Just after HP's first-ever [1] mass layoffs, I tried to write down some of my thoughts and feelings about the personality change of the company that has employed me for 19 years. The picture was considerably confused by the announced merger/buyout of Compaq in early September. My draft was dated September 9th. Almost 4 months later, the issues of layoffs, the merger, and recession remain confounded.

I had an ex parte conversation with a woman who works for Lee Hecht Harrison just before 9/11, the firm that HP hired to help with their "Workforce Reduction Program." When she found out I worked for HP, she hit me with a wave of genuine sympathy, and started talking freely about the event from a completely impartial point of view. Having struggled with my own reaction to it for most of three weeks, it was a refreshing new angle.

She suggested that HP should hire LHH to counsel the "survivors." Their work so far had focused on the "participants," helping them to recognize the opportunity before them, to re-examine what they wanted to do with their careers. They'd been doing a good job of helping people to a positive understanding of what had happened and what's next. I thought about the issue of it not turning out well for everyone, but didn't bring that up. Nothing turns out well for everyone, after all. HP's severance package was by all accounts a generous one (it's looking more attractive all the time). It isn't the same as continuing employment, but it can certainly fund a reasonably comfortable transition for most. I'm thinking of the "signed the agreement" version of the severance package, of course, the one that exchanges 2 to 10 additional months' pay (based on time of service) for agreement to a variety of conditions, such as forbearing the privileges of bringing a lawsuit and disparaging the company.

Such provisions don't apply to the survivors, of course. We're bound as always by legal standards of business conduct, as well as by the higher standard that HP has long promulgated among its employees. (For my reference, I summarize that with its preamble: we conduct our business with uncompromising integrity. I note that not all corporations have such an explicit standard, let alone an implicit one. Some feel that corporate power justifies breaking the law, for example. But that's another story...)

For many years, the practical result of this in my case was that I wouldn't say anything substantially negative about the company. I won't lie about it, I won't cover up anything negative that I think needs to be said, but neither would I take the trouble to go into unnecessary detail in a public forum. And of course, not much from me is "necessary" in these regards. I'm just one of the "worker bees."

One thing that's changed as a result of the downsizing, however, is that I'm less willing to just keep quiet and present a "company face." As a continuing employee (for the moment!), I still plan on reasonable discretion, and long before I feel the need to write an exposé of anything, I'll quit first. It's not exposé time, by any stretch.

This LHH dispassionate view was most striking in the way it characterized the event as some sort of corporate spasm, a non-human reaction that had to be carried out by (and to) humans, for the apparent good of the organization. It couldn't be based solely on performance, or ranking, so that it was defensible against litigation. Performance, gender, racial, age and other dimensions of the participants have to be well-distributed, make a nice bell-curve. A bell-curve is the form of a random distribution, of course; in other words, the axe has to fall in some measure of a random manner. For the good of the corporation, and therefore (I suppose it's rationalized) for the good of both the people leaving and the people staying.

From her point of view it was something that was out of control of the good people who had to carry out the orders, or receive them. (The latter part was clear enough!) It's as if at some higher level of management, human responsibility magically shades into corporate responsibility, and actions can be taken without attaching names. As if the decision of what is made, and then the how involves a roulette wheel. And everyone understands that the wheel may have to be spun again some time, maybe some time soon.

If there were any doubt about that, the stunning news of the proposed merger with Compaq set it to rest. 15,000 more people would be laid off in the process of "realizing synergies."

But that's still some months away, we suppose, if and when the merger is approved by both companies' stockholders and passes through regulatory hurdles. (In early September, that was just "when," but Walter Hewlett's vigorous opposition, and expected proxy solicitation puts the emphasis more on if.)

Coincidentally, this all happens about the time that "Neutron" Jack Welch retires from America's greatest (current) success story, GE. [2] He didn't get that nickname from being Mr. Nice Guy when it came time to make a reduction in force! But none of the employees who were also long-term stock holders were left empty-handed. At this point, no one's saying "good riddance," they're all asking if anyone can succeed Jack. Carly seemed to be taking pages from Cisco's playbook for a while, but they've been hammered down worse than HP. Once in the top 3 of market capitalization with Microsoft and GE, they're now down in the mid-teens. Maybe GE is the new model.

Downsizing was an important topic of discussion in the middle of the last decade, before it became overshadowed by the fever of the dot.com bubble. Ironically, HP was cited as an exemplar of a no-layoff policy in Alan Downs' piece in Mother Jones, The Wages of Downsizing. "David Packard's compassionate capitalism has paid off in spades. Hewlett-Packard has doubled its revenue over the last five years. Notes John Jones, an analyst at Salomon Brothers, ``There are very few $30 billion companies that are growing 20 percent a year and are as profitable as HP.``" (20% growth was a bubble thing; HP reached $45 billion revenue in 2001, after spinning off Agilent Technologies, and its $8 or $9 billion of annual revenue. HP is still profitable, but without bragging rights, and with a downward trend.)

Downs argues that the usually cited benefits of downsizing are myths: Downsized companies are not leaner; layoffs do not increase productivity; new, better jobs are not being created; and downsizing does not increase profits. What it does do is reduce wages. But with our founders now gone, that is not where the conversation is centered. We now hear about bold moves, strategy, synergies, being #1 in our markets. Workforce reduction is just one of many management tools, with its own infrastructure, organizational structure and outsourced consulting.

Howard Stein's landmark paper on Death Imagery and the Experience of Organizational Downsizing is also from the "last round" of the mid-1990s. He writes: "(A)s a social form of problem-definition and problem-solving, downsizing has taken on mythic, magical, reality-distorting proportions." There is plenty of experience of death and separation in the process: the loss of trust of the organization as a whole, loss of trust in individual managers who had to carry out the task. No one is willing or able to make the process honest and transparent, and the front line managers are arguably the most abused by the process. The separation from coworkers, the awkwardness of quick departures, and in some cases, the return of those coworkers as lower-status (and of course lower-wage, and lower-benefit) "external temporary workers" prolongs the injury. With more promised, it's hard not to keep watch over your shoulder.

Whatever happens, I suspect that someone will be there to tell me it's for the best, and that it's nothing personal.

It's corporate.


This work expresses my own opinions, of course, not those of the Hewlett-Packard Co.

[1] HP has had layoffs before, but the only sizeable ones were of employees of acquired companies. The August, 2001 event was unique in the history of the company and signaled a departure from long-standing policies. Expressions to the contrary are obfuscation.

[2] Work by Jim Collins, reported about a year ago in Fortune, studying mediocre companies that became great (measured in terms of stockholder return) revealed that less well-known companies such as Walgreen had beat GE. He used a threshold of return greater than GE's to select the candidate "became great" companies to study.

Other sources

Yahoo has a useful index of articles concerning Downsizing and Layoffs

Your tax dollars paid for a fat study of Best Practices in Downsizing, predicated on the assumption that downsizing is necessary and simply needs to be managed well to be "successful." The executive summary ends with a flash of the blindingly obvious: "A key conclusion of this report is that the success or failure of a downsized organization depends on the workforce remaining after the downsizing." (Interestingly, it includes a link to the Downs' piece in Mother Jones that I cited above.)

Tom von Alten      tva_∂t_fortboise_⋅_org

Sunday, 06-Jan-2002 10:28:41 MST