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Management
by Scott Wilson on March 31, 2009
I've already mentioned my approval of the aggressive IBM approach to going after new business in the down economy; HP, on the other hand, gets props for both their team-oriented response to the crisis and their pre-crisis orientation toward efficiency and profitability. You can get a picture of both by reading CEO Mark Hurd's memo to employees last month. The situation Hurd describes is no different than that facing any other business in these times; disappointing revenue projections, uncertain markets, evaporating sales. But HP's response stands out from the crowd: no mass layoffs.
Instead, to make up for unavoidable shortfalls, Hurd is asking most employees, starting with himself, to take salary and benefit cuts for the duration of the difficult times. Restructuring, in those portions of the business where it is unavoidable, will still occur, but there will be no massive across-the-board bloodletting as is the case at more panicked corporations.
Why isn't HP panicked? Hurd explains:
To be clear, these actions don't make up for all of the decline in revenues. We're also benefiting from the tough actions we've taken over the last few years. People always asked, "Why are we so focused on getting costs out in good times?" Now…is why that work was so important. We've been able to bank some of those savings, and we're making a withdrawal, which along with the actions we're taking today, I hope, will get us through this recession.
This answers my question in the Managing IT Costs post a few days ago: if your business can run without all this headcount, why didn't you cut it five years ago and position yourself for this situation (and enjoy increased profits in the meantime) then? HP made the hard choices years ago and they will benefit from them all the more now, and enjoy a relatively strong position coming out of the recession, where other businesses will find themselves scrambling to rebuild.
Edit 0700 March 31: Clarified comment about layoffs at the company
Permalink: Getting the recession right
Trackback: http://publish.creative-weblogging.com/publish/mt-tb.pl/147790
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Vote for Getting the recession right:
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Rating: 7.67 out of 6 vote(s) cast.
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Response from:
John
(03/31/09 5:47am)
"But HP's response stands out from the crowd: no layoffs." I think you should check your facts. There have been many layoffs at HP - just google it! http://fuckyoumarkhurd.blogspot.com/
Response from:
H Bergeron
(03/31/09 7:23am)
Hate to tel you this...
But HP is laying people off. I know have two very good friends that worked for EDS that got axed last week. So you might want to hold your praise for HP.
But HP is laying people off. I know have two very good friends that worked for EDS that got axed last week. So you might want to hold your praise for HP.
Response from:
Scott Wilson
(03/31/09 8:17am)
John- I'm not sure I'd want to rely on a site like that for facts; there is a ever-so-slight bias obvious in the title. :)
I do apologize, however, for being unclear and I have gone back and changed the post. As you and H Bergeron both point out, HP certainly is laying some people off. I alluded to as much in the next paragraph citing "restructuring" but wasn't completely clear. Many of the ongoing layoffs are with the EDS unit, but those were probably inevitable anyway, as is often the case when companies merge.
My real point, which I unfortunately muddled with the blanket statement "no layoffs" was that there have been no firing quotas or across-the-board cuts as we have seen at other organizations responding to the crisis.
I do apologize, however, for being unclear and I have gone back and changed the post. As you and H Bergeron both point out, HP certainly is laying some people off. I alluded to as much in the next paragraph citing "restructuring" but wasn't completely clear. Many of the ongoing layoffs are with the EDS unit, but those were probably inevitable anyway, as is often the case when companies merge.
My real point, which I unfortunately muddled with the blanket statement "no layoffs" was that there have been no firing quotas or across-the-board cuts as we have seen at other organizations responding to the crisis.
Response from:
Check the Facts
(03/31/09 10:24am)
The facts as outlined on Damain Saunders blog entry http://www.damiansaunders.net/
are factually correct. Mark Hurd's voluntary cut in pay amounts to less than 1% of his total $42M package he received in 2008. Please, please, please research the true story before publishing a superficial view as presented by the HP PR machine. - from a Disappointed HP Worker
are factually correct. Mark Hurd's voluntary cut in pay amounts to less than 1% of his total $42M package he received in 2008. Please, please, please research the true story before publishing a superficial view as presented by the HP PR machine. - from a Disappointed HP Worker
Response from:
Scott Wilson
(03/31/09 11:20am)
As an observation, I get suspicious anytime anyone has to assert that their facts are "factually correct." Usually it means that while they are correct, they are not presenting the whole story, and that's the case with the argument made on Saunders' blog. While Hurd's 2008 compensation was the $42M Saunders cites, the overwhelming bulk of that was in stock.
Looked at HP's stock price lately? I would say that is its own punishment, entirely aside from any cuts to base pay. And frankly, if he can bring the valuation up in this environment, then I would say he's probably earned it.
I am not trying to make Hurd out as some sort of saint; he's a suit, after all, just like the rest of 'em. But it strikes me that he could have axed employees left and right with equal impunity as so many others are doing right now and not touched his compensation package at all. I think that in comparison, he still comes off pretty shiny.
Looked at HP's stock price lately? I would say that is its own punishment, entirely aside from any cuts to base pay. And frankly, if he can bring the valuation up in this environment, then I would say he's probably earned it.
I am not trying to make Hurd out as some sort of saint; he's a suit, after all, just like the rest of 'em. But it strikes me that he could have axed employees left and right with equal impunity as so many others are doing right now and not touched his compensation package at all. I think that in comparison, he still comes off pretty shiny.
Response from:
tj
(03/31/09 4:12pm)
teh recession is bad for everybody..
Response from:
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