HP Cuts Costs And Restructures Itself, Cuts 14,500 Jobs
HP is implementing a program designed to cut costs and simplify its structure. Part of this plan is terminating the jobs of 10% of its regular full-time staff.
This adds up to about 14,500 employees, who will lose their jobs at some point over the next six quarters. Aside from that, the company is modifyingits U.S. retirement benefits programs.
HP expects this plan to save the company $1.9 billion annually, as well as drive growth and increase business performance. The plan will also simplify the company’s reporting structure with fewer layers of management.
“After a thorough review of our business, we have formulated a plan that will enable HP to begin delivering its full potential,” said HP CEO and President Mark Hurd. “We can perform better – for our customers and partners, our employees and our shareholders – and we will.”
The projected yearly savings of $1.9 billion is made up of an estimated $1.6 billion in labor costs and $300 million in benefits savings. The company expects to save between $900 million and $1.05 billion next year. The company said in a press release:
HP will carefully target staff reductions. Reductions in sales positions will be minimal, so that HP can continue to provide world-class service and avoid impacting customers; and there will be little change to headcount in research and development, to ensure that the company remains a leader in technology innovation.
The majority of staff reductions will come in support functions, such as information technology, human resources and finance. The remainder will be made inside business units, in areas where work can be reduced by improving processes and re-prioritizing existing tasks. To facilitate these reductions, HP will offer a voluntary retirement program to longer-serving staff based in the United States.
“Our objective is to implement these measures smoothly, with as little disruption to our business as possible. Great companies grow and reduce costs. We will do both,” said Hurd.
HP has recently added three new executive vice presidents (Cathy Lyons, Todd Bradley, and Randy Mott) to its Executive Council, which is now made up of 10 people.