Chapter 14 Case – “Hewitt-Packard Company”

Instructor: Professor Pamela McLaughlin

Course: Management of Concepts – BUS 302

Date: August 21, 2011

* Discuss the three most serious problems you have identified in the case. Defend why you think they are the most serious.
One of the more serious problems that I have found in this case is under management. When a company is under managed, workers struggle because their management is not sufficiently engaged to provide the direction and support they need. The management is not informed about worker’s needs and, therefore, is unable to help with resources and problem solving. Thus management cannot judge what expectations are reasonable, and cannot set goals and deadlines that are ambitious but still meaningful. Meanwhile, the under-manager gets caught in a vicious downward spiral managing problems after the fact, putting out fires that never should have gotten started in the first place, salvaging wasted resources and turning around employees who have been going in the wrong direction, unnoticed, for days, weeks or months. Secondly, having a bonus system that was so complicated that no one understood it is never good for a company. Bonus systems should be as simple as possible to measure and track. Also a bonus system should be designed to reward good behavior, not necessarily to change or punish poor behavior. Lastly, a complex and confusing matrix structure blurred accountability lines and slowed the decision making process. A Matrix structure is a type of “organizational management in which people with similar skills are pooled for work assignments” (Matrix Management, para 1). For example, all information technologists may be in one IT department, but may be assigned to different projects and report to a project manager while working on the project. When a matrix structure works properly it allows the team members to share information more readily across task boundaries and it allows for specialization that can increase depth of knowledge and allow professional development and career progression to be managed. * Describe how the company should attempt to correct each of the three most serious problems.
The company has already made the first step at correct their under management by getting rid of the former CEO, Carly Fiorina, and hiring new CEO, Mark Hurd. Hurd is already taking a step away from CEO and going down to the bottom floor to rebuild HP. You have to start from the bottom up to rebuild a company; just making statements as CEO does not get things done. Hurd chose to recast the strategy that Fiorina had in place, but to make it more concrete, Hurd offered specific visionary purposes. Again Hurd has also made the first step at fixing the matrix structure. Again the matrix structure divides employees under the same department into sub departments with project managers or sub-managers. This system allows for a smaller group to work on a project making it have better communication and team skills. Hurd divided up the sales division, so that each of the major HP product divisions has its own dedicated sales division. With the bonus system, Hurd has already simplified it. HP could also tie bonuses to schedules. To do this it’s essential that they map out an accurate schedule before a job begins, and update the schedule as changes occur. This bonus system could attach a financial reward to finishing the job on schedule. Also a bonus system should be desirable to employees and to keep them engaged to a project. If a bonus system is not desirable, then employees are more subject to leave the company to go somewhere where they are desirable and appreciated. HP has much rebuilding to do, beyond restructuring their management and bonus system. HP will have to be restored as communities, which means from the middle out, not the top down. Being an engaged leader means you must be reflective while staying in the never-ending world of managing. * Recommend a leadership style or combination of initiating structure and consideration the CEO should adopt to address the problems of distrust and declining morale. Explain your answer.
I would recommend a combination of visionary leadership, coaching leadership and affiliative leadership styles. Visionary leadership style is most appropriate when an organization needs a new direction. Its goals are to move people toward a new set of shared dreams. Visionary leaders articulate where a group is going, but now how it will get there; setting people free to innovate, experiment and take calculated risks. Coaching leadership style is a one-on-one style focused on developing individuals, showing them how to improve their performance, and helping to connect their goals to the goals of the organization. Coaching works best with employees who show initiative and want more professional development. Affiliative leadership style emphasizes the important of team work, and creates harmony in a group by connecting people to each other. HP and Hurd are trying to rebuild this company from the ground up and to do this all these styles need to come into play. Hurd is trying to revise the company and set new goals, this is where visionary leadership comes into play. Hurd is also trying to reorganized the company with sub-divisions making employees work on a one-on-one basis; this is where coaching leadership style is focused. HP needs affiliative leadership style because they are trying to heighten team harmony, increase morale, improve communication and repair the trust that Fiorina has lost with the employees.

* After having examined all of the issues facing HP, recommend whether the CEO should focus on the approach to the current strategy or on implementation and execution. Defend your decision.
I would recommend the CEO focus on implementation and execution. Execution management is about bringing order to chaos by changing the rules of managing. It is about managers having better control with less micromanagement. It is also about doing projects faster and delivering them on time; fighting fewer fires but realizing higher throughput. The main reason the board hired the new CEO, Mark Hurd was because of his focus on execution management. By focusing on implementation and execution, Hurd was able to successfully transform the company from a struggling, dysfunctional corporation into a well-structured and profitable corporation. Under his work style, Hurd was able to work with the lower divisional levels to make sure operations were running efficiently. He was able to reorganize the previous CEO Fiorina’s strategy vision into something more concrete, offering specific visionary purposes. He attacked the confusing matrix structure by dividing up the sales division, so that each of the major HP product divisions had its own dedicated sales division. He simplified the complex reward system by linking bonuses directly to divisional and company performance. He proved to match more closely to the traditional “HP Way”, which was friendly, approachable, and supportive of its employees. Finally, within two years of Hurd taking the CEO position, sales increased by $10 billion, and the stock price rose 80 percent.

Reference
Williams, Chuck. (2010). Management
Case Study, Hewitt-Packard Company
Matrix Management, http://en.wikipedia.org/wiki/Matrix_management