The HP Way, also known as the Packard Way, was a celebrated business philosophy and corporate culture established by Hewlett-Packard (HP) founders David Packard and Bill Hewlett from the 1940s through the 1990s.
It was a form of Management by Objectives (MBO) rather than top-down control, and became a model for many Silicon Valley startups.
Core Principles and Characteristics
The philosophy was rooted in a deep belief in the individual employee and was characterized by:
- Trust and Respect for Individuals: Believing people want to do a good, creative job and will do so when provided the right environment and support. This led to practices like doing away with time clocks and implementing flexible work hours.
- Management by Walking Around (MBWA): A practice where managers were expected to leave their offices, walk through the workplace, and talk to employees informally to get input and offer guidance.
- Decentralization and Freedom: Fostering initiative and creativity by giving individuals great freedom of action in attaining well-defined objectives.
- Teamwork and Open Communication: Encouraging informality, a first-name basis, and open-door policies.
- Focus on Contribution and Achievement: Striving for the highest quality and value in products and services.
- Uncompromising Integrity: Conducting business with openness and honesty.
- Profit Sharing: Employees were positioned to benefit directly from the company’s success (e.g., profit-sharing plans and employee stock purchase plans).
The Seven Company Objectives
The HP Way was formally outlined in 1957 as a set of seven written company objectives:
- Profit: To achieve sufficient profit to finance growth.
- Customers: To provide products and services of the greatest possible value.
- Fields of Interest: To enter new fields only where HP can make a needed and profitable contribution.
- Growth: To let growth be limited only by profits and the ability to produce products that satisfy real customer needs.
- Our People: To help employees share in the company’s success and provide job security based on performance, recognition, and satisfaction.
- Management: To foster initiative and creativity by allowing the individual great freedom of action in attaining well-defined objectives.
- Citizenship: To honor obligations to society by being an economic, intellectual, and social asset to each community.
Notable Example: The Nine-Day Fortnight
In 1970, during an economic downturn that saw orders drop below production capacity, HP faced the choice between layoffs and an alternative solution. Living by the HP Way’s emphasis on respect for the individual and job security, the company implemented the “nine-day fortnight.” This meant everyone, from executives to factory workers, took a 10% reduction in work schedule and pay for six months to save 10% on labor costs across the board, thus avoiding mass layoffs.