By Peter Lavelle
Tuesday 16th February 17:33 GMT
Should a company lay off their employees only as a last resort? Ought an employer retain a worker at the expense of profit, if doing so is fiscally viable?
Those are the questions raised by 2 columnists this week – debating whether printer brand Hewlett Packard’s decision to make redundant 75,505 workers last decade is justified.
Their queries are pertinent – January saw strikes from HP employees in the UK for the first time, objecting to the removal of a £2000 bonus scheme, while 3400 HP employees were made redundant during 2009’s first half.
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In a 13 February 2010 article by Chris O’Brien for MercuryNews.com entitled ‘Lessons From Hewlett Packard’s Massive Job Cuts,’ O’Brien argues that the large restructuring undergone by HP last decade doesn’t justify their job losses.
He points to similar sized cuts in the motoring industry – General Motors have announced 210,000 since 2001, for example – to prove HP has been excessive.
After all, vehicle manufacturing is spluttering in and out of bankruptcy – while HP announced profits every year except one last decade, doubling their profit since 2000. Given this performance, are 75,505 losses justified?
Yet O’Brien’s argument doesn’t give sufficient weight to the restructuring undergone by Hewlett Packard since 2000.
He points out that since 2000, HP ‘trimmed’ almost as many employees as hired – 84,000. Yet within this same period, HP acquired two companies that shifted its focus away from personal computers to IT services: Compaq and EDS (recently renamed HP Enterprise Services.)
Purchased as recently as 2008, HP IT services contracts made 8% profit – $1.4 billion in operating profit – in Q4 of 2009’s $2.4 billion profit. In the same period, sales for hardware such as personal computers were down.
Hence, why should Hewlett Packard be obliged to retain jobs from a less profitable sector, when they’re refocusing?
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InformationWeek.com writer Bob Evans takes up this argument in his 15 February post: ‘Hewlett Packard and Oracle Layoffs Are Ugly But Essential.’ He asks ‘Are we going to cripple our leading corporations’ by encouraging uncompetitive policies – such as ‘employment is a right.’
Evan’s point is valid; yet his article is a master class in demonising yourself with the winning argument. Reading him, you can imagine Evans kicking aside a puppy that crosses his path, crying ‘Time is money!’
In short, Evans doesn’t leave room for the possibility that HP are the teensiest bit in the wrong.
For example, in February 2009 CEO Mark Hurd announced blanket pay cuts for HP’s 304,000(!) strong workforce – and knocked 20% off his $1.5 million base pay. Yet Hurd received $24.2 million in his total pay package in 2009.
Is this justified when HP is slashing its work force? Or – as O’Brien suggests in his MercuryNews.com article – could this money have been spent retraining people, instead of subjecting them to the sack?
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Finally, O’Brien is wrong to chastise HP for making redundancies that have ultimately helped the business. HP employs 304,000 people today – who perhaps would be jobless but for HP’s tough policy toward sacking those no longer needed.
Evans though is wrong to treat Hewlett Packard as a profit-making machine – what is business for, if not the benefit of people? Not hoarding money?
Between their perspectives, a middle ground is possible – one of remaining profitable, while recognising the ultimately obligation to people. With luck, Hewlett Packard will pursue this.
Sources
Bob Evans, ‘Hewlett Packard and Oracle Layoffs Are Ugly But Essential,’ InformationWeek.com, 15 February 2010.
Chris O’Brien, ‘Lessons from Hewlett-Packard's massive job cuts’ MercuryNews.com, 13 February 2010.
Daya Boran, ‘HP Pay Cut is a Bail Out,’ WebGuild.org, 20 February 2009.
Kelly Fiveash, ‘HP Faces First Ever UK Strike Action,’ TheRegister.co.uk, 28 October 2009.
Jordan Robertson, ‘Hewlett Packard CEO Got $24 Pay Package in 2009,’ MercuryNews.com, 12 January 2010.
Matt Burns, ‘Pay Cuts, Not Lay Offs, Coming To HP,’ CrunchGear.com, 21 February 2009.
Tuesday 16th February 17:33 GMT
Should a company lay off their employees only as a last resort? Ought an employer retain a worker at the expense of profit, if doing so is fiscally viable?
Those are the questions raised by 2 columnists this week – debating whether printer brand Hewlett Packard’s decision to make redundant 75,505 workers last decade is justified.
Their queries are pertinent – January saw strikes from HP employees in the UK for the first time, objecting to the removal of a £2000 bonus scheme, while 3400 HP employees were made redundant during 2009’s first half.
--
In a 13 February 2010 article by Chris O’Brien for MercuryNews.com entitled ‘Lessons From Hewlett Packard’s Massive Job Cuts,’ O’Brien argues that the large restructuring undergone by HP last decade doesn’t justify their job losses.
He points to similar sized cuts in the motoring industry – General Motors have announced 210,000 since 2001, for example – to prove HP has been excessive.
After all, vehicle manufacturing is spluttering in and out of bankruptcy – while HP announced profits every year except one last decade, doubling their profit since 2000. Given this performance, are 75,505 losses justified?
Yet O’Brien’s argument doesn’t give sufficient weight to the restructuring undergone by Hewlett Packard since 2000.
He points out that since 2000, HP ‘trimmed’ almost as many employees as hired – 84,000. Yet within this same period, HP acquired two companies that shifted its focus away from personal computers to IT services: Compaq and EDS (recently renamed HP Enterprise Services.)
Purchased as recently as 2008, HP IT services contracts made 8% profit – $1.4 billion in operating profit – in Q4 of 2009’s $2.4 billion profit. In the same period, sales for hardware such as personal computers were down.
Hence, why should Hewlett Packard be obliged to retain jobs from a less profitable sector, when they’re refocusing?
--
InformationWeek.com writer Bob Evans takes up this argument in his 15 February post: ‘Hewlett Packard and Oracle Layoffs Are Ugly But Essential.’ He asks ‘Are we going to cripple our leading corporations’ by encouraging uncompetitive policies – such as ‘employment is a right.’
Evan’s point is valid; yet his article is a master class in demonising yourself with the winning argument. Reading him, you can imagine Evans kicking aside a puppy that crosses his path, crying ‘Time is money!’
In short, Evans doesn’t leave room for the possibility that HP are the teensiest bit in the wrong.
For example, in February 2009 CEO Mark Hurd announced blanket pay cuts for HP’s 304,000(!) strong workforce – and knocked 20% off his $1.5 million base pay. Yet Hurd received $24.2 million in his total pay package in 2009.
Is this justified when HP is slashing its work force? Or – as O’Brien suggests in his MercuryNews.com article – could this money have been spent retraining people, instead of subjecting them to the sack?
--
Finally, O’Brien is wrong to chastise HP for making redundancies that have ultimately helped the business. HP employs 304,000 people today – who perhaps would be jobless but for HP’s tough policy toward sacking those no longer needed.
Evans though is wrong to treat Hewlett Packard as a profit-making machine – what is business for, if not the benefit of people? Not hoarding money?
Between their perspectives, a middle ground is possible – one of remaining profitable, while recognising the ultimately obligation to people. With luck, Hewlett Packard will pursue this.
Sources
Bob Evans, ‘Hewlett Packard and Oracle Layoffs Are Ugly But Essential,’ InformationWeek.com, 15 February 2010.
Chris O’Brien, ‘Lessons from Hewlett-Packard's massive job cuts’ MercuryNews.com, 13 February 2010.
Daya Boran, ‘HP Pay Cut is a Bail Out,’ WebGuild.org, 20 February 2009.
Kelly Fiveash, ‘HP Faces First Ever UK Strike Action,’ TheRegister.co.uk, 28 October 2009.
Jordan Robertson, ‘Hewlett Packard CEO Got $24 Pay Package in 2009,’ MercuryNews.com, 12 January 2010.
Matt Burns, ‘Pay Cuts, Not Lay Offs, Coming To HP,’ CrunchGear.com, 21 February 2009.
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