The Major Human Resources Management Systems of HP - Case Study Example

HRM and Organizational Culture Introduction A crucial factor in the success of Hewlett-Packard is the development of a workplace environment that attracts and retains the best people. The organization, from the outset, consciously employs its strategic Human Resources Management (HRM) systems in order to build, shape, and then reinforce a culture necessary for its strategy. Specifically, one sees this in efforts to alter its culture that is seen to have been designed as self-perpetuating into one that is enough to fit the new strategic directions in which appears to be heading. HRM activities for HP, is used strategically to shape and reinforce a certain type of culture by reinforcing certain ideas, norms, and behavior and by discouraging others. Strong values are passed down by the management and then reinforced by procedures and rituals that emphasize and reward desired behaviors in tandem with a cultural network that is consisted of a system of communication that is used as a tool to disseminate values and create corporate heroes. (Barry 2000, p. 107) This paper will explore the processes involved behind the HP HRM strategy, particularly the organizations rigorous selection and recruitment methods and the emphasis on employee training, compensation and performance evaluation. Overview It is important to underscore that HP, along with IBM, initiated the antecedents of HRM in its studies of non-unionized employee management. For HP, HRM has always been associated with the kind of people management that placed a great deal of emphasis on gaining the commitment of individual employees to organizational goals. As early as 1957, HP has formalized its value statement called “The HP Way.” This system was focused on the “belief in our people.” It maintained: Confidence in and respect for our people as opposed to depending upon extensive rules, procedures and so on; which depends upon people to do their job right (individual freedom) without constant directives. (Gratton 1999, p. 109) And so, HP’s HRM is currently considered to be people-centered and marked by successful recruitment, selection, compensation, training and other innovative human resource management initiatives. Recruitment and Selection One needs to remember that HP is now known worldwide as a company that continually creates innovative products and processes. That is why HP wants to recruit not just the best people but those skilled and committed to work in an entrepreneurial team-based environment that breeds innovation. According to Dexter Dunphy (2002), the core approach that drives HP’s way in developing its human capital lie in the following strategies: Emphasis on creating career and not jobs; Promoting from within; Developing and encouraging a culture of continuous learning and the expression of innovative ideas and practices; Development of programs designed to encourage diversity, profit sharing and the creation of a better work-life balance; and, The creation of programs designed to build human capability in local communities. p. 175) The above-mentioned strategies supposedly make it possible for HP to be able to quickly respond to the requirements of the market and the customers’ expectations. Such strategies are anchored on the development of enabling departmental structures like the utilization of smaller departments and cross-functional teams that enable employees to communicate freely, diffuse ideas and exchange knowledge. (Dunphy 175) In line with the recruitment strategies, HP set up in place a rigorous recruitment process. This is demonstrated in their selection for the management position. No less than Carly Fiorina talked about unique HP recruitment and selection methods in her memoir. As she vied for the CEO position, she recounted: Lew Platt said that he and his executive team had gone through an extensive psychological testing process. The Board decided that all CEO candidates go through the same process… The psychological test consisted of two parts: a Web-based questionnaire… and a face-to-face interview with two psychologists. The interview occurred in Foster City… We talked for more than two hours. The questions were about anything and everything personal. I was asked more about my family relationships than about HP. (p. 160) Here, one sees that HP focuses on people as much as their abilities in recruitment because there are existing organizational culture in HP’s several departments and the wider corporate culture before that. Knowledge in the computing business or excellent skills and abilities related to a job position is not enough in order to be accepted. There are clear profiles that the human resources managers are looking for specific positions in specific departments. HP has always been guided by the principle that some of its values must always be a key characteristic of its brand. And this clearly showed in how they go about with the recruitment process. For instance, HP encourages diversity in the workplace for specific purposes. A specific example was the encouragement for age diversity in HP’s facility in Grenoble, France. The company launched ad and interviewing processes designed to attract older people to apply. Recruiting older employees, along with other diversity initiatives allowed HP to achieve its “work/life” program. The issue of work/life program is considered to be connected to diversity in the sense that it fosters an inclusive environment. The work/life program is characterized by a flexible, supportive environment that allows for an easier management of the demands of work and life for HP employees. (Griffin & Moorhead 2009, p. 134) Here, employees are expected to be empowered with the flexibility of such arrangements so that personal life and work life are positively integrated. Performance Appraisal Performance appraisal in HP is through the everyday practice of ranking employees on a one to five scale. In HP, performance appraisals function according to a different perspective. This method becomes a tool for the organization to encourage a better employer-employee relationship. The idea is that employees need continuous performance feedback - they want to be recognized and rewarded for accomplishments and at the same time they want feedback if their performance is missing the mark so that changes can be made. According to Bill Hewlett, co-founder of HP, “men and women want to do a good job, a creative job, and if they are provided the proper environment they will do so.” (cited in Nelson & Economy 2005, p. 168) This is why performance appraisal information as input for person analysis, has always been the basis for promotion and compensation in the organization. HP’s merit compensation is a case in point. HP is open in handling pay matters and advocates flexible benefit plans which are within what John Miner (2007) called as expectancy-theory-based pay-for-performance. (p. 75) Furthermore, at HP, there is a Standards Board that set consistent guidelines and implement standards that cover performance appraisals and compensations, among other related issues. Then, in a research conducted by Lynda Gratton (1999), it was found that in regard to individual performance, several important themes emerged: Not only is performance measured in variety of ways, through the business planning and monitoring systems, but it is also aligned in a productive way with the organization’s goals. This was illustrated most clearly by the unwritten rule of getting involved in task forces or projects which add value to the overall company. (p. 113) In addition, performance appraisal also helps the HP HRM to develop training systems. For instance, if performance deficiencies point to ability problems, the creation of new training to address such deficiencies solves productivity problems. Training Systems An example that demonstrates how HP engages in employee training is HP’s use of a satellite broadcast system to deliver product demonstrations to its employees. As time progressed, it was found that such training approach was partially effective because of the problem with the access to downlink sites. This was immediately corrected by the development of a low-cost alternative, called DeskTV, that can train most of its employees around the world through the transmission of training materials via HP’s intranet. (Krempl and Pace 2001, p. 101) The materials are digitized combination of recorded video, audio and Web-based materials. Now, this initiative illustrates how HP takes advantage of cutting edge technology and how it could develop training programs and rapidly respond to their failures and challenges. The age diversity example cited elsewhere in this paper could also be used to demonstrate the training processes in HP. HP’s recruitment of older staff will demonstrate how HP deals with the issue of diversity so that differences are harnessed to be an asset for innovation rather than challenges. When older people, especially those who have not been working for a period of time, are hired in HP, the company gives them special training to reintegrate them in the workplace particularly to the HP culture. According to Maryann Albrecht (2001) small diversity events are organized every three months in HP to achieve this end. (p. 117) Compensation The compensation program at HP is driven by the pay and benefits philosophy called as Total Rewards. This guiding principle states that: 1) success depends on rewarding talented employees who can achieve exceptional results; 2) HP uses variable pay program to reward strong performance; 3) rewards are differentiated based on results and performance; 4) HP provides opportunities for employees to be shareowners through its stock purchase programs. (HP 2009) Along with the base and performance-related pay and stock ownership, HP employees also enjoy other benefits such as health plans, insurance and retirement and saving packages. Again, one sees that the compensation program at HP forms part of the strategy to empower employees. Not only are there competitive remuneration packages but that HP has also implemented for the employees stock purchase program as early as 1957 when HP went public. Furthermore, by making performance as the basis for compensation, promotion and rewards, HP was able to get the best from its people. Evaluation There are several advantages to HP’s HRM that other organizations could emulate for their own. The most fundamental of which is its system that allows the organization to recruit and retain not only the best people but the people that the company wants. The perceived support by the organization to its employees, for instance HP’s work/life initiative and the company’s performance-based compensation program, greatly increased employee motivation. In a study conducted by Griffin and Moorhead (2009), for instance, a respondent stated: Much of what I am able to do seems uncommon in the rest of the industry… I talk to my friends that work at other companies. They don’t have the same alternatives… That has really added to my loyalty to the company. (p. 134) Secondly, HP was able to introduce a culture that served the company in its objectives such as in the development of innovative products. What is unique to HP and perhaps should looked closely by those who want to copy its strategy is that, the organizational culture does not stop in merely determining strategies but rather, the culture strengthens in its implementation. The most important aspect of HP’s culture is that it successfully consists of the ideologies, traditions, rituals and values about human nature, the objectives and purpose of the organization and the world it operates in. As a result, culture clearly outlined, for everyone to see at HP, what is important at work. HP’s emphasis on culture also highlights another important aspect. There are several departments in an organization and certainly, HP had a number of them. These departments are not uniform and, therefore, have their own subcultures and departmental values as well. For example, staffs from sales, manufacturing, and research and development usually employ different languages, they have different criteria for evaluating success and that they operate using varied attitudes toward turnovers, particularly time and deadlines. It is not uncommon for this circumstance to cause problems. Furthermore, differences definitely allow too independent departments that cause divisions, too much competitiveness, non-cooperation and disunity. In HP, however, this is not the case. The strong organizational culture in the organization overrides all other subcultures at work within its departments. The organizational culture serves as a network across departments because it is, above all, the shared beliefs and assumptions held by working groups. No matter what the differences are in responsibilities and objectives, there is a clear definition of purpose and, as previously mentioned, what is important at work. For example, HP has a clear definition of how managers should treat employees – open-door-policy, encouraging independence and the promotion of equal status relations. While there are differences in strategies, there is a fundamental strategy that everyone understands and practices. Here, targets and goals are coordinated in such a way that the differences and divisions within the organization allow the entrepreneurial spirit or innovative thought to flourish within the defined business parameters. The achievement of an organizational culture may be daunting for other HRMs. It took HP several years of building on its values with consistent reinforcement on rituals, beliefs, goals, and traditions. However, it is not unattainable. Finally, what HP’s HRM tells us is that a systematic strategy, which in this case is the creation of an organizational culture and values that employees are proud to practice, is an efficient method to achieve organizational objectives. It builds on maximizing the potential of human capital and therefore could provide an organization, long-term benefits, when developed and implemented properly. References Albrecht, M 2001, International HRM: managing diversity in the workplace, Wiley-Blackwell. Barry, J 2000, Organization and management: a critical text, Cengage Learning EMEA. Dunphy, D 2002, Organizational Change for Corporate Sustainability, New York: Routledge. Fiorina, C 2006, Tough choices: a memoir. New York: Portfolio. Gratton, L 1999, Strategic human resource management: corporate rhetoric and human reality, Oxford University Press. Griffin, R and Moorhead, G 2009, Organizational Behavior: Managing People and Organizations, Cengage Learning. Hewlett-Packard (HP) 2009, HP Global Citizenship Report: Compensation and Benefits. HP. [Online]. Available at: http://www.hp.com/hpinfo/globalcitizenship/gcreport/employees/compensation.html [Accessed 15 Nov. 2009]. Krempl, S and Pace, W 2001, Training across multiple locations: developing a system that works, Berrett-Koehler Punlishers. Miner, J 2007, Organizational behavior, Volume 4, M.E. Sharpe. Nelson, B and Economy, P 2005, The management bible, John Wiley and Sons. Read More