Tower of HP shows signs of crumbling

EARLIER THIS week, HP screwed up and released a confidential internal presentation to its intranet. Instead of going to only management, it went everywhere internally, and before the pixels were dry, made it to the entire world. If you didn't receive a copy of this and you have anything at all to do with IT, feel left out.

The presentation was lovingly entitled 'Fortune Magazine's 100 Best Companies to Work for in America List', and tantalizingly subtitled 'Why HP Did Not Make the List'. Curious capitalization aside, if it weren't so painful, it would be funny.

Since last summer, I have been deluged with pained letters from HP employees asking my why the company is being destroyed. They all tend to be well written, and back up the arguments with enough facts to make a jaded analyst shudder. They all say the same thing, we love this company, how can the management do what they are doing? While they all defend the company, not a single one defended Carly or upper management. In fact not a single one was even neutral about her management style.

The mood from inside HP is demoralized, fearful, and kind of dazed. No one can actually believe the company is falling this far. Support is being outsourced, and the numbers we are told about show that hold times have doubled, and customer satisfaction is not only in the toilet, someone is jiggling the handle to make it flush faster.

On October 2nd 2003, an HP VP of TCE and Quality, who shall remain nameless so she doesn't get letters from the inside, gave a presentation entitled 'Beating the competition with best TCE'. For those of you not up on HP touchy-feely lingo, TCE is the acronym for Total Customer Experience. In it, they define, in slightly different formatting, TCE to be 'Overall impression of HP based on perceptions and experiences with HP people, partners, products, services, and solutions at every touch point'. Puke inducing new age speak aside, they are right on the money here, they know they need improvement.

They go on to list the problems surrounding customer loyalty, with a beautiful picture of a leaky bucket. The explanation, in so many words, is that happy customers buy more from HP, and unhappy customers go away, and are expensive to get back. The topping on the ice cream is that 'An increase in customer retention of just 5% can boost profits by 25-85%'. Holy expletitive deleted, they get it. Happy customers buy more, unhappy ones do not, genius! The next 15 or so pages go on to describe how they are going to accomplish those goals in excruciating detail. Like I said, they get it.

Well, someone gets it, and they obviously have no power to actually do any of it. As they point out in the presentation, actions speak louder than words. The outsourcing efforts have probably saved the company money, but it has pissed of so many people I can no longer count them. These are people who don't come back.

Far from taking the corrective action the HP Canada person told me they were aware they needed to, they have accelerated the very practices that drive customers away. One hand says do better, and the other screws them. Good job, anyone wonder why the workers are so demoralized? You really need to help people, but you have no tools, and by the way you are fired. Oh, don't worry, you can get the same job paying 33% of what you were paid in an 'outsourced' position, but the working conditions are much worse, so smile.

In the latest release of the Fortune 100 numbers, there are a few striking details. HP scored 12% less than the top 100 average in the final tally. Some are not all that relevant to the discussion, like the Camaraderie section, where they don't do well on the question 'People celebrate special events around here'. Call me a cynic, but I can forgive this one, if Carly didn't come around and give me a cookie on my birthday, I would forgive her too.

Questions like 'I am given the resources and equipment to do my job' rates a 73%, 15% below industry average. That stings a bit. Slightly worse is 'Management is competent at running the business' at 70%, 15% below the top 100 average. Ouch, but based on an unscientific survey of people who write me, the surveyors picked a non-representative sample.

The real kicker is the question 'I believe management would lay people off only as a last resort', which comes in at an astounding 84%. Well, the industry average comes in at that number, HP scores a shameful 44%, a full 40% less than industry average. If I didn't know better, I would think HP upper management fires people more or less at random for sport. Think about that number for a bit, the 'good' places to work are double the HP figure.

Did I mention demoralized people? HP's perilous slide down the rankings were only interrupted by the Compaq merger, and now they don't even place. If anyone knows the numbers for past years, or where HP ranked this year, let us know, and we'll put it up. I would guess that the numbers are not nearly as pretty as the bleak outlook from the presentations.

So what does all this mean? HP is in a tailspin. It announced positive numbers last November in a company Las Vegas love in, but inside word is this quarter is not nearly as rosy. The rumours are totally unsubstantiated at this point, but if I were a betting man, I would not put money on HP making its sales goals this quarter. Then again, word has it that specific goals were not set this quarter so they could not be missed. Clever little middle managers in the once proud ink peddler.

So, where does it end? Well, if you annoy workers enough, they leave and you don't have to fire them. The whole corporate culture at HP can be summed up most eloquently by those in the meat grinder of HP love, so let's allow them to speak.

"Carly has been "successful" in ramming the merger through, and in fundamentally changing the culture of the company. I'll admit that the consensus culture of the old HP was not healthy, but current culture has destroyed some very valuable qualities - the foundation for trust between employees and the management. For the first time on internal message boards, we're hearing talk of organizing.

"In the past, HP Management has always valued the rating on the Fortune "Best 100 Companies" as an indication that employees were attracted to HP, and that we found working here to be "better" than our peer companies. Since Carly has taken over, our rating has steadily declined, and we are no longer on the map at all. They were notably silent on our failure to make the list this year - you'll note that this was an internal BOD presentation, and not for employee consumption". µ