HPs-Human-Resources

DONOTCOPYHarvardBusinessSchool9-495-051Rev.November1,1995ResearchAssociateGregoryC.RogerspreparedthiscaseunderthesupervisionofProfessorMichaelBeerasthebasisforclassdiscussionratherthantoillustrateeithereffectiveorineffectivehandlingofanadministrativesituation.Copyright©1995bythePresidentandFellowsofHarvardCollege.Toordercopiesorrequestpermissiontoreproducematerials,call(800)545-7685orwritetheHarvardBusinessSchoolPublishing,Boston,MA02163.Nopartofthispublicationmaybereproduced,storedinaretrievalsystem,usedinaspreadsheet,ortransmittedinanyformorbyanymeans—electronic,mechanical,photocopying,recording,orotherwise—withoutthepermissionofHarvardBusinessSchool.1HumanResourcesatHewlett-Packard(A)Atthecloseof1992,newlyappointedCEOLewPlattsatathisdeskponderingthestateofHewlett-Packard.HP'srevenuehadgrownatanaveragerateof15.3%overthepreviousfiveyears,leavingnetrevenueat$16.4billion.PlattknewthatHPwasconsideredoneofthebestcompaniesintheindustry.FortuneMagazine's1992CorporateReputationssurveyofthetopFortune500rankedHP#1inthecategoryofcomputersandofficeequipment,aheadofApple,IBM,andDEC.HP'sreputationinthebusinesspresscontinuallyrosewithitssustaineddominanceinhigh-technologymarketssuchasthatofprinters.InhisfirstmonthsasCEO,PlattwasconfrontedbyadisturbingreportfromataskforceappointedbyhispredecessorJohnYoung.Thetaskforcecitedseveralissuesthatneededtopmanagementattention.Theirmostalarmingconclusion--HPwaslosingitshumantouch.DuringHP'searlyyears,itsfounders,BillHewlettandDavidPackard,developedanumberofmanagementprinciplesthatlaterevolvedintoasetofcorporateobjectives,businessvalues,andmanagementpracticesknownastheHPWay.Asa26-yearveteranofHewlett-Packardwithexperienceinseveralofitsbusinesses,PlattfeltstronglythattheHPWaybestowedthecompanywithauniquecompetitiveadvantage:highlycompetentemployeeswhoexhibitedgoodteamworkandwerecommittedtoexcellentperformance.Hadadecadeofturmoilinitsmarketsandorganizationdamaged,perhapsirreparably,HP'ssourceofsuccess?Besidesthistaskforcereport,PlattcontemplatedanumberofissuesthatwouldhavetoberesolvedduringhistenureasCEO:•CouldthefeelingofmanyemployeesthattheHPWayisdeadbereversedandhow?Inparticular,whatshouldbeHP'spolicywithrespecttoemploymentsecurity,whichmanyperceivedtohavebeenabandonedinthe1980s.•CouldtheHPWaybeappliedindevelopingcountrieswithverydifferenttraditionsandcultures?StrongconcernsaboutthisissuebyoneofHP'sbusinesspartnersinEastAsiahadsurfacedduringthelastthreeyearsofJohnYoung'stenure.•HowmuchautonomyshouldHPallowitsfourmajorbusinessesinshapingtheirstrategies,policies,andmanagementpractices?Fargreaterdiversityinmarketsandproductsthanhadexistedonlyadecadeearlierresultedinpressurefromthebusinessestogotheirownway.•CouldHPavoidthefailurethatfollowedsuccessinmanyhigh-techcompanies?Toanswerthisquestion,PlattneededtounderstandthesourceofHP'sunusualsuccess.DONOTCOPY495-051HumanResourcesatHewlett-Packard(A)2TheprecipitousdeclineofoncegreatcomputercompanieslikeIBMandDigitalEquipmentCorporationcausedPlatttopursueanswerstothesequestionswithconsiderableurgency.HebeganbysearchingHP'spastforclues.TheFirst40YearsofBusiness(1939-1979)1In1939,BillHewlettandDavePackardsetupshopinaone-cargarageinPaloAlto,California.Theirfirstproductwasanewtypeofaudiooscillator,anelectronicinstrumentusedtotestsoundequipment.By1979,thenumberofemployeeshadincreasedto52,000,andcompanysaleswereat$2.4billion,basedonmorethan4,000products:electronicequipmentformeasurement,analysis,computation,andprinting.TheHPWayHewlettandPackard'sstrongbeliefsinseveralareasshapedHPfromitsinceptionintheformofthecorporateobjectives:Earlyinthehistoryofthecompany,whilethinkingabouthowacompanylikethisshouldbemanaged,Ikeptgettingbacktooneconcept:Ifwecouldsimplygeteverybodytoagreeonwhatourobjectiveswereandtounderstandwhatweweretryingtodo,thenwecouldturneverybodyloose,andtheywouldmovealonginacommondirection.[DavePackard]Theobjectiveswerefirstputintowritingin1957,andwithminormodificationtheyremainedthemostfundamentalguidingforcesatHP.(Exhibit1givesHP'sdescriptionoftheseobjectives.)UnderlyingtheseobjectiveswereHP'scorporatevalues,asetofdeeplyheldbeliefsthatgovernedemployeebehaviorinmeetingHP'sobjectivesanddealingwiththeircolleagues,customers,andshareholders.Notmeanttoberulesofbehavior,thevalueswerenotformalizedandwrittendownuntil1989(seeExhibit2foradescriptionofthevalues).Instead,theywereespousedthrougheverydaybehaviorandmanagementprocessesthatconstitutedHP'suniquestyleofdoingbusiness.ThroughtheyearsthevaluesandobjectiveswerecreditedwithHP'ssuccessfulgrowthandthestrongloyaltyandsatisfactionexpressedbyitsemployees.ThevoicesofpeoplewhoworkedatHPbestcapturedtheHPWay:Yousaidyoudon'tthinkmakingprintedcircuitboardsismuchdifferentherefromotherplaces;Ithinkprobablyitis.PeoplemakingPCboardsheredon'tpunchtimeclocksandhaven'tforthemanyyearsI'vebeenhere.Theydohaveflexibleworkhours.TheygotthemassoonasIdid.They'vegotconsiderablefreedomofinputabouthowtheyaredoingtheirjob.Theymakesuggestionsforchanges.TheyhaveeverybitasmuchaccesstoJohnYoung[HP'spresidentatthetime]asIdo.They