This report, "the

HP

way," is designed to help

communicate a better understanding of the

working philosophy of Hewlett-Packard

Company.

To

do this it relies

on

the definitions,

experiences

and

statements of a wide range

of people

and

sources within the organization.

What is it?

"Any group of people who have worked together for some

time, any organization

of

long standing, indeed, any state

or

national body over a period of time develops a philoso-

phy, a series of traditions, a set

of

mores. These,

in

total,

are unique and they fully define the organization, setting

it aside for better or worse from similar organizations.

At

HP

all

of

this goes under the general heading of "the

HP

way." I want to emphasize that the

"HP

way" cannot be

demonstrated to be unique, and that although based on

sound principles, it

is

not necessarily transplantable to other

organizations. But what can be said about it

is

that it has

worked successfully in the past

at

HP and there

is

every

reason to believe that being a dynamic "way," it will work

in

the future.

If

this

is

true, and if it differs from more

conventional practices, then it

is

important that whatever

this "way"

is

that

it

be conveyed to, and understood by

new

HP

people.

"What is the

HP

way? I feel that in general terms it

is

the pOlicies and actions that

flow

from the belief that men

and women want

to

do a good job, a creative job, and that

if they are provided the proper environment they will do so.

But that's only part

of

it. Closely coupled with this

is

the

HP

tradition of treating each individual with consideration

and respect, and recognizing personal achievements. This

sounds almost trite, but Dave and I honestly believe in this

philosophy and have tried to operate the company along

these lines since it first started.

"What are some examples of this application of a confi-

dence in and concern for people? One was a very early de-

cision that has had a profound effect on the company. That

decision was that

we

did not want to be a "hire and fire"

operation - a company that would seek large contracts,

employ a great many people for the duration of the contract,

and at its completion let these people

go.

Now, there

is

nothing that

is

fundamentally wrong with this method of

operation - much work can only

be

performed using this

technique - it's just that Dave and I did not want to oper-

ate in this mode. This one early decision greatly limited

our freedom

of

choice and was one of the factors that led

us

into the business in which

we

are now engaged.

"There are a number of corollaries to this policy. One

is

that employees should

be

in a position to benefit directly

from the success of the organization. This led to the early

introduction

of

a profit-sharing plan, and eventually to the

employee stock purchase plan. A second coroIlary was that

if an employee was worried about pressing problems at

home, he could not be expected to concentrate fully on his

job. This, and the fact that in the early days Dave and I

were very closely associated with people throughout the

company and thus had a chance to see firsthand the devas-

tating effect

of

domestic tragedy, led, amongst other things,

to the very early introduction of medical insurance for

catastrophic illness,

"As the company grew and it became evident that

we

had to develop new levels of management,

we

applied our

own concept of management-by-objective. When stripped

down to its barest fundamentals, management-by-objective

says that a manager, a supervisor, a foreman given the

proper support and guidance (that

is,

the objectives),

is

probably better able to make decisions about the problems

he

is directly concerned with than some executive way up

the line - no matter how smart

or

able that executive may

be.

This system places great responsibility on the individual

concerned,

but

it also makes his work more interesting and

more challenging.

It

makes him feel that he

is

really

part

of

the company, and that he can have a direct effect on its

performance.

"Another illustration of the

HP

way occurred in 1970.

During that time, orders were coming

in

at

a rate less than

our

production capability. We were faced with the prospect

of a 10 percent layoff - something

we

had never done.

Rather

than

a layoff, we tried a different tack. We went

to

a schedule of working nine days out of every two weeks -

a 10 percent cut in work schedule with a corresponding 10

percent

cut

in pay for all employees involved in this sched-

ule.

At

the end

of

a six-month period, orders and employ-

ment were once again in balance and the company returned

to a full work week.

The

net result of this program was that

effectively all shared the burden

of

the recession, good peo-

ple were not turned out on a very tough job market, and,

I might observe, the company benefitted

by

having in place

a highly qualified work force when business improved.

"The

dignity and worth of the individual

is

a very im-

portant part

of

the

HP

way. With this in mind, many years

ago we did away with time clocks, and more recently

we

introduced the flexible work hours program. Flexible,

or

gliding, time was originated within the company

at

our plant

in Germany. Later

it

was tried for six months or

so

at

the

Waltham Division in Massachusetts, and then made avail-

able throughout much of the company. Again, this

is

meant

to be an expression

of

trust and confidence in

HP

people

as well as providing them with an opportunity to adjust

their work schedules to their personal lives.

"Many

new

HP

people as well as visitors often note

and comment to

us

about another

HP

way - that

is,

our

informality and our being on a first name basis. Both Dave

and I believe we all operate more effectively and comfort-

ably in a truly informal and personal name atmosphere.

Hopefully,

with increasing growth we

can

retain

this

"family" way of operating with the minimum of controls

and the maximum of a friendly "help each other" attitude.

"I could cite other examples, but the problem

is

that

none by themselves really catches the essence of what the

HP

way

is

all about. You can't describe it in numbers and

statistics.

In

the last analysis it

is

a spirit, a point

of

view.

It

is

a feeling

that

everyone

is

a

part

of a team, and

that

team

is

HP. As I said at the beginning, it

is

an idea that

is

based on the individual.

It

exists because people have seen

that it works, and they believe in it and support it. I believe

that this feeling makes

HP

what it

is,

and that it

is

worth

perpetuating." - Bill Hewlett, president.

"What

is

the

'HP

way'? A lot of employees would like

to have a nice

cut

and dried definition. I don't have one to

give. There are a lot of elements in it - such

as

our

informality, our knowing each other on a first name basis,

our

working to achieve the small-company atmosphere,

and things like flexible hours. You can go on and on,

but

one of the most important points

is

the integrity and

honesty of the way we do business. And treating people

the way we would like to be treated ourselves."

-

Ray

Wilbur, vice president-Human Resources.

During the annual

HP

management meeting in 1975,

the participants developed this list

of

concepts embodied

in the

HP

way and their importance to the individual:

• Belief in people; freedom.

• Respect and dignity; individual self-esteem.

• Recognition; sense of achievement; participation.

• Security; permanence; development of people,

• Insurance; personal worry protection.

• Share benefits and responsibility; help each other.

• MBO; decentralization.

• Informality; first name; open communication,

• A chance to learn

by

making mistakes.

• Training and education; counseling.

• Performance and enthusiasm.

.

..

but

how

do

you

do

it

?

You

trust people

.. . practice sharing

Underlying Hewlett-Packard's personnel policies is the con-

cept of sharing - sharing the responsibilities for defining

and meeting goals, sharing in company ownership through

stock purchase plans, sharing

in

profits, sharing the oppor-

tunities

for

personal and professional development, and

even sharing the burdens created by occasional downturns

in

business.

Sharing, to

be

truly effective, requires

an

atmosphere

of trust and

of

great respect for the individual. The com-

pany seeks to create that atmosphere

by

maintaining a rec-

ord of steady growth

and

good performance, one

that

assures both stability and opportunity

for

HP

people.

It

is

also important

that

people have a sense

of

close. personal

involvement in the achievements

of

their particular division

or

department.

One important way the company keeps people involved

is by paying close attention to its organizational structure.

HP's

basic business units - the operating diVisions - are

kept relatively small and well defined. The purpose

is

to

give people a clear sense of their own mission and

an

aware-

ness of their individual contributions to overall performance.

This policy has manifested itself in recent years with the

formation of many new divisions. As a consequence, many

opportunities were created for people to take on new re-

sponsibilities built around clearly identified product Jines.

Helping people prepare themselves for their new re-

sponsibilities is yet another important

part

of the sharing

process. A wide variety of company-sponsored training and

development programs

is

available for this purpose.

The

concept

of

sharing is very evident in the company's

benefit programs. These take various forms around the

world, each country organization having its own set

of

bene-

fits tailored

to

its own traditions, laws and values.

Employees in many countries participate

in

cash profit

sharing.

In

the U.S., for example, employees with more than

six months service are eligible to participate,

and

receive

amounts calculated on

HP's

pre-tax earnings.

Profit sharing has also been the basis of the company's

retirement program in the U.S. This program has under-

gone a number

of

modifications in recent years, and further

changes have been incorporated in order to provide more

secure value in the face of increasing fluctuations in mone-

tary and market values of securities.

U.S. and many other employees participate in stock

purchase plans. The U.S. plan allows employees with

at

least one year

of

service to set aside up to 10 percent of

base earnings to buy shares of company stock. Shares are

issued quarterly

at

the current

market

price. The individual

pays 75 percent of the total cost of the stock with the

company contributing the remaining 25 percent.

Where such plans are not appropriate, the company

seeks

to

provide other benefits that recognize and reward

employees for their contribution to performance.

Perhaps the company's most important responsibility

to its people is providing stability

of

employment. This con-

cern

is

particularly evident during periods

of

economic re-

cession. Early in fiscal 1975, for example, the company was

able to avoid layoffs by transferring production from some

areas

to

others, and

by

instituting temporary work reduc-

tion programs at a few locations. This approach of sharing

the burdens

of

recession along with the rewards

of

success

is valued

by

HP

people

for

the security

it

provides in their

lives,

and

by

the company for the continuity of experience,

skill and loyalty that it engenders.

4

Under the flexible hours program now

in

effect at most

HP

fTl

ufal:'tutln

locetroJ'lS

\If rldwld eople

Qj;lJ'1

~Iarl

th

Ir

orkday

At

ny

tIm

within a tWo.nOLH

"WJr'lde

Y,'

Fer

mn.ny

working

parent~

like

Nor

M·

dnmc

Q e Microwave Semi-

conductor

Division, the program makes

it

possible to take

children to school before reporting to work.

Communication at HP is enhanced by the company's

traditional twice-a-day coffee breaks. They promote

a relaxed, informal atmosphere and encourage the

exchange of useful ideas among various groups

and operating levels.

"There

is

a widely held belief

that

the

educational process stops when a per-

son leaves the formal schooling pro-

gram.

The

reverse should, and must. be

true; formal schooling should be only

a background for further education,

albeit in a different form.

"As

a company.

we

should look

upon

each new employee in terms

of

potential for further development.

But

this view

is

predicated

on

two impor-

tant

factors - that we provide oppor-

tunities for ongoing training, and

that

each individual

is

motivated to partici-

pate in

further

training.

"People

come

into the

company

at

various levels. A general requirement

of a training and development program,

therefore,

must

be

that

there are devel-

opment

paths aVailable for all entry

levels,

and

that

these paths have a con-

tinuous spectrum such that

upon

com-

pletion of one portion

of

the program,

new

and

increasingly

challenging

courses are available. Thus, as new em-

ployees complete some

of

the

more

general

development

programs

and

acquire proficiency in their

current

em-

ployment positions. they will have the

opportunity to parllcipate in the mitial

programs

of

supervisory development.

But, a word

of

caution

is

necessary.

Just because an tndividual has com-

pleted conrses for a higher supervisory

position does

not

guarantee

promotion

to the next vacancy

that

becomes avail-

able. TralOing

is

only one of the factors

to be considered.

By

a similar token,

and

for the same reason, lack

of

a

(continued)

specific trammg background will

not

preclude advancement - training will

only facilitate it. Obviously, though,

minimum qualifications

are

essential.

"We

now have training and devel-

opment

programs that range from those

for the newest employee to those for

our

senior management. It

is

our

con-

viction

that

if the company is to com-

pete

in

the world

of

the future, it

can

only do so because

of

the skills,

the

training

and

the

dedication

of

HP

people"

- Bill Hewletl, president.

"One

notable

influence is

the

high

level

of

competence found throughout

the

HP

organization. and the strong

mutual respect that grows from

it.

In

the all-important

area

of

engineering,

for example,

HP's

practice

is

to recruit

the best people it

can

find, then con-

tinually train them on the job

to

take

on broader responsibilities. The net

effect

of

this shared background and

training

is

an ability to communicate

with considerable precision and com-

prehension across organizational lines

and

geographic boundaries.

" 'Growing our own' people results

in a strong upward flow

of

supervisors

and

managers knowledgeable not only

in terms of their profession but also the

company and its business. This

is

a

very

important

requirement

if

we are

going to fulfill the promise of manage-

ment by objective, because once that

principle has been set

into action it

can only

carryon

if everyone in the

organization understands it and works

at

it.·' John Young, executive vice

president.

onci

cooch thern for

"The

job

of

a supervisor

is

to make the rest

of

the people

look good, to help them do their job

the

best;

and

if you

can

do that,

you

quickly earn their

respect

But if you

think

that

all

of

a sudden you're a supervisor, and you're IT,

then you're in trouble! It's

the

people who have to be

successful.

If

they

are

successful, then

you

are

successful."

- Ralph Lee, executive vice president.

nel'V

chC111enl~es

on

I.j

"One

of

the

nice things about

HP

is

the

importance it places on personal

development as well as technical

expertise."

-

Jim Watson, Analytical

field engineer.

Sydney

office.

HP

Australia.

A scheduler

at

the San Diego Division

points to her own development - up

from

minimum-wage clerk a few years

after joining

HP

- as evidence

that

the

system works very well.

''I'm

sti[]

going to college,

and

I think

that

anyone who takes advantage

of

the

opportunities

can

grow in almost any

direction they choose. The doors are

really open here, and if something

is

bothering a person, they shouldn't

hesitate to speak out.

For

better

or

for

worse - they'll get a response."

-

Mary

A nn Shaw.

A training-the-trainers class in the Management Development

Program

for

HP supervisors and managers

is

conducted by

the Corporate Training and Management Development

department. The program was videotaped to help the trainers

train even more instructors

in

their home divisions.

How does someone who comes in "green as grass"

become a sales office manager?

Dana

Cox of the

Oklahoma City Office admits to being almost totally

innocent of office know-how when she joined the

Southern Sales Region's Atlanta office in 1969.

Starting as an accounts receivable clerk, she

coached herself to become a sales secretary, shifted to

the "admin" side, set up the region's first consignment

inventory program, and then decided to try her hand

at order processing.

"Every time they gave a training program,"

Dana

recalls, "I got my name on the list. 1 tried to learn as

much as I could

as

quickly as I could, and I've never

had

anyone at

HP

tell me I couldn't learn."

So when the Oklahoma City job came up,

Dana

was ready.

pportunities.

A number

of

apprenticeship programs are

available

to

HP

people to help them upgrade

their skills and qualify

for

advancement. Through

a combination

of

on-the-job training and class-

room instruction, Sandra Fernandez

is

studying

to become

an

electronics technician.

Among the educational programs which HP divisions offer

their people are several that provide televised courses from

nearby universities. Usually, these are given

in

a classroom

close to work. The rooms are often equipped with two-way

audio hookups that enable the

HP

students to talk directly

with their instruclors. HP was one of a number of companies

that helped pioneer this use of video instruction in cooperation

with the Association for Continuing Education.

7

You

manage

by

objectives...

Personal involvement

and

sharing

is

engendered

through the application

of

a management philosophy

closely related to "management by objective." Dave

Packard described this several years ago when he said,

"Early in our history, while thinking about how this

company should be managed,

I kept getting back

to

one concept:

If

we could simply get everyone to agree

on what our objectives were and

to

understand

what

we were trying to do, then - starting with people who

want to work,

and

providing them with the right con-

ditions

and

resources to do

it

- we could

turn

them

all loose

and

they would move along in a common

direction." A set of written corporate objectives based

on

this concept was first published in 1957. Although

revised from time to time to reflect the changing

nature

of

our business and social environment, over

the years they have retained their basic substance.

The following

is

a summary:

1.

PROFIT

OBJECTIVE: To achieve sufficient profit to

fi-

nance

our

company

growth and to provide the

resources we need to achieve our other corporate

objectives.

2.

CUSTOMERS

OBJECTIVE: To provide products and services

of

the greatest possible value to

our

customers,

thereby gaining their respect and loyalty.

3. FIELDS

OF

INTEREST

OBJECTIVE: To enter new fields only when the

ideas we have, together with our technical, manu-

facturing and marketing skills assure that we can

make

a needed

and

profitable contribution

to

the field.

4.

GROWTH

OBJECTIVE:

To

let our growth

be

limited only

by

our profits and our ability to develop and pro-

duce technical products that satisfy real customer

needs.

5. OUR

PEOPLE

OBJECTIVE:

To

help

HP

people share in the

company's success, which they

make

possible; to

provide job security based on their performance;

to recognize their individual achievements; and

to help

them

gain a sense

ot

satisfaction and

accomplishment from their work.

6.

MANAGEMENT

OBJECTIVE:

To

foster initiative and creativity

by allowing the individual great freedom

ot

action in attaining well-defined objectives.

7. CITIZENSHIP

OBJECTIVE:

To

honor

our

obligations to

society by being

an

economic, intellectual and

social asset to each nation and each community

in which

we

operate.

"The

starting point for management by

objectives in

a division should be an

overall set

of

short and long range

goals. These should

flow

from corpo-

rate

and

group objectives and have the

acceptance and support

of

group and

corporate management. These division

objectives serve as the framework for

all further decision making and plan-

As

part of their responsibilities,

HP

supervisors are asked

to

conduct periodic evaluations of employee performance based

on

previously set objectives,

as

well

as

to recognize individual accom-

plishments. Paula Weir (left), a supervisor with the Deleon Division,

chose

an

informal patio setting

faT

discussion of draftswoman

Ramona Avila's performance.

Supplementing daily, personal contacts. many

HP

managers

hold periodic, informally structured meetings with people

in their operating units. These round·table sessions are

useful

in

setting goals and obiectives, resolving problems,

and exploring ways of improving operating performance.

ning, and therefore should be broadly

visible.

"Each functional manager (R&D,

Marketing, Product Assurance, Per-

sonnel, Manufacturing and Finance) is

responsible for insuring that these over-

all objectives are understood by all

members of the team. Most impor-

tantly, each manager is expected to

secure the team's commitment

in

spirit

to these objectives.

"Within this framework the func-

tional managers then establish objec-

tives for their areas. As before, each

functional manager consults with the

team

in

establishing them and reviews

them with the general manager to

as-

sure they mesh with the division and

other functional area objectives.

"This process is repeated

at

each

level until all managers have developed

objectives

to

guide their team, each

team member

is

committed

to

the ob-

jectives,

and

all plans mesh both hori-

zontally and vertically. This last point

is

not

easy to achieve and deserves

maximum attention from every man-

ager.

"Throughout

this

process,

good

managers are aware

and

responsive to

the personal goals and aspirations

of

their people.

Each

manager

molds

plans and assignments to help each in-

dividual fulfill these

personal

goals

through the accomplishment of divi-

sion objectives.

"Objectives are not unchanging and

static. Rather the need to adjust your

objectives should be understood as the

environment causes change in strategic

or tactical plans or

as

deviations in per-

formance occur in other areas. How-

ever, rapid, unnecessary,

or

arbitrary

change

is

highly undesirable. When

changes

are necessary they

should

occur

through

the

organizational

structure." - Paul Ely, vice president,

Computer Systems Group,

"While the

HP

philosophy was quite

visible to

us

in those early years, man-

agement-by-objective probably had its

acid test in 1957, following the first

management meeting.

At

that meeting

it was decided to reorganize the com-

pany along more structured lines, with

Bill and Dave delegating the functional

responsibilities they had held.

"The R&D activity was set up into

four lab groups.

I'll

never forget the

sight

of

Packard

walking

past

the

microwave lab, not saying a thing.

It

must have been

hard

for them to pull

out that way, but they stuck to it, even

to the point of letting me run one proj-

ect right into the ground.

It

was a very

interesting technical project

I had sold

myself on, and they let me go right

ahead and discover that there wasn't

much of a

market

for it.

"To me, that management meeting

and the changes that occurred as a re-

sult of it were a landmark for the com-

pany. I think it proved

that

we

could

change, and that

we

could

not

only

preserve

our

management philosophy

but

also strengthen it. Growth could

happen without

our

having

to

give

up

the good things that made

HP

different.

"A

lot of companies never made it

past that point - remaining small

or

changing their

style-because

top man-

agement didn't know how to let go."

- Bruce Wholey, vice president,

Corporate Services.

...

through

people

"The

art of getting things done through people

is

fairly

simple when operations are small. As we become more

complex organizations, with interactive product lines and

international markets, the art

is

to simplify lines

of

authority.

We

need to give people a clear sense of the objectives and

a clearly defined responsibility they can understand.

'To

bring this off we are going to have to develop

a new breed of managers who will be able to manage

on

a

multi-plant, multi-national, multi-product basis, yet provide

all the traditional strengths

of

a local manager."

- Bill Terry, vice president, Instrument Group.

...

by

wandering

around

"Once a dh'ision or a department has

developed a tactical plan

of

its

own -

a set

of

working objectives that are in

essential agreement with corporate ob-

jectives - it's important for managers

and

supervisors to keep

it

in good op-

erating condition, This

is

where obser-

vation,

measurement,

feedback

and

guidance come in. It's

what

I call

'management

by

wandering around.'

"Management

by

wandering around

is

how you find out whether you're

on

track and heading at the right speed

in the right direction,

If

you don't

constantly

monitor

how people

are

operating, not only

wiII

they tend to

wander off track but also they will be-

gin to believe you weren't serious about

the plan in the first place,

HS

O

,

managment

by

wandering

around

is

the business

of

staying in

touch with the territory all the time,

It

has the extra benefit

of

getting you

off your chair and moving around your

area,

By

wandering

around

I literally

mean moving around and talking to

people, H's all done on a very informal

and spontaneous basis, but it's impor-

tant in the course of time to cover the

whole territory.

"You

start out by being accessible

and

approachable,

but

the

main

thing

is

to realize

that

you're there to

listen, The second

is

that

it

is

vital to

keep people informed about what's

going

on

in the company, especially

those things that are important

to

them,

The third reason for doing this

is

be-

cause it

is

just plain

fun."-John

Doyle,

vice president, Personnel.

"Management by wandering around"

entails a dedicated effort at keeping

in

touch by direct and informal contacts

between many levels

of

the company.

At many

HP

organizations these are

supplemented by regular informational

meetings such

as

extended coffee breaks

once

or

more a month,

...

and individual contributions

"A

division

at

HP,

as I view it, is peo-

ple working together to meet well

un·

derstood goals

and

objectives in three

areas where they have a common con-

cern

and

feeling

of

responsibility. First,

for a division

to

exist, the people in-

volved

must

feel a vital concern and a

strong responsibility for the success of

a specific product line. Secondly, there

must be a deep concern for helping

the other people involved with the

product line achieve their own personal

goals and ambitions, Third, there must

be a strong feeling of responsibility for

contributing positively to the general

welfare of the communities in which

the division participates,

"Divisions are normally organized

into six functional areas: research and

development, manufacturing, market-

ing, finance, product assurance,

and

personnel. The first three are typically

called line functions. This means

that

they have the primary responsibility

for the overall success of the product

line. Finance, product assurance, and

personnel are normally thought of as

staff functions which provide impor-

tant information and assistance to the

line functions to help them carry out

their responsibilities more effectively.

"The

division manager

is

respon-

sible for

making

sure

that

clearly

understood division and product-line

goals and objectives are established;

that

an organizational framework

and

environment

is

provided in which peo-

ple

can

work together effectively to

accomplish their goals and objectives;

and that outstanding individuals are

selected

to

be responsible for each of

the functional areas.

"It

is

important to remember that,

while the autonomy of a division

is

one

of

HP's

strengths, it

is

our ability to

work together to transfer technology

and

ideas across divisional lines that

has really made

HP

so

strong,"

- Mason Byles, general manager,

Avondale Division.

10

In

the face

of

steady growth in corpo-

rate

size

and

complexity, a continuing

challenge for Hewlett-Packard

has

been

to insure the most direct possible link

between its

product

organizations and

the

needs

of

its customers.

Certainly, the sales organization

is

somew'hat complex

when

viewed

on

paper: teams

of

field engineers locally

supported

by

regional and

country

or-

ganizations, sharing

common

offices,

services

and

policies,

and

all requiring

the attention of the

more

than

30

fac-

tory organizations.

How

does the

HP

way operate in

that

setting?

There

is, first,

the

organizational

answer: field teams and the factory

divisions are organized into six product-

related groups which provide the nec-

essary cohesion

and

identity.

But

the main answer

is

still the

HP

principle

of

getting the job done

at

the

most fundamental levels

of

the organ-

ization.

Commenting

on

this,

Paul

Guercio,

manager

of

the

Eastern

Sales Region's

Instrument

sales-service team, noted

that

"For

the greater

part

of their ac-

tivities, the field engineers will be in

direct

contact

with

the

divisional sales

engineers.

When

problems

or

special

circumstances corne up,

the

district

managers will be in touch with the

division sales managers -

and

so on.

They

have a direct working relation-

ship with the people who

can

give them

answers."

o

team

efforts.

The

basic principle

of

individual re-

sponsibility

for

work

has been devel-

oped and applied with special vigor by

HP's

manufacturing

operations

at

Boeblingen

in

lhe

German

Federal

Republic.

It

was there, for example,

that

flexible work hours got its first big

test. Srini

~ageshwar,

manager

of

cal-

culator

operations, recalls

that

the idea

came

up during a coffee break meeting:

"Someone wondered why a notorious

late riser on the administrative staff

should have

to

be at his desk at exactly

the

same time as the early bird in the

metal shop turned

on

his lathe. We

discussed the idea further,

and

in 1967

introduced flexible hours."

Obsenations

by the U.S co-managers

at

YHP,

who usually spend

two

or

more

years

at

either the Hachioji

plant

or

Tokyo

sales office, provide some re-

vealing insights into how two organiza-

tions

of

quite disparate national back-

grounds can work together.

Jack

Dunn,

former co-manager

of

sales, recalled

his early reaction to the business style

he first saw

at

YHP.

So

many

people

seemed to be involved in making de-

cisions

that

he felt there must be

more

efficient ways

of

arriving

at

solutions.

By

the

end

of

his

YHP

tenure

Jack

had

a completely different view:

The

YHP

"participatory"

style was intrin-

sically neither better

nor

worse than

any other style.

It

was different, but it

was very well suited to the Japanese.

In

Europe,

the basic HP

unit

for doing

business

is

the

country

organization.

Presently there

are

14 such organiza-

tions operating

under

the coordination

of

European

headquarters (HPSA)

in

Geneva. These

country

teams show

their basic strength in the \

....

ay they

build their businesses - employing and

developing local national people, serv-

ing national goals, finding their

own

way in the sometimes turbulent eco-

nomic

and

political life -

and

yet

somehow managing to remain essen-

tially

HP

organizations.

Bill Doolittle, vice president-Inter-

national, emphasizes that

the

HP

way

in Europe

is

much

more

than

a veneer

of

management style. According to Bill,

it works in

Europe

just as it works

in

the U.S., as a fundamental factor in

the way things get done, giving the

individual

orga

nization

and

person

wide

discretion

in

the

setting

and

achieving of goals.

Ken

Riley, an analytical products

field engineer in the Manchester (U.K.)

office, noted

that

"In

my previous sales

job I did what I was told.

My

boss

didn't

give a

damn

what

I thought.

However, in

HP

it takes a while to

get

used to the way things get

done

- to

know

what

resources you

can

call on

and

how

you

can

exploit them to the

customer's benefit.

The

ability to make

decisions and take responsibility

is

a

real benefit."

Guido

Prestinenza, Administration-

Finance

manager

for

HP

Itatiana,

affirmed the openness of the

HP

man-

agement style.

He

noted in

contrast

that

"Even

today in some

of

the old

traditional firms you would have to

wait weeks and even months to talk to

the top manager. But this

is

changing,

especially in the larger companies."

HP's "small business team" concept is exempli-

fied by this gathering of members

or

a division

product-development team, discussing progress of

their joint engineering efforts.

HP

is

pre-eminently

a team-style organization, one in which individu-

ality

is

recognized and rewarded primarily for

its contributions to team effort.

Il

The

billion dollar question:

But

does

it

reall

There if was

in

black

and

white: one billion, one hundred and eleven

million dollars worth of

HP

shipments - sales - in fiscal year 1976!

Even ten years before, with sales nearing one quarter of

that

figure,

questions were being asked: How would growth of that order affect the

style and

chmacter

of

the company? Would it become just another big

company

in

which to lose one's individuality?

''''auld

HP

initiative

be

swamped by stiffer, longer lines of authority and communication? Would

the proliferation of new product lines break down the "one-company"

posture that

had

served

HP

and its customers so well?

The complexities

of

global

business, both manufacturing and

marketing,create special challenges

for

the

Hewlett-Packard philosophy.

According

\0

most observers. however. it

"travels"

very well because

it

is

based

on

fundamental human values

of personal

dignity

and fair play.

here's

what

some

HP

people

have

to

say

·

ark?

Two members

of

the German manu-

facturing

team

at Boeblingen get down

to cases. The trust

on

which individual

initiative at

HP

is based

is

anything bul

blind. John Doyle, vice president-

Personnel,

has

described the company's

approach

10

managing people

as

"hard-

headed in general, but soft-hearted

in

particular.

You

can usefully and success-

fully

be

the lalter only when hard,

practical thinking

has

gone beforehand."

Harvey Kellogg, a 25-year employee

now

in

the Mountain View Corporate

Parts Center, feels very strongly that

"the

HP

way" has been very well main-

tained

in

spite of the company's size.

"Dave and Bill's basic philosophies still

predominate," he insists. "There's still

a small-company spirit - at least in

the areas I've experienced

- and oc-

casionally I see new employees who

don't necessarily think the way

we

do,

but it's just a matter of time before

they learn the

'HP

way.' "

Viv van Zyl, branch manager at Cape

Town, South Africa, quickly realized

as a newcomer that Hewlett-Packard

had a special atmosphere and eight

years with the company have con-

firmed that impression: "Soon after I

joined the company I met Bill Hewlett.

I expected the great

man

to

be

like I

imagine all corporate presidents to

be

- cold, impersonal, businesslike with

only a few moments to spare. Well, a

little over-awed I called him 'Mr.

Hewlett' and he replied,

That

was my

father's name; mine

is

Bill'."

Ralph Helper, in his twentieth year

with the Neely sales organization and

presently its service manager, makes

the point that the company's present

size has served to reinforce the

HP

way of doing things: "Our size and

rate of growth, in fact, have required

that more of our people get their jobs

done through clearly defined objectives.

The

efforts that are presently being

made along these lines - through train-

ing, management and communications

- are better now

than

they have ever

been. This demonstrates the corporate

commitment

to

provide everyone the

opportunity for growth and develop-

ment."

Reinhold Weyl, customer assurance

manager at Boeblingen, joined

GmbH

in 1960 shortly after

it

began opera-

tions and sees a loss of flexibility as

the result of growth: "As divisions

be-

come larger, they develop relatively

fixed systems for their capacity plan-

ning. Day-to-day or week-to-week ad-

justments to meet changing needs are

now almost impossible to make, for

instance. The paths of communication

in

our

division are also significantly

longer than some years ago."

Candy Painter, admin supervisor at the

Boise Division, believes that most peo-

ple relate primarily

to

their local organ-

ization.

"At

our

Friday morning coffee

break division meetings, people are

mainly interested in division perform-

ance. Being part of a billion-dollar cor-

poration hasn't affected

us

at all at the

division

level-except

we're proud of it."

Alan Holdway, Southern Ontario dis-

trict sales manager

in

Toronto, joined

HP

Canada within a

few

days of arriv-

ing from the United Kingdom nine

years ago. He believes that encourag-

ing individual initiative

is

still one of

the company's major strengths and the

factor that keeps

HP

one step ahead:

"Each of us should fully understand

that our jobs exist to serve the custom-

er.

If

roadblocks develop and the sys-

tem isn't getting the right results for a

customer,

we

should question the pro-

cedures. Perhaps delivery times can be

speeded up by an inquiry to the

fac-

tory, for instance.

HP

continues to

allow plenty of room for the individual

to contribute and succeed."

Boh Tong Chiew, production lead,

is

an

HP

Malaysia pioneer who thinks

the

HP

way of doing things will survive

continued growth: "As the company

grows in size, personal contact between

a person at the higher level and one at

the lower level

will

become more rare.

However, I believe that if the

HP

way

of giving people trust and responsibility

is

practiced at every level - from the

manager

to

the supervisor, from the

supervisor

to

the lead and all the way

down the line - then no matter how

big the company grows, the

HP

phil-

osophy will remain intact."

Robert Hofgaertner, operations man-

ager for the Instrument Division of

GmbH

and an employee since 1960,

thinks the

HP

way

is

still alive al-

(continued)

13

though

he

suspects that the percentage

of

employees who do not correctly

understand the concept has risen:

"HP

still allows employees to find their own

way; only starting points and goals are

given.

Our

employees are used to the

HP

way and work accordingly, using

their initiative and flexibility to make

the best use of the resources of the

large organization."

Glenn Green, marketing communica-

tions manager at New Jersey Division,

thinks the changes he has observed

over ten years

at

HP

have all been for

the better: "We now have a much

Jarger reservoir

of

talent and resources

to call on. We have more sales offices

to represent us, more products to sell,

and more public visibility.

At

the same

time, we remain a relatively small unit.

That's the key - to maintain local re-

sponsibility while making use of more

interactive resources."

Jacques Brugere, personnel manager

at

Orsay, thought he observed a signifi-

cant swing away from the

HP

manage-

ment style during his ten years with

the company, but that has since been

changed:

"At

one time the French

managers felt the

HP

way was fading

away with more and more centralized

management coming down the chan-

nels

of

verticalization and the horizon-

tal lines of management. But today the

pendulum of centralized versus decen-

tralized management has returned to a

more steady position.

For

me, the

HP

way

is

characterized by easy communi·

cations at all levels with attention and

respect for everyone's contribution."

Jack

Carloni,

product line supervisor

at

Corvallis Division and an

HP

em-

ployee since 1956, believes that large

size does pose a threat to the ability of

people to be heard when they speak out

as well as the ability

of

the company to

respond. "When I started, the company

had only 600 people. I can recognize

the difference today. But management

does strive for flexibility, for the per-

sonal touch. Actually, because

of

the

company's large size, there are now

more opportunities for achieving goals

that

you strive for."

Cindy Wilber, personnel assistant

at

General Systems Division, Santa Clara,

has worked for large and small divi·

sions during her IS-year

HP

career:

"I

definitely like the atmosphere and

working relationships in a smaller divi-

sion. I feel you can communicate on a

person-to-person level more effectively.

That's why I like the way

HP

splits a

large division into smaller divisions

according to product groups. People

can

take more pride

in

their work when

they can see and understand the end

result. Yet you stilI have all the growth

benefits of a large company."

"I

thought: These people are putting

me

on. Why, there's not a shop in the

world where someone isn't bad-mouthing

the management. So it bothered me that

no one was saying anything really bad

about HP. I still can't say I really under-

stand why it works, but it does. And the

surprising thing

is

that results are better

here. Peer pressure has something

to

do

with

it.

And another factor

is

that you're

given work assignments days in advance

instead

of

one at a time every couple of

hours. They aren't looking over your

shoulder.

No

matter how much they give

you, you seem to get it done."

- John Wood,

model

maker,

A vondale Division.

"As a growing company

we

are more and more exposed to factors that previously

did not directly concern

us.

The government, and society in general,

is

becoming more

legalistic and bureaucratic with increasing demands and it

is

important that

we

prepare

ourselves to meet these obligations in a positive and progressive manner.

"In

all

of

the changes

we

have made or will make in the future, a prime goal must

be to preserve the freedom of action of

our

operating units.

That

freedom, coupled with

strong professional staff support, creates the kind of dynamic environment to stimulate

individual accomplishment." - Bob Boniface, e.:{ecutive vice president, A dminislration.

1

Can

it

survive?

"The balance

we

strive for

is

to pre-

serve the flexibility and freedom of ac-

tion characteristic

of

a small company

with marketing, technological,

and

management

strengths

of

a

larger

organization.

"The heart of the organization

lies

within the six product groups: Instru-

ments,

Computer

Systems, Compo-

nents,

Medical,

Calculators,

and

Analytical.

"Each product group

is

character-

ized by having a common sales force

for all of its divisions' products on a

worldwide basis except calculators,

which has two. The task

is

to match our

product offering to the applications

needs of our customers.

"Other jobs of the group managers

are to set overall targets and continu-

ally review performance. They also set

the strategic direction for the business

they are in, and insure that the product

programs of the divisions are comple-

mentary and make the important 'con-

tribution' to the customer that has

so

successfully characterized the company

over the years.

"The overall corporate organization

has been designed to let the divisions

and groups concentrate on the product

activities that they uniquely can do

without each having to understand and

perform all the important administra-

tive tasks of doing business on a world-

wide basis." - John Young. executive

vice president.

In

setting up manufacturing opera-

tions around the world,

as

HP

has done

in Europe, Asia and South America,

cultural differences obviously present

some interesting challenges.

People in quite a

few

parts

of

the

world, for example, often accept the

authority of a boss as absolute.

In

turn,

this tends to make it difficult for em-

ployees to suggest or initiate actions

that

modern industrial managers weI·

come and even take for granted.

Tom Lauhon, formerly managing

director of HP's Southeast Asian oper-

ations (now general manager of the

new Computer Service Division), re-

calls the point at which he was able to

sort out the dilemmas created by such

differences, and to answer them.

"After several months of thinking

about it, I finally boiled them down to

...

it

depends -

two questions: Should

we

operate

as

an

Asian-style factory working for HP?

Or

should

we

be an HP-style operation

in Asia?

"It became clear to me that

we

had

to become the latter;

First,

it

seemed

to me that the governments of Singa-

pore and Malaysia had welcomed our

manufacturing

operations there in

large

part

because they believed

we

would help them in the process of their

industrial development. They

didn't

need

us

to help run Asian shops. They

wanted

our

industrial know-how not

just in products but also in organiza-

tion and people - and the philosophy

that goes with them.

"It

was very interesting to see the

people in Singapore and Penang plants

respond to our approach. They con-

vinced

me

that people are basically the

same everywhere

in

terms of the way

they

will

respond positively when bar-

riers are removed and when they are

recognized as individuals. I believe the

'HP

way' will become one

of

our major

contributions in those countries."

mostly on ourselves.

"Size can be a threat - if it entails a proliferation of

management and supervisory levels. But I think that

HP

is

just as much a 'family'

as

it

was

when I joined

in

1967,

even though we're much larger now. We've always

kept the operating unit at a reasonable size, and people

have been chosen to rlln these units who understand

the

HP

way." - Emery Rogers, general manager,

Analytical Products Group.

15

In

the final analysis, profit

is

the ulti-

mate source

of

the funds needed by any

business enterprise to prosper and grow.

At

Hewlett-Packard it is considered the

one absolutely essential measure of cor-

porate performance over the long term

- for only

by

meeting the profit objec-

tive

can

the other corporate objectives

be

achieved.

HP's

long-standing policy has been

to

reinvest most of its profits and to de-

pend

on

this reinvestment, plus funds

from

employee stock

purchases

and

other

cash

flow items,

to

finance

its

growth.

As

a result of this policy,

the

company's long-term debt has tradition-

ally been very low. The policy of financ-

ing its growth and other commitments

with internally generated funds dates

back to the company'sfounding in 1939.

It

can be achieved

if

the annual return

on net worth roughly equals the growth

rate in sales.

Meeting the profit objective requires

that

HP

design and develop each and

every product

so

that it

is

considered a

good value

by

customers, yet priced to

include

an

adequate profit. Over the

years, the

company

has

made

many

technological contributions in measure-

ment and computation that, because

of

their inherent value, have resulted in

products that have been both widely

accepted and profitable.

The

original Hewlett-Packard prod-

ucts were electronic measuring instru-

ments.

That

product line has been ex-

panded to include medical electronic

equipment, instruments for chemical

analysis, computers, electronic calcu-

la

tors,

electronic

components,

and

complete, automated systems for mea-

surement

and

data

processing.

This

diversification has evolved from the ap-

plication of

HP

resources and skills to

fields technically related to the com-

pany's traditional ones.

In

considering entry into any new

field, the important criterion is whether

HP

can make a real contribution by

providing something new and needed

- not just another brand of something

already available.

To

meet this objec-

tive,

HP

must continually generate new

ideas for better kinds of products,

and

And, of course,

HP

also benefits!

give full consideration to the associated

problems of manufacturing and mar-

keting them.

Although there are limitations im-

posed

by

the fields of interest objective,

they in no way constrain

HP

people

from searching out new technologies,

seeking improvements in manufacturing

skills and efficiency, and developing

new techniques for serving customers.

In

fact, it has been this freedom of op-

portunity and interchange that has led

to

the gradual broadening of the com-

pany's fields of interest over the years,

a trend

that

can

be expected to con-

tinue in the years to come.

When aU's said and done about the

HP

way, what does the company expect

of the people who accept it as a work-

ing philosophy?

Performan~e:

Fundamental to the

HP

way

is

the belief

that

its practice will

engender superior performance on the

job, and the company expects every-

one's best efforts toward that goal. As

the sixth objective concerning manage-

ment says: " Employees must take suf-

ficient interest in their work to want to

plan it, to propose new solutions to old

problems, to stick their necks out when

tbey have something to contribute."

Enthusiasm: Another fundamental ex-

pectation, as noted in the corporate

objectives,

is

that "the organization

should have objectives and leadership

which generate enthusiasm

at

all levels

...

There can be no place for half-

hearted interest or half·hearted effort

...

Management

by

objective,

as

opposed to management

by

directive,

offers opportunity for individual free-

dom and contribution: it also imposes

an

obligation for everyone to exercise

initiative and enthusiasm."

1-

HEWLETT-PACKARD

COMPANY

Public Relations Department

1501 Page Mill Road. Palo

Alia, California 94304