1. CASE STUDY

Cheryl Ways and Agilent Technology’s Layoffs

Cheryl Ways, a 30-year-old IT professional, took a call at around 9 p.m. on October 15, 2001, from her husband, who rang complaining about her still being at work and asking her when she was coming home. Most of her co-workers had already left for the day, but she worked on for another half hour before shutting down her computer and heading out of Agilent Technology’s empty building. What’s remarkable about this story is that Cheryl had been told three weeks earlier that she was soon going to be laid off. So what was she doing, still working hard for the company putting in long hours just before being finally let go?

Ways was one of 8,000 staff at Agilent Technology who were cut from the firm during 2001 and one of 2 million people throughout corporate America who lost their jobs that year. A technology and electronics manufacturer and maker of measuring and testing equipment, Agilent Technologies was spun off from Hewlett-Packard during 1999. Hewlett-Packard was known for its “precept that workers will give their best if they’re treated honestly and listened to” and this philosophy was emulated by Agilent. Maintaining an open style of communication through e-mails, meetings, and other media, senior management openly acknowledged that downsizing went against the embedded HP way of caring for staff.

Prior to commencing downsizing, Agilent tried other solutions to their business woes. Faced with a 23 percent decline in sales, a sharp fall in orders, and a falling share market, the company put in place a pay cut of 10 percent to save costs. This was seen as a temporary measure, with Agilent’s CEO Ned Barnholt predicting a “slow and gradual recovery.” The company tried other cost-saving measures such as reducing external consultants and hirings and calling on staff to limit travel and other discretionary spending. There weren’t clear guidelines for how to do this or how much savings were needed. As Juan Yamuni, and international treasury analyst, said: “Top management was good about guiding you instead of getting a direct order.” It also tried to minimize layoffs by reducing variable pay such as stock options and bonuses.

Despite laying off 8,000 workers (20 percent of the company) in 2001, the following year the company was listed at number 31 on Fortune’s 100 Best Companies to Work for. This suggests that, for the most part, it had retained the trust of its employees and displayed empathy toward their plight. Staff knew what was going on through a “barrage of emails and face-to-face meetings with top management down; even the tired sound in the CEO’s voice as he delivered news of mass layoffs.” Other forms of communication with staff included a newsletter call InfoSparks that came out twice a week, “coffee talks,” brainstorming meetings, and public-address-system speeches. When staff were laid off, Barnholt decreed that there were to be no across-the-board cuts, that specific staff would be identified, and that they would be told directly by their managers. The 3,000 managers were given a daylong training session with an outplacement agency to assist them in delivering the bad news.

According to Karen Scussel, vice president of HR Operations: “The main thing is to keep the communications open . . . That’s how we’re maintaining morale. The main employee morale issue is anxiety, and we’ve learned a lot about how to deal with it.” She also said, “We keep talking about hanging in there. Employees have come to believe in our purpose.” And it seems to have worked, at least for a while. Staff realized that management would prefer to continue with the HP values—but recognized the financial difficulties facing the company. As Cheryl Ways said about being let go, “I felt horrible that they had to do this”; working hard up to the end was her “gift” to her co-workers who remained, “to leave my job in the best possible way.”

For others, working hard right up to the end was for other reasons, such as trying to prove themselves in order to stop the decision to close down various parts of the company. For example, Dave Allen, the general manager of Agilent’s semiconductor factory at Newark, California, announced in September 2002 that the division would be closed and shifted to Colorado and that most would lose their jobs within the year. Production at the plant initially dropped but then increased. Asked about this phenomenon, one of the workers at the factory, Mary Dominguez, said, “[M]aybe Fort Collins won’t work. And maybe they’ll let us stay.”

The early optimism of a gradual recovery seems to have faded, with the staff who remain feeling the pressure; as Steve Peterson, a global online manager, said, “We are just really working hard and are discouraged that things are not better.” In November 2002, it was announced that 2,500 more jobs would be eliminated and in February 2003 it was announced that a further 4,000 jobs would follow suit. In total, some 15,000 people were laid off between 2001 and early 2004. This represented approximately one-third of Agilent’s Staff. However, in 2002 it was ranked and in 2003 it ranked 33 on Fortune’s “Best Companies to Work for,” even bettering its 2001 ranking. Barnholt aimed for communication that was clear and consistent. In achieving this consistency across a large company, he adopted a cascade philosophy in which unit-level manager assisted in communicating key company messages. As he said, “First we decide the key messages we want to communicate each quarter about what went right or wrong and the call to action for the next quarter. This gets put together in a communication tool-kit that’s sent to about 2,000 managers across the company.”

Agilent put in place training in communication best practices, including sending 3,000 managers to an outplacement firm to hone their skills in how to let people go. Barnholt focused on communication with customers by conveying to them how the changes the company was making were adding value to it. As he argued,” … you need to communicate to customers the same way you need to communicate with employees. We’re selling the whole package and communicating all the things that we bring to the party, beyond just the product itself.” In 2005, Barnholt retired and was replaced as CEO by Bill Sullivan.

2. SUMMARY

Agilent Technology deserved to receive trust and sympathy of employees as they always tried their best in. Technology always showed their attentions toNot only when thecompany had to lay off employees, Agilent Technology followed the percept of HP that workers would give their best if they were treated honestly and listened to. They always maintained an open style of communication through emails, meetings, and other media. Their respect to employees helped them to be likely to convince employees in the hard time, even for the hardest situation here as layoffs.

Prior to commencing downsizing, Agilent tried other solutions to their business woes: a pay cut of 10% to save costs, reducing external consultants and hirings and calling on staff to limit travel and other discretionary spending. Minimize layoffs by reducing variable pay such as stock options and bonuses.

Despite laying off 8,000 workers (20 percent of the company) in 2001, the following year the company was listed at number 31 on Fortune’s “100 Best Companies To Work For” is retained the trust of employees and displayed empathy toward their plight.

Staff knew what was going on through a “barrage of emails and face-to-face meetings with top management down”. Other forms of communication with staff included a newsletter called InfoSparks that came out twice a week, “coffeetalks”, brainstorming meetings, and public-address-system speeches.

The 3,000 managers were given a daylong training session with an outplacement agency to bad assist them in delivering the news.

The main thing is to keep the communications open and the main employee morale issue is anxiety, and we have learned a lot about how to deal with it. Staff realized that management would prefer to continue with the HP values but recognized the financial difficulties facing the company.

Communication was clear and consistent. “First, we decided the key messages we want to communicate each quarter about what went right or wrong and the call to action for the next quarter. This gets put together in a communication tool-kit that‘s sent to about 2,000 managers across the company”

Agilent put in place training in communication best practices, including sending 3,000 managers to an outplacement firm to hone their skills in how to let people go. “You need to communicate to customers the same way you need to communicate with employees”

QUESTION 1: How would you describe Agilent Technology’s communication process for dealing with downsizing?

Communication is a message from a sender to a receiver in an understandable manner. The importance of effective communication is immeasurable in the world of business and in personal life. From a business perspective, effective communication is an absolute must, because it commonly accounts for the difference between success and failure or profit and loss. It has become clear that effective business communication is critical to the successful operation of modern enterprise. Every business person needs to understand the fundamentals of effective communication.

Companies are working toward the realization of total quality management. Effective communication is the most critical component of total quality management. The manner in which individuals perceive and talk to each other at work about different issues is a major determinant of the business success. It has proven that poor communication reduces quality, weakens productivity, and eventually leads to anger and a lack of trust among individuals within the organization.

The communication process is the guide toward realizing effective communication. It is through the communication process that the sharing of a common meaning between the sender and the receiver takes place. Individuals that follow the communication process will have the opportunity to become more productive in every aspect of their profession. Effective communication leads to understanding. The communication process is made up of six key components. Those components include message, feedback, channel, sender/receiver, encoding/decoding, and noise.

In the beginning to dealing with downsizing, Agilent was emulated with philosophy by Hewlett-Packard was known for its “precept that workers will give their best if they’re treated honestly and listened to”. Agilent tried other solution and the Agilent’s CEO predicting a “slow and gradual recovery” and cost saving measure such as reducing external consultants and hiring and calling on staff to limit travel and other discretionary spending.

QUESTION 2: Which approach—“getting the word out” or “getting buy-in”—best characterize the communication process? Why?

Getting “buy in” represents 90% of the effort needed to accomplish any change effort. Many managers are embracing e-mail, intranets, and other technological innovations as efficient solutions to the high communication demands during times of change. However, simply making information available is not the same as communication.

During organizational change employees are often in turmoil, fearing loss of employment security and loss of loyalty to seemingly uncaring employers. For all its capacity, information technology provides only limited relief for the anxieties and frustrations of human resources burdened by change.

In Agilent Technology Managers made sure employees have a voice in decisions, in an appropriate manner is critical to their sense of control and therefore acceptance of organization change. It does not constitute a vote or a veto. What employees need is assurance that their point of view has been heard, reasonably considered and responded to before the decision is made.

QUESTION 3: Apply Stace and Dunphy’s contingency approach to the case. What emerges from your analysis?

The contingency or situational-based' approach is a development of the universalistic approach where one solution or approach be adopted in organizations to deal with different situations. Stace and Dunphy regard this approach as much more useful, "What is needed is a contingency framework of the management process, to help in matching managing processes to the changing business needs of the organization" (Stace & Dunphy, 1991: p264). In their paper, Stace and Dunphy apply their framework to the changes in Waterford, and stresses from the start the firm must undertake a situational-based approach opposed to universalistic.

In Agilent Technology I believe this approach is much more relevant. The underpinning argument of the approach is that the Human Resource policies and practices (or processes and activities) adopted by organizations reflect their overall competitive strategies. In this sense, Human Resource Strategy is set of processes and activities, which with implementation will bring about an outcome, exemplified by Waterford's implementation and return to efficiency and profitability.

QUESTION 4: What assessments would you make of the media used by the company?