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Thursday, February 19, 2009

The Real Leaders!

Close on the heels of Barry Diller’s Lay Off The Layoffs talk, comes a brilliant note form Mark Hurd. Faced with a deep slowdown and disappointing growth numbers, he highlights the challenges for HP and his plan of action.
From a productivity standpoint, you’re supposed to reduce headcount on par with declining revenue. If you believe the environment isn’t going to improve, you should take a bigger cut to get in front of the problems. Confronted with the challenge of 20% revenue down, he argues that a company wide level restructuring /retrenchment is not the solution as he believes that he does not see a structural problem of that magnitude(to reduce 20% workforce). In his words, he sees HP as fundamentally sound, and when the economy picks up, he wants HP to be strong, and to take share and to outgrow the market. Proposed action : Further variablize our cost structure by reducing base pay and some benefits across HP. CEO base pay will be reduced by 20 percent. The base pay of Executive Council members will be reduced by 15 percent. The base pay of other executives will be reduced by 10 percent. The base pay of all other exempt employees will be reduced by 5 percent. For non-exempt employees, base pay will be reduced by two-and-a-half percent. Additional efficiencies, including changes to the US 401(K) plan and the share ownership plan, will also be implemented. and all of these actions would be subject to compliance with local laws and regulations.
In an age when the corporate chieftains believe in laying off as a safe and acceptable option, it requires real courage and determination to hold on to your people on changed terms , motivate them to contribute more for a fast recovery and eventual growth. Looks simple but 90% plus organizations do not think that way – they act without class and no doubt – Losers!

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