Case: The HP Way

Individual Case write-up: HP Way

Date: May 28, 2007 Student name: Pham Thi Thuy Ha (2A5026)

HP Way is the culture of work freedom, open communication and goal-orientation effectively supported by excellent HRM system.

This culture is quite suitable for a technology-driven company like HP. Goal-orientation drives employees to achieve their objectives which are in line with HP’s corporate objectives. Work freedom enables employees to find their best ways to complete tasks fast and accurately and work together as teams. Open communication allows all employees to be aware of what is going on, have a feeling of fairness and to be part of management. All these three elements enable employees to be creative in their work and as a result, HP has always achieved robust success in growing its business.

HRM was an important enabler to keep this culture over time. HP’s hiring practice was to find people who can fit its culture and who has long term sets of skills and knowledge. HRM had designed an excellent ‘story telling’ strategy to train employees continuously about the company’s spirit. HR function had conducted series of continuous training, executive seminars etc to bring employees at all level together and prepare them for new challenges. HP’ rehire strategy enables the company to get back excellent employees.

This culture could motivate well employees and drive them to excellent even exceptional results. Especially, MBO made employees feel part of the company and therefore increase employees’ satisfaction and commitment. Continuous training and MBO produced good managers and brilliant employees who are able to work in such demanding environment and achieve goals.

However, this culture had some drawbacks. First, maintaining this culture was expensive because of costs associated with continuous training and employee turnover. Second, this culture required a very strong HRM system and excellent employees. As excellent employees were chased by good corporations, HP might face a risk of being unable to find good people who can fit this culture. Another risk is high turnover rate. This is because excellent employees HP has trained are usually smart and they tend to leave HP to set up their own business or to be lured by other corporations.

Why has the HP way been working well?

- HP had grown slowly.

- HP did not expand quickly its operation to the global market. So HP still could maintain its Way in some international locations where HP Way was suitable for local cultures.

- Jobs were not well available in labor markets so employees stayed with HP long time.

- Venture capital was not widely available to start up new companies so excellent HP employees could stay longer with HP.

- Employees at that time were not so motivated to quite HP to set up their own business or to seek better position. This was because the pace of globalization was not high and therefore, international labor movement and international business opportunities were rare.

- The rate of retirement from HP was not high so HP did not have any lack of management position.

- HP’ product lines were somehow similar and HP did not diversify business to any completely new business. Therefore, it was easy to mold new employees in HP Way.

Comments:

HP Way is a perfect fit with HP’s business model. However, as the company expands internationally, it will be a real challenge to hire overseas employees who can fit perfectly with this culture. Keeping this culture is vital for HP to exist and grow so the company might think of new HR practices to maintain this culture in foreign countries.