HP Layoffs a Sign of Bad Management

[Anonymous]

HP Layoffs a Sign of Bad Management

HP may have 27,000 employees too many. It may be the case that 27,000 people should be laid off. I don’t know, but here’s what I do know: HP management does not know if the right number is 27,000.

    The massive staff reduction really signals that management failed to do its job in the good times.  If, in fact, the business is better off without these staff members, then they should have been pruned back gradually in the good times.  In this context, senior managers can make clearer judgments about which functions are overstaffed and which functions are adequately staffed, or even understaffed.  It is far kinder to an employee to terminate the job when the economy is strong than when it is weak.  Managers who allow staffing levels to become bloated, and who then fire large number of administrative staff  members, have failed to do their jobs and put their organizations at greater risks during economic downturns.

HP has about 350,000 workers in total. When you get down the level of a team of 35 people, the boss may be able to tell whether she can let some people go without cutting profits. When the division gets up to 350 people, the boss has hunches, but not certainty. When the group size is 3,500 employees, there is no way for the executive in charge to know whether staffing is too tight or to loose. And 350,000 employees? It is preposterous for a CEO to imagine that she knows what to do about headcount.

What can the CEO do when her company is not performing well? One track has to be to challenge her direct reports to delve into their groups to find opportunities for improvement. At the same time, she needs to reach way down the organization chart to understand the real problems the company is facing. While doing this, she may well find some exceptions, departments that are doing well. It wouldn’t be surprising to learn that the successful departments were not following central directives in some way. After all, those centralized directives are not working at the corporate level, so the right kind of insubordination may be the solution.

Each employee provides specific services. At the top of the organization chart, there is no way to know whether a particular employee is adding value in excess of his cost. HP needs to push decision-making downward. That might result in 27,000 terminations, but who knows.

http://www.channelinsider.com/c/a/Hewlett-Packard/Assessing-the-Impact-of-HP-Layoffs-344672/
Assessing the Impact of HP Layoffs
HP needs channel partners to help put some distance between it all the drama
Any time a company such as Hewlett-Packard announces that it intends to lay off 27,000 employees, or 7.7 percent of its workforce, it’s going to be cause some consternation. There is a natural tendency to assume the sky is falling, and while it’s not an ideal situation by any means to put that in some context there are still roughly going to be 322,600 people employed at HP. You can still accomplish quite a bit when you have enough people to fill six sizable stadiums at your disposal.

The question that is of most concern to HP business partners is where these cuts going to being made over the coming year. HP CEO Meg Whitman has implied they will be made across the company, but at the same time she pretty much said product development and growth markets such as China will largely be spared. In addition to cutting administrative overhead, it would be fair to say that a lot of these cuts are going to be in the area of marketing, sales and services. If that’s the case, HP will need to rely on it channel partners more than ever.

Right now HP is caught in a transition on multiple fronts. Tablets are eating into PC sales, customers were putting off on buying servers in anticipation of new platforms such as the Proliant Gen 8 server, and a significant portion of the hosting business is shifting towards shorter term cloud computing contracts for which there is a lot more competition.

In theory at least, HP should be able to address these issues in the months ahead starting with tablets running Windows 8, an increase in server sales that will be driven in large part by interest in new advanced systems management capabilities, and the general availability of HP cloud services. At the same time, HP remains strong in printer and is making headway in the networking, security and software categories, all of which suggests that despite all the turmoil the fundamentals remain relatively strong. In fact, the news of layoffs actually seemed to drive HP’s stock value higher this week.

What’s even more interesting from a channel perspective is that in the relatively near future selling IT products should get more profitable. As more services are automated, the cost of delivering those services drops. That creates opportunities for solution providers, at least for a while, to turn a higher level of profit even if gross revenues fall. That same thinking is also behind many of the decisions that the management team is trying to make right now.

As one of the most important vendors in the channel HP’s long term viability is critical for a significant part of the overall channel community. While no one wants to see 27,000 people lose their jobs, many of those people are going to wind up being contractors for HP, or in some cases become employees of HP channel partners. Some might even start their own solution provider companies.

Because all these changes are happening simultaneously it may seem like something catastrophic is occurring. Arguably these changes could have been better anticipated over the years, but the fact remains that they are now long overdue. As Whitman has noted on several occasions there really is no changing the past, so the real question becomes where does HP and its channel partners really need to focus on now to get where they want to be tomorrow. The answer to that question almost invariable begins and ends with coming up with products and technologies that a customer wants to buy.

The best thing HP can do right now to make that happen is put as much distance as possible between it and all the recent drama. HP in the months ahead will need its channel partners to get everyone’s attention put squarely back on the capabilities of its products, as opposed to the soap opera in Palo Alto, Calif., that mercifully looks like it might be finally coming to a close.

HP Warns Of British Cuts As 27,000 Jobs Go
Hewlett Packard has warned of cuts in its UK operation in a global purge that will see it axe 27,000 workers.

The US technology company plans to make the cuts, which amount to 8% of its global workforce of almost 350,000 people, as it struggles for sales in a marketplace increasingly dominated by smartphones and tablet computers.

HP, which has its headquarters in Palo Alto, near San Francisco, California, said the job cuts, along with other measures, should save it £2.2bn which it would invest in growth areas like "cloud" storage technology.

A spokeswoman said: "We do expect the workforce reduction to impact just about every business and region."

The firm currently employs 20,000 people in the UK.

One of those leaving is Dr Mike Lynch, chief executive of HP’s Autonomy (Dusseldorf: AUY.DU – news) division, formerly a UK-based stand-alone company he founded in 1996 and sold to HP last year for £7.1bn.

Cambridge University graduate Dr Lynch, who made £500m from the sale, is being replaced by Bill Veghte, HP’s chief strategy officer "to help improve Autonomy’s performance".

Dr Lynch will leave after what the company called a "transition period".

HP says it hopes to reduce the number of redundancies by offering an early retirement programme. Workforce reduction plans will vary by country, based on local legal requirements and consultation with works councils and employee representatives.

The firm’s chief executive Meg Whitman, also a former CEO of eBay, said the cuts were needed to ensure HP’s long-term health.

"While some of these actions are difficult because they involve the loss of jobs, they are necessary to improve execution and to fund the long term health of the company," she said.

"We are setting HP on a path to extend our global leadership and deliver the greatest value to customers and shareholders."

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May 24, 2012 at 9:51 AM