RSSClarifications on HP and Mark Hurd
Perhaps predictably, my praise of HP's handling of the recession touched a raw nerve, particularly among HP (or former HP) employees.
Unfortunately this morning is also when our comments and editing system has decided to have a conniption (I'm looking at you, Amazon [just kidding... I believe this is an internal problem and not related to AWS at all]), and I have been unable to go back yet and correct the point which seems to be provoking most of the controversy, that HP has "no layoffs."
That was hyperbole which has suitably come back to bite me; although I noted in the following paragraph that the company was still restructuring certain business units, I didn't make it clear that I was really referring to the en masse, across-the-board staffing cuts common in other enterprises right now, rather than those smaller tactical cuts. Much of the feedback has to do with staff put out on the street due to the EDS assimilation; while those layoffs are no doubt traumatic and ongoing, they were probably inevitable, recession or no. People get laid off during mergers, regardless of the larger economic climate, and in any enterprise as large as HP you are going to have a background level of hiring and firing no matter the economy. My poor choice of words obscured that and I apologize.
Another common point is that Mark Hurd is no saint; I'm willing to accept that stipulation. But in my view he and others in the HP management structure are still worth commending. Could they have taken larger pay cuts? Perhaps. Many of the complaints I am hearing are from people who are getting pay cuts, but still have their jobs. Let me tell you, if you were working elsewhere right now, you could well be out on the street. Certainly Hurd wouldn't have risked anything from his board or investors had he simply kept his salary at its previous level and axed big bunches of staff. We're seeing a lot of CEOs in his position doing exactly that. You can certainly complain that the executive class in corporate America today is pampered, over-compensated, and generically evil, and I might not argue with you, but if you stack HP leadership up on the scale, I think they come off relatively clean. Well-meaning people differ on this, but in my view if you can't recognize and applaud progress where it is made, even in an imperfect system, you're not likely to see any long-term improvements in behavior.
I am working in HP now. My salary is cut 5% and the head of department announced that there will be a 25% workforce reduction. That means 1 out of 4 people will lose their job.
Other departments have been asked to start cutting the headcounts too.
It\’s actually about 8% if you believe current reporting; about 25,000 out of 320,000 total staff. But AGAIN this was an expected outcome of the EDS acquisition, announced last September and occuring over three years.
If you\’re trying to suggest to me that HP is in fact planning to triple that number, I would expect to see that on the front page of the Wall Street Journal, not in an anonymous comment on a third-string industry blog.
RE: “Many of the complaints I am hearing are from people who are getting pay cuts, but still have their jobs. Let me tell you, if you were working elsewhere right now, you could well be out on the street.”
First off, saying “from people getting pay cuts” is every employee in the company. Many employees fear that on top of the pay cut there will also be job cuts. The average employee lives much closer to the level of his/her paycheck. Taking away from that takes away from lifestyle, job satisfaction, security, morale–all of which will affect job performance–and that will hurt HP as a whole. Employees are already tense because of pay cuts… now there is also lots of turnover at the top. It looks like these executives know something the average employee doesn’t know and they are jumping ship before it sinks. The morale is so low… and the executives try to give “pep rally” speeches and think that makes up for losing pay and benefits. Sure, Hurd and HP Management numbers will look good, but at what cost? I think at the cost of good people, and of HP service and products.
I wouldn’t dispute any of that, but again, it misses the point… which is that all those things could be much, much worse; and are, at other companies whose leadership has handled the situation worse than that at HP.
People I know at Microsoft, who haven’t had to deal with across-the-board pay cuts, are practically trembling with the expectation of remaining cuts announced but still unspecified hanging over them, and a rather wishy-washy response from management. I still agree with Hurd’s early and decisive actions. You may be nervous, but you would have cause to be considerably more nervous without those efforts to stabilize the business.
It’s an interesting portrait in psychology, however… from an outside seat, HP employees probably have less to be fearful about exactly because the numbers look good, but because the steps taken impact all of them, they seem to be reacting unfavorably. Employees at other companies, which have management who play the old game to the hilt before blowing the tires out (Chrysler, anyone?) and collapsing, seem more confident than they reasonably should in the circumstances.
So now the Q2 is out and HP has posted double the profits in Q2 2009 then it posted in Q2 2008 one would ask was the pay cuts justified? Many such as Scott was quick to put there hands together and clap for the social experiment. So the pay cuts were to save jobs? No the pay cuts were to double the profits and increase the package of the CEO. BTW more lay-off are to come in Q2. So I ask with all of the lay-offs in Q1 and more in Q2, who’s job was saved?
You are cherry-picking your numbers and doing a poor job of it; only ONE division doubled profits, and those comprised only 4% of overall revenue… which was actually DOWN year-to-year by 3%. Operating profit was down 12%. So if revenues are down three points and profits are down twelve, you tell me, where did the difference get made up? If profits drop faster than the revenue that supports them, that certainly doesn’t point to some corporate fat-cat jacking up his compensation. That difference comes out of paychecks.
You’re right in one sense, however… Hurd’s gamble looks like it has not paid off, as HP announced a fresh round of 6000 layoffs yesterday which were not part of the continuing EDS consolidation. You may continue to think this is just vindictive profiteering, but the real numbers, and the overall dismal market prospects going forward, don’t support that view at all in my opinion.
GREED IS PERSONAL AGAIN!!
Mr Scott,
Some light that I want to throw:
Mark Hurds compensation increased by over 68% from $25M in 2007 to $42.5 in 2008. 20% GENEROUS cut was on his base pay which was $1.45M.
As employees we have received cuts of 5%. Ask the Sales teams like us: Targets increased by over 25% in a down market for PC business to ensure nobody get the variable pay, eventually nsuring people lost 50% + 5% salary. While all sales people have contributed 55% to Mark Hurd’s 68% increase I wonder where did he get the rest 13% from. Btw while we are still slogging our asses to save our jobs, Mr Hurd spent $135k for the use of the corporate jet for personal use. With HP everything is possible & Greed is personal again!!
“Many of the complaints I am hearing are from people who are getting pay cuts, but still have their jobs.”
What an idiotic statement, but unfortunately it reflects the cut throat reality of our time. Let them each cake. The above statement is akin to saying “Well, most people who are complaining have been raped but now killed. They should stop whining and count their blessing because there are many who were raped AND killed.”
Correction of typo:
“Many of the complaints I am hearing are from people who are getting pay cuts, but still have their jobs.”
What an idiotic statement, but unfortunately it reflects the cut throat reality of our time. Let them each cake. The above statement is akin to saying “Well, most people who are complaining have been raped but not killed. They should stop whining and count their blessing because there are many who were raped AND killed.”
What is idiotic is comparing something like rape and murder to pay cuts and layoffs. I’ll take it that you don’t know anyone personally who either of those utterly shattering, violent events has ever happened to, or you probably wouldn’t have revealed your own idiocy in making such a comparison. If you do know anyone who has been raped, do they have any idea how classy you are that you go around equating their trauma to taking a 5% pay cut?
In contrast, I know a lot of people who have been laid off. It stings, but they pick up, move on, and often prosper. It’s a difficult setback; it’s in no way equivalent to being murdered.
But thanks for your contribution to the conversation.
Quote: But in my view he and others in the HP management structure are still worth commending. Could they have taken larger pay cuts? Perhaps.
You’ve got to be kidding. Mark Hurd alone made almost 43 million dollars in 2009. His 20% pay cut was on his base salary of about 1.5 mil. That equates to the cost of a dinner party or two for him. There is nothing commendable about him, nor any upper management at HP. They flatly lie – saying the pay cuts are to avoid layoffs, meanwhile “quietly” laying off thousands. The original “HP Way” is no more – the products are shoddy, customer service is practically non-existant. Jobs are leaving this country faster than offal flushed down the toilet.
I know a H.P. employee that works in a legal department and works mostly out of the home and sometimes in the office. He drinks beer and checks on his boat and watches sports while working. Wow, It must be nice to get a 6 figure income to sit home and drink beer.