by Sharon Florentine

HP’s divide, layoff and conquer strategy a challenge for managers

News Analysis
Sep 21, 2015
CareersIT LeadershipRelationship Building

HP CEO Meg Whitman announced layoffs of 30,000 workers in an attempt to refocus and restructure the company. But is it already too late? And how will front-line managers handle retaining and motivating workers?

On Tuesday, Hewlett-Packard CEO Meg Whitman announced the company plans to lay off go an additional 25,000 to 30,000 workers in an attempt to “enable a more competitive, sustainable cost structure” for the new company — or, companies.

Whitman says the job cuts are part of a larger restructuring of HP into two separate companies: HP Enterprise, which will focus on cutting-edge, high-growth technologies like cloud and cybersecurity while HP Inc. will stick with slower-growth commodity solutions like printers and PCs.

During Whitman’s tenure, HP has let go 55,000 workers prior to this latest round of layoffs. And they aren’t over yet.

HP Enterprise still has more restructuring on the horizon, in part because the technology landscape changes so fast. “It’s remarkable, what’s happening in the services business, as new tech comes in we have to restructure that labor force to low-cost locations; to much more automation than we have today,” Whitman told CNBC. “These cuts are never easy, but it’s the right thing to do because we have to be able to get into the next phase of the HP journey,” she says.

Related Story: How to do layoffs right (when you absolutely have to)

According to Jason Berkowitz, vice president of client services for recruiting and staffing firm Seven Step RPO, it’s clear much of the workload carried by those 25,000 to 30,000 workers will be delegated to lower-cost, less-skilled workers in offshore locations, though she doesn’t come right out and say so. But it’s her comments about the reality of the IT market that are most disturbing to some industry experts.

Falling behind?

“It’s not unusual for companies to move some operations to lower-cost locations. However her comments about how she has to do these layoffs because of the ‘remarkable’ speed of change is worrisome to some. This has been the norm in IT for the last 10 years. The market’s always changing — moving lighting-fast, and if they’re making these changes as a reaction to the market, they’ve already fallen behind,” says Berkowitz.

Companies that can’t keep up with the breakneck pace of IT become reactive instead of proactive — a dangerous position in an increasingly competitive and cutthroat technology market. The ability to be nimble and proactively address changing market conditions, customer needs and demands is critical to success.

HP Enterprise and HP Inc. also face some talent management and recruiting challenges: How to retain those not affected by the layoffs and how to recruit new talent for the areas they’ve earmarked for growth.

According to Berkowitz, the embattled CEO faces an uphill challenge. “Every recruiter I know can smell the blood in the water. They know now that the people who remain, people who may have been content at HP will be more willing to take calls from recruiters. Turnover’s going to be a problem for them in the near-term, and that becomes a problem if it happens in areas they’re targeting for growth, like cloud technology and cybersecurity, he says.

Keep talking

To succeed, HP Inc. and HP Enterprise must ramp up their communication strategies around what the split means for each company, the direction each company will take, the expectations for growth and what it means to be a current and future employee, as well as rebuild trust within the remaining workforce. They also have to work to rebuild HP’s reputation as an employer of choice. That’s no small feat.

“A lot will depend on how HP treats the people they’re letting go. The folks left behind are watching and judging leadership’s every move to see if they’re acting with dignity and respect. Something like 45 percent of employees don’t trust company leadership – they’re going to have work hard to rebuild that trust,” says David Brennan, general manager of employee reward and recognition solutions firm Achievers.

Related Story: How to Lead When Working Through Layoffs

Much of that work will fall to managers, Brennan says, and they must continually deliver the message that their workers are valuable, are making positive contributions for growth and that the organization has a bright future. Making sure managers have resources and information to be honest and authentic with their direct reports will go a long way toward rebuilding trust — and that can aid recruiting and retention efforts.

Focus on the day-to-day

“C-level leadership may spend time looking at quarterly results and yearly results, but front-line workers and managers are more concerned with the day-to-day. You’ve got to over-communicate to an understandably skittish workforce that they have value, that they are delivering great work and that there’s potential with the company,” Brennan says.

Leadership and managers must also understand and empathize with their remaining workforce. Brennan recommends taking the time to communicate effectively and proactively work to rebuild the workforce’s trust. “Given what’s just happened — a layoff or a restructuring — it might be hard for them to trust you, but keep working toward that. We always say, ‘people join companies and they leave managers.’ You want to be the manager they want to stay with,” Brennan says.