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Posted by Susan Sparrow, President Domicity Ltd.
This post is based on research for an upcoming Domicity CORProfile© report analyzing the strategies and operations of a global cloud leader.
Please click here for advance notice and 33% savings on early orders.
Hewlett-Packard, once a beacon of progressive human resources policy, has lost its way. Regarded for years as a top place to work, the company has not been seen on Fortune’s annual ranking of “America’s 100 Best Companies to Work For” since 2000.
Other IT companies in the Silicon Valley/Bay area have picked up the torch. For instance, in 2011 Google was #4, NetApp was #5, Cisco was #20, and Intuit placed #44. A couple of other companies were knocking on the top 50 door, notably Intel (#51) and Salesforce.com (#52).
Our analysis shows that 30 IT/electronics companies made it to Fortune’s top 50 companies between 1998 and 2011. Fifty-seven per cent were based in the Bay Area. (A few companies disappeared along the way into the belly of a bigger fish.)
Companies “from away” that cracked the top 50 in 2011 included SAS of North Carolina, judged by Fortune to be the number one company to work for in America for 2011 and 2010, and the only IT/electronics company to make the top 50 every year between 1998 and 2011 (Cisco was off for just one year). Qualcomm of San Diego clocked in at #33 for 2011 and Shared Technologies (now an Arrow Electronics subsidiary) at #43.
Yet, it was HP that pioneered the idea of an employee-centred corporate culture, not just within the Valley, or the US but throughout international business. The “HP Way” that Bill Hewlett and Dave Packard put in place included the introduction of such progressive HR practices and benefits as: profit sharing and employee share purchase plans; flex time; job sharing; telecommuting; open cubicles to support the free flow of ideas; promotion of women to senior management; support for employee volunteerism; a portion of time for engineers to work on their own ideas; development of a collegial environment where workers felt safe sharing their ideas with others without fear of having them stolen; and disciplined hiring that would prevent the need for layoffs.
HP’s employee-centred corporate culture was a fundamental part of its strategy for the first 60 years of its existence — from the late 1930s through to 1999. The notion was that the world’s best and brightest would flock to HP and generate a firestorm of creativity and enthusiasm that, if harnessed and channeled by a strong management regime, would result in revenue growth and high levels of profitability. A key element of the management regime that Bill and Dave instituted was the early adoption of Peter Drucker’s Management by Objectives.
All this worked. Over the years of the HP Way, the company grew from three employees — Dave and Lucile Packard and Bill Hewlett — with $5,369 in 1939 revenue to 124,600 employees and $47.1-billion in revenue for fiscal 1998.
By the late 1990s, as dot-com madness stalked the land, some believed that HP lacked the bloody-mindedness and marketing smarts to prevail. This led, in 1999, to the company hiring its first outsider and non-engineer as CEO. Carly Fiorina was a marketer with a background in networks (Lucent and AT&T).
When Fiorina took over as CEO, HP ranked #10 in Fortune’s 100 Best Companies to Work For. By the end of her first full year at the company, it had dropped to #43. After that HP disappeared from the list. When Fiorina left in 2005, HP picked another outsider as CEO, Mark Hurd.
At HP, both Fiorina and Hurd embraced the human resources principles now common throughout much of North America’s multinational sector. Workers, just another commodity, could be sourced globally from wherever they were least expensive and in best supply — sometimes referred to by the unfortunate term “labour arbitrage”. HP’s value chain was made lean and mean by waves of mass layoffs, typically in multiples of 10,000 workers at a time. Wages were slashed and benefits were stripped to help juice up the company’s earnings. At the time, employees mumbled darkly that the goal was to plump up the options-enriched compensation packages of those at the top of HP’s pyramid.
In mid-2010, a few months before Mark Hurd was let go, the results of an internal HP employee survey surfaced, revealing that two-thirds of the staff would work somewhere else for the same salary. Facing a serious morale challenge, HP’s new CEO Meg Whitman acknowledged, shortly after being appointed in Sept. 2011, that employee relations must improve.
As HP tries to maximize cloud computing opportunities in the face of tough competition from more employee-centred competitors, it could rediscover that humans matter.
[...] satisfaction survey “100 Best Companies to Work For“ . As someone who believes Humans Matter, I looked over the list of US companies in search of insights into why Google, NetApp, SAS, and [...]