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Performance Reset

Hewlett-Packard: Guilty of Oops! No. 12

September 6, 2012
Related Topics: Strategy and Management
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Who doesn’t love a good list? Whether it’s the "best of" or "worst of," we can’t help ourselves but to look at the lucky or unlucky ones that made it. I recently came across a few worst of lists: "The 11 Worst Companies to Work For" and "Labor Day 2012: 8 Biggest Layoffs." Now, it’s bad enough to be found on one, but Hewlett-Packard managed to find its way on both.

As I read more about why it made each list, it became pretty clear. HP seems to be victim of many of the management practices that waste time and money. In particular, I think the mistake it is and will continue to be most affected by is what I call Oops! No. 12: Downsizing.

In a business world where headline after headline puts employee engagement right at the top, I can’t help but believe that with the leadership transitions of the past two years and its recent announcement to lay off more than 8 percent of its workforce by 2014, HP is creating a culture that will have employees running for the door.  And even those who don’t will have likely "checked out" on the job.

I’m not oblivious to the appeal downsizing has for organizational leaders. When you have lagging sales and your cash flow is diminishing, as is the case with HP, it’s only natural to think there would be many advantages to doing so, mostly an immediate positive impact on the bottom line. The problem is, in the end, it doesn’t accomplish what you set out to do and does more damage than good to the employees who are left behind.

For starters, there should be valid reasons for letting employees go, and it should be considered only after the organization has explored all other options. In my experience companies rarely get employees involved upfront in identifying alternative actions that will in the end strengthen their culture and make unavoidable layoffs more understandable. Flex time and across the board salary cuts are some ways in which employees come together in the hopes of avoiding layoffs, but more important are the ideas for reducing costs while maintaining high levels of quality and outstanding customer service.

In the event your organization finds it has no other option but to downsize, it should be done with the utmost care. What many organizations don’t realize is that layoffs not only affect those who have lost their jobs but also those who are left behind to pick up the work that was once performed by others who are no longer there. How laid off employees are treated during and after the announcement also sends a message to the rest of the organization. If the remaining employees feel that those who were laid off were not treated fairly, you can bet that it will not only create a morale problem but will also affect performance as well. Companies who are more generous than they have to be to those laid off will recoup the expense of time and money many times over through the performance and attitudes of the remaining employees toward the organization.

Something that is almost never done is to increase positive reinforcement for the employees who remain given that they will be expected to do more with less. If that is not done, it begins a downward economic spiral that most companies experience after downsizing.

While I realize HP is facing many uphill challenges, the least of which is the market in which they compete, I do hope for the best for its leader and employees. I hope they heed my advice to not fall victim to Oops! No. 12 and instead, work with their employees to find a positive solution to their current problems.

Incidentally, one practice that HP seems to have avoided is Oops! No. 11: Promoting People No One Likes. According to the worst companies to work for article, Meg Whitman has an 82 percent approval rating. Here’s hoping that Meg will have as much success at turning HP around as she did at eBay.

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