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1993 General Excellence Optimas Award ProfileBRHewlett-Packard Co

May 27, 1999
Related Topics: General Excellence, Reengineering, Strategic Planning, Featured Article
You can always tell who the winners are. They never settle for less than the best. They're motivated more by inner conviction than outside influences. And they willingly learn from their own mistakes. But winners aren't made in a day. Neither was Hewlett Packard Co.'s personnel department.

Despite the commitment of co-founders Bill Hewlett and Dave Packard to create an environment in which employees can fulfill their natural desires to do good, creative work, they refused to establish a personnel department until 1957 — 18 years after they founded the electronics manufacturer in Palo Alto, California, simultaneously creating Silicon Valley. A personnel professional wasn't allowed to run the department until 1989, when F.E. (Pete) Peterson became vice president of personnel after a 24-year career in human resources, 17 of them at HP. "My getting this job was unique," Peterson says, "because the company had a tradition of filling the top personnel job with a general manager on his or her way to something bigger and better."

As with many roads paved with good intentions, HP's way didn't always take it to the best of places. The company got a late start on its personnel department because both Hewlett and Packard believed that line managers should care about their people and handle their own personnel issues. And because big bureaucracies often inhibit creativity, the late-blooming personnel function, like the rest of the organization, was decentralized as much as possible. Ironically, by 1990 the firm had an inflated roster of 1,800 personnel staffers, for 90,000 total employees worldwide, which represented twice the industry norm. Moreover, HP's line managers were relying increasingly upon these personnel staffers, with diminishing returns. "I didn't see morale going up [and] I didn't perceive that managers were getting any better at people management," Peterson recalls.

That era has ended. Today, HP's core values are evident in sweeping changes in how the $16.4 billion (sales) electronics firm's human resources are managed. In only three years, the personnel-to-employee ratio has dropped from 1:53 to 1:75 — and while Peterson has set no new goals for slimming his department, he's keeping an eye on other firms that boast ratios as low as 1:200.

But reducing numbers are only the beginning. That they've been attained without violating HP's long-standing no-layoff ethic is equally important. At the same time, Peterson's staff has launched a campaign to provide better service to the organization by carefully reexamining virtually every personnel process. Thus, they're searching out opportunities to consolidate activities that can work better either in a single global center or in a few regional locations. New computer technologies are putting information in the right hands — whether it's a staff professional, line manager, employee or job applicant — more quickly than ever. Wherever possible, they're taking personnel out of the decision-making loop, assuming a consultative role, re-empowering line managers to take responsible action on people issues and returning their attention to staying at the top of the list of preferred employers. And through it all, they're trying to preserve the best of HP's past practices. "We're moving the pendulum back in the [right] direction," says Peterson. Once again, personnel is becoming a complement to management, not a substitute for it — and it's looking a lot like a winner in the process.

New personnel leadership leads to new strategy.
After Peterson took the top personnel position in 1989, he spent six months gathering data and developing a plan of action. He met with all 50 of HP's senior managers in addition to benchmarking the best practices of other companies. Peterson concluded that HP's personnel function was on the right track in several areas, but still could benefit from some changes that would more closely link personnel with the organization's goals, processes and strategies. "Identifying, prioritizing and resolving issues was something we already did well," he says. "What was lacking was a clear definition of the role of HR in the '90s and how we add value to the organization."

Part of the answer lay in returning to the founders' original vision of making line managers responsible for people issues. "I think of ourselves more as consultants than as counselors," he says. Instead of being involved in the day-to-day people problems, HP's personnel professionals are taking on a broader consulting and coaching role to train managers how to be more effective in people management.

"There's a lot more coaching and counseling that managers could do that personnel has been happy to do [in the past]," says Tom Pierson, HP's human resources planning, staffing and relocations manager. Anybody can sit down and become familiar with HP's transfer policy, for example, and make an employee and his or her family feel comfortable about transferring. Getting personnel out of the loop allows managers more responsibility over this process and others. "You provide the tools to managers that allow them to do it themselves or make it easier and so much fun that they want to do it themselves," says Pierson.

In 1990, Peterson called upon his worldwide personnel team to create the environment by increasing value, providing higher quality and utilizing resources more effectively. Moreover, as part of its new role, personnel at HP is serving as a business partner with line managers. "HR will become an increased source of competitive advantage and will become more involved in business strategy throughout the '90s," says Peterson. "How you help your organization become more competitive in a rapidly changing business environment is by far the No. 1 issue."

To translate this revised vision of personnel's role into specific actions, Peterson designed Project '93, a set of specific goals for personnel. In addition to reducing the personnel-to-employee ratio, some of these goals were to:

  • Reengineer, define, standardize and continuously improve HP's personnel processes
  • Implement information technology such as a worldwide employment-management system and an international- employee master file and to improve efficiency and effectiveness
  • Stimulate change in such areas as teamwork, organizational effectiveness, quality and people development.

To accomplish these goals, Peterson focused the personnel department's attention on its own processes. The first order of business for HP's personnel department in learning how to use its resources more effectively was to decrease the personnel-to-employee ratio. The goal was meant to help the department streamline its operations and increase its effectiveness both to employees and to the company's managers.

Over the years, the personnel function had grown both in numbers of people and as a percentage of the work force. The largest gain in personnel professionals was in the area of personnel generalists or personnel liaisons. Peterson had to find ways to reduce personnel headcount, while still being a value-added function at HP. Basically, it was a matter of doing more, better, with less. By May 1993, the department had shrunk to 1,335, a 25% reduction in personnel staff worldwide that will yield an overall savings of more than $35 million a year for the company.

For HP, streamlining the personnel function to its present level has been an important step in its reengineering process. After considerable debate, the department decided to monitor ratios annually, but not to set new ratio goals for the future so that it can focus on other parts of Project '93. One of those has been the consolidation and regionalization of certain personnel services.

This move came as the result of the personnel department looking at its processes, which were highly decentralized worldwide. Virtually all of Hewlett Packard's 50 divisions and 120 sales offices had their own on-site personnel staff, which took care of all their HR needs, both administrative and strategic. Peterson decided that there had to be a better way. There was.

Peterson's strategy was to consolidate duplicated or redundant personnel operations wherever possible while keeping those activities that require local attention at the site level. Some operations were centralized at the corporate level, others were concentrated into regional personnel centers, while still others remained the responsibility of on-site personnel staffs that could be responsive to business needs.

Over the past few years, for example, personnel has consolidated disability-claims management into a disability service center, medical transactions into a medical response center and relocations into a relocations center.

The disability service center was consolidated into a single site in January. Previously, there were 26 personnel staffers responsible for disability-claims processing. Instead, managers now own the process by submitting the initial information about an employee who's out on disability leave. "[The new process is that] wherever possible, decisions should be made by the people who know the most about it," says Sally Dudley, compensation, benefits and systems manager.

Some of the other major personnel consolidations at HP have taken place in the U.K., Italy and HP's European multicountry region. HP's Australasia location, which includes Australia and New Zealand, has gone to one personnel function for both sites, instead of having two. In the U.S., a large number of field offices have consolidated many of their people-related processes, most notably in the San Francisco Bay Area.

The Bay Area includes 13 different sites and more than 15,000 employees. Since Project '93 started in 1990, the area's 200 personnel employees have incorporated most human resources functions into one regionalized center called the Bay Area Personnel Services (BAPS) Regional Center. This consolidation is expected to be completed by the end of fiscal year 1994.

The regionalized personnel services include operational activities such as records, benefits and staffing and organizational activities, such as employee-relations issues and organizational design projects. Personnel site managers primarily are responsible for these operational and organizational activities at all of Hewlett Packard's business sites, including the Bay Area.

In addition, BAPS personnel plans to add another component to the 13 Bay Area business sites which will give managers access to common human resources materials such as personnel forms, training and education schedules and employee-records forms. These components will be known as personnel-service centers.

"Progressive HR practices don't just occur because you have a group of bright, dedicated people sitting in corporate headquarters thinking up new ideas

One of personnel's new goals is to contribute to business decision making and facilitate changes that are consistent with HP's basic values. By maintaining on-site personnel professionals who can consult with managers on business-specific issues, personnel can be more involved in correlating personnel knowledge and practice with business challenges. These on-site groups, called management support teams, include personnel managers, personnel support managers, function specialists and administrative assistants.

Each of HP's business sites may have different needs. For example, one site may need custom training that must be designed especially for them. Personnel and management can meet to discuss exactly what's needed and develop a solution according to those needs.

"We learned years ago at Hewlett Packard that progressive human resources practices don't just occur because you have a group of bright, dedicated people sitting in corporate headquarters thinking up new ideas," says Peterson. That's why HP opens up the process to managers for suggestions. Ideas are tried out and implemented if they work. If ideas work in one area, they can spread throughout the organization worldwide. For example, Hewlett Packard pioneered the idea of flexible working hours in its West German division in 1967, and by 1972 it had spread throughout the organization.

The long-term results of personnel's regionalization at HP are yet to be realized. Personnel expects continued cost reduction, increased effectiveness and greater efficiency of service delivery. Peterson says that he hopes to spread the regionalization of personnel services to wherever it's applicable worldwide.

In addition to consolidating services, personnel has streamlined itself carefully by outsourcing administrative activities when it proves cost-effective and provides a higher-quality service. Outside vendors already handle: 401(k) administration, group universal life program (GULP), COBRA administration and service-award administration.

Technology helps personnel streamline and get managers closer to the people-management process.
HP is well on its way to being world-class in human resources information technology systems. Currently, it has several systems in place and several more on the way. These systems are helping the HP personnel community improve its efficiency and effectiveness in numerous ways.

Before technology improvements could be made, however, it was important for the personnel function first to look at its overall operation. "You can't implement the information technology unless you have process definition. You can't go to consolidated organizations without having systems in place. All three have to move in parallel," says Peterson.

The focus on technology has come as a direct result of Peterson's new direction for the personnel department. In terms of technology, the human resources function had taken a back seat to most other functions at Hewlett Packard. "We've been kind of the cobbler's children," says Peterson. "We're now very highly funded in long-term information technology."

HP's business sites used to manage human resources projects with decentralized personnel technology systems in much the same way as it provided personnel services at each location. Personnel's technology, in some cases, was more than 20 years old. Now the company is moving toward a single, integrated system that will serve as the foundation for all people-management processes worldwide — from recruitment through retirement.

The personnel department scrapped its previous HR technology, which included a distributed-employee database, an HRIS and a payroll system. It now has a new umbrella system called PeopleBase, under which it developed several new personnel applications. These include a telephone-activated benefits system, an employment-management system, a training-management system, a human-resources-management system, an optical-file-imaging system, a personnel-document-management system and an international-employee-master-file system.

In short, HP intends for PeopleBase to be more than just a personnel information system. It's a vision of people management as an integrated, cross-functional process, rather than a collection of separate, people-related activities.

The employment-management system (EMS) represents one of the personnel department's biggest achievements and is the largest application on the PeopleBase client/server network. The idea for EMS started three years ago with a conversation between Dave Packard and Tom Pierson. They realized that they had a big problem: just to apply for a job at Hewlett Packard, applicants had to send their resumes to 46 different mailing addresses in the U.S. Each of Hewlett Packard's business units collected resumes individually. Few, if any, shared resumes with each other.

Pierson has spent the last two and a half years designing, developing, testing and implementing a completely automated staffing system for Hewlett Packard U.S. and all of its English-speaking foreign divisions. Applicants now send their resumes to one Hewlett Packard address — HP's employment response center at its corporate facility in Palo Alto. They're then scanned into the system using advanced, optical-character-recognition technology and are available to all U.S. hiring managers within 72 hours. The system currently is available only to HP's U.S. personnel staff and its English-speaking divisions, but plans are in the works for similar systems to become available for Hewlett Packard's non-U.S. operations.

The system, which just went online this fall, can hold as many as 220,000 resumes in the data base. The resumes are kept current — six months old to the present. In addition, EMS can perform a short-list search for applicants in various categories such as the college-recruitment pool, the unsolicited-resume pool or the internal-candidate pool. The system also tracks each resume through the entire hiring process so that any personnel staffer or hiring manager knows at any given time exactly where each candidate is within the HP system. In addition, EMS automatically sends acknowledgement and regret letters to candidates and tracks affirmative-action information. It evens opens an employee file for each new hire as soon as he or she accepts a job offer. The system is expected to save HP $24 million a year.

In the future, Pierson says that HP is hoping to put fax machines on each college campus where it recruits so that students can send their resumes directly to HP's employment-management system. In addition, Hewlett Packard plans to install kiosks at every HP building so that employees can submit their resumes for any job opening.

Another bonus for employees is that if they don't currently have a resume, the system will help them write one. EMS even can be accessed by HP's college recruiters with laptop or palm-held computers so that they can input student-interview reports off-site.

The system also will be compatible with HP's redeployment program, which matches employees who have lost their jobs because of downsizing or outsourcing with other positions within Hewlett Packard. "It's reverse engineering," explains Pierson. HP can match people with jobs rather than jobs with people. "It will provide a lot of added value to be able to rebalance our work force and move people around within HP to maintain their employment security," he adds.

Line managers also are getting closer to the hiring process with the advent of the new employment-management system. Instead of asking a personnel staffer at his or her particular site to look up all the candidates that fit a certain job description, site managers can look up those candidates themselves in a maximum of five minutes using a key word or key phrase. It takes only a few minutes to learn how to use the system. "Managers are now begging for it because they've heard how great it is," says Pierson. The system will serve managers better, especially those who work alternate shifts and who don't usually have live access to personnel staff members.

Another technology system that's in development is a worldwide data-access system. The system basically is a warehouse in a client/server environment that allows managers worldwide to access employment information across geographies. In the past, when senior management teams wanted information about their worldwide work forces, personnel had to gather each element from each country or entity separately. HP's international systems don't talk with each other whether it's U.S., European or Asian. "It's very frustrating for the managers," says Pierson.

"How you help your organization become more competitive is by far the No. 1 issue."

With the input of managers worldwide, personnel has identified 14 data elements and installed them into what's called an international-employee master file. On the system's first incarnation are such data elements as performance evaluations, payroll and benefits information. The master file will be updated each month with information on every HP employee worldwide. Managers can access everything from employees' names and employee numbers to payroll information.

Personnel will be adding more data elements to the system each year. Soon it will become so automated that HP will have one employee master file that contains information on every HP employee worldwide.

According to Pierson, no other company in the world has HR systems with the capabilities of its EMS and international-employee-master-file systems. They already are proving to be models for the future as other companies call upon HP to share information about how it developed these systems.

Personnel links its strategy to HP's quality-of-work-life strategy.
One of personnel's major new initiatives coincides with those of HP's new chairman, president and CEO, Lewis E. Platt. For 1994, Platt set a strategic planning policy to reassert HP's position as the best place to work. Hewlett Packard's past leadership in this area has translated into a significant competitive advantage for the firm in the computer industry, where rapid turnover among highly valued employees is a persistent challenge. HP's most recent internal surveys, however, show that its employees now believe that the company no longer exceeds industry norms.

To outsiders, this perception may seem off the mark. After all, for the past seven years, the company has been on Working Mother magazine's list of the 100 best places to work. It's also featured in The 100 Best Companies To Work for in America, the widely acknowledged book by Robert Levering and Milton Moskowitz. And just this year, HP was ranked as No. 7 on Money magazine's list of companies offering the best benefits packages in the U.S.

Nonetheless, some events over the past decade may have tarnished HP's image with its own employees. For example, a corporate downsizing and an illfated program to use part-time workers have taken the luster off its vaunted no-layoff policy. Moreover, the firm isn't making as much progress in managing diversity and promoting women as senior management had hoped.

Once more, the solution was found in refocusing on HP's traditional values. While putting a fresh emphasis on its internal employee survey, Peterson's staff is working to reverse any weakening of commitment to the Hewlett Packard Way throughout the organization. This campaign touches on everything from job security to promoting women.

"We need to provide the right level of support for development activities."

"I'm absolutely convinced that employment security has a lot to do with why reasonably well-educated human beings select a company, are loyal to a company and are good performers," Pierson says. So, HP has gone out of its way to maintain that employment-security mindset and value system. "It repays itself tenfold," he adds.

The no-layoff policy, however, has changed since 1985, when Hewlett Packard embarked on a major restructuring, which has been accomplished through voluntary severance, early retirement and redeployment plans. Pierson credits the success of the no-layoff policy to good overall management. "HP has been well-managed to the extent that we can see things coming better than maybe some other companies do," he adds.

Another of Hewlett Packard's personnel programs undergoing change is its flex-force program. Designed to protect the company during recessions while offering employment to non-career workers, it was a well-designed program that had some fatal flaws, which personnel discovered three years into the five-year program. One flaw was that the company counted on having an ample labor market of retirees, students and second-income earners who didn't need medical insurance or pension security from Hewlett Packard.

Within a few years of implementing its flex-force program, personnel realized that there weren't enough people like that to meet its needs. The other problem was that Hewlett Packard realized that it was taking advantage of contingent workers. The individuals that Hewlett Packard hired for its flex-force program actually wanted full-time work, but couldn't find it elsewhere. "HP, the consummate ethical company with uncompromising integrity and high moral standards, said, 'This isn't right,' " explains Pierson. Clearly, it needed a new strategy.

Now, Hewlett Packard is winding down its flex-force program and is developing partnerships with third-party employment agencies that provide their workers with insurance coverage, benefits and employment security. "These agencies are in the business of making sure they find these people their next job," explains Pierson. "We feel more socially responsible about developing relationships with two or three world-class companies that have a value system similar to HP."

By effectively managing diversity within Hewlett Packard, personnel also hopes to help increase the firm's stance as a leading employer. Although the overall percentage of professionals at Hewlett Packard who are women is a respectable 28%, and the overall percentage of professionals who are minorities is 17%, the upper echelons of management still are experiencing the glass-ceiling effect. Only 4% of senior managers at Hewlett Packard are female and 5% are minorities. Women managers quit at twice the rate of men at HP.

Hewlett Packard has had a management-diversity training program since 1988. The training is given to the company's first- and second-level managers. "What was missing in that program was that it really didn't start at the top," says Emily Duncan, Hewlett Packard's corporate manager of work force diversity.

The issue of diversity needed top-down emphasis. In June, Hewlett Packard's CEO and his direct reports participated in an executive diversity-education workshop. This has helped increase awareness of the issue and positioned it as one of the key business policies for the '90s at HP.

Duncan sees development and retention of women and minorities as the two biggest problems facing HP in the area of diversity. "We need to ensure that we're providing the right level of support for development activities," says Duncan. In addition, focusing on making sure that the work environment is supportive and is a place where people want to stay and grow will aid retention.

Hewlett Packard has a variety of diversity-education programs for employees and managers. Recent additions to the program include classes on the issues of disability, sexual orientation and harassment. In many cases, employees and managers take diversity-education classes together.

Peterson says that it's important that both senior executives and line managers get involved in the diversity process at Hewlett Packard. "Show me an entity where there's excitement in managing diversity — where there's enthusiasm, results and where people are busting through the glass ceiling — and I'll show you an organization where there's management ownership and responsibility for that aspect of the business," he says. "Show me an entity where it's primarily a compliance program and I'll show you where the personnel function has sole ownership for what goes on in the personnel area." Managers at Hewlett Packard now must be directly involved in bringing about change throughout the organization.

An important component of HP's diversity-education process is a 12-month, accelerated-development program for high-potential employees who are in mid-level management positions representing line functions. The program is for all employees, not just minority and women managers, but HP's goal is to have 38% women and minorities in the program. So far, 38 people have participated in the program, which started two years ago.

The program has four major components: an assessment center, a mentor relationship, a structured work experience and an external education and training program. During the year, managers work (in addition to their normal jobs) on projects that give them a better understanding of HP's business and help them develop new skills.

Outside the U.S., HP's diversity program faces special challenges. For example, the management team at Hewlett Packard's Yokogawa (YHP), Japan, region has focused on the process of hiring women, people with disabilities and utilizing and motivating its employees who are over the age of 40. Currently, 4.7% of this division's professional work force are women. Its short-term goal is to increase the number to 10% by the end of 1995. Its long-term goal is to have 25% of its professional/exempt positions filled by women.

One of the region's special problems retarding the movement of women into senior management is a labor law that prohibits professional women (except managers) from working after 10 p.m. It's common for professional men to stay until midnight, often giving them a business advantage over women colleagues. The other problem is that the Japanese culture is among the world's most conservative on women's issues. Not surprisingly, it hasn't encouraged women to be as aggressive or as confident as men in moving up the organizational ladder. Focusing on the development of professional women is HP's goal.

One of the region's solutions is to send an annual interviewing invitation to all of its female employees. Those women who want to move up within HP then can interview with various managers for higher positions. Other solutions include better training of employees and managers about diversity issues, giving dependent-care leave and offering more flex-time arrangements.

Although Hewlett Packard's U.S. divisions may be slightly ahead of the game over its foreign counterparts in terms of diversity issues, the company has refocused its efforts to provide its managers worldwide with the tools that they need to build a diverse work force, such as part-time work, job-rotation assignments and telecommuting. Says Duncan: "I think most companies now recognize that this isn't just something nice to do. It creates an important advantage to our business success."

There never is one answer to a problem, and Hewlett Packard hasn't cornered the market on personnel solutions. However, by not being afraid to reevaluate every HR process and to constantly discard what doesn't work so that solutions emerge, HP has discovered a winning combination. It very well could be the only way that the human resources profession — and therefore, business — will survive in the '90s.

Personnel Journal, December 1993, Vol. 72, No. 12, pp. 38-46.

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