INTRODUCTION

The case presented to us is on the human resources at Hewlett-Packard. This company started out small
and through hard work and determination is a vast organization today. One unique thing about it is the way
it manages its employees. It is a distinct method, probably not applied anywhere else hence the name the
HP way. The employees feel motivated and satisfied as every individual personally participates and
contributes to the well being of the company.

This supportive process not only forms new working relationships but also emphasizes on goals ant
teamwork. This method works as the basis is trust, loyalty and openness. Besides, how something is being
done is more important than who is doing it.

The company is technically driven hence the main focus is on R&D. Profitable opportunities are sought for
a vision towards greater market share. HP is an independent organization that promotes a self sustaining
atmosphere.

When we look at HR there is an emphasis on adaptation and fitting into the company. The employees get
hired on a long term contract that secures their future. Training programs have also been expanded as
values and methods of HP are instilled in the employees. As the previously used word of mouth was getting
difficult, executive seminars were increased. The day to day activities are run on MBO, which means that
the short and long term goals are run on corporate and group objectives. This has the main hold on product
division.

Moreover the company relies on commitment to teamwork and participative decision making. It is mostly
needed in sales force management. When it comes to communication, the company has an open door
policy. This means that there is freedom of speech. Employees have access to each other and don’t
hesitate while communicating day to day dilemmas. Expectations are held and advice is sought. Managers
are encouraged to take rounds to see what is going on. Ideas at all levels are welcome and communication
is also done through demonstration, it is not just entertaining but also open. As there is a great deal of
tolerance, things are not misinterpreted.

Promotions and reward systems are also based on communication as employees feel free to speak their
mind. Career maze works well at HP which is the lateral moves inside the company. Employee pay is set
by a combination of relevant experience and sustained performance. Pay is based on the performance on
the wage curve. Quarterly reviews are also done based on this as employees are ranked. The knowledge
of accomplishments motivated others to perform well as well. This is a merit bases system that is very
open.

Conclusively this is a well managed company with a good reputation. Communication may be its strong
point but the company has many challenges to face in the future based on competition, growth and newer
markets.

QUANTITATIVE FACTS

 The startup capital was $538 and the company started in the garage.
 The sales grown and compounded at 23% in 1980
 Sales were $3.1 m from a line of more than 4000 products
 Net profits compounded at 27%
 R&D funds 9% of sales, after adjustment to profit and loss.
 Hp had 57,000 employees
 20 manufacturing locations in USA and 8 around the world
 More than 60 USA over more 100 in 64 other countries
 At the end of 1980 there were 40 HP divisions
 Corporate personnel function initialized in 1957 with 12000 employees
 Survey results:
 93% employees agreed for HP as “a place to work in”.
 83% felt themselves to be responsible of adding their share in the progress of the company.
 25% identify themselves as a part of company whole heartedly
 Financials:
 Net sales have increased from $378m to $3,099m in 1980.
 Cost increased from $332m to $2576m in 1980
 Shipments amounted to $192m in 1980 as compared to $111 in 1978
 Total Assets increased from $259m to $409m in 1980
Analysis:

 The company is ranked good in the market as it has been able to improve its costs, cost/net
sales=0.0312% in 1980 as compared to 0.878% in 1971.
 The financial strength in the market is also good as, earnings/total shareholder`s equity=0.1738%
in 1980 as compared to 0.0194% in 1971.
 The company believed in self sustaining and thus mostly re invest rather than paying dividends
 The debt structure and liability side shows that company believes on its own.

QUALITATIVE FACTS

 HP has a participative management style that supports even demands, individual freedom and
initiative while emphasizing commonness of purpose and teamwork.
 HP provides its employees with direction in the form of well-defied negotiated goals, shared data
and the support of necessary resources. A conscious intent has been made to retain the sense of
purpose, closeness, and informality that HP had as a small company.
 The process within HP provides the strength and structure to help assure the desired products of
their efforts. This process has got a very good track record.
 HP provides exceptional subtlety in approach and trust and openness in relationships.
 HP’s strong beliefs in several areas shaped the company from the beginning which remained the
most fundamental, active guiding forces at HP.
 HP has a dominant emphasize on R&D to create products that will compete by the new technical
contributions rather than through marketing or other competitive devices.
 HP’s organizational structure is designed to maintain flexibility and responsiveness by
decentralizing responsibility and authority to divisions responsible for each market segment.
 HP establishes a close working relationship with vendors and the use of computer information
systems to help pin-point problem areas.
 The financial reporting system also provides special statements to view each division’s success in
worldwide management of its product line.
 HP’s management believes it is very selective in considering job candidates. There is great
emphasizing on adaptability and cultural fit. This selectivity is widely discussed to help instill a
sense of pride in work force at all levels.
 HP says that everybody they hire, they hire them forever and promote them within and grow their
own supervisors, technical people, and look for people who have a lot of growth potential.
 HP has developed a very successful and useful training program for the development of their
employees.
 The day-to-day activities of HP employees are primarily directed by a comprehensive system of
management by objectives (MBO) which is seen as an iterative process, beginning with the
establishment of shirt and long-range objectives derived from the corporate and group objectives.
 HP’s divisions have real freedom of choice in their operations, which enabled them to share their
problems and strengths, thereby building a much stronger company.
 At HP, a supervisor is expected to promote an atmosphere wherein an employee feels comfortable
and free to seek advice and counsel regarding problems of either a personal or job-related nature.
 Common coffee breaks are practically a ritual at HP with the company providing coffee and snacks
to all the employees every morning and afternoon. In this way managers and non-managers get to
know each other and discuss projects and problems more informally.
 Managers at all levels are encouraged to spend a part of each day wandering through the
organization, often without specific purpose other than to see what is going on and to build new
channels of communication with other employees.
 All employees at HP have the same profit sharing and eligibility for stock options.
 HP employees cite case after case of the great latitude and aid given to them during periods of
personal crisis.
 HP has an integrative bargaining system.
 HP has a job rotation culture which it uses for career development.
 Quarterly performance reviews helps maintain equity within employee pay but also spreads
extensive knowledge of employee accomplishments throughout the company.
 All aspects of the salary administration are very open. Each employee sees his or her wage curve
and the one on the next level up.
 HP has charismatic or transformational leadership which has left a personal impact on the
company.
CASE PROBLEMS

 HP is unable to develop Leadership roles from within the organization as half of their employees
have been with the company for three years or less. This is why HP hires supervisors from outside
the organization.
 The number of experienced employees leaving on the basis of retirement has increased which has
reduced the experience in terms of skills and culture and is adversely affecting the organizational
culture.
 HP hires exceptional people who are more money oriented. Either they join another firm or start
their own businesses. Retaining these exceptional people is HP’s challenge.
 Hp has created various small divisions which have led to direct leadership at lower curve.
 Due to fierce competition in market, along with mass production of hardware, HP has to create
adjacent software. Thus they lack the required skills needed create software in competing market.
 HP’s unique management techniques have made their human resources more attractive to
competitors who want to capture them, hence deteriorating HP’s performance.

Core Problem: HP has failed to translate traits and skills in its exceptional human
resource to complete with dynamic environment.

As discussed in the case; the environment is very competitive for computer industry. Along with hardware,
companies are also focusing on software development. HP is mass producing hardware. With more and
more hardware being produced, software required for this hardware is also a challenge. Employees lack
software development skills. So when they see the dynamic environment in the industry, they leave HP to
more diverse opportunities. HP is not able to retain its employees for a longer period of time hence they are
unable to produce leaderships within the organization..Leaders are not born but trained. Employees leave
the organization in a period of three years or less and new ones are hired. And before a leader is created
from them, he quits the organization.
SOLUTION

The best solution for the above mentioned problem is that HP should focus on training of its employees.
The set of skills which are now required in the market, is what HP employees don’t have. Since employees
are not updated with software develop skills, they are de-motivated and dissatisfied with their job.
According to Two-Factor theory, job satisfaction is achieved when employee is intrinsically satisfied. This
satisfaction comes from sense of achievement, recognition from supervisors, responsibility etc. Motivation
doesn’t only come with a good reward system. Once this problem is solved, automatically, employees will
be more committed with organizational goals and objectives.

CONCLUSION

To conclude, the basic problem faced by HP was that its employees didn’t have adequate knowledge and
skills of software development which were now a prerequisite for hardware production. This made them
dissatisfied with their job and to avail opportunity in dynamic computer industry, they either quit the job or
switched to another organization. This also led to leadership issues at HP. So HP should focus on training
and development programs for its employees to update their skill and knowledge so as to boost their
motivation and job satisfaction.