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Executive Summary

William R. Hawlett & David Packard , the co-founder of hawlett & Packard company started their journey in 1938 with $538. through the years they grew the company into one of the leading IT industries of the decade. Along with updated technology they discovered the unique managerial style and named it HP way. This HP way later on became an exemplary managerial style for all the organizations in the IT and cross industry. Even though the company boomed with this style for many years, there was a down fall at a certain time. In the 21st century the company merged with another giant Compaq and the court battle took place which destroyed the moral of HP employees. All the facts due to which HP way can no longer be maintained in HP and the conditions required by other companies to follow HP way are discussed in the following chapters of the assignment. With all highs and lows of the business cycle HP still remains the leading industry of current time.

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INTRODUCTION...............................................................................................................2 i) Hewlett-Packard Company:..........................................................................................2 ii)The HP way:.................................................................................................................3 Answer 1:.............................................................................................................................4 1.3.1.2. Drawbacks of MBO:...................................................................................8 1.4 Conclusion: .............................................................................................................10 Answer 2:...........................................................................................................................11 2.2 The Large & Small enterprise:.................................................................................11 2.3 Conditions for HP way to work:..............................................................................12 2.4 Conclusion:..............................................................................................................13 Answer 3:...........................................................................................................................14 3.1 Introduction:.............................................................................................................14 3.3. Carlys Way according to the Research Scientist at HP:........................................15 3.4 Conclusion:..............................................................................................................18 Conclusion.........................................................................................................................19 Reference...........................................................................................................................19

INTRODUCTION
i) Hewlett-Packard Company:

-3Bill Hewlett and Dave Packard graduated in electrical engineering from Stanford University in 1935. The company originated in a garage in nearby Palo Alto during a fellowship they had with a past professor, Frederick Terman at Stanford during the Great Depression. In 1939, Packard and Hewlett established HewlettPackard (HP) in Packard's garage with an initial capital investment of US$538. Hewlett and Packard tossed a coin to decide whether the company they founded would be called Hewlett-Packard or Packard-Hewlett. Packard won the coin toss but named their electronics manufacturing enterprise the "Hewlett-Packard Company". HP incorporated on August 18, 1947, and went public on November 6, 1957. Annual net revenue for the company grew from $5.5 million in 1951 to $3 billion in 1980. By 1997, annual net revenue exceeded $42 billion and HP had become the worlds second largest computer supplier.

ii)The HP way:
The founders, known to friends and employees alike as Bill and Dave, developed a unique management style that came to be known as The HP Way. In Bill's words, the HP Way is "a core ideology which includes a deep respect for the individual, a dedication to affordable quality and reliability, a commitment to community responsibility, and a view that the company exists to make technical contributions for the advancement and welfare of humanity." The following are the tenets of The HP Way: Trust and respect for individuals. Focus on a high level of achievement and contribution. Conduct our business with uncompromising integrity. Achieve our common objectives through teamwork. Encourage flexibility and innovation.

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Q.1. Is the HP way of managing creating a climate in which employees are motivated to contribute to the aims of the organization? What is unique about the HP Way?

Answer 1:
1.1. Introduction:
In 1956, Bill Hewlett, Dave Packard, and a handful of other HP executives gathered at the Mission Inn in Sonoma, California, to create a set of values and principles to guide their company. The six objectives that this small group subsequently created not only helped shape a new kind of company, but ultimately became the foundation for what came to be known as the HP way. These six objectives, which later became seven, are: 1. Recognize that profit is the best measure of a companys contribution to society and the ultimate source of corporate strength. 2. Continually improve the value of the products and services offered to customers. 3. Seek new opportunities for growth but focus efforts on fields in which the company can make a contribution. 4. Provide employment opportunities that include the chance to share in the companys success. 5. Maintain an organizational environment that fosters individual motivation, initiative and creativity.

-56. Demonstrate good citizenship by making contributions to the community. 7. Emphasize growth as a requirement for survival.

1.2. Implementation of HP WAY :

1. Having trust and respect for individuals: The management believes that people want to do a good job and will do so if given the proper tools environment and support. Informality in personal relationships is established by the use of first names. This involves an informal organization in the formal organization. Managers are friendly with their subordinates and employees. At times they have coffee or lunch with their subordinates and talk about what has been going on. Through this process if the employees are facing any difficulties that will be known to the managers and will be solved eventually. 2. Focusing on a high level of achievement and contribution: Customers expect HP products and services to be of the highest quality and to provide lasting value. To achieve this, all HP people, especially managers, must be leaders who generate enthusiasm and respond with extra effort to meet customer needs. Techniques and management practices which are effective today may be outdated in the future. For the management to remain at the forefront in all their activities, people should always be looking for new and better ways to do their work.

3. Conducting business with uncompromising integrity:

-6The expectation is that HP people will be open and honest in their dealings to earn the trust and loyalty of others. People at every level are expected to adhere to the highest standards of business ethics and must understand that anything less is unacceptable. As a practical matter, ethical conduct cannot be assured by written HP policies and codes; it must be an integral part of the organization, a deeply established tradition that is passed from one generation of employees to another. 4. Achieving common objectives through teamwork: Recognizing that it is only through effective cooperation within and among organizations that one can achieve goals. Their commitment is to work as a worldwide team to fulfill the expectations of the customers, shareholders and others who depend upon them. The benefits and obligations of doing business are shared among all HP people. 5. Encouraging flexibility and innovation: Creating an inclusive work environment which supports the diversity of our people and stimulates innovation. They strive for overall objectives which are clearly stated and agreed upon, and allow people flexibility in working toward goals in ways that they help determine are best for the organization. HP people should personally accept responsibility and be encouraged to upgrade their skills and capabilities through ongoing training and development. This is especially important in a technical business where the rate of progress is rapid and where people are expected to adapt to change.

-76. Demonstrate good citizenship by making contributions to the community: HP believes in corporate social responsibility (CSR). In Singapore, HP staff raised nearly $295,000 for charity in 2003 and received a SHARE Gold Award from the Community Chest of Singapore for employee participation exceeding 50%. One event was Gladiathon, a fundraiser in support of the President's Challenge 2003. Leading by example was the Managing Director from HP Asia Pacific, who wore a gladiator costume and competed with other IT industry leaders in the battle for charity. HP was the largest corporate donor of this event, raising a total of $121,000.
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1.3. Exception about HP way:

Almost all companies regardless of their financial ability have individual ways of management. Among those some work and some end up with a disastrous result. But the successes of each of these companies mainly rely on their management. Same goes for HP. HP way is one of the major reason why the company is standing at the position where they are now. The exception is such that the management has sincerely designed the policies and rules of the HP way. They have made sure that any deviation or lacking does not go unnoticed. They have supplemented management by objective(MBO) by management by wandering around(MBWA).

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1.3.1. Management by Objective (MBO) :

The managerial system that integrates many key managerial activities in a systematic manner and is consciously directed towards the effective and efficient achievement of organizational and individual objectives. This system is widely used in the industry.

1.3.1.1 Benefits of MBO:

Improvement of managing through result oriented planning. Clarification of organizational roles and structures as well as delegation of authority according to the results expected by the people occupying the role. Encouragement of commitment to personal and organizational goals. Development of effective controls that measure results and lead to corrective actions. Although it is one of the most widely practiced managerial style yet there are drawbacks which stops the system to work. Even leads to a disastrous result.

1.3.1.2. Drawbacks of MBO:

Failure to teach the philosophy of MBO. Failure to give guidelines to goal setters. Difficulty of setting verifiable goals with the right degree of flexibility.

-9The overuse of quantitative goals and the attempt to use numbers in areas where they are not applicable.

1.3.2. Management by wandering around (MBWA) :

Relax People will sense genuineness and casualness, and they'll

respond accordingly. Stiff and formal conversation will probably lead to equally rigid responses. Listening and observing more than talking Usage of active listening

with staff. Asking for feedback and ideas Let everyone know that their ideas are

valued. Wandering around equally one should not spend more time in one

department or section than another and should not always talk to the same people, or to people with certain ranks. Using the time for spontaneous recognition Showing gratitude if

something good is observed by complimenting the person. Communicate Sharing company goals, philosophy, values, and vision.

"walk-around" are opportunities to mutually share information that helps everyone understand and do their jobs better. Chat Effective organizations aren't all about work, work, work. Should not overdo it should not leave people feeling that one is

always looking over their shoulders.

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1.3.3. Combining MBO & MBWA:

As HP grows bill Hewlett and Dave Packard create a management style that forms the basis of HPs famously open corporate culture and influences how scores of later technologies companies will do business. Dave practices a management technique MBWA which is marked by personal involvement, good testing skills and the recognition that everyone in an organization wants to do a good job. As managers Bill & Dave run the company according to the principle later called management by objective communicating overall objectives clearly and giving employees the flexibilities to work toward those goals in ways that they determine are best for their own areas of responsibilities.

1.4 Conclusion:

Despite all ups and downs the HP way has proved to be the most effective manner of management. This has set an example for all other companies. HP management does not consider the organization as their job place. They think of it as their home and the employees working there as their family members. Therefore each and every person working for HP- regardless of the geographic region they are in, they are all treated equally and with equal respect and importance.

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Q.2 Would the HP managerial style work in any organization? Why or why not? What are the conditions for such a style to work?

Answer 2:
2.1 Introduction:
HP posted latest revenue in 2010 was $126.3 Billion in 2009 net revenue was $115 Billion with approximately 40 Billion coming from services. HP started its journey from one car garage in 1939 with $ 538 and eventually built a very successful company with high level resource let it be human or business. These 72 years they have grown from level zero to the latest technological level. HP way was one of the most important and basic reason why HP is called to be the most successful and booming industry of current time. They are currently working with 3, 24,600 employees and such high skilled and motivated workers are the reasons behind HPs success.

2.2 The Large & Small enterprise:

The reason why HP could follow such managerial skill is because of their financial ability. It takes expertise to understand own employees & high technology to build the knowledge of these employees. All these cost money which HP could pay off. HP could ensure job security at the time when the economy was facing high recession. This is not possible by all companies but due to this the employees have grown faith and trust towards the organization.

- 12 The small and moderate companies can not afford to employ such large number of employees. IBM, DELL, and APPLE such company can financially afford managerial style similar to HP way but it also depends on their working environment. It is not possible by all companies to employ large number of employees, give them job security, flexibility and job enrichment. All these need large finance and high level expertise who will understand the needs and wants of the employees. Yet among these ways that HP follows, there are once that the small organizations can follow. Such steps do not involve money.

2.3 Conditions for HP way to work:

HP management mainly follows three famous theory of motivation. It is a mixture of MCGRAGORS Theory Y, Herzberg Hygiene Theory and Maslows Theory of motivation. The contrast of the theories to prove the validity of HP way and conditions for such style to work are: The founders of HP way always think friendly job environment is essential

for working and McGregors theory Y also considered friendly environment is more helpful than external control and the threat of punishment. The theory also implies that physical and mental effort in work should be as friendly as play and thus HP way always avoid formal relations between the managers and subordinates and try to maintain a friendly relation and create a Herzberg maintenance factor. This is affordable by both large and small company. Any organization can follo such managerial style as it is effective and free of cost by monetary means. HP way always promotes the team effort and always expect all employees

participation and thats why they provide their employees proper scopes to proof their qualities thats how HP way fulfill the Maslows esteem need as well as the

- 13 Herzbergs motivation factor. Like all companies, small and midsized businesses need to update and upgrade IT equipment as new generations offering greater capabilities and efficiencies are introduced, and as the company itself grows or evolves. With limited resources, just staying in tune with whats available and appropriate for the business can be daunting. Therefore only large companies with updated technology can encourage the innovation of the employees. The small once can only encourage team work with limited resources. Employees of HP rewarded with profit sharing, above market wages ,

generous work life balance and a culture where their contribution not only appreciated but also expected and McGragors theory Y also talks about the reward for the achievement. The large companies, as large as HP, which has growth every year and earn a sufficient amount of profit can follow such managerial style. Maslaws Heirchy of needs always give importance to the job security and

safety and HP way also try to provide job security and safety for their employees. HP has provided job security when the economy was below average and people were laid off. Such ability was due to strong financial background of the company, therefore it is only possible for companies with strong financial background.

2.4 Conclusion:
More or less, each and every step of HP way helps others realize and teaches how to manage the organization. It is an exemplary managerial style for all organizations let it be of IT industry or any other cross industry. It has shown the world that to be successful, maintaining a proper working environment is as important as making profit. The growth of a company can only be expected when the people working for it is satisfied.

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Q.3 Do you think it is possible to maintain the HP way after the merger with Compaq, the court battle, and the damaged morale at HP? Why or why not?

Answer 3:
3.1 Introduction:
Carleton S.Fiorina 47, graduated from Stanford University with a bachelors degree in medieval history and philosophy and masters degree in Business Administration from University of Mayland as well as Master of Science degree from MIT. When she became chairman and CEO of HP in 1999, she became the first woman to lead a so large company, and consequently, one of the nations most prominent female executives, perhaps more important to HPs future. However, fiorina became the first outsider to take charge of the 62 years old company.
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3.2 The court battle & the damaged moral :

It took 62 years to build the moral of the employees. For all these years HP maintained a family. Their values, dedication and honesty was as though for own family. If a decision was taken it was taken with the consent of each and every family member. But this moral was destroyed when, Carly Fiorina declared a merger of HP with Compaq. This declaration created the court battle between Walter Hewlett, the son of William Hewlett a board of director and Carly Fiorina. The critics of merger, like Mr. Hewlett cited a long list of problem with the deal. Some opponents of the deal believed that rather than accelerating growth,

- 15 merging the two companies would simply create a bigger company with bigger problems. As one analyst explained, This is not a case of 1+1=2 more like 1+1=1.5 (R.F). In justification to the merger Fiorina emphasized that- The HP way has always been about change. It always been about innovation, it always been about moves. She as well counted that the important values of HPs culture (that is creativity, change and innovation) were the very values that justified the merger. What she ignored was the emotion of the employees that was attached to HP. HP has a history of offering job to unemployed people at the time of high recession. It ensured job security to its employees. The combined company would have about 145,000 employees, which called for and initial work force reduction of 15,000 employees, with further reduction likely. This radical redesigning threatened the security and safety needs of the employees. After the merge, whenever the company faced a loss, Fiorina went for work force reduction. Probably due to merger HP got rid of one giant competition in IT world but it surely lost the trust and faith of its employees.

3.3. Carlys Way according to the Research Scientist at HP:

An electronic engineer who worked as a Research Scientist at the HewlettPackard Imaging Systems Laboratory starting in 1975 until he resigned in 2003. G.S. thought HP represented the very best of American character -- "a spirit of adventure and a belief in unlimited possibilities." He charges, though, that starting in 2000 the can-do attitude was killed by management choices intended to placate nervous investors and board members rather than benefit the company and its workers over the long-term. He warns

- 16 that sustained cut-backs to R&D budgets over the past half-decade may have irreversibly damaged HP and the entire U.S. technology industry.

3.3.1 Experience of the Research Scientist :

I snuck out of Hungary in 1973, one week after I was told that if I ever wanted to advance as an engineer, I would have to join the Communist Party. Being a good party member was far more important than your skill level, and so my boss was a man who had been a pig farmer. After decades spent raising hogs, he suddenly was supervising dozens of machinists, most of who had engineering degrees and had built bridges and buildings until we were reassigned to "practical and useful" work -- making parts for factory machines. Working for Carly Fiorina reminded me of my days working for that farmer. I remember the first time she walked into the Hewlett-Packard labs. She said that our new company slogan was "Invent." Then she told us that the technology industry would never again be as exciting and profitable as it was in the '90s. That we'd all need to grow up now and face that fact. I knew from that moment that HP's best days were behind us. Carly was a marketing person put in change of engineers, a person who cared nothing about the art and beauty of technology. She just wanted saleable stock to bring to market. My uncle gave me a present when I first arrived in America -- an HP-35 Scientific Calculator, the first handheld scientific calculator. "People here don't use slide rules anymore," he says.

- 17 Well, that turned out to be not quite true, but my HP-35 was beautiful. It had integrated circuits and LEDs, brand new things that had been developed in HP Labs. When I got a job at HP's Palo Alto lab two years later, I was proud. You were encouraged to work on whatever excited you. Bill Hewlett used to remind us that "The marketing guys said the HP-35 would be a failure because it was too small, and then we couldn't make them fast enough to meet the demand. The marketing folks don't know everything." It was Bill's idea to start HP Labs in 1966. He figured there should be a place where people could focus on building the future. I worked on projects such as thermal inkjet printing because I thought dot matrix printouts were ugly. And I worked on miniaturizing huge industrial inkjet printers because I thought it would be great if people could print wonderful color images from their desktop PCs. We had no idea when we started what these projects would lead. We just wondered "what would happen if?". Our biggest mistake at HP Labs came from being too cautious. We passed on developing Steve Wozniak's cheap little personal computer. Woz was working in HP's lab, on calculator projects, at the time. We knew the computer idea was great, but we couldn't work out how to market it, so we passed. The lab was never packed with genius marketers. Carly told us we had no business sense, and that every project needed to make a profit within three years or less. She usually said that right before the research budget got slashed again and more lab employees were laid off. In mid-2002, HP's labs became solely focused on finding ways for other businesses to save money. This led to some good projects grid computing, self-maintaining servers, self-healing systems. But the emphasis was not on creating new or better technology, just technology that would boost the bottom-line.

- 18 I left in late 2003. Profit is every CEO's major focus. Research almost always benefits an entire industry more than any particular company. And research doesn't have immediate results. Sometimes it doesn't have the results that CEOs want. You invent a product that has a longer life-cycle, that doesn't need constant refills or upgrades. Research is expensive and unpredictable. Things that today's business world frowns on. New technology typically has a five-year development cycle. The U.S. technology business stopped being serious about research in 2000 and the results are showing now. People have a little more money but there's nothing they want to buy. There's nothing that makes you say, Wow!! Ten years ago I was seeing something interesting every month, but now we're touting bloated software and cute case designs as innovation. The damage to HP and the U.S. technology industry at large may already be irreversible. If we start investing today and let our engineers play we might have something exciting to show people in 2010. That's a long time to wait for the next big wow. To me, this rabid fixation on short-term profits is a bigger threat than outsourcing -- it is killing our ability to make astonishing things. From the above interview it can be concluded that the basic of HP way was destroyed and the motivation of employees to work for HP was completely damaged.

3.4 Conclusion:
Therefore after the merger it was not possible to maintain Hp way as now there were new people with new leaders who focused more on profit and less on

- 19 innovation. The R&D department was now more responsible of finding new ways of cost-reduction rather than new invention. Even after few down falls HP might be enjoying the competitive advantage but at the cost of the moral of the employees.

Conclusion
Even though the company struggled through the years of merger and faced loss, yet it is still one of the leading companies in the world of Information Technology. HP still leads its way with a revenue of US$ 126.033 billion (FY 2010) and currently Employees 324,600 (2010) running the organization. The values and views of the employees have changed with time but the dedication of working with HP remains ever unchanged. Therefore with the change in time, the managerial style has changed. Today HP offers thirteen or more numbers of various products which satisfies the demand of their customers. With all highs and lows, HP still remains one of the leading companies of the decade with a strong and highly trained work force.

Reference

- 20 1. http://www.hpalumni.org/hp_way.htm 2. http://en.wikipedia.org/wiki/HP 3. Heinz Weihrich, Mark V Cannice & Harold Koontz, Management- a global and entrepreneurial perspective, chapter-4 pp 104-6, the McGraw-Hill companies. 4. http://www.mindtools.com/pages/article/newTMM_72.htm 5. http://www.awpagesociety.com/images/uploads/HP-Compaq-case.pdf merger 6. http://www.signallake.com/innovation/CarlysWay030405.pdf 7. http://www.amazon.com/HP-Way-Hewlett-Built-Company/dp/0887308171 8. http://www.jimcollins.com/article_topics/articles/the-hp-way.html 9. see also http://www.smallbusinessnotes.com/small-business resources/william-r-hewlett.html 10.http://www.paloaltoonline.com/weekly/morgue/2002/2002_04_10.hpway10.ht ml 11. http://www.ibscdc.org/Case_Studies/HRM/OB0011.htm 12. http://www.1000ventures.com/business_guide/cs_inex_hp.html 13. http://www.flipkart.com/hp-way-david-packard-kirby-book-0060845791