Despite the across-the-board pay cuts HP CEO Mark Hurd made (and I lauded) two months ago, the latest quarterly results have proven disappointing and the outlook no better, leading the company to announce that it will be making recession-related layoffs after all... 6000 jobs over the next 12 months, amounting to 2% of the overall workforce.

I caught a lot of flack from HP staff for voicing my approval over the pay cuts; now we'll see how they feel about the alternative of outright layoffs. It was odd to me that people seemed to prefer the more traditional sugar-coating and uncertainty followed by outright layoffs or business failure, prompting this observation in comments:

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, perhaps morale will improve now that people are simply being let go. On the other hand, perhaps people feel even more persecuted by having their wages slashed, and then simply being laid off anyway. So was Hurd's decision a bold effort to avoid RIFs which failed, or a mistake which would better have been avoided by deep and dramatic workforce reductions in the first place? It should certainly give pause to other CEOs and executives who might be tempted to share the burden of (or be shamed into) across-the-board pay cuts... Hurd has been rewarded neither by his employees or by the Street, whereas more traditional layoffs would at least have been more likely to bolster the company's stock price.

My bet is still on HP over the long term; the sole bright spot in the quarterly report is the recently services division formed out of the EDS acquisition. Services are the future for major hardware companies which are watching their hardware become a commodity, and HP is making the transition more boldly and successfully than most.