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November 5, 2012

Downsizing it Right at HP

Another call; taking the toll to six calls in the last 5 days for the content writing position with a pay package below industry standard. What makes these calls so very unique, well it would be the candidate, who mostly has work experience of almost 8-10 yrs earning a six digit salary per month.

They are looking for a job and the profile looks like a suitable fill gap arrangement till the next opportunity comes in, coz they are all trying to survive the catastrophe of downsizing.

A very unpleasant word, for both the parties especially the one at the receiving end. It is not always about the financial component it is more of the emotional injury that it causes. The global economic recession has raised its ugly head consuming companies which have lost balance. Companies and HR folks would like to camouflage it with terms like ‘Refocusing’, ‘Re-Engineering’ or ‘Restructuring’ but truth remains that it is traumatic, however temporary. To put the definition right, we would need to understand the difference between ‘Downsizing’ and ‘Rightsizing’. The first term might be the consequence of external forces like economic recession, natural disaster, government policies, resource scarcity or war, while the second term might be a strategic decision prompted by both external forces as well as internal churning.

When companies decide to realign their focus to channelize their resources in the most profitable business lines as a proactive step we might call this ‘Rightsizing’. We live in a dynamic world of business were change in government policies, technological advancement, changing customer expectations are imperative and we would need to be on our toes to balance it right.

When crisis has befallen and the cash book looks to be in a sorry state, the decisions we take are more reactive and would be appropriately instigate decision related to downsizing.

A company which is in news quite often for handing out pink slips this year is Hewlett Packard. Under the aegis of CEO, Meg Whitman; HP promised a total layoff of 27,000 jobs but it over achieved the target taking the number to 29,000 jobs and we still have the last quarter to go. HP calls it a ‘Restructuring’ as the dollars it would save would fuel the Research & Development wing of the company.

In 2009 and through early 2011, HP added significantly to its workforce. The revenue graph sadly started a journey southward and the top management was left with very few options. With the second best in computer making industry, Lenovo all set to take the first position owing to year over year decline of close to 12% for HP; the decision might be called a reactive approach.

Much thought would have gone into this significant decision of HP, with business leaders pondering over the pros and cons but study shows that a maximum of 50% chance exists for companies to turn profitable after adopting the downsizing resolution. We hope HP gets lucky.

While companies are at massive job layoffs, the contributors who can actually help the organization get back on its feet leave owing to job insecurity leaving behind the mediocres. I would like to however conclude with the thought that ‘Rightsizing’ is a much better option and although both end up with people losing their job but the overall health of the organization can be maintained.

Tags : Downsizing, HP, Hewlett Packard, pink slips, retention, layoffs, restructuring

About Nivedita

Nivedita has almost six years of experience in the HR domain. In her current role with an IT company, she manages the talent acquisition and talent management initiatives of the organization. She has been honored a Master’s degree in Business Administration with a specialization in Human Resources. She began her career in 2005 and has been working in the different domains of Human Resources ever since.