HP exchanges 15K jobs for new $15.3M CIO

HP exchanges 15K jobs for new $15.3M CIO

Summary: I couldn't help but spot the irony in the fact that in the same week that HP announced it would be laying off approximately 15,000 employees, it also announced it would be taking on one new employee who will be getting a compensation package with an estimated worth of $15.3 million per year.

SHARE:
TOPICS: Hewlett-Packard
13

I couldn't help but spot the irony in the fact that in the same week that HP announced it would be laying off approximately 15,000 employees, it also announced it would be taking on one new employee who will be getting a compensation package with an estimated worth of $15.3 million per year.   If each of those employees made $1020 per year (they don't) and the package was a one year package (it isn't), the "exhange" would have been an even swap.   What single person can command such a package?  Perhaps proving that IT really does matter (Nicholas Carr, eat your heart out), the golden boy was Michael Dell's superstar CIO Randy Mott.  Dell's information technology -- a setup that tighly ties direct sales to supply chain management and cash flow --  has played a crucial role in the company's Wall Street darling-like success.   Mott, 49, spent 22 years at Wal-Mart before joining Dell.  Two years ago, Mott questioned the viability of Unix.  Now, he'll  be working for a company that not only says its still committed to Unix (HP has officially refuted Sun COO Jonathan Schwartz's assertion that HP-UX is getting the axe), but to other operating systems such as HP's OpenVMS as well.

The hardest hit of HP's ranks, according to News.com's Michael Singer and Dawn Kawamoto,  will be its IT sales and services groups.  Given Dell's direct model and IBM's sale of its PC operation to Lenovo, those being released may have a tough time finding work with another Tier 1 vendor.   Meanwhile, Dell and HP have been at each other's throats as of late.  HP, still stinging from former CEO Carly Fiorina's inability to improve shareholder value during her tenure (which included an acquisition of Compaq), is looking for ways to extract big success out of more than just its digital imaging and printing group (about HP's only real bright spot).  The company's new CEO Mark Hurd is wasting no time in his quest to establish a new foundation for success at HP. Meanwhile,  Dell is making several surgical strikes of it's own against HP.   Earlier this year, the company hired HP server exec Brad Anderson and mobile exec Alex Gruzen.   And, while Hurd will probably have to rob the successful Peter (it's imaging group) to boost up Paul (the rest of HP), Dell is wasting no time in trying to neutralize HP's remaining defenses by attacking HP's command of the printing and imaging market.   Last month, Dell introduced a $99 laser printer -- a move that caused at least one analyst to say "Dell is going to screw everybody."

Topic: Hewlett-Packard

Kick off your day with ZDNet's daily email newsletter. It's the freshest tech news and opinion, served hot. Get it.

Talkback

13 comments
Log in or register to join the discussion
  • Notice the contradiction?

    HP wants to "extract big success out of more than just its digital imaging and printing group", so that means selling more of their other products and services.

    The focus of the layoffs: "The hardest hit of HP's ranks, according to News.com's Michael Singer and Dawn Kawamoto, will be its IT sales and services groups."

    So maybe "The company's new CEO Mark Hurd is wasting no time in his quest to establish a new foundation for success at HP."

    But he's doing it only by increasing the currently available supply of cash.
    Anton Philidor
  • Linux is overwhelming ...

    ... more expensive Unixes. Mr. Mott is right about that.

    But the more expensive Unixes can continue to exist, if in fewer places. Any time a company finds Linux insufficient, IBM et al can sell them more expensive Unix software. This may make the change to Linux a net loss for the buyer, but it's certainly a good reason for the seller to keep Unix on hand.

    Doesn't seem like Mr. Mott has to change his opinion too much, once he realized the bait and switch nature of Linux for some buyers. Not Dell, maybe, but some.
    Anton Philidor
  • Why isn't

    EVERY SINGLE MANAGEMENT PERSON at HP a CIO? Usually you get a CIO because you need to manage an IT department that is NON CORE business. HP "IS" IT, and their management should ALL be able to do the CIO job.

    NO ONE is worth 15 million bucks, no matter what the pedigree . . .
    Roger Ramjet
    • If the CIO gets $15 million...

      ... what do you think the CEO is getting?

      Another moment from a book on Enron. A Vice President of Enron was asked what he thought Andrew Fastow, the CFO, was making annually, including his take on the more or less fraudulent schemes to hide losses.

      The VP was unconcerned, didn't care. Then his interlocutor told him, $24 million. Now that VP was outraged. "That's more than I make!" he shouted.
      Anton Philidor
      • Who should really get the beaucoup buckaroos

        The press. Without the press -- for example Fortune Magazine in HP's case -- the stockholders might not even know of the folly that needs to be stopped (the bleeding that needs the tourniquet). The rewards go to the replacements. Perhaps all the big corporations should contribute to an independently managed "governance fund" that offers monetary rewards to whistleblowers and members of the press that start the sea changes in the first place. The result would be increased scrutiny on corporate behavior by press and insiders but presumably, they'd want that sort of self-policing system in place to keep themselves out of trouble.

        db
        dberlind
    • I disagree

      Something is worth whatever the market will pay for it.
      tmurph1810
      • Tell that to

        the NHL players . . .
        Roger Ramjet
        • Trust me, As much as I like hockey

          They are not quite as marketable as the NFL, MLB and even NBA...
          John Zern
      • Except the markets are rigged. Especially...

        ...in regards to CEO/upper management pay.

        I say there's plenty of cheap executive talent to be had overseas.
        ordaj@...
  • Think of this in terms of sport

    Sports salaries are heavily-tipped toward superstars, and this will become even more true with the new NHL labor agreement. This will also be true for executives.

    A star executive who can create and implement a new strategy will, in time, create far more jobs than are being destroyed based on the failures of the past.

    In addition, the new star's people, when they come in, will be loyal to the new star. They won't be saying, "yeah, but we used to do it different." Because they weren't here.

    And they'll be cheaper.

    That's the way the world of business works.

    That may not be a good society to live in, but that's the way of creative destruction, and from a purely business perspective I can't argue with it.

    As social policy, of course, it sucks. But if Mark Hurd were doing social policy he wouldn't be a CEO.
    DanaBlankenhorn
    • Okay. But what is the new strategy?

      You wrote:
      A star executive who can create and implement a new strategy will, in time, create far more jobs than are being destroyed based on the failures of the past.

      So far, all we've seen are layoffs, which briefly increase the share price and profitability. But that's not a way to "create far more jobs".

      Mr. Hurd's time at NCR did not make him famous for his skills as an innovative creator of products with inventive marketing. My understanding is he whittled at the company until it could be profitable for a while in its small and slowly diminishing niche.
      Why should you believe that his approach will be different here?
      Anton Philidor
    • Yes... but Tech isn't NHL

      Anyway,

      NHL, NBA, MBL..... and so, income is base on
      Ticket sales, merchandise sales, city or town
      pride to be hostest and big time on TV right.
      Fair to say, income is warant.

      Baseball player employment agreement is base
      heavily on: hit lots of hits, there is a bonus
      for hitting, if a home runner hits lots of
      home runs, there is a bonus, if team makes it to
      the leage final there is a bonus, if they win, there is a bonus, if they win the Championship
      there is another bonus... basically players "salary" is base on performance, to makes things
      to happens at the end of the day. Becasue of that
      they forced themselves to excel.

      CxO have a basic salary (which is already good
      enough >500K) + sales bonus + excesive Stocks.
      Does it matter if they don't perform well?
      mabricen
      • Why Not???

        A player's "value" is also based on his past performance; that's what makes his career. You don't hit that many hits, you don't score that many home runs, your team doesn't get into as many finals, where's the bonus? & where's the career? & more importantly, where's the PERCIEVED VALUE? on the basis of that alone (which is based on his past performance) is his present value decided (trading of players between teams for millions of $), & not just what he does presently. He may perform badly in one season, he'll still get the amount he was signed up for & that's on a per annum basis. All the rest- bonus et al is over & above that.
        & endorsements are also "other source of income"; add to it, other biz that they might develop with their name (sportswear, perfumes, etc.).

        Use this as an analogy to "star executives".

        His past performance is what makes up his "percieved value". He has to have excelled expectations in his past to be able to have a high percieved value. That is what he gets as a present salary. How he performs in his current position will earn him a sales bonus; & if his leadership sees the organization improve top & bottomlines, the share value will go up, so his stock option depends on how the company performs in the stock market, & that depends on how it has performed in the economic front. So, you see that the R&D & Sales team is more or less intact. The other functions is where the layoffs will be as they are not the company's core biz. A company that develops software, for e.g., doesn't have payroll, HR, IT infrastructure management as core biz. ONLY software development is the core biz. So, they can be hived off/outsourced. The overheads for non-core biz. is actually more than that for core biz. So, you reduce on all overheads + pensions, medical insurance, & a host of other variables, thus improving the profiability of the company.

        Moreover, what we see in the $ figures is the CTC. As you go higher up the management ladder, the variable component of the "salary" increases. Many of these CXOs have a variable component of close to 70-80%. What they get out of this figure (in this case $15.3 Million) is actually much less. That's why THEY, too, HAVE TO PERFORM. To actually lay their hands on the stock options, & sales bonuses.
        The 15K that are being laid off, all have fixed component salaries. They'll all be working @ not less that $2000 per month. So, the actual figure is some $3.6 Billion. That's certainly MUCH MUCH MORE than $15.3 Million. So, actually, the company is better off on financial figures. But, how it translates to better performance in the long run is something I am still trying to figure out!!!
        itmarketer