Posted on Wed, Dec. 20, 2006
EMPLOYEE ``CHURN'' AS COMPETITIVENESS TOOL
What's 150,000 minus 45,000? In Hewlett-Packard's world, the answer is still roughly 150,000.
Since 2002, HP has laid off 30 percent of its employees worldwide to cut costs and improve operations. But sending all those employees away with pink slips or early retirement packages hasn't caused a plunge in HP's global head count -- because the company continuously hired new workers while it escorted others out the door.
Hiring people while laying off others is called churn. And HP isn't the only aging Silicon Valley vanguard that's using churn to survive the onslaught from technological innovation and global competition. But the legendary computer company's use of churn to help fuel its financial turnaround illustrates how the strategy has shattered the implicit employment contract that once bound America's companies with their workers.
The technology industry titan that was started by two Stanford University graduates in a Palo Alto garage in 1939 had averted layoffs for nearly 60 years. When times were lean, HP coped by spreading the financial hardships among all employees and by training workers so they would possess the new skills that the evolving market demanded.
http://www.mercurynews.com/mld/mercurynews/news/breaking_news/16286165.htm<snip> ``Some jobs are disappearing on-shore because the skills and the quality exist elsewhere at a much cheaper cost,'' said Eric Grall, HP Services' vice president of global delivery for Europe, the Middle East and Africa.
U.S. companies are rarely required to disclose how many employees they have -- or have laid off -- in a particular geographic location, and HP has declined to do so. However, HP did reveal in July 2005, when it announced the most recent layoff plan, that its 151,000 employees worldwide included 58,000 in the United States and 9,000 in the Bay Area.