When I started working for Hewlett-Packard 20 years ago, it was a company that valued its employees. Even in 1984, there were not many such companies still around. Globalization had begun its merry march, and the race to the bottom line and the immediate payoff had focused more and more CEOs on the almighty quarterly earnings report.
But HP in the 1980s was different. With its roots in electrical engineering—and with most of its products either complex instruments or high-end servers and workstations—the company had the luxury of a healthy profit margin, leaving enough financial cushion for an emphasis on research and innovation. Those profits also left room for investment in people, for a loyalty to employees, that permeated HP’s culture.
Bill Hewlett and Dave Packard had codified these ideas in 1957 as "The HP Way," a set of ten principles that they passed down to their managers and employees, as though they were tablets from Sinai. There was one item about making money (if the company didn’t make money, it wouldn’t survive), and the other nine items were about providing for employees, listening to customers, and living productively as part of a community—not the typical business-speak. In fact, as Mark Simon once wrote in the San Francisco Chronicle, "What you’ll never find in the HP Way principles is any mention of return on shareholder investment. Packard said that if you took care of customers and employees, shareholders would be fine."
Soon after I started at HP, there was a serious downturn in the tech business. Most companies started laying people off, but HP took a different approach. No one was fired; everyone, from the janitor to the CEO, took a temporary 10 percent pay cut—along with a 10 percent cut in hours. We were all in this together, and we would succeed together, management said—and we believed. Three months later the cut was just 5 percent, and three months after that we were all back on full pay. HP emerged from the crisis with employees whose loyalty was redoubled, and for years the company flourished on that sense of solidarity.
The world has changed in 20 years. In business—and throughout society—it’s now every dog for himself, and you’d better watch your back because it you don’t trample on others they’ll trample on you. Any thought of a supportive community is naïve, misplaced, passé. The principles of the HP Way no longer appear on the HP website.
Last week there was another serious downturn in the tech business, though it seemed to be more of a problem for Hewlett-Packard than for anyone else. CEO Carly Fiorina did not react by reducing hours and asking everyone to work together—she peremptorily fired three executives. And by implication, she let every employee know that no one was safe from being blamed if something went wrong—that every employee is fair game in the vindictive corporate jungle.
Darrell Dunn reports the story in Information Week:
Hewlett-Packard fired three top managers Thursday after reporting that its Enterprise Servers and Storage Group experienced a sales decline in the third quarter.
Following the earnings announcement, chairman and CEO Carly Fiorina said Mike Winkler will replace Peter Blackmore as executive VP of the Customer Solutions Group; Jack Novia will replace Jim Milton as the group’s senior VP and managing director for the Americas region; and Bernard Meric will replace Kasper Rorsted as the group’s senior VP and managing director of Europe.…
"It’s pretty clear that heads will roll," says Jonathon Eunice, an analyst with Illuminata. "If you’re a customer with certain personal relationships with some of the people inside that organization, you’d better brace for change. Anyone with responsibility within that organization is at risk."…
"Execution issues cost us, and we are therefore making immediate management changes," Fiorina said in the statement.…
Fiorina pointed to three issues that led to problems, resulting in shortfalls in revenue of about $400 million and operating profit of about $270 million. The company "executed poorly" on the migration to a new order-processing and supply-chain system, which led to missing some sales opportunities. The problems also required the company to take special measures to ensure deliveries, including fulfilling some direct orders by its channel partners and expediting orders with air shipment, which led to erosion of gross margins.
This is not the first indication of where Fiorina’s loyalties lie. The Institute for Policy Studies reported last year that "The top layoff leader in terms of layoff numbers is Carly S. Fiorina at Hewlett-Packard. She fired 25,700 workers in 2001, and saw her pay jump 231 percent, from $1.2 million in 2001 to $4.1 million in 2002."
It’s easy, of course, for old curmudgeons like myself to mourn the passing of a half-remembered golden age. Well, the 1980s were not a golden age, but it is true that here and there a sense of community and shared loyalty still survived. It was not always management by pique, and control by fear. It had not yet become the stuff of Carly Fiorina’s new screenplay, Mad Max in Silicon Valley.
Ah, the memories… Takes me back to when I was Director of the Psych Dept. in a mental hospital in Canada. My immediate superior was an Asso. Exec. Director who also happened to be Chinese. He had come to my office to tell me what I could and could not say to the accreditation team scheduled to evaluate our hospital the next week. I told him I would simply tell the accreditors what I thought to be the way it is and “if that won’t get us accredited, we don’t have any business being accredited.” He acted as if I had hurled a dead cat into the sanctuary and, as if to put the fear of God in me, replied, “I believe in management by shame.” I said, “I’m going to do you a favor and pretend I didn’t hear that. I happen to believe in management by trust and mutual respect. You show people you have confidence in them and appreciate what they’re doing, and they’ll do anything in the world not to disappoint you.” “No,” he replied, “it doesn’t work that way. It’s like in China under the Red Guards. They would haul people out in front of their neighbors and shame them publicly; it’s the only way to maintain control.” Things being as they are, two weeks later I caught him red-handed having “retrieved” (as he euphemistically put it) an undelivered memo of mine to his boss, the Executive Director, and I had to haul him out in front of his neighbors and shame him publicly. The moral of the story, of course, is that the safest place for a fly is on the flyswatter.