The purpose of this paper is to analyze the state of the company Hewlett Packard in 2002 when it faced a severe corporate culture crisis due to unsuccessful management. Over seven years, the company has transformed from a corporate entity with an intense atmosphere of respect towards employees to a corporation that prioritizes efficiency and revenues over staff loyalty. The main problem facing HP is rampant dissatisfaction with the company’s CEO, Carly Fiorina, whose behavior negatively affects the motivation of employees and leads to financial losses (Table 1). Finally, Fiorina’s position as a CEO may become compromised due to the criticism of her decisions. Two possible solutions are identified to return HP to its prosperous times: recognizing camaraderie among workers and returning to a decentralized structure.
Table 1. Comparison of Chief Executive Officers
|Chief Executive Officer||Fortune’s Ranking||Strategies to increase growth potential||Consequences|
|Louis Platt (1992-1999)||№ 10||Flexible employee schedules, motivation, accurate deliberation, belief in people, recognition of their abilities||Trust between the CEO and employees, job satisfaction, high productivity, increased sales.|
|Carly Fiorina (1999-2005)||№ 43||Focus on speed, increasing sense of urgency, radical ideas, more centralized structure, merging with Houston-Based Compaq.||Weak financial performance, 15,000 lost jobs|
The first factor is the significance of HP’s unique corporate culture. For decades, HP had the reputation of a company with strong corporate ethics. The decentralized framework of decision-making enabled the company’s divisions to exercise autonomy. At the same time, employees were compensated with attractive benefits, which were reciprocated with staff loyalty and commitment to the company. When Fiorina’s new policy started to contradict the established corporate ethics, memories of HP’s former culture lingered and affected the mindset of many employees. The second factor is Fiorina’s unwavering commitment to achieving results. Her rise to the role of CEO was accompanied by promises of increasing HP’s competitiveness via intensive risk-taking. Despite the criticism and financial losses, she has remained steadfast in her determination to make high-risk but potentially rewarding decisions.
The first possible solution is to remove Fiorina as the CEO. The advantages of such a decision include the return of employee trust and motivation and the reduction of highly risky decision-making. The disadvantage is the potential stagnation due to the absence of possibly profitable decisions. The reason for the rejection of this option lies in support of the board of directors of Fiorina. The second option is to retain employees and bonuses while proceeding with Fiorina’s high-risk endeavors. The advantage is the restoration of employee trust due to the management’s commitment to the old culture. The disadvantage is the company’s possible bankruptcy from the constraint in the form of its inability to sustain earnings, which would be sufficient for paying for all bonuses, and the lack of readiness to face such a risk. These alternatives are impossible since the company is financially unstable to change the country’s management or provide employees with some bonuses. To accept these decisions, HP should resolve disagreements between the CEO, stockholders, and her board of directors.
Proposed Solution & Recommendations
The first solution is to enhance the camaraderie among employees because it establishes an employee-friendly environment that facilitates their engagement in resolving the company’s financial issues. The specific strategy of establishing a financial threshold beyond which actions of the CEO are no longer acceptable is essential. Therefore, Fiorina could not make employees stressed out or leave them without any choice. For example, Platt identified the common goals for the staff but never dictated any rules, which formed a more flexible employee mindset focused on the desired outcomes. Although the advantage is increased productivity in the workplace, the disadvantage is the lack of behavior regulations, which could violate the company’s vision. This solution prioritizes employees as the most influential force driving business growth.
The second solution is to return to a decentralized structure, for the board of directors to buy out the shares from the stockholders. The strategy is to remove decision-makers who can potentially thwart the CEO’s undertakings. The evidence for this option is the influence of stockholders and the Hewlett and Packard families that result in positive financial sales. The reason for this solution is that stockholders’ voting power will no longer threaten Fiorina’s policy. The positive consequence is management’s decisiveness, which would not be hindered by criticism. The negative consequences are the death of corporate culture and the loss of founders’ influence. This solution is in line with the theory of constraints, according to which protesting stockholders are the main business obstacle.