When CEO Meg Whitman joined Hewlett Packard in September 2011, the Silicon Valley founding company was suffering a major crisis. With profits down 19% on the previous year and a proliferation of problems with acquisitions and board shake-ups, something had to be done.
Whitman, a former eBay chief and one-time candidate for the role of California governor, unveiled an ambitious five-year turnaround plan to restore HP to growth. Now, in the third year, HP is generating a cash flow of more than $10 billion, and the stock price has more than doubled in the last 12 months. HR is a key focus of the plan – it’s about having the right people in the right roles at the right time and with the right attitude.
“People and culture have always been central to our business,” says Diaa Mohamed, VP of WW HR Global Services. “We have introduced some of the most innovative people management practices to the business world.”
Focus on employees the HP Way
Founded by Stanford University classmates Bill Hewlett and Dave Packard in 1939, HP employs more than 300,000 people across 170 countries globally. Now the largest IT company in the world, HP was the first company to introduce open plan offices in 1940 in its Redwood Building in Palo Alto, California. HP then pioneered company-wide employee benefits in 1942, followed by pension plans in 1948, stock grants in 1958, and ‘flex-time’ working in 1967.
“It’s about empowering people and giving them the flexibility to make decisions,” says Mohamed. “This way, we promote innovation.”
Having focused heavily on people since its inception, it’s no surprise that HR is playing a crucial role in the organization’s turnaround.
Part of the plan is to find ways to reduce bureaucracy, and concentrate more on innovation and customer service. Global HR and the company’s other Shared Services organisations played a crucial role here.
Growing internal talent
Through a focus on career development within the business, HP has shifted from filling 70% of new positions externally to recruiting roughly that many through internal moves, explains Mohamed. The remaining 30% come from outside which ensures that new talent keeps the company from becoming stagnant, in line with the aims around innovation.
“The only way you can do this is if you understand your people and the skills they have,” says Mohamed. “You can then focus on their development and ensure critical roles have a succession plan.”
HP has a ‘talent health check’ which helps managers identify talent gaps and come up with a plan to fill them. Similarly, managers identify high potential employees and come up with a structured career plan for them.
Employees are evaluated on two key drivers: performance and potential. HP also monitors how long people stay in a particular position.
As a result of these initiatives, employee engagement has ‘risen significantly’ over the past three years. “We are managing our people as a critical strategic resource, which is key for us,” says Mohamed.
HR in the region
When it comes to HR practices in the Middle East, while Mohamed believes there are many innovative HR strategies being implemented, some companies still lag behind more developed markets. “The HR profession is much more developed than it was 10-15 years ago, but in many cases it is still seen as an administrative function.
“Employees are often seen as cost rather than a competitive advantage. Some companies believe the best way to keep employees is through residency visa control and not through true employee engagement. But if you want to build a sustainable business and outgrow your competition, your only way is have a skilled and engaged work force that is motivated and rewarded to innovate and grow the business.”
To quantify your position as an HR professional, it’s very important to educate the senior leadership of the company about what you do, Mohamed says. “Come up with robust data and metrics to show the impact of your major HR initiatives and the return of the investment the company is making in HR. Investing in HR is the right thing to do for any smart business but you need to show them why it is so with supporting data” he advises.
If you’re thinking of implementing new initiatives, the first step is to secure senior leadership support. “Explain why the action is a business thing, not just an HR issue. Articulate why you need change and what return this will yield – how will profits increase as a result of long-term investment?”
For Mohamed, communication throughout the process is critical. “Explain what you are trying to do, why and how. And most importantly, get metrics in place to measure the impact.”
Future of HR
Mohamed is, however, optimistic about the future of HR in the region. “I believe HR will change for the better in coming years,” he says. “Lots of companies are moving from being family owned to publicly traded, which is great. As a result, I predict we will see companies fighting for top talent in a bid for growth, and we will also see higher level of transparency and compliance with national and international regulations including labour ones .”
He also anticipates a shift in the number of qualified HR people in the region. “At the moment, a lot of people think anyone can do HR or ‘I’m good with people so I will be good in HR’, but this is far from the truth. Today, HR has a huge body of theory and practice and you need to know this in a similar way to learning Finance or Marketing in order to be a strong HR professional. Most business schools now have 4-year undergraduate programs in HR, and it is not the case as it used to be 30 years ago when the focus was on personnel and administration.