You can tell a lot about a company by the way they treat the employees lowest on its pay scale. Pay cuts and, yes, even layoffs are inevitable in today's economic climate. The decisions are painful, but they're often necessary and unavoidable. They aren't, however, a license to be callous and cold toward the very people who have kept your business running.
Computer vendor HP recently announced significant across the board pay cuts for everyone starting at the top down -- and I do mean everyone. All 100,000 employees on the payroll at HP will suffer some sort of reduction in pay. The exact percentage of the pay cut is based on where the employee falls on the organizational chart, ranging from 15% for Executive Council to 2.5% for non-exempt employees.
The good news? All 100,000 employees get to keep their jobs. To be sure, no one likes a pay cut but I'd wager people prefer it over no pay at all.
In an open letter to HP employees, CEO Mark Hurd -- who is taking a 20% pay cut himself -- said he considered laying off approximately 20,000 people instead of enforcing pay cuts. "Well, I don’t want to do that. When I look at HP, I don’t see a structural problem of that magnitude. There are pockets where restructuring needs to happen, and areas where actions will be taken as part of our ongoing workforce optimization process. But at a company-wide level, I don’t believe a major workforce reduction is the best thing for HP at this time."
In other words, he looked at the big picture and chose to retain his workforce. It's a smart move that I'm sure most of the employees at HP appreciate. In the end, if it turns out to not be enough at least employees will know he tried.
Now, contrast this with the recent announcements of layoffs at Massachusetts-based software vendor Novell. Earlier this month, they laid off approximately 100 employees due to a "global economic downturn." I have to wonder how many of those jobs could have been saved if Novell CEO Ron Hovsepian had declined to accept the sum total of his $6.9 million compensation package last year.
I mean, it's not as if he didn't see the potential for layoffs coming. In a December 4, 2008, conference call with analysts he is quoted as saying, "I think we are just evaluating at this point any additional restructures or activities that may take place in 2009, and those would be largely dependent on the overall economic condition and its impact to our revenues, if any."
In other words, the writing was on the wall late last year but he still grabbed his share of the pie. Sadly, this doesn't seem to be an isolated case. Linux Journal reported earlier this week that the CEO of Texas-based chip maker Spansion, Inc. played his $1 million violin while 3,000 jobs burned.
Even before the bodies are cold at Novell, its PR department put a particularly thoughtless blog post up announcing the new user management technology it recently acquired from Fortefi. "Novell Privileged User Manager [is] a new product that allows granular access control (including immediate termination capability) and auditing of 'super' or 'root' users across multiple systems including Unix and Linux environments."
Essentially, it's a computer system lock-out mechanism an IT department can activate when employees are terminated or let go. Talk about a callous blog post coming from a company that just laid off 100 employees. That's like saying "We're really sorry we had to put all these racehorses down. Oh, look! We bought a glue factory."
I understand that companies have to cut employee pay or face going out of business. I understand that many companies may have to resort to lay offs in order to stay afloat. I'd like to think that the people behind these tough decisions have hearts and are compassionate.
I guess that's the difference between the CEOs of HP and Novell. One is a class act while the other is just an act.