Everybody's Financial's suck this quarter, but HP announced that they will try to avoid 20,000 layoffs by reducing employee salaries across the board. The shocker is the progressive nature of the cuts: Top execs lose 20% down to only 2.5% for lowest tier employees. ZDnet has posted the full text of the internal memo on it's site.
Maybe I'm naive, but could this be a model for how large corporations should act to protect their employees? The Republican business model has always seemed to be "I've got mine, screw you" - this seems to be "I've got mine - but I can share..." by asking more from those who can afford it. Is this going to piss off Wall Street or am I wrong...?
I've heard of small companies "sharing the pain" with their employees, but I don't think I've ever seen the equivalent of a "progressive salary cut" implemented across the board. Most of the time, it seems that we see a symbolic cut from a CEO ('I'll only take $1 salary for a while...') or the usual knee-jerk layoffs Wall Street investors seem to demand to maintain short-term profitability.
I'm not a financial geek and I'm no big fan of HP's big "suit", Hurd - but this surprised me (from Hurd's memo):
The math is pretty straight forward. From a productivity standpoint, you’re supposed to reduce headcount on par with declining revenue.
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"We have about 100,000 people in our product businesses, with revenue down roughly 20%, and an environment that may not get any better in 2009.
I’ll be asked by investors, "Where’s the job action, where are you taking out this roughly, 20,000 positions?"
That's what usually happens; you have a bad quarter or face a bad economic climate and you just lay people off. Wall Street usually rewards such standard actions with an immediate jump in stock price. Forget productivity by the people left - or employee moral by the same people wonder when it will be there turn. Here's where I see something different (more excepts from Hurd's memo - skipping the geeky accounting part):
Well, I don’t want to do that. (snip)... I don’t believe a major workforce reduction is the best thing for HP at this time.
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But we do have to do something...
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So we are going to take action. We have decided to further variablize our cost structure by reducing base pay and some benefits across HP. My base pay will be reduced by 20 percent.
I realize that most CEOs compensation is from their Options & Bonuses, but I still find it interesting that a progressive pay cut has been implemented down the line. Sr. managers are taking 15% cuts, other managers 10% - down to 5% for everyone else and only 2.5% for non-exempt employees. Admittedly, this is not something I track, but this may be more significant that symbolic "PR" cuts to key positions.
Predictably, it looks like Wall Street is hammering HP stock over the last few days - despite the fact that they've increased market share (vs. segment competitors) and had better financial performance than the overall economic or sector trends. (Again, "don't know nothin' about financial stuff" here - my friend say I'm financially illiterate - I'm a graphics geek)
My question is (for those that do understand this stuff): Is this a model for other companies to emulate? Is this as significant as, say, Costco structuring their internal compensation in a more equitable way? (i.e.: Costco's CEO limiting his own pay vs. lowest paid employees and having better benefits than the "lowest common demoninator" - yes, Walmart & Sam's, I'm talking about you...) Will other tech companies follow HP's lead - or will anybody but Wall Street notice?
Is it time for progressives to show HP some love? I know I'll buy from Costco over Sam's when I shop because I know how they treat their employees and vendors. Is this a significant development or just window dressing PR?
[Disclaimer: I used to work as a tech analyst for a company that HP ate and still have friends working there. I just think that if we have to buy "stuff" (printers, replacement computers, etc.), we should direct our purchases to nice people that are doing least harm. HP has been good on progressive issues (like GLBT et al) in the past and this doesn't look too bad either - just my opinion.]
Well, as long as I have your attention - my proposal for a new GOP logo for progressives to use:
They've made "liberal" a pejorative - Let's brand them as obstructionists! If Rove can create his own realities. we can facilitate actual reality. It's my original artwork, so have at it - I can provide original vector art, too - if anyone wants it.
(Not used to this kind of attention - my diaries are usually too geeky to get rec'd)