Case Analysis Hewlett-Packard: Culture in Changing Times

Hewlett-Packard: Culture in Changing Changing Times Times Case Analysis

Scenario •

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HP - Inception in a garage garage in 1939, founders - William Hewlett Hewlett and David Packard Hewlett-Packard (HP) grew to be a leading technology solutions  provider in the 1990s. It attributed its growth to the unique culture that the company had fostered - 'The HP Way'. Carly Fiorina appointed as HP’s new CEO in July 1999. In September 2001, HP, led by Fiorina, announced acquisition of Compaq Computers. Walter Hewlett opposed the acquisition. HP narrowly won a shareholder vote in March 2002 favoring acquisition. Hewlett filed a lawsuit alleging discrepancies in voting regarding acquisition of Compaq computers by HP.

Changes made by Fiorina •

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More concentration on individual products.

HP’s 

total solution offering compared to

Reorganization into a front-back structure with sales & marketing on the front end and R&D and manufacturing on the back end. More emphasis on using pay to motivate executive behavior by tightly coupling incentives with performance targets   Pay-forresults plan. Advocated emphasis on revenues over profits in contrast to founders’ importance of profit and people. Availed perks like private jets against the egalitarian culture of HP nurtured over the years

Basis of the Acquisition •

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A combined company would be better able to face the changes under way in the industry. industry. Can Leverage on the strength of one company in key areas where the other held a weak position. Can enable significant Cost Savings, achieved in  part through job cuts. Can gain business efficiencies, especially in manufacturing and distribution systems. Can achieve significant operational efficiencies, efficiencies,  by reducing annual costs by $2.5 billion by 2004.

Acquisition Aftermath •

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Held a strong No.1 market position in both servers and desktop PCs On the efficiency front HP reduced costs by $3.5 billion and headcount by nearly 20,000 HP obtained several large outsourcing contracts that it was unlikely to have won prior to the merger By end of 2002, 2002 , Dell overtook HP in PCs and by mid 2003, IBM overtook HP in servers Employees gave low rating on management credibility, credibility, respect and fairness The HP Ways and the high-commitment culture to which it had given rise was largely gone.

ANALYSIS •

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The culture of the organization, The ‘HP Way’ is the image created for the employees and market. HP’s  culture gives importance to  people by giving the sense of belonging and reward for collective  performance. When Carly Fiorina took over, she bypassed the HP way. By being oblivious to the core issues that made the organizational architecture of HP, she undertook change steps that contradicted with the existing setup and conflicted with the thinking held by workers of the company. approach to the organization and its vision reflected towards individualism, and left the workers stranded to understand their role especially during the changes being made.

  Fiorina’s

The strategies have to be made by taking impact on organizational culture in to consideration. The employees may be reluctant to the changes and may question the core vision and objectives of the organization.