After Hewlett-Packard posted its latest quarterly results and outlined next fiscal year expectations, there has been a general perception of HP willing to provide a “Thanksgiving gift” to its employees or issuing pay raises, and similar views.
Though arguably technically correct expressions, we do not really think Hewlett-Packard could consider this a gift or a pay raise.
Firstly, what Hewlett-Packard is going to do with salaries is just setting them back to the levels of early 2009, before Mark Hurd decided to slash them under the financial circumstances of that moment. This does not really seem and increase at all. Conceptually speaking, Hewlett-Packard was requesting support from its employees at that time, and putting salaries now right were they where is just returning the favor.
Secondly, it was only a portion of employees who were impacted by salary reductions in 2009. It’s only them who are going to have their wages repositioned. This is, obviously, not a pay raise.
Thirdly, HP will grant better funding for US employees social plans 401(K). True that HP is an American company… as true is that it has a lot of employees who are not working in the US nor for the US branches of Hewlett-Packard. Is this a general benefit for HP employees? We are afraid this goes only to employees based in the US.
Of course, we recognize a positive tone under after these news. But if we were an average HP employee, we would be cautious. These measures are not something to throw fireworks. In fact, as we said earlier in November, this somehow the least Hewlett-Packard should do for its employees, especially after the difficult times of 2009 are over. At least, according to Hewlett-Packard’s own results.
We still see two benefits for Hewlett-Packard after these measures:
On one hand, as Léo Apotheker was not at all responsible for those pay cuts in 2009, he will benefit from employees appreciation. He could have simply ignored the need to act as he has, demanding more time to think about it, as he has said when being asked for more details on his plans for the future. Even in the case he had done so, nobody would have been able to blame him for the pay cuts.
On the other, there might be some gains in the appreciation employees have for the company they work for. A more positive attitude from them would certainly turn into better performance, one way or another.
Overall, tone is OK… but we would recommend some skepticism for the time being. It probably is a bit too early, to quote Léo Apotheker himself.
According to Sir Winston Churchill, British Prime Minister during the war, Bletchley Park was the British Secret Weapon that allowed them to win the war. In fact they succeeded in breaking the German Code used by the famous Enigma machines, and ever since, German communications were transparent to the Allies despite having had the most technologically advanced cipher system. By the way, Germans never learnt before they surrendered their code had been broken, so sure they were about it.