
Hewlett-Packard to Cut About 30,000 Jobs (9% of workforce) - barredo
http://www.nytimes.com/2012/05/18/technology/hewlett-packard-plans-job-cutbacks.html?_r=1&smid=tw-nytimes&seid=auto
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apike
This would be roughly 9% of HP's workforce. It's always much more interesting
to see layoffs in terms of percentages rather than absolute numbers.

"Walmart to cut 10,000 jobs" = 0.5% of their employees, probably nil effect.

"Instagram to cut 10 jobs" = complete destruction of the company.

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barredo
Thanks. I edited the title.

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pinaceae
For you guys wondering how it is even possible to fire 30k people at once:

In every organization of that size there is cruft. Mind-bogglingly large
cruft. Working with those behemots will teach you that you could fire entire
departments and no one would notice. There is so many people simply tasked
with completely non-customer relevant things like reviewing HR review forms,
etc. - they get their pay, produce no tangible value.

Now mind you, every company needs people to keep the whole structure going.
HR, IT are never profitable, of course. But at some point during the growth
phase of a company these start to metastasize - they are cancer, feeding
themselves, leeching of the company that hosts them. And not just money, but
also power. Suddenly managers of those areas have a say in company direction.
Block innovation because of 'processes'. Have never seen a customer, never
produced anything in their life, have no shred of idea of the core business of
their company.

And just like cancer treatment, past a certain stage you need to cut deep and
wide.

Prahalad and Hamel laid a bit of groundwork for more effective org-cancer
treatment with their core competency definition.

You know your cuts were deep enough when a few months in you notice pain.
People not being able to service customers effectively. And you'd be surprised
just when this really happens at places like HP. 9% is laughable. If you have
lots of layers in an organization, every employee laid off has a ripple
effect. Need less HR, accounting, IT, etc to service less employees. Even less
layers of management as you can combine teams.

Looking at certain country hubs of HP here in Europe I'd wager you could
easily cut 50% of the current workforce without any negative impact on
customer relations.

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hrktb
> _You know your cuts were deep enough when a few months in you notice pain._

There is always a layer or two of cruft in any large organisation, and I'd
throw numbers like 10% out of thin air so 9% seems pretty reasonable. But
cutting yourself until you bleed doesn't seem a healthy behavior.

Added to that, in an organization where power games are all the rage and
completely unneeded divisions have gained a say on important matters, the
9/10% you are cutting might not be the ones you really wanted to get rid of.

P.S: At the exception of cutting an entire location or activity, It feels to
me like you won't see much companies successfuly cut 10% of their workforce
and turn the ship around. Not that it's a bad move, but it feels like you'll
hit the bottom anyway when you come to this point (now once you touch the
bottom you might actually be able to come up again, who knows).

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efsavage
> But cutting yourself until you bleed doesn't seem a healthy behavior.

(To take the analogy probably too far) Due to any number of
legal/psychological/morale/etc issues, sometimes you need to draw a little
blood just to make sure that you got it all. If you hit an artery, well,
you're screwed, but if you have a couple of good people stuck in a terrible
department, you can nuke the whole department and re-hire the good ones back
(often as contractors, then as FTE). This seems silly but compared to the
costs of selectively choosing 30k people and it's probably far cheaper.

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hrktb
That's a good point. I was thinking about how hard it can be to get rid of
corrosive elements that are entrenched in your organization (by definition you
can't count on them to filter the wheat from the shaft). Cutting a bulk of
your employees and try to get back the good elements afterwards is an
interesting solution.

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braisedbeef
Why is there a CEO job if the only solution to problems is doing a layoff? Any
fresher can do that for a small percentage of the CEO salary. Shouldn't an
efficient company make layoffs part of their process if share price is the
only goal and implement bonus reductions to CEO whenever that happens.

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yuhong
There are different kinds of layoffs, not all of which are bad.

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hkmurakami
Interesting, this morning it was quoted as 25,000 jobs.

I'm actually quite surprised to hear that 10,000 of the cuts will come in the
enterprise area, since I was under the impression that it was an area that HP
was going to focus on, squaring off against IBM and Oracle.

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DeepDuh
My guess is it's the area they were going to focus on _under apotheker_ until
he lost all support.

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adr_
They really are decimating their workforce. Ouch.

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msderosa
HP has been cutting their workforce for a long time, at least since the Hurd
days. Back then I suspect cuts were made based just on the numbers. Some
people were expensive and I saw a lot of very capable people get let go.
Eventually it became hard to find capable people and now, many years later, I
suspect continued cuts wont matter. The good engineers that would have made
their next generation of products were disposed of and wont go back. The good
engineers of the future aren't being drawn to careers at HP. And the current
management is getting theirs, while there is still momentum in the system.
HP's time is past.

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shiftpgdn
I worked at HP briefly in 2007 and it was possibly one of the most poisonous
work environments I've ever dealt with. Layoff rounds were a regular thing and
you spent every day wondering if it was your last. Shortly after I left my
entire department were told they could quit or be given a 50% paycut. I'm glad
I got out when I did.

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kprobst
That's a _lot_ of jobs, even accounting for the fact that companies of that
size often announce X number of positions eliminated to make investors happy
but a lot of attrition ends up being "internal displacements" and accelerated
retirements with chunky severance packages. Nearly 10% of a total workforce is
nothing to sneeze at.

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parasubvert
Keep in mind that EDS, when HP acquired them, had 139,000 employees.

The cloud has fangs. Just a matter of time for the big IT strategic
outsourcers to feel the pinch (looking at you, IBM, CSC, Infosys, TCS, etc).

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jonursenbach
Is it a cloud issue, or is it just that HP has lost their "touch"?

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gaius
HP's "touch" is now called Agilent.

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mquander
Why would a company ever cut 30,000 jobs at once, instead of smaller amounts
of jobs incrementally? Presumably their desired number of employees did not
actually change overnight by 30,000.

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adventureful
They're looking for a headline. 30k gets you headlines.

The cut is for Wall Street.

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johnthedebs
Also, morale. Remaining employees will have a hard time focusing if they're
worried about losing their jobs.

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oconnore
How does a 9% job cut actually work? How do you reliably pick 30,000 people
who are less valuable than others? Is it just by department? Do middle
managers make arbitrary lists? Dice?

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eitally
It depends on the situation, but it's usually a combination of a) entire
organizations being gutted and b) specific individuals or small teams being
let go. The former cuts broad swaths and the latter is to fine tune (a RIF is
a great excuse for cutting unproductive employees that would otherwise be
allowed to continue to be mediocre).

Yes, I fully understand how ridiculous all of this sounds.

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maximilianburke
I've been through so many rounds of layoffs and it's always hard. I remember
we lost about 15% of the workforce one year across the board which was tough.
It was indiscriminate, friends you had know for years were gone all of a
sudden. Then the next year we lost another 10%. That would've hurt too but by
then I was just numb to it, and in some weird way I felt that those who were
laid off were the lucky ones.

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mparlane
I feel for you, especially with the looming "when is the next lot going to be
let go".

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alanh
Good luck to any of you who work at HP.

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adventureful
It's kind of mind boggling that HP has nearly 350,000 employees.

Facebook is soon to be worth twice (maybe three times) what they are, with a
mere 3,500 employees, despite HP earning seven times more profit. Something
will have to adjust with that math.

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joshu
It's not current revenue that determines price. It's prediction of future
value.

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adventureful
If we're going to be pedantic about it, it's not revenue that determines
price, it's earnings, and specifically the expectations of future earnings.

And it still makes absolutely no sense. HP has a great track record over the
last decade of generating solid profits. I understand why they have a low PE
ratio, the market is anticipating very slow growth.

However, Facebook's growth meanwhile is slowing significantly, and they're
IPO'ing at perhaps 120 times earnings (or more). That's a very large bet that
Facebook will figure out how to accelerate their growth again. The market is
wrong in its pricing of Facebook, and retail investors are going to suffer for
it.

Facebook is a compression trap. You slow their growth to 35%, peg their PE
ratio to 35 times, and they need $3 billion in profit to justify their IPO
price. Growing at 35% it would take Facebook about five years just to trade at
a reasonable valuation. These things correct themselves one way or another;
either FB accelerates, or the market will slice it in half in the next year to
18 months.

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reitzensteinm
Future earnings isn't correct either (through pedantic glasses), because it
doesn't handle cases where companies build value and then are acquired for a
strategic reasons (think PA Semi).

Expectation of future value and dividends is probably the truely pedantic
thing to say, since (earnings - dividends) accrues to value. That way Walmart
is covered.

