Hewlett-Packard Company Compensation & Benefits:

Hewlett-Packard Company

Compensation & Benefits:

Hewlett-Packard (HP) is a technological IT multinational company located in CA, USA. The compensation strategy of HP is as follows:

Ans.1

1. Objectives: HP defines its corporate objectives also defined as code of conducts as (welcome.hp.com);

a) Customer Loyalty: To provide products, services and solutions of the highest quality and deliver more value to our customers that earns their respect and loyalty.

b) Profit: To achieve sufficient profit to finance our company growth, create value for our shareholders and provide the resources we need to achieve our other corporate objectives.

c) Market Leadership: To grow by continually providing useful and significant products, services and solutions to markets we already serve—and to expand into new areas that build on our technologies, competencies and customer interests.

d) Growth

e) Employee Commitment

f) Global Citizenship

Each objective covers HP’s business in various divisions like, IT (Information and Technology), Software, Printing, Storage and maintenance.

The compensation designed in such a way that tries to retain and attract employees (Annual Report, 2009).  

2. Internal Alignment: The Company has competitive advantage of its global workforce and knowledge driven skilled workforce.  The internal alignment describes issues / objectives. The company offers various compensation benefits to its employees like retirement benefits, employees’ well being, benefits for employees and retiree and their families, discounts programs and health benefits.

3. External Competitiveness: HP faces competition including payment to employees but not limited to price, quality, reliability, brand, reputation, product range and more. HP offers share-based compensation and trying to lower the cost of the company, i.e. reducing the base pay to employees. According to the company, this could result in employee retention and satisfaction. The wide range of competitors resulted in reduction of base pay of employees (Annual Report, 2009).

4. Employee contribution: HP reduced the base pay and encouraged employee contribution in 401 (K) plan (Annual Report, 2009). Employees are allowed to purchase stock and hence company encourages investment options.

5. Management: HP is a multinational fortune 500 listed company. HP ranked 10^th in 2010 (Fortune, 2010). The former CEO Mark Hurd paid $ 24.2 million during 2009 (money.cnn.com). Later in August 2009, Hurd stepped down because of his outside relationship (Time.com).

Cost Cutting efforts: A technology driven company also focuses on cost cutting by reducing base pay, encouraging employees to buy stocks. HP believes that cost cutting strategy may boost efficiency in productivity (Annual report, 2009).

Ans. 3

Exhibit 2.7 shows moral values / code of conducts of Medtronic. The values reflect work life balance of employees and give reasons of existence of company. “Let the market decide” may not be consistence with Medtronic values.

Ans. 4

A firm / company have some competitive advantages which make it market leader in particular product / industry. To measure the competitive advantages in compensation, 3 tests applied (Textbook,  p.50-52):

·         Align

·         Differentiate and

·         Add Value

(i) Alignment: This strategy includes alignment with internal-external and socio-political environment and it’s easy to measure.

(ii) Differentiate: Every company’s pay structure differs from one-another. Some gives importance to work life balance and some includes base pay increase, where as some offers stock option etc. Every company’s facilities and benefits are not suitable for all, even within same industry too. For example, Google Inc. offers day-care for infants of employees, hair-saloon, laundry and more benefits beyond salary, other competitors may not copy it.

(iii) Values: Values are moral aspects. Values can’t calculate by any equation or can’t measure with any management tool. Values are not easy to describe and measure.

From all of the three strategies, alignment could be defined where as differences and values are hard to pass.

References

Objectives and Compensation. HP Annual Report 2009. Retrived on March 11, 2011 from http://phx.corporateir.net/External.File?item=UGFyZW50SUQ9MjgxNTR8Q2hpbGRJRD0tMXxUeXBlPTM=&t=1

Fortune 500. Hewlett-Packard. Retrieved on March 12, 2011 from http://money.cnn.com/magazines/fortune/fortune500/2010/snapshots/206.html

20 Highest paid CEOs. Mark Hurd. Retrieved on March 12, 2011 from http://money.cnn.com/galleries/2010/news/1004/gallery.top_ceo_pay/4.html

Gerhart B., Newman J. M., Milkovich G. T., (2011). Sources of Competitive Advantages: Three Tests (p.50-52). Compensation 10^th e. Mc Graw Hill, USA.