Hewlett-Packard’s story famously starts in a small garage in Palo Alto, Calif., where William Redington Hewlett and David Packard founded the business in 1939.
Now, 76 years later, the company is about to move “from a one-car to a two-car garage,” says Tracy Keogh, HP’s executive vice president of human resources.
In describing Hewlett-Packard’s latest iteration, Keogh is actually borrowing a phrase from Dion Weisler, who used the expression in discussing the pending separation of Hewlett-Packard into two new companies — Hewlett-Packard Enterprise and HP Inc. — with a group of delegates at a December 2014 HP customer conference. (Weisler will serve as CEO of HP Inc.)
The separation — announced in October 2014 and set to go into effect on Nov. 1 of this year — will create one HP business focusing on personal computers and printers (HP Inc.), and another on enterprise hardware, software and services businesses (Hewlett-Packard Enterprise). The move is “the right next step in the great HP turnaround story,” according to HP CEO Meg Whitman, who will serve as president and CEO of Hewlett-Packard Enterprise. (Keogh will head up HR at HP Inc.)
Of course, the global IT giant has already grown quite a bit since its humble beginnings in the spot widely acknowledged as the birthplace of Silicon Valley. HP now boasts 600 locations in 170 countries, including its main campus in Palo Alto, just a few miles from the original Hewlett-Packard headquarters at 367 Addison Avenue, which is now a designated California historical landmark and home to the HP Garage private museum.
At the moment, however, the company whose slogan was at one time simply “Invent” is in the midst of reinventing itself in a very big way.
It’s no secret that HP, a long-time leader in the PC market, has clearly and very publicly struggled to keep pace as the technology landscape shifted, with more compact and portable smartphones and tablets eclipsing desktop computers. In recent years, the company has seen sales dwindle, share values plummet, several CEOs exit, other top leaders get reassigned and tens of thousands of employees let go altogether. (Just last month, the company announced plans to cut 25,000 to 30,000 jobs, which will take place at Hewlett-Packard Enterprise, in a move that Whitman says will eliminate the need for future restructuring at the new company.)
Since taking the reins as CEO in 2011, Whitman has implemented a five-year turnaround plan to make HP more innovative and adaptable, and help the company reclaim its place as a leader in an always-changing market.
Keogh, HRE’s 2015 HR Executive of the Year, has been at the center of this ongoing transformation, and is charged with leading all HR-related aspects of the separation.
“I have worked with Tracy over the past four years, and she has been instrumental in helping to drive the turnaround journey at HP,” says Whitman, who notes that Keogh has “delivered on numerous HR initiatives” in that time, which have improved employee engagement, driven culture change at HP and reshaped its workforce through a new recruiting strategy.
With respect to the separation, Keogh and her HR team have, in the space of roughly five months, conducted a global organizational design-and-selection process to align approximately 300,000 employees with either HP Inc. or Hewlett-Packard Enterprise.
Keogh has helped build the boards of both organizations as well, aiding in the recruitment and selection of 13 new directors that will help steer the new companies.
“HP has added outstanding new board members, thanks to a process facilitated by Tracy and her team,” says Patricia Russo, lead independent director of the HP board. “Under Tracy’s leadership, we have gone through a rapid [selection] process and assembled an excellent slate of candidates to create two outstanding boards.”
From the moment HR went public with the split, Keogh has led the effort to keep HP employees apprised of developments regarding the two new companies.
“We actually conducted a survey the day we announced it,” she adds, noting that “about 70 percent of our employees had positive or neutral feelings about it” at that time.
Keogh and HP have administered similar surveys on a monthly basis, asking employees if they feel they need more (or less) information on the separation and what it means for them, for instance. To date, about 70,000 employees have weighed in, she says.
So far so good, it seems.
“Overall, our people are excited to go to the new companies, and seem to understand the strategy for both organizations.”
The numbers suggest as much, with the most recent survey finding 87 percent of employees feeling the separation is “on track,” and 80 percent reporting that their managers are doing a good job of keeping them informed, says Keogh, noting that “we saw a 20-point increase in that number between March and July.”
While keeping those numbers high is one of Keogh’s goals with the pending separation, it’s what she’s already achieved at Hewlett-Packard, and leading up to it, that’s helped earn her this year’s HR Executive of the Year title.
Shaping the Strategy
Not long after completing the Harvard Business School M.B.A. program, Keogh traveled extensively as a management consultant at Arthur D. Little, working with organizations in the healthcare and hospitality industries.
Eventually growing weary of spending long stretches on the road, Keogh tendered her resignation, and was convinced to stay by the promise of leading an internal project, which turned out to be a redesign of the firm’s recruiting process.
She ultimately made the leap into full-time HR as the senior vice president of people strategy at Sapient Corp., and later became senior vice president of human resources at Analog Devices in 2003.
It was at Analog — whose board at that time included an HP executive — that she first started paying closer attention to what was going on at Hewlett-Packard. “I remember reading about the changes going on there when [former HP CEO] Carly [Fiorina] came in,” she says.
Soon after visiting HP headquarters “to see what they were doing in terms of training,” she was hired by then-CEO Leo Apotheker as the organization’s new CHRO. She would quickly become a key player in the company’s transition.
When she joined the company in 2011, for instance, the organization had seen five different individuals occupy the CEO seat over the previous seven years, and had been involved in numerous acquisitions since the mid-’90s.
Keogh’s arrival roughly coincided with the birth of Whitman’s five-year plan. She and the HR team would be instrumental in realizing the CEO’s vision, which included putting a new leadership team in place, driving a comprehensive employee-engagement program, revamping the board of directors, focusing more closely on succession planning and aligning compensation with HP’s desired business results.
Before immersing herself in these new initiatives, however, Keogh had to reassess — and ultimately halt — several HR-related projects already in progress.
“With all the changes that had happened, we really needed some focus,” says Keogh. “There were a lot of HR initiatives that hadn’t really gotten traction. I think I catalogued around 250 of them that hadn’t really gotten off the ground.”
Many of these programs were “very fragmented and locally focused,” she says. “For example, they were happening within a particular business, team or country, focusing on a variety of engagement levers, including leadership, communications, retention and development.”
These projects were effectively stopped as Keogh set about reimagining “every aspect of the company’s people agenda.”
Such was the goal of “Shape the Strategy,” a global initiative — and Keogh’s brainchild — designed to overhaul Hewlett-Packard’s approach to all things HR, including talent development, compensation, staffing and culture.
A starting point for Shape the Strategy was the dearth of “homegrown” leaders in managerial and executive positions, says Keogh, who looked around HP and saw that “a vast majority of our senior leaders were coming from outside the organization.”
Indeed, roughly 65 percent of HP’s executives at that time were external hires.
She wanted to see that number drastically reduced, and fast.
“We pivoted almost immediately to start looking inside to fill these roles.”
Keogh began working closely with the recruiting team to identify internal candidates for executive positions and high-potential employees who could someday slide into those spots.
As part of this effort, Keogh and company instituted rigorous talent reviews and development plans, starting with HP’s executive teams.
“We brought the leadership team together and did a review for the first time,” she says.
“We wanted to change our ethos from [business-unit leaders] owning talent within [their] own organizations to leadership being responsible for developing talent throughout HP.”
Keogh and Whitman also began meeting quarterly with business-unit leaders, conducting talent reviews, defining follow-up actions and monitoring leaders’ progress between these sit-downs.
To ensure the overall initiative’s visibility among board members, Keogh also instituted a “people update” at every board meeting — an idea she says she got from former General Electric CHRO and 2004 HRE HR Executive of the Year Bill Conaty, who sat on the board at Hewitt Associates while Keogh was the organization’s senior vice president of human resources. Keogh reports to the board on “timely HR topics” ranging from employee engagement, benefits programs, compensation and leadership talent and development to succession plans and HR programs that are “in flight,” she says.
Speaking of boards, she adds, many of HP’s senior leaders are directors at outside organizations, which Keogh and Whitman actively encourage as a way “to help with their development.” Keogh, herself, sits on the boards of the HR Policy Association and the Cornell Center for Advanced Human Resource Studies.
“It’s kind of an unusual process, but it’s part of how we just doubled down and focused on talent, driving deeper into talent reviews and development plans,” she says.
Keogh has also sought to sharpen the company’s focus on executive-succession planning, even extending down to the manager level.
HP uses the nine-box succession-planning model to evaluate employees’ current contributions and project their future potential, making sure the talent pool is deep with candidates for executive roles when openings arise.
“Now, we make sure we have several levels of succession for each [leadership] role,” says Keogh. “And we put development plans in place to make sure we’re growing our people.”
The new approach began to bear fruit seemingly overnight.
“Within a year, we had about 65 percent [of executive hires] coming from inside. We basically flipped that percentage,” she says, noting that internal hires now comprise 68 percent of HP’s executive ranks. “We made it a mandate to look for people within HP who could grow.”
The effort has had a substantial financial impact as well, with the company saving nearly $30 million per year in search fees and improving executive retention by 50 percent over the four-year period since her arrival.
Back to Basics
In 2011, the organization’s succession-planning strategy wasn’t all that needed revamping, according to Keogh.
Historically a strength of Hewlett-Packard, the company’s culture — long known colloquially as “The HP Way” — had actually begun to slow the organization down.
“The culture had not been managed in a long time,” Keogh says. “With acquisitions, leadership changes and hiring externally for most leadership roles, it was no longer clear what ‘The HP Way’ stood for.”
The best way forward, Keogh determined, was to look to what worked in the past.
At an employee meeting in 2012, she stepped onstage alongside Whitman to formally introduce “The HP Way Now” to the organization’s 300,000-plus workforce.
That campaign is an “evolved take” on The HP Way espoused by the company’s founders, and redefines the core HP principles as well as the attributes the company seeks in its people, such as trust and respect, and a desire to innovate.
This was no small feat for a company of HP’s size and scope.
For example, Keogh partnered with HR leaders in the more than 150 countries in which HP operates to translate The HP Way Now tenets into different languages.
To help spread the message globally, Keogh also identified what HP calls “Pride Builders” to act as guardians of the HP culture and to help instill desired leadership behaviors in their colleagues. For instance, local leaders identified employees at all levels “who were respected locally, influential and engaged” to fill these roles, says Keogh, noting that she and her HR team arranged for regular calls and updates with Pride Builders.
It seems this back-to-basics approach is working. In just four years, employee-engagement numbers have increased by 23 percent, says Keogh, noting that the company has also seen a 43-percent increase in the number of employees recommending HP as a great place to work, and has realized a nearly 4-percent drop in voluntary turnover.
Retaining the company’s unique culture — and keeping engagement numbers high — through the pending separation is just one goal for Keogh and the HR team, which is part of the cross-company management team that she calls “the separation-management office.”
“The team has done an incredible job in executing,” she says, “when you look at the 760-plus entities we have around the world that had to be separated.”
Establishing the organizational structures of the two new companies, however, may have been the most labor-intensive undertaking connected to the separation, says Keogh.
“That was a four-month process that took a huge amount of work,” including the aforementioned organizational design and selection process.
“I think, with handling this amount of change management while running the company and the separation at the same time, we’ve had a remarkable outcome.”
Change is occurring outside HP as well, in an industry that evolves at an almost dizzying speed. Keogh has — with plenty of employee input — initiated other programs large and small, designed to help the company be more agile, efficient and “employee-centric,” she says.
For instance, Keogh created an online suggestion box on the company’s intranet, known as Bureaucracy Busters, which has thus far received 18,000 suggestions for cutting costs as well as improving the HP employee and customer experience.
And, Keogh says, she will continue to rely heavily on these kinds of insights to help navigate HP Inc. once the separation goes into effect.
“We’ve had to make some hard decisions,” says Keogh. “But you’ve got to have feedback to be able to manage those tough decisions and create an environment in which employees are happy, because that translates to happy customers.”
Read these stories about the 2015 HR Honor Roll:
Marcia J. Avedon’s integral role in the creation of a spin-off company proved just how vital it is for successful HR executives to have a firm grasp of their business’s business.
Though no longer with DirecTV, Joseph A. Bosch leaves behind an enhanced platform for developing managers, engaging employees, and attracting and critiquing talent.
By transforming HR from an administrative function to a strategic partnership, Sallie Larsen and her HR team helped LPL Financial grow and strengthen its management team and outcomes.
By building an HR function from the ground up, Michelle Link has implemented her own HR vision for PRA Group during a period of rapid international growth.