Organizational change, specifically to the management of the company’s corporate culture, has brought about much criticism. In the paper, we will look at the leadership style of Carry Farina, details of the HP-Compact merger and the effects of the merger, further changes in HP strategy, and finally, provide recommendations. Introduction In 1999, Carry Farina accepted the position of CEO of Hewlett Packard. The challenge for Farina was to help the company grow in the Internet Age without eliminating the very things that had brought the company to where it is now; the corporate culture of Hewlett Packard.
In accepting the position, Farina became the first woman to head a DOD 30 company and the first outsider to take control of HP. Hewlett Packard is a computer company that sells everything from $25 ink cartridges to million-dollar supercomputers. Bill Hewitt and Dave Packard founded the company in 1937 in 1937. By 2001, the company had over 85,000 employees and operations in 120 countries. During the sass and sass, companies began to downsize, while Hewlett Packard continued to offer their employees job security. The following extract, from the company’s Corporate Objectives (1995), illustrates the main values underpinning the HP Way. Our People’ To help HP people share in the company’s success, which they make possible. To provide job security based on performance.
4 To recognize their individual achievements. To help them gain a sense of satisfaction and accomplishment from their work. Relationships within the company depend upon a spirit of cooperation among both individuals and groups, and an attitude of trust and understanding on the part of the managers towards their people. These relationships will be good only if employees have faith in the motives and integrity of their errs, supervisors and the company itself. Job security is an important HP objective the company has achieved steady growth in employment by consistently developing good new products, and by avoiding the type of contract business that requires hiring many people, then terminating them when the contract expires. To foster initiative and creativity by allowing the individual great freedom of action in attaining well-defined objectives. Insofar as possible, each individual at each level in the organization should make his or her own plans to achieve company objectives and goals.
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After receiving supervisory approval, each individual should be given a wide degree of freedom to work within the limitations imposed by these plans, and by our corporate policies. Although Farina possesses a leadership style and strategic vision that has contributed to the success of previous companies that she held leadership positions in, HP wasn’t ready for the organizational change she thought would be necessary for the future of HP. Leadership Farina first showed her unique style of leadership when her company, Lucent, was spun off from AT.
The night before the company was to go public, she stayed up all night to make sure the stock offering was perfect. She also offered her personal support to a fellow executive when his wife was ill. Farina made sure the couple received medical advice, doctors, and emotional support. It is that type of attitude and leadership that made her an excellent candidate for the top position at Hewlett Packard. New leadership was in order for HP. The company had over 130 different product groups, many of the time competing with other HP product groups for external customers.
Managers didn’t embrace innovation for fear they wouldn’t meet their own goals. An employee poll taken in 1997 revealed that HP employees believed that the company needed an infusion of new thinking and more customer focus. (Burrows, 1999). Farina focused not only on improving growth in revenue and profitability for Hewlett Packard but also in greater innovation. She wanted to also focus on making the company customer-centric or having a customer focus while the company embarked on being a leader in the Internet Age. Corruptive innovation Although the initial intent in organizational change and new strategies for Hewlett Packard were for the better, Farina has faced increased criticism from business analysts, and worse, the family of the founders of Hewlett Packard. Despite an industry-wide economic downturn, Farina was determined to up the growth and profits of HP.
In 2000, HP experienced a growth in revenues of 15% and earnings up 5. 9% from the previous year (Rothschild, 2001). Farina was driven to increase the profits even more by trying radical changes. The changes are highlighted as follows. Farina fostered a top-down approach to management. This approach conflicted with the old style of HP: a completely decentralized management approach. Although change can be good, when Farina did away with the companies decentralized approach, she did away with a 60-year tradition. Company employees were not happy about this. Taking on too many revolutionary company projects at one time: wireless service, digital imaging, and commercial printing. The original founders of HP had continuously taken given product lines and made them better, not taking on innovations. While Farina was at Lucent, she had become frustrated with the buying process from HP. For this reason, she created selling teams and completely changed the way the sales forces were compensated. HP employees no longer possess the job security that they had in the Us and ass’s when the economy and computer industry was gagging. By May 2003, the company had cut nearly 20,000 jobs (Fried, 2003). Farina has led the company to its most widely scrutinized strategy yet; the merging of HP with Compact. Since then, most of the nastiness has come from the side of HP management.
It began with a newspaper ad quoting the late David Packard in apparent agreement with the idea of the merger. This led to an angry response by David Packard Jar. That his father would never had countenanced the company’s growth through such a massive acquisition. Especially not with a culture so alien to the legendary HP way. (Malone, 2002). The HP – Compact Merger When the children of the founders of HP were notified of the possible merger with Compact, they publicly stated that they would vote their shares (18%) against the merger.
Farina responded by taking out full-page advertisements and press releases denouncing the heir and most vocal family member, Walter Hewlett. (Discard, 2002). Farina and other top HP executives were able to get the deal done. In July 2002, HP-Compact briefly became the top personal computer maker with more worldwide shipments of personal computers than it’s top rival, Dell Computers. By the end of the 3rd quarter in October 2002, HP-Compact saw its domination all again to Dell who had a 23% market share compared to HP-Compass’s 15. 5% share.
The dual-brand strategy of HP-Compact makes things even more difficult for the company. Top executives must be able to market both Hewlett Packard and Compact products, as the company has no plans to do away with either brand. Shortly after the merger, the company’s president, Michael Capsules, announced that he was stepping down as president of the company. Recommendations Knowing the financial condition of HP in 1999, we know that change was in order. Farina should not have tried to make so many drastic changes in such a short erred of time.
There is no reason that Farina should have made such drastic changes when the company was not in danger of collapsing. Farina should attempt to restore a decentralized approach. Autocratic management was never needed and completely went against a 63-year tradition. Strategies for the company should be formulated by senior HP-Compact management and discussed thoroughly as to the success of the strategies. Conclusion Overall, it seems that the Hewlett Packard-Compact merger has been successful. HP-Compact earnings have gone from 13 cents a share in first-quarter 2002, to 22 .NET a share for this year’s first quarter.
Analysts are starting to believe that the merger might have been a good thing after all. Bill Hewlett and Dave Packard pioneered “The HP Way. This deal valued the company’s people as well as profits. I believe that the success of the company ultimately lies in getting back this way of thinking, The HP Way, but also in being innovated as it relates to tackling new technology challenges and opportunities, but not at the expense of its people.
