It continuously amazes me how poor executive culture can sometimes be in large companies. My industry is full of it, and unfortunately has much farther to fall before a new generation can come along and start picking up the pieces. Clayton is speaking of an HP policy that doesn’t allow laid off workers to be rehired:
The reason was that Hurd found out that some divisions were laying off workers–then rehiring them a few months later, when they discovered, “Gee, no one else but Fred knows how this works!” His solution, rather than asking if perhaps he was pushing too hard to get costs down–was to adopt this absurd rule.
HP is busily hiring people at the moment for positions that I could easily do, and for considerably better pay than I now get. But Hurd’s stupid, peevish rule means this valley is filled with qualified engineers that can’t be hired back. Instead, HP has to hire people from elsewhere. Dumb, dumb, dumb.
Unintended consequences aren’t just for stupid government bureaucrats. Corporate bureaucracies are no less infested with the same diseases. There is a tendency in Corporate America to still believe we’re in an economy of interchangeable labor. This thinking is a relic of the industrial age. The vast majority of a corporations value is increasingly coming from intellectual capital, i.e. it’s people. There are certainly times when layoffs are necessary, and I wouldn’t argue that empire building isn’t a pervasive problem (as it’s been even in small places I’ve worked), but policies that don’t center around hiring the best people for the job are doomed to failure.
As a checker of other draftsmens work I made a little money on the work that had been sent overseas to India and other places to be drawn by CADD. They were doing the work for what basically amounted to about &$7.50 an hour and were running their shops nearly 24 hours a day. Some of the companies I worked for even hired American draftsmen, barely trained, from schools barely adequate to teach, to fix the many errors made by the overseas firms. Those American draftsmen will never be able to work on their own, without very close supervision, IMHO.
You hit this one out of the park!! My company, a big Philly cable company, is exactly the same. Penny wise and dollar stupid!!
There’s something similar going on where I work, though it’s not limited just to employees that were laid off. The senior civilian refuses to hire any former employees back into the department. Regardless of why they may have left, he sees leaving as a lack of loyalty (as though you owe something to the place by working here).
I guess CEO’s and politicians are cut from the same cloth… upscale liberal arts colleges, where illogic is the new logic!
Just as i made the last post, i found this… maybe all is not lost!
http://online.wsj.com/article/SB10001424052748703545604575407401350252916.html?od=WSJ_hpp_sections_careerjournal
I agree that’s a crazy policy, but I can see how someone came up with the notion. It’s dangerous for critical assets or processes to be dependent on Bob – what if Bob gets hit by a bus or the Chinese make him a better offer? I’ve seen that problem close up, and I’m betting you have too. A motivated person leaves, and their key projects just stop, with incomplete or no documentation, to be expensively redone from scratch months or a year later by the eventual replacement.
Yeah…. I’ve seen it. But I’ve also benefitted from it, because one thing I’m relatively good at is figuring out what Bob did and taking over his functions.
I can understand the desire for redundancy, but I’m not sure it’s efficient. Good people are irreplaceable. If you can bring in someone and they can take over the function easily, that person can’t have a whole lot of value, can they?
Unfortunately, the overall cost structure of the company usually improves when they use this policy. The job eventually is done by the new hire, and, if the company is smart, at a lower cost. The company is forced to create policies and procedures to facilitate high turnover of employees. It really is a sound (but heartless) business practice. If I were a manager responsible for cost reduction, I would do the same thing.
Company loyalty has been declining for years, both from the company side as well as from the employee side. As a long term non-union employee in today’s job marketplace, there is no defense to being laid off, and no way to guarantee a rehire if you are laid off. Those days are pretty much gone.
“no way to guarantee a rehire if you are laid off.”
No one wants a guarantee. It is silly to have a guarantee that you CAN’T be rehired.
One of the Golden Rules of HR is to be really nice to people who are laid off because they will probably be the best candidates for jobs in the future.
Rehiring former employees is almost risk free: you know if they are a good worker, you know if they get along well with a team and they are already familiar with the company systems, procedures and culture.
No HR manager would advocate such a ludicrous policy.
I’m sure it improves the cost structure, but what does it do to productivity? What does it do for the company’s long term health?
No one is suggesting there ought to be a guarantee, but I think a company not committed to hiring the best person for the job, in the long term, is shooting itself in the foot.
There are some interesting legal issues around ‘no rehire’ in the last decade. In one case, Allstates no rehire policy was found by the EEOC to be age discriminatory since it mostly affect older workers.
I’d never heard of this policy at HP and can only find a couple of anonymous references to it online. Interestingly in David Packard’s book ‘The HP Way’, one of the corporate principles for HP is:
rehiring policy: we’d love to rehire you as long as you did a good job at your other companies and you didn’t work for a direct competitor
Honestly, Ikind of suspect that Messers Hewlett and Packard are wondering why in the world the *instrumentation* business was spun off (as Agilent) and the computer business kept their names. At that point they owned the Compaq brand and the HP nameplate wasn’t any particular indicator of quality in computers. Spin them off into the Compaq brand, and keep the instrumentation business and the calculator business. If you like, keep the consumer printer business as well – since the HP brand *did* have a good rep there.
Thank goodness my employer doesn’t have such a foolish policy. They seem to prefer previous employees, in fact, and there’s quite a few people who’ve worked here off & on over the years. I just don’t see the benefit in a no-rehire policy. Sure there might be some people you don’t want back, but you don’t HAVE to hire them, either. And you will probably miss out on good folks in the meantime.
Remember this is the company whose CEO just got $11.5 million in cash for resigning over “company standards and ethics” violations plus somewhere around $40 million in stock.
I wish I could get a chunk of my salary just for quitting my job.
Sources –
http://www.cnbc.com/id/38597921
http://google.brand.edgar-online.com/displayfilinginfo.aspx?FilingID=7399748-892-12045&type=sect&TabIndex=2&companyid=9437&ppu=%252fdefault.aspx%253fsym%253dhpq
http://www.engadget.com/2010/08/06/former-hp-ceo-mark-hurd-rewarded-with-a-12m-severance-after-bei/
Point being, this is not a CEO or a company that has made smart decisions in recent memory.
Management only cares about their own goals and interests. They rig their employee review & goal assignment process to maximize the chance that they will achieve them and get their bonus (which is, for VP level and up, often as large or larger than their “salary”). “The best interests of the company? Who cares? I need to cut XX positions to achieve my department profit goal and get my bonus!”
I knew a guy who worked for a company that committed an
Enron-level financial scam, originated at the CEO level. They went through 6 rounds of layoffs and in the process they whacked this guy I know from his senior IT position.
He had been asking them to approve budget and manpower to create an IT map/schematic/blueprint (whatever it’s called) for years beforehand, and always got turned down. So he did it on his own.
And when they whacked him, they were up the creek without a paddle. They had to hire him back for years, at double his salary. And he kept that blueprint in his car, and would go out to refer to it when needed. Never brought it into the building or left it unsecured.
At my company, they have laid off multiple people who were the sole SME (Subject Matter Expert) for their area. It’s a chinese fire-drill every time.
Although large businesses have their place, this is one reason I favor small businesses over large: less bureaucracy, and more flexible when things need to change. Of course, their chief disadvantage is that they are either forever small (so they can’t do things on a massive scale) or they become big, bureaucratic companies. And another disadvantage to being small is that bigger companies navigate the big government-bureaucratic mess of regulations and fines–if you are large, you can more easily absorb fines, pay for the things required by law, hire lawyers to fight off bureaucrats, and even help make the rules that can squish competition. Sometimes the regulations are so onerous that small companies have almost no chance!
I agree with Sebastian, too: specific people are irreplaceable; this fact applies as much to “unskilled” work as to the most skilled of work. Sure, you could find another replacement to pack those boxes or to fix that Perl script, but will he have the same charm as Steve, who worked hard, knew his work (whatever it was) in and out, and even knew how to do things that he wasn’t originally hired for? While you may *have* to replace him when he gets hit by a bus, if you had to cut his position because times got hard, why not re-hire him when it’s either clear that you need him (or at least really could use him) or when times get better again?