Task-02-hewlettpackard.docx

Project Report on Organizational Development through Strategic Management taking from the Hewlett-Packard. Executive Summary This study is based on Organizational Development through Strategic Management taking from the Hewlett-Packard. The whole study revolves around the role of board of directors and CEO’s. Moreover, this study discussed numerous events happened during the tenure of different CEO’s namely Carly Fiorina (1999-2005) , Mark Hurd (2005-2010) , Léo apotHeker (2010-2011) and Meg Whitman (2011- ).In addition to this, this study discussed positive and negative events happened during the tenure of mentioned CEO’s. To sum up, this study also discussed organizational transformation as well. In short this study comprised upon following sections, 

Introduction



Statement of the Problem



Objectives of the Report



Analysis



Role of the Chief Executive Officer



Carly Fiorina (1999-2005) Era as a CEO



Florina Disruptive Move



Controversy Emerged to acquire Compaq Computer



Compaq Acquisition & Transformation



Mark Hurd (2005-2010) Era as a CEO



Hurd & Operational Changes



Emergence of Scandals during Hurd Tenure as CEO



Sexual Harassment & Hurd



Léo apotHeker (2010-2011) Tenure as a CEO



Meg WHItMan (2011- ) Tenure as a CEO



Recommendations and Implementations



Conclusions



References

Introduction The main aim of this report is to understand and discuss the how leadership have changed during the different tenure of the CEO’’ for organizational change and development. Moreover, as a CEO my role is to discuss about the right and wrong happenings during the tenure of different CEO’s and also to analyze what they have done regarding the strategies related to transformation. This report has to discuss the events happened during the tenure of Carly Fiorina (1999-2005) , Mark Hurd (2005-2010) , Léo apotHeker (2010-2011) and Meg Whitman (2011- ). Statement of the Problem Board of directors responsible for the evaluation and approval of the corporate strategy and also responsible for hiring and firing of CEO. Hiring right man for the right job is the key for organizational success. Role of the board is the key in organizational success. Study have to evaluate and determine the role of board and CEO’s for organizational change and development. Objective of the Report The main objectives of this report are, 

In depth examination of the change in the leadership during different tenure of the CEO’s for organizational change and management



Investigating about right and wrong happenings during the tenure of different CEO’s

Analysis Role of Chief Executive Officer The role of the CEO in the organization is dynamic nature and he/she is considered as the top leader of the management. He is responsible to manage all operations of the firm. The main roles and responsibilities of the CEO are, 

CEO is responsible for the creation and implementation of the organization vision and direction



He is responsible to lead from the front and also responsible to guide and evaluate executives



The most important role of CEO is soliciting guidance from the board of directors.



He is responsible to create such an organization that will grow and flourish.

Carly Fiorina (1999-2005) Era as a CEO The management of Hewlett-Packard decided to hire Carly Fiorina as CEO in the year of 1999.He was former senior executive of Lucent Technologies. It was a strange move made by the company because they hired first time any external source as CEO. Moreover, she was the first lady to head HP as a CEO having no background in engineering. The outgoing Chairman and CEO named Lewis Platt welcomed her as new CEO and argued that outsider can perform well. After joining of the company Fiorina as a CEO reenergize the company and started to take decisions quickly. She reduced reporting units from 83 reporting units to 12 and consolidated the all functions of back offices. Moreover, to encourage individual productivity she replaced profit sharing program with the performance based compensation system. Furthermore, she also made necessary changes in marketing functions and revamped sales and marketing functions. In the shorter period of time she got attention and even Fortune magazine listed her at top in the list of “50 Most Powerful Women in Business.” In addition to this The Wall Street Journal also described her as epitomizing as a new breed of CEO along with self-centered and demanding styles. But many criticized her and said she changed the culture of HP and it basically heart a lot to the company even many of the employees and executives said “The HP we know is gone.” Florina Disruptive Move The major competitors of HP were Compaq and Dell. Florina decided to acquire the second largest producer of computers after Dell for $25 billion. She was thinking that combination of two companies will make HP a market leader. Moreover, she was thinking that this will also help HP in competing with competitions like IBM as well in the enterprise systems market. Controversy Emerged to acquire Compaq Computer Acquiring Compaq became controversial due to two main aspects. Analyst were not convinced that this move made strategic sense. The second reason was to involve in commoditized business of hardware manufacturing instead of focusing on higher margin activities. Moreover, HP stock prices goes down after the acquisition of Compaq by 30%.The whole situation simply states that change is necessary and inevitable but it is the fact that sometimes it does not follow and make any sense that every innovation is an improvement.

Compaq Acquisition & Transformation The Compaq acquisition not proved to be transformative event that actually the CEO and board envisioned. HP forecasted that both companies can generate operating margin of 3.0 percent in 2003.But the actual value came 0.1 percent in the year of 2004 it was 0.9.These all figures were very disappointing. Meanwhile, Robert Wayman, chief financial officer of HP served as interim CEO and company started to look for new CEO as well because situation was not good. Mark Hurd (2005-2010) Era as a CEO The rummage around for Fiorina’s successor was junction rectifier by nonexecutive chairman Patricia Dunn and administrator’s patron saint Key value and Thomas Perkins. Consistent with Dunn,

“the

board

is

firmly

committed

to

the

business

strategy that's in

situ. wanting forward, we expect the work is incredibly dependent on handson execution, and that we suppose that a brand new set of capabilities is named for.” once asked whether or not the corporate would contemplate internal moreover as “We aren't ruling something out, however we

external tend

candidates, to are

Dunn

responded,

committed

to a

really thorough rummage around for the foremost qualified candidate. We tend to associate that that's an external candidate, however we tend to don’t grasp of course.” Ultimately, the corporate named Mark Hurd, former chief executive officer of NCR, as chief govt. whereas a relative unknown in geographic area, Hurd had a name for sturdy operations management and strict cut. Though he had ne'er managed a corporation of HP’s size (NCR had $6 billion in revenue at the time, compared to $80 billion at HP), he had a long-track record of success. Hurd & Operational Changes Hurd created aggressive

changes

to

the

company’s

operations.

He declared a

broad

restructuring, as well as the closing of fourteen, 500 staff. He reduced management layers and eliminated the company sales cluster, reassigning staff to divisional teams (PC, printing, and enterprise) in order that they might have deeper information of the merchandise they sold-out. To enhance answerability,

he

gave

executives additional management over

their

budgets,

and command them strictly in charge of performance. The corporate used the income generated by reduced in operation prices to fund a series of acquisitions, primarily within the computer code and services area. These enclosed Mercury

Interactive, Peregrine Systems, Palm, and Electronic information Systems. The approach paid off. Over the following 5 years, HP’s in operation margins accrued from four PC to nine percent. Emergence of Scandals during Hurd Tenure as CEO Stability at the corporate, however, failed to last. In the year of 2006, the news broke out that Patricia Dunn who was the Chairman, was forced out as chairman of the board of directors. Since 2004, the

corporate had

struggled

to

contain the

discharge of tip relating

to council

chamber discussions that was being leaked to the press. This enclosed personal discussion among board members and management relating to strategy, leadership, and company structure. To spot the supply of

the

leaks,

Dunn employed a

firm to

analyze the

matter

that successively employed a second firm. The detectives of that firm used a questionable technique known as “pretexting” (pretending to be somebody else) to get the personal phone records of each HP administrators and reporters. Though Dunn was unaware that the technique was getting used, she resigned from the board. Patron saint Key value was known because the supply of the leaks and not re-nominated at the subsequent annual meeting. Sexual Harassment & Hurd In 2010, HP faced another scandal due to the resignation of Mark Hurd. An organization contractor had suspect Hurd of being involved in sexual harassment. Though the costs were determined to be groundless, the investigation discovered that Hurd had submitted inaccurate expense reports, supposedly in a

trial to

hide his

relationship

with the

lady.

Director brandy Andreessen referred to as Hurd’s resignation “a necessary call.” In losing Mark Hurd, the power unit board didn't act within the best interest of HP’s workers, shareholders, customers, and partners.” but one month later, Ellison employed Hurd to be president of Oracle’s hardware division. Hurd left power unit with a severance package value $35 million. CFO Cathie Lesjak was named chief operating officer on associate interim basis. Léo apotHeker (2010-2011) Tenure as a CEO After Hurd Apotheker’s was selected as the CEO at HP and his tenure at HP was brief and disappointing. At first, has done nothing new and just continued the policies of Hurd that he had put in place during his tenure. Later on he started to make changes abruptly. It includes,



The company would terminate its recent foray into tablet computing



Sell or spin off its PC division



Purchase business-analytics company Autonomy for $10.25 billion

These types of news triggered a one-day 20 percent sharp decline in HP’s stock. Due to this the board of directors terminated Apotheker’s employment. Moreover, he proved to be most costly CEO for the company because of severance package worth $9.6 million, even he served as CEO for just 11 months. Meg WHItMan (2011- ) Tenure as a CEO The board appointed Meg Whitman as CEO. Meanwhile, the Director Ray Lane became executive chairman. The new CEO started to work to rebuild the trust of the employees and to work on basic strategy of the company. Its well-known phenomenon that Whitman was well known in Silicon Valley because of his services at eBay and her unsuccessful run for the California governorship. Moreover, it was the fact that she did not have experience in managing a large company like HP a pure engineering company. But board always try to justify the appointment of Whitman as CEO and they provided all the necessary support to her. Recommendations & Implementations On the basis of the case study following recommendations and implementations needed to be done. 

Need to strengthen the board of directors and CEO vacancy announcement should be for both internal and external sources. But preference should be given to internal sources if best source exists.



Need to include competent individuals to the board of directors. There should be balance of executive, on-executive and independent directors. The case study shows that members of the board was not skillful and competent towards the selection of CEO for 5 years.



Moreover, HP need to work on its culture and they to rebuilt the trust of employees.



HP need to promote and encourage their existing staff members and should provide them all promotional opportunities and try to avoid outsource CEO and they should hire CEO from their internal sources. This will definitely improve the performance of the company and even all employees will work hard because when they observe that hard workers are rewarded by the company then definitely they will work harder and harder.



Need to strengthen the board and there should be mixture of board members. Only the active and positive involvement of shareholders and board members can guaranteed the success of the organization.

References [01] Larcker, D. F., & Tayan, B. (2011). Leadership challenges at Hewlett-Packard: Through the looking glass. Rock Center for Corporate Governance at Stanford University Closer Look Series: Topics, Issues and Controversies in Corporate Governance No. CGRP-21. [02] Brian Bergstein, “Rebukes from Hewlett-Packard Sons Make Fiorina’s Life Hard,” Associated Press, Nov. 7, 2001. [03] Carol J. Loomis and Oliver Ryan, “Why Carly’s Big Bet is Failing,” Fortune, Feb. 7, 2005 [04] Hamilton, D. P. (2000). Soul-saver: Inside Hewlett-Packard, Carly Fiorina combines discipline, new-age talk. Some executives lose sleep, but now HP units work with each other on deals. Big kudos for ‘‘Ann Amazon. ’The Wall Street Journal A, 1. [05] George Anders, “H-P Board Ousts Fiorina as CEO,” The Wall Street Journal, Feb. 10, 2005. [06] Larcker, David F., and Brian Tayan. "Leadership Challenges at Hewlett-Packard: Through the Looking Glass." (2011). [07] Williams, M. (2001). HP’s Deal for Compaq Has Doubters as Value of Plan Falls to $20.52 Billion. Wall Street Journal, A3. [08] Pui-Wing Tam, “Fallen Star: HP’s Board Ousts Fiorina as CEO,” The Wall Street Journal, Feb. 10, 2005 [09] Quentin Hardy, “The Cult of Carly,” Forbes, Dec. 13, 1999. [10] Steve Lohr, “It’s the Scion vs. the Board in Merger Fight,” The New York Times, Feb. 4, 2002.