HR enters the HP fray: Raw data

Workforce, April, 2002 by Todd Raphael

Wether Hewlett-Packard's proposed merger with Compaq was a good or bad idea remains to be seen. What is for sure is that HR issues did not go unnoticed.

Hewlett-Packard publicly bickered for months with those opposed to the merger, mainly HP board member Walter Hewlett. Many of the issues centered on HR. Both sides agreed that the merger--which was set for a vote March 19 and 20--would result in layoffs because of redundancies that would exist in the new, combined company.

Hewlett sent letters to the SEC saying that the layoffs at the merged company could lead to poorer customer service.

HP, on the other hand, explained in a January SEC filing (above) that despite the layoffs, it hadn't forgotten the importance of employees to a company's bottom line. HP used the word "retention" 57 times in that document.

The company told the SEC that employee turnover must be kept to a minimum "to minimize negative effects on its customer relationships." It also discussed the importance of keeping employees motivated amidst the distractions of the merger.

HP also outlined its plans to pay millions of dollars in "retention payments." Top executives would get approximately three times their salaries in these payments for sticking around. In addition, about 6,000 mid-level managers and other key employees would receive a bonus of approximately half their current salaries.

There was also debate over whether HP would change benefits, such as retirees' health benefits, as a result of the merger. The opposition worried that HP would make a change; HP insisted it had no such plans.

"When we have changed benefits programs in the past, we've thoroughly developed alternatives, agreed on the end goal and guiding principles, and communicated decisions well ahead of implementing them, once they have been made," says Susan Bowick, HP's vice president of human resources. "This is how we will continue to handle any decisions around all HR programs going forward. Nobody will have to read about anything in the fine print of a proxy statement. That's not how we do business at HP."