I had a summer internship at HP while I was in college. (I graduated in 1992.) When I graduated, the assumption/expectation was that they would offer me a job. They hesitated, and a manager who was unusually nice to me explained that HP hires people who will stick around for many years -- and thus, they weighed every hire carefully.
He went further and said that several years before that, when there had been a recession, everyone at HP -- all the way up and down the ladder -- worked 9 days out of 10, and took a 10% salary cut, in order to ensure that there wouldn't be any layoffs.
People spoke about the company, and how it treated employees, with great pride, and the way that they treated workers during hard times was one major reason for that.
If nothing else, I learned from these stories that the boss/owner should be paid last, after all of the employees receive their salaries. I've done that whenever I've had employees, and I credit that lesson not just to general business ethics, but to a sense that business is about much more than just profit.
It's hard to imagine a modern company taking such steps to avoid layoffs, but the story continues to inspire me nearly 30 years later.
Hey, lately i'v read "The HP Way: How Bill Hewlett and I Built Our Company" and your story really resonates to what the founders said.
Snippet:
> We have always considered that we have a responsibility to our employees to plan our work so we can assure job continuity. We do not intend to have a "Hire 'em and fi re 'em" operation. This poses some serious considerations. One is always compelled to fi nd the most effi cient way to get a job done. At times it seems the most efficient way is to hire a group of people, work them as hard as possible, and when the job is fi nished, send them home. Well, even if this is the most efficient way, we have never operated in this manner. Bill and I do not feel this is the best way for a company like ours to operate. We have very rigid requirements of technical competence to maintain and rigid requirements in the quality of our equipment. This requires that we have and keep good people at all times. So we feel it is our responsibility to provide opportunity and job security to the best of our ability. This means specifically, sometimes we ask people to work overtime in order to meet customers' demands rather than hire additional people. While this is an imposition in a sense to our employees, it seems to be generally acceptable and we feel it is preferable to "hiring and firing." This is something you all need to understand as supervisors.
It's a good book and I really respect their management philosophy which could not be more different than modern corporate theory. Just look at this snippet of Dave's statement on the purpose of a corporation (The whole thing is really worth a read).
"I want to discuss why a company exists in the first place. In other words, why are we here? I think many people assume, wrongly, that a company exists simply to make money. While this is an important result of a company's existence, we have to go deeper and find the real reasons for our being. As we investigate this, we inevitably come to the conclusion that a group of people get together and exist as an institution that we call a company so they are able to accomplish something collectively which they could not accomplish separately. They are able to do something worthwhile-they make a contribution to society (a phrase which sounds trite but is fundamental)"
Remember that Bill and Dave started HP as a 2 man operation in their garage during the great depression. They basically built the company from nothing into a technology power house over the course of their lives and the things that they went through clearly shaped how they ran the company. It is a testament that you can still find a large number of impressive engineers that were HP lifers.
It's sad. Most companies these days (to include HP) are hire and fire shops. All of them deny it.
Want to know why my resume is full of 1-2 year stints? Because when a project is winding down I've learned to start looking for a new job - because it's the safe thing to do. Managers will tell you up until the day you get your layoff notice that your job is safe.
At my last real job, the entire IT staff was getting laid off when the new CIO came in. One team after another and replaced with contractors. We knew in November of 2016 things weren't going to last. I was on the last IT team still employed.
My manager was fighting tooth and nail to try and save at least some of us. But come February (3 months longer than other IT teams) the fight was over and he lost. We were all laid off. I was given 6 months severance + insurance if I would stay around for 1 month and do a knowledge transfer to the new team, one of the easiest decision of my life. The majority of the team were escorted off premises that day.
Manager's boss helped everyone secure a new job (except 1 who just disappeared never to be heard from again), I got a contract gig for double the pay of that job.
I still talk to everyone, and we are all in better positions today than we were there.
>It's sad. Most companies these days (to include HP) are hire and fire shops. All of them deny it.
This is a good thing for people who want to work at those companies but are not yet employed there. Companies that can fire people easily are more willing to take a chance on someone without a perfect pedigree than those who insist on only hiring those that they are certain they want to work there forever.
Scania, the truck manufacturer, did this during 08-09. 10% paycut, 20% time reduction and they encouraged people to use the time to study and improve. None were laid off.
While I think this might be a good step in production work, it might be killing for firms in knowledge intensive industries. When this happens the first to move are the still employable and affordable youths. So the average age and salary might go up after a move like this. In the long run older firms get more trouble hiring youthful people, etc. Source: an interesting discussion with a union bargainer that was actually dismayed that young people disliked working hour reductions even though the firm promised no layoffs in return. My take away is that for some employees an honest severance package is better than working hours reduction.
I've actually seen the opposite of that, on medium/small firms (at least the ones I've worked on) when hard times hit the first to go down are the senior positions (except those close to management) and they're substituted with way cheaper out-of-college people.
I'm not certain it would be bad for knowledge intensive industries. My reasoning is that people would use their time more wisely and get more done. As for young people (also affects older), I think the implication `more time working => more done` is still deeply ingrained even when there are arguments against it[1].
I do agree that having forced off-time can be distressing to some people. Some may like to think they are indispensable to run the company, and suddenly they feel betrayed because their company doesn't need them working at 100%. Or they are optimistic and think the grass is greener elsewhere. Or...
Anyway, I think it would be interesting to see studies of """productivity""" when employees are forced to do part-time work. Based on what I know, I wouldn't too surprised to see good social benefits (but it doesn't mean everybody would thrive).
Unions generally work for those who have been there the longest. The young workers don't like hour cuts when they see people who have been there for years not have to take the same cuts. Worse, when you are young it is harder to have the required savings in place. My bank won't accept a lesser house payment - if I have been there for 10 years inflation has indirectly made my house payment less so I can afford to live on less income, which benefits the older worker over the younger. (there are lots of bills in life, some do hit older workers more and I'm intentionally not talking about them)
Google "dead sea effect" for some interesting discussion of this sort of thing. Many companies end up with a majority of employees with no mobility, and the culture in those workplaces suffers because of this.
Note that union boosters tend to want to push the narrative that all business owners and managers are evil caricatures of greedy capitalists who wouldn't give workers anything but scraps if not for the valiant unions protecting them.
Not saying it's never true, but know when to be wary of union people claiming this and avoiding the point that unions sometimes obstruct efforts to keep the company alive and not lay anyone off during hard times by demanding strict adherence to negotiated agreements on hours and wages.
A pay cut would be an "over my dead body" issue for many unions.
Edit: Since this apparently does not go without saying, the feedback loops in a union are all wrong for taking that kind of risk (remember, the pay cut does not guarantee company survival). People willing to rock the boat with calculated gambles like that do not rise to positions of authority in a union.
That depends on where you are.
If I recall correctly, In ~2009-2010 German automotive unions worked together with management and employees and negotiated widespread reduction of work hours in order to prevent layoffs.
Of course unions/employee representatives have a different place here(e.g. half of members of the board of directors are elected representatives of employees.)
Section 8(a)(3) of the Act makes it an unfair labor practice for an employer, "by discrimination in regard to hire or tenure of employment or any term or condition of employment[,] to encourage or discourage membership in any labor organization." (An employer that violates Section 8(a)(3) also derivatively violates Section 8(a)(1).) For example, you may not
- Discharge, constructively discharge, suspend, lock out, lay off, fail to recall from layoff, demote, discipline, or take any other adverse action against employees because they support the union or engage in union activities.
What about companies where different parts of the company have differing work arrangements? For instance, my telco has some union workers in specific roles, as well as non-union retail staff, and a "management professional" category. If union people were getting laid off, it would be due to the role, but of course there would be no non-union workers in that role.
This is nothing to do with union membership: when sales are down we slow the production line (everything is just in time) and part of that is letting go people on the production line who are not needed at the slower pace of operations. They will be recalled if sales improve. You have to be union to work on the production line (that is in the contract), so there is no discouragement of membership.
Yup. My dad is big on that too. Always thought he overplayed it, but one day he explained that the people he employs are quite poor. So if they don't get paid they can't put food on the table - literally. While he has a bit more of a buffer.
When I was a contractor in fintech, I did a lot of work for one guy on and off over 10 years. He was always very prompt in paying, and I only found out after some time that some of his clients (big banks) were very slow to pay him. At one point he paid everyone contracting for him out of his own pocket for nearly a year. None of us were exactly poor, but it contrasted with other clients who were happy to pass payment delays straight on to me!
Leaders Eat Last. A very good book by Simon Sinek but based on an old Marine Corps principal.
While other services have 'head of line privileges' - basically the more senior you are the more you can cut in line to get food at chow time. In the Marines, you always line up most junior to more senior.
It drives home the responsibility leaders have to take care of the people who follow them.
Exactly. This also extends further. I have led and managed, and always try to take on the least appealing work while letting those I managed do the 'fun' work.
There's a definite threshold between "their responsibility" and "the economy's responsibility."
I'd say generally the number at which you can no long afford to (a) put a roof over your head in a reasonably safe environment, (b) buy enough at the grocery to feed yourself and any dependents, (c) afford necessary medical care.
When you're trying to figure out how to make your paycheck cover only those things, we're not talking about disposable income anymore.
I have done this when companies I worked at where having difficulties, I volunteered to wait for my pay and prioritise other colleagues who had less of a buffer (single parents for example)
Did mean in one case I had to take the hit when the company collapsed and claim via RB2 (this is in the UK) - of course it turned out that my employer had not been making my NI payments so no unemployment benefit for me.
>I have done this when companies I worked at where having difficulties, I volunteered to wait for my pay and prioritise other colleagues who had less of a buffer (single parents for example)
That's quite a brave move if you might end up never getting paid. Props
Well I would get the government safety net which pays out a proportion of wages id just have to wait a couple of months so I wasn't risking much a few hundred.
But when one of your co-workers is a single mum who lives in rented accommodation and is buying her electricity on a Pay As you go electricity key losing a months wages is more serious.
There's many reasons the owner(s) should get paid last. That's the moral reason. From the financial perspective, I've always viewed it as a risk/reward scenario. The people who are guaranteed paychecks aren't really taking much of a risk, except the general bet that their employer will continue to exist and need them. The owner(s), however, are taking a large risk in many different ways and if they are able to make a profit, then they should get a larger portion of it.
I've always thought of it in this investment sense with the risk to reward payoff.
This is similar to how many German companies adapt with recessions. They even subsidise in-house trainings to keep their employee's skills up to date during the non-working days.
I wish HP did the same reduce-work-hours scheme during the 2008 recession instead of the pay cuts w/o reducing the working hours. At least the pay cuts were voluntary but still...
When Bill and Dave were finally out of the company there was a stark 180 in philosophy. You can always tell when management is about to do something sleezy in any of the HP spin offs (including HP) because they invoke the founder's to justify their obviously poor decisions.
"I really think this is what Bill and Dave would have done"
Exactly! Short-term tactics are good for loot-and-plunder leadership, seldom for the business. And the market tends to be disproportionately interested in short term gains, so things can be antagonistically stacked against the business as an organization. After all, short-term is where the best combination of margins and flexibility lie.
Yep. High CEO salary, especially in startups, is a big red flag. Typically, C-suite/founders in startups should be paid enough to live on or $0 if they're already rich.
He went further and said that several years before that, when there had been a recession, everyone at HP -- all the way up and down the ladder -- worked 9 days out of 10, and took a 10% salary cut, in order to ensure that there wouldn't be any layoffs.
I have a good friend who has helmed several very successful software companies. His philosophy is quite different: it is unfair to ask employees to work take a pay cut (and work more hours) when they could find another job that would potentially pay them more money.
I'm not posting this to argue with the HP philosophy, but rather to point out that there are other ways for management to care about their employees.
For the record, I stuck with my current employer through some hard times (forced furlough was the worst of it) because I appreciated what the leadership was doing, and believed in the goals of the organization.
Well, they can always leave if they can find such another job.
I'd love to been suggested that arrangement instead of the "We're sorry we are out of money" excuse I got (while the company was heavily spending in other stuff). 3 months later they "got a new client" and posted new job ads to hire back the positions (while swapping all senior positions with junior staff).
What angers me about the situation is not that I was laid off, but that it was a decision only justifiable by focusing exclusively in the short term.
Doesn't pass the sniff test. Employees can find another job while working at the place they got a pay cut. Sorry to say but your friend might have terminal executive-brain.
He went further and said that several years before that, when there had been a recession, everyone at HP -- all the way up and down the ladder -- worked 9 days out of 10, and took a 10% salary cut, in order to ensure that there wouldn't be any layoffs.
People spoke about the company, and how it treated employees, with great pride, and the way that they treated workers during hard times was one major reason for that.
If nothing else, I learned from these stories that the boss/owner should be paid last, after all of the employees receive their salaries. I've done that whenever I've had employees, and I credit that lesson not just to general business ethics, but to a sense that business is about much more than just profit.
It's hard to imagine a modern company taking such steps to avoid layoffs, but the story continues to inspire me nearly 30 years later.