicing all stakeholders with integrity and fairness. HP’s culture encouraged initiative and creativity, it promoted managers who were nthusiastic and effective team players. The encouragement of lower employees through empowerment meant that most competent employees would be doing important and new assignments. The culture provided an excellent incubator for innovation and a rigid regimen for following through on those innovations. This is how HP’s culture influenced its success. Q. 3 Comment on Fiorina’s approach to alter the HP culture. Examine the reaction to the steps taken by her. Carly Fiorina was appointed the CEO of HP in July 1999. She had earlier worked in Lucent technologies and AT&T. She was alien to the HP culture.
Fiorina implemented various cost cutting measures, layed off employees all to meet profitability. In doing so she encroached upon the HP culture. The HP employees usually enjoyed relatively good job security, they used to get their bonuses on time and they were not used to pay cuts. This was a huge departure from the HP culture. She put performance ahead of teams, values, and intuition. The employees were highly critical of her decisions. The analysts called it a an outrage, an attempt to subvert HP’s culture, something which had helped it grow for so long. The employees were in an outrage, over the steps taken by her.
They begged to differ on several of her decisions, the most important of which was the decision to lay off people. Layoffs had always been non traditional in HP. And as her decisions were not proving themselves, the employees were tired of this . Q. 4 Compare and contrast the ‘HP Way’ with ‘Fiorina’s Way. ’ Should Fiorina change the culture radically in response to the rising competition and HP’s falling profits? The HP way- The HP way centred on its organizational values this shaped its strategies and practices like Management by wandering around, Management by objectives, the open door policy and open communication.
The HP culture was employee oriented and it focussed on achieving the common objectives through teamwork. HP felt that the company should share its success with the employees and laid great emphasis on job security and job satisfaction. It paid special attention to each and every employee. Fiorina’s Way- Carly Fiorina’s way was aggressive. She brought radical changes in the work culture at HP and changed the 64 year old HP way. She tied the sales composition to performance and changed the bonus period from once a year to every six months.
She instituted a 360 degree feedback concept which meant that the pay for the company’s managers would be based on the input from employee survey. Fiorina initiated cost cutting measures at HP. The bonuses were based on HP’s performance in comparison with its competitors. The cost cutting measures also included laying off the employees. Around 10,700 employees were laid off during her reign as the CEO of HP. She adopted a hire and fire policy which resulted in low levels of morale and a feeling of dissatisfaction amongst the employees.
The changes brought down by Firorina should’ve been gradual and not radical. The sudden changes brought by her resulted in a complete turnaround of the traditional HP way. These changes and the subsequent merger of HP and COMPAQ did not yield results during the period of 1999-2005. During her period, HP’s shares came down by 50%. The revenues became stagnant and profits fell significantly. Fiorina’s way was perceived to be too aggressive by the people at HP which subsequently resulted in her stepping down from the position of the CEO of HP in 2005. Q. How should Fiorina manage HP’s culture to improve the company’s performance and meet business challenges?
Fiorina should’ve understood the HP way and should’ve tried creating a balance between the traditional HP way of working and the new ideas she wanted to bring across. She should have explained the employees the problems HP was facing and that something new was to be adopted in order to overcome the prevalent issues. In this way, Firorina could’ve won the trust of the employees. She should’ve been gradual in her approach in bringing about changes in the company.
The primary objective of making profits should’ve been achieved without bringing in cost cutting measures like laying off the employees. The number of employees laid off was huge which resulted in a feeling of insecurity amongst the employees which further resulted in low levels of performance. Instead, the layoffs should have been performance oriented. People performing should have been retained and people not performing should have been laid off. In this way, levels of performance could’ve been achieved and the employees would have worked had to retain their jobs. In this way the employees would have become more responsive and adaptable.