Hewlett-Packard Company: Personal Management and Organizational Behavior

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Introduction

The company, today is known popularly as HP or Hewlett-Packard Company (NYSE: HPQ), was founded in 1939 by Bill Hewlett and Dave Packard, Stanford University classmates at Palo Alto, California (HP, 2007). Starting out with the manufacture of an audio oscillator in a garage, the company today offers a wide range of technological products and services worldwide. One of the earliest customers of HP was the Walt Disney Studios which placed an order for eight oscillators for the making of its movie Fantasia. During the 1940s, the company received many orders from the U.S. government for electronic instruments due to World War II. This laid the foundation for the growth of HP. In the 1950s, as HP grew, Bill Hewlett and Dave Packard introduced a new management style that soon became a popular corporate culture and was followed by several other technology companies (HP, 2007). The company went public in 1957, and true to its policy of respecting workers, the company offered stock grants to employees. Since the beginning of the twenty-first century, HP has become of the world’s largest IT companies and is a strong force in the realms of printing, personal computing, and IT infrastructure globally (HP, 2007).

Hewlett-Packard Inc

The company leads globally in the manufacture of printers, software such as blade, x86, Windows®, Linux, UNIX, and high-end UNIX servers, total disk and storage systems, and desktop and notebook computers. HP has reported revenue totaling $100.5 billion for the four fiscal quarters ended July 31, 2007 (HP, 2007). Speaking from a global context, the company serves more than one billion people in more than 170 countries, has 156,000 employees, and ranks 14 in Fortune 500 ranking (GCR, 2006b). HP spends over $3.6 billion (U.S.) every year for research purposes. According to its official website, the company’s mission is to “invent technologies and services that drive business value, create social benefit and improve the lives of customers — with a focus on affecting the greatest number of people possible.” In fiscal 2006, HP revenue increased 6 percent to $91.7 billion, and non-GAAP earnings per share increased 46 percent to $2.38. And, according to Mark Hurd, current CEO and President of HP, the company “achieved the most balanced profit mix by business group and region that HP has seen in years” (Hewlett-Packard, 2007).

Leadership at Hewlett-Packard

Initially, the company’s founders focussed on the quality of the products and not on growth. But when the company became public in 1957, the founders planned to give considerable operating freedom to the managers of these business units but to do so within a set of commercial and management guidelines (HP, 2007). These guidelines became encapsulated within a vision statement known as the ‘Hewlett Packard Vision’: “Confidence in and respect for our people as opposed to depending upon extensive rules, procedures and so on; which depends upon people to do their job right (individual freedom) without constant directives” (‘The HP Way).

A good leader is one who is able to have a vision, set organizational goals, and motivate employees towards achieving those goals (Luthans, 2005). It was through the visions, goals, and motivational strategies of Bill and Dave that the company HP became a huge success. When Bill retired as CEO in 1778, he was followed by John Young, who served until 1992. The company reached several milestones of success under his leadership. Thus great visionary leadership was a vital factor in the success of HP.

Management at Hewlett-Packard

Bill Hewlett and Dave Packard introduced a management technique that came to be popularly known as “management by walking around.” This involved informal methods of management through personal involvement, good listening skills, and the recognition that “everyone in an organization wants to do a good job”(HP, 2007). As managers, Bill and Dave introduced the concept of management by objective – their first set goals and communicated overall objectives to their employees, and also gave them the freedom to choose their own methods to achieve the company’s goals (HP, 2007). Thus the employees determined what they thought is best for their own areas of responsibility. This made the leadership style at HP more participative in nature.

HP also introduced the open door policy. They had open cubicles and executive offices without doors in order to encourage employees to come forward and discuss their issues with their managers (HP, 2007). The HP objectives provided a framework for managerial decision-making on a daily basis. Dave said: “We thought that if we could get everybody to agree on what our objectives were and to understand what we were trying to do, then we could turn them loose, and they would move in a common direction” (Hewlett-Packard, 2007). This is, in fact, the core of the management model called MBO (management by objectives). This management model differed radically from the then popular and traditional top-down management style of many companies.

Organizational culture

Hewlett Packard is viewed by its staff as having an outstanding organizational culture. The ‘Unwritten rules of the Game’ interviews conducted with middle managers highlighted the fact that the culture was seen as ‘supportive,’ very, very open, with a ‘team ethic’ (Gratton et al., 1999). At HP, the ability to operate as a team player rather than as an individual is highly valued and reinforced. The importance of selling the customer the ‘right product’ rather than selling at any cost stresses the long-term nature of the culture (Gratton et al., 1999). Hewlett Packard seeks people who wish to become part of the ‘family’ rather than those who wish to reap high returns over a short period (Gratton et al., 1999). Though Hewlett Packard promotes the rhetoric of freedom and innovation, it is not right to assume that HP has a loose culture. Strict managerial control is achieved through output control. The rigorous application of business planning and performance systems ensures that the target of employees’ behaviors is tightly prescribed and controlled. How employees achieve that target is not overtly prescribed (Gratton et al., 1999).

Stress Management

Today, management theory shows that in order to make employees less stressed, they should be made to feel relaxed at their workplace. Bill and Dave introduced various measures to make employees feel relaxed: they provided catastrophic medical insurance, made it a rule to use first names to address employees, and gave regular employee parties and picnics (HP, 2007).

Communications

HP has a framework for strong internal communication. This ensures that employees are well informed and also provide feedback to management. HP uses several channels to communicate with employees, “including an internal web portal and company news website, regular e-newsletters, quarterly all employee webcasts, and regular communication sessions with the CEO and other senior leaders” (GCR, 2006c). In 2006, the CEO alone held 15 communication sessions at locations around the world (GCR, 2006c). The employees can get details of all major company events through the website. Surveys are widely used to get feedback from employees. Employees are encouraged to ask questions to HP business groups and functions through the award-winning “Ask HP” service. In 2006, more than 112,000 employees (74% of the total workforce) responded to HP’s annual global employee survey – the Voice of the Workforce (VoW) (GCR, 2006c). HP’s Chairman, CEO, and President, Mark Hurd, and HP’s Executive Council personally go through the anonymously written comments of the employees (GCR, 2006c).

Measurement of Performance

At an individual level, Hewlett Packard also uses a variety of mechanisms to plan, monitor, and assess individual performance: performance evaluation, ranking, and self-development plans. There is a constant, informal, day-to-day appraisal of performance by line managers. In fact, among all organizations in the Leading Edge Consortium, Hewlett Packard scores highest for the number of discussions conducted by line managers with their staff on career management, appraisal, and personal development (Gratton et al., 1999). HP rewards good performances and offers attractive bonuses and rewards to its most efficient workers. This keeps them motivated. In 2006, the Total Rewards strategy was introduced to further enhance the performance-based culture at HP (HP, 2007).

Diversity

The company sees itself as a multinational corporation and not as a global corporation. It, therefore, seeks to promote a culture that allows different national cultures to thrive along with the HP Way. Diversity, in general, adds creativity to the workforce and also helps in creating a stimulating work environment. HP’s workforce has scaled new heights in the realm of diversity. The workforce at HP is spread across various regions in the world: the Americas; Europe, the Middle East, and Africa; and the Asia Pacific and Japan (HP, 2007). As most of the employment growth takes place outside the United States, there is a global diversity focus. Globally, HP focuses on increasing the representation of women in HP, and domestically, within the United States, HP focuses on increasing people of color. HP has a Diversity & Work/Life Manager named for each of the following regions: Asia-Pacific, Europe, Middle East, and Africa, and Latin America (HP, 2007). There is an HP Diversity Council formed with senior executive leadership from each HP business to develop, direct and champion diversity initiatives worldwide. Ron Brown Award is given by HP for Diversity in Education, and the company has launched digital Villages to narrow the digital divide (HP, 2007).

Global Citizenship

HP is a company that has a global citizenship strategy covering a wide range of issues.

This table shows some of HP’s current and future goals in each of the three priority areas.

	Goal for 2006	Progress	Future goals
Supply chain responsibility	Conduct new, and follow-up/verification audits at 90 sites	Conducted 125 site audits	Audit 95% of high-risk product materials, component, and manufacturing supplier sites by the end of 2007
Energy efficiency	Reduce HP’s on-site greenhouse gas emissions by 18% from 2005 levels	Through several process changes, we reduced site emissions by 31%	Reduce the combined energy consumption of HP operations and products 20% below 2005 levels by 2010²
Product reuse and recycling	Recycle 1 billion pounds of electronic products and supplies by the end of 2007	To date, HP has recycled more than 920 million pounds since 1987	Recycle 1 billion pounds of electronic products and supplies by the end of 2007

The recent focus has been on environmental issues such as energy efficiency and product reuse, and recycling. The global citizenship priorities for 2007 are supply chain responsibility, energy efficiency, and produce reuse and recycling. HP ensures that suppliers meet high environmental responsibility standards and even has a Supplier Code of Conduct. HP also promotes the recycling of products through take-back and through regulations. Mark Hurd cits that the company is on target to achieve the long-term goal of recycling 1 billion pounds since the product recycling program began in 1987 (GCR, 2006a).

Conflict Management

Hewlett-Packard was widely criticized for conducting illegal investigations to track down troublesome leaks caused by warring board members. The company’s reputation came under threat as the media brought into the limelight the various conflicts within the company. For a board to become a high-performance unit, it must be able to have a mechanism in place for resolving conflicts among the board members. A high-performance board is one that can comfortably face confrontation, dissent, and conflict (Luthans, 2005). The board members should be aligned in four key areas: strategic and operational goals, delineation of roles and responsibilities, rules and protocols for decision making, and conflict management and interpersonal relations (Luthans, 2005). In the case of HP, the board members were not clear regarding the strategies and operational goals of the company; there was no transparency and no mechanism to resolve conflict among the board members (Guttman, 2007). In her memoir, Tough Choices, Hewlett Packard CEO Carly Fiorina, who was ousted before the outbreak of the scandal, reveals that board members have their own limitations and that the HP board was sometimes disruptive and “didn’t know what they didn’t know” (Guttman, 2007).

The Wall Street Journal reported that within weeks after Patricia Dunn became the new chairman of HP, she found herself “in open warfare” with Director Tom Perkins (Guttman, 2007). Dunn complained that Perkins was conducting high-level strategy discussions that belonged in front of all directors, as well as making decisions on which she did not have a vote. This conflict was mainly due to a lack of clear-cut assignment of responsibilities. The conflict might have been prevented if there had been appointed committees to conduct due diligence and make either recommendations or decisions on important issues. A conflict can become destructive if not managed properly. Some of the mistakes made by HP in this regard are: the leaking of confidential information by HP directors, recruiting of supporters, and accusing people who are absent.

Conclusion

Hewlett Packard has revolutionized the world of management through its introduction of the management-by-objectives model and its focus on the freedom and welfare of employees. These changes ushered in by visionary leaders have made HP one of the most successful companies in the world.

Bibliography

Hewlett-Packard (2007). HP Interactive Timeline.

HP (2007). Highlights of our diversity journey.

Global Citizenship Report (GCR) (2006a). Global citizenship at HP.

Global Citizenship Report (GCR) (2006b). Employees.

Global Citizenship Report (GCR) (2006c). Communications.

Guttman, M. H. (2007). Lessons from the Hewlett-Packard Debacle. USA Today. Vol. 135, Issue 2740. 2007. Page 60+

Gratton, L.; Hailey, H.V.; Stiles, P.; Truss, Catherine (1999). Strategic Human Resource Management: Corporate Rhetoric and Human Reality. Oxford University Press. Oxford. Publication Year: 1999.

Luthans, F. (2005). Organizational Behavior: Tenth Edition. McGraw-Hill. New York. 2005.

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