SAN JOSE, CA. — What's 150,000 minus 45,000? In Hewlett-Packard's world, the answer is still roughly 150,000.
Since 2002, HP has laid off 30 percent of its employees worldwide. But sending all those employees away with pink slips or early retirement packages hasn't caused a plunge in HP's global head count - because the company continuously hired new workers.
Hiring people while laying off others is called churn. And HP isn't the only Silicon Valley vanguard that's using churn to survive the onslaught from technological innovation and global competition. But the legendary computer firm's use of churn illustrates how the strategy has shattered the implicit employment contract that once bound America's companies to workers.
On Wall Street, HP's strategy is seen as a smart way to adapt.
Steven Cochrane, a senior economist for Economy.com, said, "This is what you would expect in a dynamic industry or a dynamic economy. Understanding the churn is important to understand whether the industry is truly shrinking or whether it's trying to change shape so it's more competitive."
To some management experts, HP's churn represents a cultural change for one of Silicon Valley's signature companies, whose workplace practices were once regarded as a model worldwide.
"HP was one of the holdouts of an older-style commitment firm," said Diane Burton, an associate professor at MIT Sloan School of Management. "Now they're treating their people as disposable workers."
Chief Executive Mark Hurd has explained that the company had too many workers in information technology, human resources and finance - and not enough in revenue-generating jobs such as sales.
The layoffs also helped HP chisel away at an expensive workforce in the United States and Western Europe and funnel work to lower-paid employees in Asia, Eastern Europe and Latin America, according to HP executives.
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