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Layoffs at HP—a New Beginning or the Beginning of the End?

For decades, Hewlett-Packard had a proud culture of respecting employees and investing in research and development. That ethos has been eroding for years now.

May 30, 2012
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Related Topics: Talent Management(2), Corporate Culture, Leadership Development, Layoffs, Termination
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Layoff announcements are rarely as dramatic as the one from Hewlett-Packard last week. A whopping 27,000 jobs are to be cut at the venerable computer maker. HP chief executive Meg Whitman portrayed the move—affecting about 8 percent of the company—as "absolutely critical to the long-term health of the company." To me, the pink slips are more an omen of HP's demise than a prescription for its revival.

I've been watching HP try to cost-cut itself to success for about a decade. It has never really worked. And in general, the research shows that layoffs are not a winning strategy.

A root problem at the legendary tech firm seems to be executives losing sight of its legacy as an innovator. In a smart essay, Forbes contributor Adam Hartung says that under former CEO Carly Fiorina, HP got bogged down in an industrial-age battle to build commodity personal computers cheaply.

Focused on that hard-to-win fight, HP missed its chance to lead the way into mobile devices, Hartung argues. "Rather than having HP pursue new technologies and products in the development of new markets, like the company had done since its founding creating the market for electronic testing equipment, (Fiorina) plunged HP into a generic manufacturing war," he writes.

Hartung is skeptical of Whitman. He notes that eBay—where Whitman was CEO before coming to HP—hasn't developed new technology like its rival Amazon.

It's not fair to say HP has been entirely dead when it comes to innovation. The company has been a forerunner in sustainable manufacturing, in part through "environmental stewards" that sit on design teams and work to reduce environmental impact throughout a product's lifecycle. And employees have had a fair amount of faith in Whitman. According to employee feedback site Glassdoor, 81 percent of HP employees approve of Whitman. But that figure may drop in the wake of last week's layoff news.

As part of that layoff announcement, Whitman signaled the company was making a more determined push into mobile computing. She promised a tablet product by the holidays. Communicating a clear path forward is a requirement in recovering from a setback. But this strategy alone may not be enough.

For decades, HP had a proud culture of respecting employees and investing in research and development. But that ethos has been eroding for years now. The latest, massive layoffs are more likely to be a death rattle than a lifeline to the future.

Ed Frauenheim is senior editor at Workforce Management. Comment below or email efrauenheim@workforce.com.

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