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Morale Is Good: HP, Google and Microsoft

By Rob Enderle
Jul 25, 2005 5:00 AM PT

Last week HP laid off 14,500 people and most determined that this was actually a good thing. In a way I think most of us have forgotten how hard a layoff of this size can be on any organization and how disruptive a drawn out process (this one is expected to take six quarters) can be. Still the result is likely to be a much more nimble and cost-effective HP, and that will be good for both the employees who remain and HP's customers.

At the same time, however, my heart goes out to the HP employees who have to live through this as, having lived through a massive layoff myself, it is incredibly stressful. One thing I'm glad to see go, however, is matrix management -- a practice that looked enticing but was an incredible failure in practice.

Morale Is Good: HP, Google and Microsoft

Matrix Management is Dead

This move corrects a problem that came out of the '70s and '80s where there was a belief that matrix organization would be the best way to govern a complex company. This was proven, over time, generally not be to true, however, it has taken us years, decades actually, to admit this as fact. AT&T, HP and IBM have all been hurt by the complexity of this model, which breaks, over time, the ability of managers to lead and employees to effectively follow.

The most common thing that matrix management does is increase the number of pointless meetings turning employees' lives into a series of seemingly endless get-togethers often without agendas or action items that simply seem to serve as gripe fests focused on those who didn't show up. A story has been repeated here in Silicon Valley of how Larry Ellison, upon seeing one of these meetings taking place, banned all meetings at Oracle and was able to raise Oracle morale dramatically at the same time.

One of the other "symptoms" of this management type is a switch from actual leadership to management-by-policy. This shields managers from bad decisions, which track back to a number of people and wherein blame avoidance becomes an art form. Compensation drifts to being based on how long you've been in the job and who you know coupled with strange rules that actually penalize over-achievers.

Chief executives tend to take on stereotypical royalty personas with little contact with employees or understanding of customers. They are often remembered more for their award-winning compensation packages than anything they've actually done for the company.

It is interesting to note that the only war that was fought that used something like matrix management was Vietnam, and that clearly didn't end well either. This move by HP to take the company to clear lines of authority and remove matrix management groups is not only healthy, it is critical to HP's survival. It also, I believe, effectively marks the death of this interesting, though terminal, management practice and I'm glad to see it go.

The move should mean HP will have employees who can better focus on results and will be better compensated for performance rather than simply be paid for showing up. Less bureaucracy should also result in happier employees and a faster company, but remember that old habits die hard and this one has proven very tenacious at other firms that have tried to eliminate the problem. The net is that even though there will be fewer HP employees, those that remain should be happier once this is over -- though a faster transition time would certainly have been even less painful.

Speaking of employee pain, a Microsoft employee recently quit to join Google only to find that his non-compete agreement was about to be enforced.

Microsoft vs. Google

Much as Microsoft was a decade ago, Google is now a nirvana for people seeking a job in the high-tech industry. With other firms in the segment nearly famous for working employees to death and compensating them with stock options that are worth less than the paper they are printed on, Google has been providing, and delivering, on the promise of hard, fun, work and very strong financial benefits.

Google represents what I hope will be the new example of how firms should be run. They have real devotion to making the company a great place to work, there is little in the way of pointless meetings, and focus is on results -- not titles, tenure, or contact list. They have also not made the two mistakes Netscape was famous for -- hiring Microsoft cast-offs and focusing on Microsoft tightly.

Google has been cherry-picking the best they can find from a variety of companies including Microsoft and has focused tightly on their customers to make a series of intelligent moves which has resulted in a stratospheric market valuation and arguably the best morale in the Silicon Valley.

There is no wonder Kai-Fu Lee, the ex-head of Microsoft's labs in China, would want to jump ship, especially since he seems to prefer lab work. His job at Microsoft had changed to a focus on user interfaces, and his new job will be much like his previous one was -- setting up and running a development lab in China.

Whether or not part of the reason he left was the near-glacial movement of Windows -- which might have highlighted the user interface work he had done -- is unclear. But it is clear he was unhappy and used his sabbatical, as many seem to do, to find a way out of that unhappiness. I understand why Microsoft feels they need to block, at least for a while, this move because of potential exposure to a growing competitor, but I think there might have been a different way to handle it than to take legal action.

Great Places to Work

The whole idea of a non-compete is somewhat moot here in California where such agreements are largely unenforceable -- one of the nice things about living in a state otherwise known for actor governors, surfers, pot, and earthquakes. We may be nuts but we don't really believe in indentured employees. Here, if you want someone to stay, it would be wise to actually find out what might make him or her want to leave and address that, because court probably won't help you if they leave. Of course, in saying that I realize there hasn't been a company other than Google that has focused on making employees happy since Rolm came on the scene with its "Great Place to Work" department.

This was why I joined that company, and while it lasted (IBM bought Rolm and killed the "Great Place" department) Rolm was an amazing place to be, and people who went on sabbatical generally came back. Since then, sabbaticals have become an opportunity to look for new jobs and many firms have prohibited them as a result.

These firms fail to realize that the cause of the departures is not the sabbatical, but the growing unhappiness in employees who, upon discovering life outside of the constant pressure and bickering in jobs that don't fulfill them, suddenly wish to aspire to something more. Strangely enough, I've watched a number of people leave Microsoft to find life worse outside the firm and come back with a new perspective on how bad things are elsewhere. Microsoft is actually one of the better firms to work for still, but Google might be better.

Personally, I think rather than getting rid of sabbaticals and avoiding having to take departing employees and their new employers to court (which darn near assures they won't be back), firms should spend quality time with their employees before they go on sabbatical and recruit them back into the company if they must. So many firms seem to think, even when hiring new employees, that the employee needs them more than they need the employee, and they miss out on a massive amount of top talent as a result.

Employees, particularly good ones, need to be nurtured if they are to be retained. Punishing them for leaving generally only makes the problem worse.

Rob Enderle, a TechNewsWorld columnist, is the Principal Analyst for the Enderle Group, a consultancy that focuses on personal technology products and trends.

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