Boring tedious jobs generally reduce people's perceptions of their

Organizational Change & Innovation CHAPTER 10 333

Hewlett-Packard Is Counting on Organizational Change to Boost Revenue Growth Meg Whitman became CEO of Hewlett-Packard Co. in 2011. Since the time H-P’s revenue peaked in 2011 at $127 billion, it has dropped every subsequent year. On the positive side, the company had two consecutive quarters of growth in 2014. H-P also is trying to right- size and reduce costs by planning to lay off 16,000 em- ployees. H-P earlier decided to lay off 34,000 people, resulting in a total reduction of 50,000 employees.100

Whitman described the job cuts “as an opportunity to streamline the company further and make it more nim- ble. An expected $1 billion in cost savings in fiscal 2016 would allow H-P to invest in new technologies and skills to revive growth.” Others, like UBS analyst Ste- ven Milunovich, believe that these job cuts will erode employee morale and may lead to increased turnover.101

“But fixing the world’s biggest tech company—with $120 billion in annual revenues and 330,000 employees— is a herculean task. Bloated by more than 70 acquisi- tions in the past 15 years, HP isn’t just sprawling and stalled out; it may actually be running in reverse.”102

Whitman decided to change the organizational structure to fuel growth. She created two clusters of businesses. One focuses on corporate technology cus- tomers. This group, which sells servers, storage, and networking, delivered 43% of the company’s overall operating profits according to Forbes. Unfortunately, the software and services that accompany all this hard- ware have not been as successful. H-P tried to build the software side of the business via acquisitions, which according to Forbes have not been very successful. The magazine noted that “when it comes to software acqui- sitions, Autonomy [H-P’s enterprise software com- pany] was merely the most high-profit misstep. All told, over the past decade HP squandered nearly $19 billion to buy myriad outfits that contribute only 7% to overall profit. The services unit, which staffs other companies’ tech projects, is barely at breakeven.”103 H-P is currently “looking for small to midsize acquisi- tion candidates in cloud computing, security, and ana- lytics software.”104

The second structural cluster sells printers, PCs, laptops, and mobile devices to people worldwide. This segment of the business contributed 29% of operating profits in 2013. The problem here is that the lucrative printer business is shrinking. Technology is simply moving more toward ink-free photo and document sharing, which benefits companies like Google, Face- book, and Dropbox.

Strategically, H-P also is trying to get back into the fast-growing tablet market. The company attempted to gain entry in this market in 2011 with the TouchPad

model, but it was a failure. Since February 2013, the company has introduced new models, and they are being well received in the market. In a similar vein, H-P has created an overall vice president for design. This was done to create a strategic focus on product development.

H-P didn’t stop at just a reorganization or a new tab- let strategy, according to Forbes. A survey of the com- pany’s 20,000 salespeople revealed that employees rated the internal sales tools a mere “7” on a scale of 1 to 100. For example, it took HP as much as three weeks to prepare a sales quote, when competitors could do it in a matter of days. The company decided to upgrade its sales process by using new tools from Salesforce.com.

Whitman also took to the road to reassure custom- ers that H-P was doing the “right things.” In the last year, she conducted “305 one-on-one meetings with customers or sales-channel partners, aides say, as well as another 42 roundtable chats with small groups” around the world.

It did not take Whitman long to realize that the or- ganizational culture also needed to be changed to fos- ter consistency between the company’s strategies and culture. According to Forbes, she eliminated the barbed wire fence and locked gates that separated parking lots for the executives and the general em- ployee population. “We should enter the building the same way everyone else does,” she said. She also de- cided to work from a cubicle, like most employees, instead of from a larger, more private location. She keeps a picture of her mother in her office. She also role models when she travels by staying at more mod- estly priced hotels.105

While H-P is positive about the changes taking place, some analysts are more skeptical. Bill Shope, an analyst from Goldman Sachs, concluded that “serial restructuring cannot solve H-P’s secular challenges, particularly following years of underinvestment.” He forecasts that H-P’s revenue might fall to $107 billion in fiscal 2015.106

FOR DISCUSSION

1. Which of the supertrends are driving H-P to change?

2. Which of the forces for change are causing H-P to undertake major organizational change? Explain.

3. How might Meg Whitman have used Lewin’s and Kotter’s models of change to increase the probability of achieving positive organizational change? Provide specific recommendations.

4. To what extent is H-P following the four steps for fostering innovation? Explain.

5. What advice would you give Whitman based on what you learned in this chapter? Be specific.

Management in Action

334 PART 4 Organizing

Should CEOs Fire Employees Based on the Opinions of U.S. Senators? This case involves the controversy surrounding Gen- eral Motors and its response, or lack of response, to the need to recall 1.6 million vehicles that could have faulty ignition switches.

GM’s CEO Mary Barra has now testified before several congressional committees on why it took so long to recall the vehicles with potential ignition problems.107 Barra has apologized for the problem and admitted that something was wrong with their in- ternal processes. The company has also established a fund to compensate victims. Distribution of payments is being managed by Kenneth Feinberg.

In a July 2014 congressional meeting, members questioned Barra about her decision to retain Michael Millikin on her staff. Millikin, who has been with GM since 1977, is the company’s top lawyer. While under oath, he stated that he “didn’t know until February about an ignition-switch defect now linked to at least 13 deaths in Chevrolet Cobalts and similar cars built in the last decade.”

According to The Wall Street Journal, an internal report commissioned by GM found that members of Millikin’s staff were warned repeatedly starting in 2010 that GM could face costly, punitive damage awards over its failure to address safety problems re- lated to the ignition defect. Millikin claims that he did not know about these cases because company law- yers settled the cases for amounts that did not require review by Millikin himself.

The congressional committee is not buying this explanation and some members want Barra to fire Millikin. For example, Senator Claire McCaskill (D., Missouri) said, “How in the world, in the aftermath of this report, did Michael Millikin keep his job? This is either gross negligence or gross incompetence.” Senator Richard Blumenthal (D., Connecticut) accused Millikin “of overseeing a staff that engaged in deceit and potential fraud.” Both Millikin and Barra deny these charges. Barra believes that the company needs a person with Millikin’s experience and integ- rity to help the company work through this crisis.108

SOLVING THE CHALLENGE What would you do about firing Michael Millikin if you were Mary Barra?

1. Nothing. Congress does not have the power to force Barra to fire an employee and it does not know what it takes to run a large company. Termination deci- sions should be left to the company.

2. Continue to investigate the situation and do not fire him if you believe he is exonerated by the internal report.

3. Terminate him even though the internal report sug- gests that Millikin did not know about the issue. He should have known, and his lack of oversight is one cause of this terrible problem.

4. Invent other options.

Source: This case is based on J. Bennett and S. Hughes, “Panel Prods GM for Actions,” The Wall Street Journal, July 18, 2014, p. B3.

Legal/Ethical Challenge

PART 5 LEADING

Managing Individual Differences & Behavior Supervising People as People

Major Questions You Should Be Able to Answer

11.1 Personality & Individual Behavior Major Question: In the hiring process, do employers care about one’s personality and individual traits?

11.2 Values, Attitudes, & Behavior Major Question: How do the hidden aspects of individuals— their values and attitudes—affect employee behavior?

11.3 Perception & Individual Behavior Major Question: What are the distortions in perception that can cloud one’s judgment?

11.4 Work-Related Attitudes & Behaviors Managers Need to Deal With Major Question: Is it important for managers to pay attention to employee attitudes?

11.5 The New Diversified Workforce Major Question: What trends in workplace diversity should managers be aware of?

11.6 Understanding Stress & Individual Behavior Major Question: What causes workplace stress, and how can it be reduced?

11

forecccasst What’s Ahead in This Chapter

This first of five chapters on leadership discusses how to manage for individual differ-

ences and behaviors. We describe personality and individual behavior; values, attitudes,

and behavior; and specific work-related attitudes and behaviors managers need to be

aware of. We next discuss distortions in perception, which can affect managerial judg-

ment. Finally, we consider what stress does to individuals.

Are the 75 million so-called Millennials, born between 1977 and 1994, really so different from earlier genera- tions (the 78 million Baby Boomers, born 1946–1964, and 49 million Gen Xers, 1965–1976)? Do they need to be managed in different ways? The answer to both questions is yes.1

Independent, Tech-Savvy, Diverse, Educated—& Anxious Some major characteristics of Millennials: (1) They are extremely independent, because many were raised as day care or latchkey kids. (2) They are tech- savvy, used to smartphones and the Internet, and ac- customed to a faster pace of life. (3) They are racially and ethnically diverse. (4) They are probably the most educated in American history. (5) They are anxious they can’t meet their financial needs.

How Millennials Want to Be Managed In the workplace, these translate into a skepticism about rules, policies, and procedures; a requirement for more autonomy; and a need for constant stimula- tion. Millennials not only want a good income and good relationships with bosses and coworkers but also challenging daily work, the opportunity for growth, the chance to show off skills and be recog- nized for their accomplishments, casual dress envi- ronment, and flexible schedules for social and personal time. Some tips for managing this group:

• Allow them independent decision making and expression. Millennials are impatient, skeptical, and blunt and expressive, but they are used to adapting and making decisions. Show appreciation for their individuality and let them participate in decision making.

• Train them and mentor them. Millennials are strongly attracted to education and training, the best kind not being classroom training but forms of independent learning. At the same time, they should be given the chance to create long-term bonds with mentors.

• Give them constant feedback and recognition. Millennials need to know they are making an impact and need to be recognized for their workplace contributions. Thus, supervisors should show them how their work contributes to the bottom line. This generation revels in, even craves, constant praise, so managers should provide rewards in the form of praise, flextime, and extra responsibility.

• Provide them with access to technology. To attract and retain Millennial employees, companies need to provide the newest and best technology.

• Create customized career paths. Millennials would most like to be self-employed, but few are able to do it because of high start-up costs. Employers can reinforce the sense of control that this generation desires by providing them with a realistic account of their progress and their future within the organization.

For Discussion As a worker, you might hope to be led by someone who would follow the preceding sug- gestions. But suppose your boss is of the old “tough guy” school and doesn’t manage this way. In a diffi- cult job market, would you stick it out? How would you try to let your supervisor know how you would prefer to be managed?

the manager’s toolbox

Managing the Millennials: What’s Different about Today’s Generation of Younger Workers A

Sociable and assertive. Does it take a certain kind of personality to be a good salesperson? Have you ever known people who were quiet, unassuming, even shy but who were nevertheless very persistent and persuasive— that is, good salespeople?

In this and the next four chapters we discuss the third management function (after planning and organizing)—namely, leading. Leading, as we said in Chapter 1, is de- fined as motivating, directing, and otherwise influencing people to work hard to achieve the organization’s goals.

How would you describe yourself? Are you outgoing? aggressive? sociable? tense? passive? lazy? quiet? Whatever the combination of traits, which result from the interac- tion of your genes and your environment, they constitute your personality. More for- mally, personality consists of the stable psychological traits and behavioral attributes that give a person his or her identity.2 As a manager, you need to understand personality attributes because they affect how people perceive and act within the organization.3