Hewlett-Packard: Decision-making style

Published Date: 23 Mar 2015

Until 1999, Hewlett-Packard had an organization culture which was very much decentralized and the employees were delegated much of the authorities. This decision-making style is especially favored in the companies dealing with the information technology needs (Malone, T.W., 1999), as it is less self-constrained (Castells, M., 1998) by way of subjecting the decisions and policies to a wider forum of delegates or participants. The decentralized decision-making style incorporates the views of the employees at every level of the organization because they are free to make decisions, but at the same time they are held responsible for the results which arise as an impact of the decision that was made. The decision-making style is also a determinant of the ethical or unethical practices being implemented at the company (Bommer, M., Gratto, C., Gravander, J., Tuttle, M., 1987), as is evident by some behavioral researches being carried out.

The decisions at Hewlett-Packard were made by way of “Management By Objectives” (MBO), which is also referred to as Participatory Management (Odiorne & George, S., 1971). Management By Objectives is thought to be a very beneficial tool because it helps in increasing the productivity by effectively integrating the processes of goal setting, participation in decision-making, and objective feedback (Robert, R., Hunter, J.E., 1991). The participatory management style is also thought to be ethically superior and inevitable, and is preferred over the autocratic alternatives (Collins, D., 1997) based on the political and economic history. It is also considered to be an effective tool for the purpose of conflict resolution (Sandstorm, P., Pahlen, T. Q., Edenius, L., Tommervick, H., Hagner, O., Hemberg, L., Olsson, H., Baer, K., Stenlund, T., Brandt, L. G., Egberth, M., 2003). The goal characteristics and the personalities of the participants are important considerations (Carroll, S. J .Jr., Tosi, H.L., 1970) when judging the success of this management style. However, an important concern in pursuing this kind of management style is that the individual objectives should be in line with the corporate goals (Harry, L., 2003), in order to contribute towards the overall performance of the organization as a whole. Another point to ponder when adopting MBO style of management is to minimize the impact of Partial Implementation, which can be effectively achieved by using the approaches of Total Quality Management (TQM) (Dinesh, D., Palmer, E., 1998).

The managers at HP also intermingled with the employees at the low-end of the organization by way of “Management By Walking Around” (MBWA). This management style is the most effective when the work setting is mobile, as it serves the purpose of sharing, indexing, diagnosing, and foreseeing (Fagrell, H., Kyng, M., & Schmidt, K., 1999). MBWA helps in promoting critical thinking process which not only improves the quality of personal and professional decisions, but also creates synergy and collaboration, thus contributing towards the effectiveness of group decision-making (Nurs, J. C. E., 1994). It was sort of a cultural web at HP because the relationship between the line, middle and top managers was very open and extensive communication was thought to be the most efficient and effective means of handling the processes at the company. The hierarchical lines were not encouraged and rigidness was not a characteristic of the embedded relations. The various divisions operated autonomously and their heads were free to make any decisions related to the operations of that particular division. However, this sometimes posed the problem of having synergy and sometimes the divisions had conflicting goals. In this way, the culture present at HP at 1999 had both positive and negative points, as it was favored and liked by the employees and was good indeed, but posed problems because of less levels of control.

Fiorina attempted to almost reverse the culture at HP from the “HP Way”, in order to execute her well-thought strategy. She made the decision-making a centralized process. This power centralization leads to the rise of politics being played in the organization to influence the decisions and the leadership style becomes autocratic (Eisenhardt, K.M. & Bourgeois, L.J., 1988), as it did in the case of Fiorina. The lower-end employees were not encouraged to participate in the decision-making process and they were required to meet the standards and deadlines set by the top-level executives. Also, the open door policy was abolished and the interaction between the managers and the employees was reduced, such as at lunch and break times, etc. The employees were now evaluated on the basis of their performance rather than on the basis of the potential they possessed. This made their job security concerns high as many non-performing employees were laid off. In a nutshell, the culture was changed in a way that communicated Fiorina?s strategy of centralized decision-making and a rigid culture where meeting targets was more important than the traditional friendly and interactive culture held at HP.