Hewlett-Packard chief executive Mark Hurd sayspay cuts of 5%for most HP employees
will help offset a 20% decline in revenue and save 20,000 jobs in
the company's product divisions.
In
first quarter results out yesterday, HP reported revenue growth
of 1% on last year and profits of £1.3bn, but Hurd said this was
largely due to the HP Services division, buoyed by the acquisition
of EDS.
"When you take HP Services out of the mix, it is a very
different picture," he said in a letter to staff posted online by
All Things Digital.
Although he did not exclude the possibility of some job cuts,
Hurd said at a company-wide level, "I don't believe a major
workforce reduction is the best thing for HP at this time.
"From a productivity standpoint, you're supposed to reduce head
count on par with declining revenue," he wrote.
Hurd said he will reduce his own base salary by 20%, executives'
pay by 10% to 15%, and most employees' salaries by five
percent.
"In an environment like this, there's no margin for error and no
tolerance for inaction," he wrote.
However, Hurd did give employees some hope. He said HP's
pay-for-performance strategy had not changed and pay cuts could
potentially be made up in bonuses.
"If we outperform, and there is a chance we will, then we will
increase the total amount of variable pay," he wrote.
UK union,
Unite, has meanwhile said UK employees who have made a key
contribution to HP's services revenue will be "astonished" by the
pay cut proposal.
Peter Skyte, Unite national officer, said the union would be
seeking assurances from the company that any pay reduction would
only be with employee agreement.
"Whilethe basic pay of senior executives is being cut, they will
more than make up any reduction in basic pay by increases in their
executive bonuses brought about by reductions in every one else's
basic pay," he said.
HP has recently come under fire from the union for the way it
handled its
acquisition of EDS in May last year and resultant
redundancies.