HP at Cultural Crossroads
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Case Details:
Case Code : HROB012
Case Length : 11 Pages
Period : 1990 - 2001
Pub Date : 2002
Teaching Note : Available
Organization : HP
Industry : Computers and Technology
Countries : USA
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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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Excerpts
The Carly Fiorina Way
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The toughest challenge Fiorina faced was in changing the HP culture, which had
been influenced by the company's engineering heritage. The challenge was to keep
the edge in engineering and innovation while making the employees more adaptable
and responsive. Fiorina immediately introduced several changes to set things
right at HP. She demanded regular updates on key units. She also injected the
much-needed discipline into HP's computer sales force, which had reportedly
developed a habit of lowering sales targets at the end of each quarter. Sales
compensation was tied to performance and the bonus period was changed from once
a year to every six months.
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She linked compensation to improvements in customer-approval ratings. To
develop better leadership skills, she instituted the 360-degree feedback
concept. This meant that the pay for the company's managers would be based
on input from employee surveys.
HP Labs, the company's R&D center, had only been making improvements to the
existing products. This was because the engineers' bonuses were linked to
the number rather than the impact of their inventions. To encourage
innovation and product development, Fiorina increased focus on 'breakthrough' projects. She started an incentive program that paid
researchers for each patent filing...
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The HP Way Vs. Carly Way
The steps taken by Carly attracted lot of criticism among the
analysts. Geoffrey Moore, a high-tech management expert, remarked, "HP was built as a collaborative culture
- not a star system. She
drives a competence culture, which puts performance ahead of teams,
values and intuition. That's a wrenching problem." According to
Grinstein, former CEO of Burlington Northern and Western Airlines, "Carly
is articulate, with a wonderful style and flair. But in breaking
from culture, you cannot elevate yourself too high above it." |
Employees had their own share of grievances too. Larry
Mitchell complained, "Layoffs had always been kind of non-traditional for HP.
HP's culture is definitely changed these days. With the prior culture we
probably would have figured out something other than laying off 6,000 people.
There are other ways to get rid of performance problems other than just
layoffs." The chances of massive layoffs after the HP-Compaq merger has met with
stiff resistance from David W. Packard, Dave Packard's son. He was against the
merger because of the changes it would bring into HP's egalitarian culture...
Exhibits
Exhibit I: The HP Way - HP's Corporate Objectives
Exhibit II: The HP Way - HP's Organizational Values
Exhibit III: HP's Consolidated Condensed Statements of Operations
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