HP’s destructive cost-cutting

Wednesday 19 May 2010This is 13 years old. Be careful.

An email arrived in my inbox at work yesterday:

To: HP Employees

As a reminder, the HP Audio Conferencing service policy requires a minimum of 4 participants.

[...] Audio Conferencing calls that do not meet this minimum requirement after 15 minutes will be interrupted by a recording, giving callers a 2 minute warning before disconnecting the call. If your meeting has 3 participants or less, please [use your office phone to dial three-way].

Thank you for your cooperation utilizing HP IT resources cost effectively.

Like many companies these days, HP uses a teleconferencing service so that people in disparate locations can have meetings on the phone. It’s convenient and ubiquitous. I’m in Massachusetts, and regularly deal with people in San Diego, Vancouver, Utah, Brazil, and India. Being distributed like this is difficult, it requires real effort to stay coordinated. Having a central conferencing service that everyone can use is essential to making it work.

But now, in a cost-saving move, HP has decided to push us to use two different conferencing tools, depending on whether there are three people or four on the call. They estimate they can save $5 million per year by making this change.

There are so many things wrong with this:

  • The great thing about the conference system is that the participants can just dial in to join, and everyone knows the phone number. If I have to coordinate a meeting of three, now I need to collect participant’s numbers, and dial them.
  • We often have a group meeting with one or two participants dialing in. Picture a conference room with eight people, all of them waiting while one person fiddles with the phone to dial in the other two.
  • People often drop from calls because of trouble on their end. Now the leader has to be distracted with redialing instead of the person who dropped off.
  • When I arrange a call, I may invite three, but what if only two join? Now we have to switch gears, collect phone numbers, and re-dial.
  • Most importantly, the great thing about the conference system is that it’s a toll-free number. Working with India often involves off-hours calls, which means I’m making them from home. It’s possible that none of the participants is in an HP office. I’m not sure what HP’s answer is to this situation. Am I supposed to dial internationally and then get reimbursed for the call? How much effort are we supposed to expend in order to not “waste” a conference call on only three people?

Adding to the irony, this memo arrived within hours of an email from CEO Mark Hurd announcing our quarterly results, including net earnings of $2.2 billion for the quarter, up 28% from last year. That makes the supposed $5 million saved only .05% of the company’s profits, pretty small change.

In fact, I suspect if I came up with a business plan for an idea that would earn the company $5 million per year, I would be told that’s too small, not worth the effort of a large company like HP. And yet the telecomm group can impose an inconvenient policy change on the entire company to save only that amount, and is applauded for it.

This is a classic example of making a trade-off while only examining one of the potential costs. We can see where the phone money is being saved. But the change has a corresponding cost on the entire rest of the company. It’s just not a cost you can easily estimate or measure.

It’s easy to see that this will be a bad move for the company as a whole. It will add frustration for everyone to an already difficult job. Some number of calls, probably more than .05% of them, simply won’t get made.

I probably sound like I’m making too big a deal out of this. After all, what’s so difficult about dialing phone numbers? It bothers me because it’s one more insult in a long stream of changes made to cut costs. Cutting costs is Mark Hurd’s super-power, and he does it with zeal. From closing offices (and dictating that half the workers work from home) to penny-pinching IT infrastructure to 5% pay cuts to requiring that employees take vacation days during specified company shutdowns, HP employees are expected to cheerfully accept all manner of dictates designed to save money.

These policies do nothing to improve the mood among HP employees, and they do nothing to make HP products better. Every one of them is a trade off of the visible against the invisible, and the invisible that suffers is everything you want in a company: productivity, morale, loyalty, and innovation. It’s hard enough to build great products, I don’t need my employer, a giant profitable tech company, nickel-and-diming me to make it even harder.

I think there are three possible outcomes of this phone policy:

  • People will use their cell phones to dial into the conference extra times to get the participant count up to 4.
  • They’ll get disconnected and dial in again every 15 minutes, wasting time and interrupting the flow of conversations.
  • They’ll invite more people to the meeting to stay above the limit. The new policy encourages less-productive meetings!

In the end, people will do what they have to do to get their jobs done, and the phone group won’t see a savings. But there will be yet more ill-will among the employees as they live under tighter and tighter strictures.

I don’t understand HP’s obsession with costs. Tech companies, especially profitable ones, need to use their money to foster innovation that will allow them to compete. The focus should be, how can we make it easier to build great products, not how can we shave .05% of our profits from the phone budget. HP should be putting out press releases explaining how they spent “only $5 million per year” to improve collaboration among their workers.

HP today seems intent on running the company like people and products don’t matter. It’s destructive, and it’s a shame.


I agree Ned. I do software support at HP and we do follow the sun support. How do you hand a call off to the next region if you have dialled the customer? We discussed the same thing today and the 'dial in a second (or third) time with your cell phone' came up immediately.

Before working at HP I thought the support they provided was good. Now, from the inside I see the tools that are used and I am amazed I got good support at all! It is a credit to the engineers that they provide the quality of support they do with the abysmal tools they have to do it with.

One thing that does surprise me though - are you allowed to speak out against company policy in a public forum this way?
Will there be repercussions? Is there no internal process for handling this concern?
Sorry, typo in web page on previous comment (just in case you try to go there)
Ned- you're absolutely right. It's a symptom of an organization that treats IT as an expense to be minimized, rather than a strategic asset. I'm sad to see that attitude has taken hold at HP of all places.

My company has implemented this in a "soft" way. They sent out an email directive: Use 3 way calling when you can, use the teleconference number when you must. There is no enforcement. You probably get 80% of the compliance vs. the mandatory system, with no cost or inconvenience.

This cost cutting measure would work better if it was implemented differently. Your company uses a VOIP PBX internally, right? I wonder how hard it would be to build an internal conferencing system that would provide a single point of access (phone # + pin) that starts with an internally bridged call (3-way calling), then seamlessly transfers to an externally hosted conference call if the number of participants increases.
One word: Skype.
Two thoughts:
increasing the minimum to 100 would drastically cut down on useless conference calls and make the remaining calls much more entertaining.

you're totally fired for this, as soon as some VP learns how to use the internet.
That's really lame Ned, sorry to hear that. Perhaps a clever engineer in the same boat will phreak the system to create a workaround.

(Clears his throat) some companies BAN the use of skype. Won't say which ones.
I think how I might contribute is to find out how HP would expect that remote/mobile workers communicate with international meetings. One thing I'm aware of is that because of cost-cutting across the board, we have the privilege of keeping our jobs. These are not normal times; yes, wwe enjoy being the top IT company in the world but it took drastic measures to get there. Let's work together to save money and work hard to improve systems, work smarter and communicate what doesn't work. If this phone system doesn't work, there is always an escalation path.
I'm with you on this, Ned. In fact, everyone I know here at HP is with you. We're all on widely-distributed international development teams, and we also deal with pre-sales, sales, and support issues world-wide. I was about to blog about it -- but on my internal HP blog. You're pretty brave for airing this publicly. Given you're willingness, yeah... I'm willing to add to it.

You've listed a bunch of ways this impedes productivity. There's more, of course. We've been moved into this new shared office space, 4 people to a "honeycomb", less space and lower walls than the old cubicles. People are packed in closer together, there is no privacy and a lot more noise. Since we moved into this configuration I've taken to wearing an ear-plug over the ear that's not covered by my headset when I'm on the phone. Of course, we've always been encouraged to use the focus rooms for phone calls, but now it's getting very necessary. And that's fine if you're the leader for a three-way call, but if you're a participant rather then the leader... how will you know what phone number to give to the leader so s/he can contact you? You'll have to get into the focus room first and then get the info to the leader. Assuming there actually is an available focus room (and right now there's a shortage due to the ongoing renovations in our facility, and it's unclear to me how many we'll have when it's all done), you'll have to get on the network and IM the phone number to the leader. (And that's assuming you can get on the network from the focus room, which is not always a good bet, either!) But what if the leader is in his car? How will you reliably notify the leader once you do know what phone number he should use?

For that matter, what if you're the leader and you're in your car? Right now, assuming I want to be safety conscious and not dial while driving), I will pull over once, dial once to open the bridge using the numbers that I know by heart, and that's the end of it. With the new policy, I will have to contact each person individually using whatever number they've given me in advance, and if someone is late I have to stay pulled over and keep re-dialing until I get through, and if someone drops I have to pull over again to re-dial them in. (The above assumes I'm actually paying for 3-way calling on my mobile phone plan, which actually I'm not sure if I am.)

And this is all for a savings of what? About $17 per employee! It doesn't take much lost productivity time for either you or me to blow through that.

Totally agree with you Ned. This totally sucks, it's going to kill productivity in already arduous meetings. Not to mention where I live it costs $3.75/month to add 3-way calling - and note it's only 3, not 3 or more. Most of my early morning and late evening calls are to other countries which means long-distance bills. Do you think HP reimburses for work@home or mobile telecom costs anymore? NO. They don't. I'll bet if you enable 3-way calling and make long-distance calls it will be totally your bill to pay - Mark wants nothing to do with it. This is all about making the IT costs go down at whatever the cost is to you. Besides, if you try to get some $$ back it will just be more of a reason for them to move more jobs to India because "it's cheaper". I, for one, will just say, "Too bad HP. You took away another tool to do my job. I won't be footing the bill or the inconvenience for this - the communication will just stop".

Also notice they gave employees 4 working days to deal with this change before they implement it.

By the way, good luck with the new job. ;-)
Oh, and another way of looking at the alleged savings... $0.07 per employee per work day.
Ugh, Ned, I am sorry you guys have to deal with this. As you point out this makes it insanely difficult to get your jobs done especially with such distributed teams. Also reminds me why I am SO HAPPY that I left HP--this is the kind of thing that just grinds you down. I understand the need to control costs but this is an example of the policy makers being ridiculously disconnected from the reality of the havoc their "looks-good-on-paper" changes will cause.
I suspect some other faulty assumptions are also behind this decision, such as everyone as 3-way conferencing on their phone system, that everyone joins conference calls on-time, and that everyone has a personal cell phone with unlimited minutes to use for business purposes. And yes, I agree we should also use other formal communication channels to let HP management know the impact of their decision.
Thanks all, for your feedback. I am also using internal channels to raise my concerns over this policy, as apparently, have many others.

@Richard, I love the figure of $17 per employee per year. It makes the whole effort seem even more pointless.

@Pam, I'm impressed by your optimism, but I doubt that $5 million per year is going to save any jobs in a company that has profits of $2 billion per quarter. I've had very poor results from "providing feedback" internally, and yes I've tried.

@tim, yes it's true that some large tech companies ban Skype. HP is a large tech company. These two statements are unrelated....
I agree as well, what if you invite four people to the call, but one person cannot make it as the last minute, now you have to scramble.

I joked yesterday, that my new full time job could be "the fourth caller." I'll join your calls to keep the bridge open.
Oh, Ned. I left HP over a year and a half ago. It was heart wrenching in many ways, I still miss the awesome people I worked with. Of course, the fact that many of them had been laid off helped, but I kind of had to stop following your blog and all other things remotely HP related there for a while. I decided it was time to check up on you today. This is exactly the kind of thing that was making HP unbearable for me while I was there, and you explain so well why it's a bad business move. Especially with your example about starting a business that would generate HP $5 million vs. cutting $5 million. I wish the people in the media and business that continually sing Mark's praise would open their eyes to this. Anyway, I'm glad for the people in HP that he's gone, and I'm glad you have found a way to move on and get yourself away from that environment. Good luck with everything and thanks for blogging.

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