From Ethical Advocate — October 31, 2006

As a previous HP executive, my heart and soul know that if more companies followed Bill Hewlett and Dave Packard’s business philosophies, they would experience more success and the world would be a better place to live. How do I reconcile my belief with the recent HP pre-texting scandals?

Significant media articles have focused on the HP scandal related to a board member disclosing confidential information and pre-texting to find out who did it. One reason so much focus has been placed on this scandal is due to HP’s roots as an organization of high values.

Hewlett-Packard was started in 1939 in Palo Alto, California by Bill Hewlett and Dave Packard. Knowledge of how Bill and Dave ran HP is well known and documented through current and former employees and in several books, including David Packard’s The HP Way and Jim Collins’ Built to Last.

One of the HP values highlighted in The HP Way was “Trust in people”. Dave’s corporate experience before starting HP was with a company whose leaders believed that its employees would steal. He elaborated in his book that the company locked up its tools and parts to control theft. Dave believed that the company’s tools and parts theft came from the company’s distrust in its employees. The company’s distrust was met with dishonesty. So, HP never locked up tools and parts.

From Dave’s book he states that he and Bill “placed great faith and trust in HP people. We expect them to be open and honest in the dealings with others”. There was always a focus on achieving business revenue and profit goals, but, achieving them through dishonest means would not have been accepted. The end would never justify the means.

Bill and Dave regularly communicated the organization’s values and objectives during meetings called coffee talks for all employees, through management by walking around (MBWA), and through published materials for employee distribution.

Bill and Dave didn’t develop their objectives in a vacuum, but included their managers and supervisors in developing them. In Dave’s own words “(I)f we could get everybody to agree on what our objectives were and to understand what we were trying to do, then we could turn them loose and they would move in a common direction.” They also listened to their employees, customers, shareholders, and community. The objectives were based on all of this, were published and given to each employee, with background on why they were chosen and why they were important. Each employee was expected to conduct their business based on the objectives and values that were communicated.

The HP values and objectives were actively supported every day by Dave and Bill’s guidance, leadership, and actions. Everyone knew the tone at the top matched the detailed objectives and values.

So, how does a company with high values end up with such a scandal? Bill and Dave were consistently communicating the HP objectives and values, but it’s been 10 years since they were in an active role at the company. In more recent years, HP faced lagging growth and profitability where the focus on balanced values and objectives was not the main focus. Change was required to bring the growth and profit that investors demanded. Management brought in to drive the change has had a different focus and Compaq brought a completely different culture as part of the merger.

I think this shows how hard it is to maintain a company’s culture through employee turnover, market changes, and diverse leaders. This accentuates that if an organization wants to maintain a particular culture, the message needs to come from the executive staff on a consistent basis.

Could someone in HP have released confidential information or been dishonest with Bill and Dave at the helm? A company is made of people and cannot be perfect all of the time. We all make mistakes and therefore companies do, too. So, yes, I believe it’s possible; it could happen regardless of the leader or company.

However, the more the company’s values are communicated by a leader that walks the talk, the more often the values will be followed by everyone else in the company. When employees are consulted in developing objectives, the more likely they will assume ownership for them.

So, my belief firmly stands that Bill and Dave’s philosophies are still applicable to today’s business success and building a better world. These philosophies are as applicable today as they were in 1939. – Janet Hankins