More on HP job cuts from me and readers

If you missed it, over the weekend we ran my look at Hewlett-Packard’s massive job cuts over the past decade: 75,505.

I have a few other stray thoughts that didn’t make it into the main story. And a few questions I want to follow up on in the coming weeks.

First, the stray thoughts.

What I still find amazing is the headcount which stands at 304,000 at the end of the last fiscal year, even after 75,505 cuts. HP made the point that it has dramatically expanded headcount since 2000 when it only had 88,000 employees. That’s true. But one important distinction that I’d make is this: The company hasn’t created any net new jobs.

Let me explain. Among others, the company has acquired Compaq, Mercury Interactive, Opsware and EDS over the past decade. If you take these companies’ pre-HP employment and added it to the HP headcount of 88,000, then you’d get roughly the same number of jobs today. The main difference is that those jobs are under one corporate shell, rather than several.

Yes, that means HP is a dramatically larger company. But in terms of the world economy, there has neither been a sizable net gain or loss of jobs.

Those 75,505 cuts represent a dramatic level of churn. While HP was pushing employees out one door, it was busy waving them in another. Granted, it was getting rid of some overlap and duplication. But if there was really any savings, where did they come from? Moving jobs overseas? Hiring people who earned less? We don’t know.

One thing that came through in emails from HP employees, former and current, is that they feel morale is slow, and there is constant anxiety created by the drumbeat of cuts. One sample comment from a former HP employee:

“If you are going to use HP as a case study, then the real issues is what happens to the people who are left at the company. It turns out lay offs can be capricious and arbitrary. If you are in the wrong place at the wrong time you are gone, regardless of performance. The objective is to keep the workforce young, hungry and a bit n the ruthless side. There are no longer any serious rewards for longevity, except for a few senior executives. The company really does not want people to work there very long. It is a little like the Survivor TV show. the most uncaring and cold-blooded survive and the rest are expected to go. That attitude permeates our whole society today. Think about, Donald Trump gets great headlines for saying, “You’re fired.” “
Some commenters also noted that the HP I wrote about was the product of the spinoff of HP and Agilent in the late 1990s, a move that also led to some job cuts.
As a side note, I recommend “The Case Against Layoffs,” an article just published by Stanford professor Jeffrey Pfeffer in Newsweek:
“…over the last two decades layoffs have become an increasingly common part of corporate life—in good times as well as bad. Companies now routinely cut workers even when profits are rising.”
Regarding HP, there’s still one big legitimate question is this: Was it worth it?
That’s a hard one to answer. Yes, HP is number one in several areas. But this got me thinking about HP’s overall strategy over the past decade, driven by acquisitions and layoffs. Here are a few questions I have, but haven’t had time to calculate the answers:
  • How much has HP’s revenue grown above what HP and its four big acquisitions would have generated separately?
  • How much would profits have grown by the same measure?
  • How many more shares has HP issued as part of the acquisitions? How much has that diluted shareholder value? And how much has HP spent on stock buybacks to reduce dilution?

I think much of this data is out there, it’ll just take time to dig through the filings and pull it together. When I get around to it, of course, I’ll share it here.

I’d also note that right in our backyard, we have two alternative examples of how to reinvent a company in this era. The first is Oracle, which has been an acquisition monster, but has conducted far fewer layoffs than HP (I’m going to tally that up). The decision to cut “only” 1,000 from Sun Micrsosystems is a good example, a low number given that I and many analysts expected the number of cuts to be over 10,000.

And then there’s Apple. They are a great example of how to innovate your way to growth. Compare Apple’s track record to that of HP’s. Through all the acquisitions and growth, there’s no major innovation that people would associate with HP over the past 10 years. New products, sure. But nothing revolutionary.

Finally, I had all but forgotten about HP’s deal to buy 3Com. But it looks like that will close soon. We’ll have to wait to see how many job cuts follow.


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  • John R

    It’s no surprise. The same dolt coworkers you are working with now will one day get promoted. People don’t get smarter, so stupid once, stupid always.

  • Z.Z.
  • @Z.Z.: Thanks for pointing that out. I’ll post a response soon.

  • John

    HP-ES is performing major job cuts as we speak

  • HP Gone Bad

    Hp Laid off 5000 employee’s today! A once great company going down the crapper just like Mark Turd!

  • BestShore

    Bob Evans sucks! I refuse to buy any more of his sausage, despite his smiling visage. Reminds me of Ann “Quoth the Raven” Nevermore!

  • Doh

    I work for HP in the UK, where we have a lot more protection against Hurd under our employment laws. Here’s what happened:

    We were ‘asked’ to take the 5% pay cut (after most hadn’t had a pay rise in 07 or 08) – EVERYONE said no.

    The layoffs were done on a voluntary basis (as compulsory layoffs have to be proven legally) and as the payout was based on years of experience and pay, the most experienced and well paid people left and are still leaving.

    Productivity is down – most now refuse to work more than their core hrs.

    The number of staff off sick is sky high.

    In the UK staff are striking because of the way they are being treated and HP has LOST a $1B+ contract with the UK government with them because of this.

    Also in the UK a cheque clearing system for a banking customer failed for 48 hrs (unheard of in the industry) because HP sacked all the experienced support staff.

    The wheels will fall off soon.

  • cher

    HP does not care about workers, they care about profits, bottom line. The morale in the U.S has continued to plumet and after 25 years with the company I was part of this last big headcount reduction on Feb. 23rd. I understand…business is business, but I would like to know who is really stearing the ship — short gains but they will get burned — they too cut many people from the same project, can’t wait for the GM execs to blow a gasket on the lack of support and failure to meet minimum SLA’s.

  • Barly

    HP used to be run by Carly. She wants to be a governor now. Can’t wait to see how the new government is going to look like when its run from Bangalore.

  • Charlemagne

    The turning point was when employees began to be regarded as merely an expense. Think about it…How can anyone accurately “cost” an American worker. Experience…attitude…dreams…none of these attributes can be correctly factored into any cost/benefit analysis.

    This “bottom line” mentality applied to people means only one thing matters: pay. When you reach a certain age/payscale, you’re on the chopping block. And let’s face it, young people, women, and foreign workers reliant on H1-B approval, are going to sit and take a lot of garbage. They won’t talk back like a man would. They won’t challenge false assumptions or speak out against the tide. I hope I’m not offending anyone here. This is how management/HR “scores” workers.

    If you work on a computer, then your job can be done ANYWHERE.
    We know our MBAs have been programmed to disavow “obsolete” concepts like patriotism and loyalty. China looks just like America from a Gulfstream flying at 30,000 feet.

    Is Australia hiring?

  • Glad to be a former employee

    After 30+ years, I’m glad to be gone, even if it was from a layoff. HP has quietly been laying off its older workers over the last year. Instead of a mass layoff, which would attract attention, they’ve been firing just enough each week to stay out of the spotlight. Since the older workers will most likely receive a 6 month severance, if they sign a waiver stating they won’t say anything bad about HP, they figure no one will complain and go away quietly. The number of people is so high, that even HP’s own HR people admit they can’t keep up with the paperwork and the waivers aren’t being sent in the time they say they will.
    Bottom line, HP doesn’t want anyone remembering what the company was like, and they definitely don’t care about the people still there. After the strike in the UK, there’s even been talk about unionizing in the United States.

  • Gone With the Wind

    HP is currently an outfit of former DEC, Tandem, Compaq, EDS, etc. – and legacy HP folks, of course. Compaq bailed out DEC and saved that company from sure demise back in ’98. Since that time, many DEC employees have survived the mass layoffs at HP. Why? Think about for a minute. Many cold-hearted, backward-thinking DEC managers are still in place, that’s why! HP (and Tandem and even Compaq) were once proud companies with thousands of wonderful employess. Yet, DEC managers have been rooting out those folks seemingly left and right over the past two to three years. Go figure!

  • L. D.

    How unfortunate that HP has now acquired another well known company such as 3Com. It shouldn’t be too long before they mess this one up like they have with their purchases of Compaq, Tandem, and EDS.

    I talked with a “person” in the HP Executive Offices a couple of weeks ago about a recurring problem (well over a year now) with one of their web sites. The “person” told me they are an international “product” company and the executive office really doesn’t have anything to do with addressing internal problems or addressing customer issues unless it has to do with purchased “products”.

    Way to go Mark Hurd and staff… great approach to customer relationships. I’m sure the customers of 3Com can’t wait to deal with you.

  • a.h.t

    To “Glad to be a former employee”. It is true, the contract that HP/EDS have you sign for severence does warn you about saying negative things about EDS. But I doubt if EDS could never win a fight in court. The United States governement says you have the right to free speech as a citizen. Signing the contract does not take that away. A contract can not shut you up anymore than it can legalize slavery, give you 3 wives, or force you to sell property that’s not yours. Contracts can contain absolutely fantastic things. The game is getting folks who sign to believe they are bound. So please, alway speak up and say what you want.

  • DC

    I was a loyal HP employee since 1983 when Bill and Dave’s influence was still clear up through 2002 when I was WFR’d (laid off) after the Compaq purchase. I then was rehired in 2004 but soon found that this “new” HP was not a “better” HP. I decided to leave in 2009 after a total (and singular) career with HP of almost 25 years after I realized there was no valuation of its employees – where as a manager, I was primarily rewarded for “managing out employees” – Dave and Bill would be turning over in their graves knowing that their beloved managers’ main job was to justify the legal firing of the bottom x% of employees to save on cost. I had really hoped to complete a career with and retire from HP but I am now investing my experience and time in a company that truly values my contributions. HP and Hurd will soon completely drain the company of all those who made the company great – I will be sure to sell my stock within 5 years as all of those contributors will be gone.

  • Jesse

    I started with HP back in January of 1978 and also knew the company Bill and Dave build (The HP Way) and I too being 52 and after 32+ years was WFR this month, I was hoping to also retire for this once great company but it is true that HP is slowly removing older workers with lots of time vested, and the DEC field folks who are not as good as the HP field techs are still there, still complaining and not doing their share of the workload, go figure.

  • Short stay

    I joined HP for 2.5 years after leaving IBM, a wrong move, but am glad that I have moved on. Within this short period of stay in HP, I witness the removal of South East Asia (jobs cut), I witness the removal of HPS (more jobs cut), the acquisition of EDS but the removal of CI to combine with SW (even more jobs cut), I had to do resource planning, where I need to calculate the number of employees needed to be WFRed (many waves of job cuts). Then comes the voluntary pay cut of 5% (I heard for those who didn’t opt for it, were blacklisted.)

    To a point, I feel it is not a place to stay. This is not a place for me to spend my efforts and energy. I really doubt HP will be able to compete with IBM. Long way to go….

  • Americans have to stop buying the outsourcing monster’s products. Let the people in the countries where the jobs are going buy the products. India, China, Argentina, Mexico the list goes on. Outsourcing American jobs needs to stop. Returning Americans back to their jobs and distributing the billions of dollars that the CEOs robbed from the hard working educated employees would get this economy moving. The countries where the jobs have went and continue to go are not supporting our economy and an executive can only buy so many luxuries. The jobs need to come back to America. Just firing one greedy executive, could employ thousands of American employees who would then purchase products. Think about it. Who did NAFTA benefit?

  • Rich

    Being an ex-HP employee also I watched as the company over time took away pay and benefits and laid off their older employees who had more vacation and benefits than the newer ones coming in. At one point HP presented an early retirement package to long-time older employees. Most of us didn’t’ take the package it was only a little better than current layoff package that we ended up with when they did lay us off a year and a half later. What is even more disturbing is I now get at least one call a week from recruiters looking for people to perform at HP work similar to what I used to do but as a contractor or at significantly less salary. Evidently they still need the skills and can’t find it easily but don’t want to pay for it either. I am surprised their aren’t a slew of class action law suits against them.

  • I worked at HP from the early 80’s and was WFR (laid off) in 2007. I was really sad about losing my job because I had always loved working for HP. I was hired on with another company much smaller than HP but had better benefits, profit sharing, and I was actually made an offer for more money than I was making at HP. Looking back I can’t believe I ever felt bad about being let go. I have friends still there and to hear how much has been taken away from employees is shocking. I wonder why people just dont’ leave. Other companies are so much better compared to HP. There is nothing there for employees to stay. HP treats its’ employees like dogs. Glad to be gone!