Identification of the Corporate Management Issues in Hewlett Packard - Essay Example

? Contemporary Management Issue of the of the Table of Contents Table of Contents 2 Introduction 3 Identification of the corporate management issues in Hewlett Packard 4 Responses of the mangers to the above stated issues 5 Management skills that should be adapted by the mangers 6 Conclusion 7 References 8 Introduction The study deals with the discussion of corporate management issues and its effect on the organization. There are various issues faced by the corporate management presently. It may involve issues related to project management, human resources management, information technology management etc. There are many US companies which manage their earnings around the seasoned equity offering and the investors often fail to recognize this fact (Teoh, Welch & Wong, 1998; Ching, Firth & Rui, 2006; Iqbal, Espenlaub & Strong, 2006). The study reports claim the view of corporate governance within an organization is build on the agency theory and transaction cost theory (Fama & Jensen, 1983; Jensen, 2000). It is very important for the corporate managers to identify the corporate management issues and improve them for efficient corporate performance. The market should provide best regulatory method which would maximise the shareholders value by restricting the state intervention in order to ensure efficient operations of the market mechanism in fields related to corporate ownership or corporate management. The company which have been chosen for presenting the corporate management issues is Hewlett Packard (HP). It is an American multinational company mainly based on information technology. The company is headquartered in Palo Alto, United States. HP offers products, software, technologies and services to its customers, various SMBs (small and medium sized businesses) and large enterprises. The customers of HP also belong to government, education and health centres. Identification of the corporate management issues in Hewlett Packard Hewlett Packard faced problems in the field of corporate governance. In the year 2012 the company received no votes from the shareholders on the executive compensation programs (FortuneCNN, 2013). In the board nomination process of HP there were two board of directors removed because of the issues related to corporate governance (Bloomberg Businessweek, 2013a). The company is a well known professional organization having good leaders and managers throughout the organization who make strong collective decisions. A loophole in the corporate governance of the organization has resulted in dissatisfaction for its investors who have high expectation on its corporate performances. In the tenure of Leo Apotheker the market value of the company was almost reduced to half where his mistakes had adverse effect on the overall trust and loyalty of the investors towards the organization (Forbes, 2013). The full board of Hewlett Packard has never met Leo Apotheker before he has taken the top job. Before Meg Whitman was appointed as the Chief Executive Officer of Hewlett Packard there has been a decline in the value of the stock by 50 percent because of the board approved strategies. Because of these issues the company is passing through challenging phase where the customers have lost their faith on its products. The company is overburdened with huge debt and has also spent huge money on acquisitions which actually did not work out (Bloomberg Businessweek, 2013b). The Personal Computers, Printers, Servers of HP looked outdated in various areas. This was also a loop hole in the decision of the board members as well. All these issues resulted in corporate destruction. According to the investors, the company would continue drifting as well as disappointing its shareholders until the management is ready for making some real tough decisions to change the present scenario. Responses of the mangers to the above stated issues Meg Whitman has admitted that Hewlett Packard is a company which desperately requires effective leadership (Corporate Secretary, 2013). The company requires increased focus and courage. But this would not be possible without the support and effective functioning of all the managers. The managers are working hard to improve the overall performance of the organization and increase the reliability of the employees, customers and shareholders. HP was in urgent need of appropriate strategic decisions which would help in turning the present scenario into great gain for the company. There were also questions raised whether there is any disorder in the formation of the senior management of the company and concerns related to the composition and proper functioning of the board. The present CEO is making attempts to create such an environment where the board would be working together as a team and everybody would play his/her role very carefully. With an overall change in the strategies along with entirely new directors, the task would be very challenging for Meg Whitman. She has implemented a system which ensures that the directors have detailed knowledge about the company and its senior leadership. Whitman has stated that the main reason of failure of the company was because of various issues related to succession planning specifically in the CEO spot. This remains a problem in most of the organizations (McAdam & Reid, 2001; Wong & Aspinwall, 2005; Sambrook, 2005; Ip & Jacobs, 2006). She argues that the organization which is best in the world in terms of its succession planning process is Procter & Gamble. She states that in a similar manner HP is aiming at making a disciplined succession planning process by developing the internal employees with such potential skills which would result in the achievement of business leadership within the company (Spender, 1996; Droege & Hoobler, 2003; Durst & Wilhelm, 2011). It would work as a talent pool management by increasing the availability of capable employees who would be playing effective roles within the organization for improving its performance (Hall, 1992; Dyck, Mauws, Starke & Mischke, 2002; Massa & Testa, 2007). Whitman aspires that the next CEO of the company should be from among its internal members. Another important issue to be addressed by the management of the company was related to the compensation issue. The most important thing was the standardization of severance packages regardless of the level an employee possess in the company. The next thing was to make sure that the compensation practises remain in line with the performance of the organization. However the CEO mainly focussed on long term planning where she stated that the short term plans should also remain in balance in order to carry out the long term goals successfully. Maximization of the values of the investors should be the primary focus for Hewlett Packard. Management skills that should be adapted by the mangers Managers are those people who make things correct. They are responsible for ensuring the fact that the vision of the organization is implemented successfully and efficiently. The managers of HP should possess the capability of allocating appropriate task for its employees which would be executed by them in best manner. Their efficacy in performing their functions would result in maintenance of efficacy in the performance of the organization as well. The managers should motivate the employees by providing them with rewards, recognition for their better performances which would result in the improvement in the overall performance of the organization. The compensation plan is required to be carried out effectively for motivating the employees, which would also enhance their engagement in the organization. As already stated above, the main problem was due to the disorder in succession planning process. In order to implement a successful succession planning process it is very important that the managers have effective communication with all their employees. It is required to be a two way communication where the employees should feel free to communicate with the top level management in case of any inconsistency in the proper functioning within the organization as well. Employee engagement and construction of strong relationship between the company and its employees would enable HP to come out of the present situation. The managers should focus on keeping the interest of the investors in the first place in order to regain reputation, trust and position among the customers and investors in the market. Conclusion Hewlett Packard needs to have a necessary change in its corporate management process in order to overcome the present situation. The most important thing is regaining the trust of the customers and the investors. The share price of the company has fallen by 50 percent (Bloomberg Businessweek, 2013b). The reduced faith of the customers has resulted in decrease in sales of the company. It is overburdened with huge debt. The products of the company seemed to be outdated in various areas because of the incorrect decisions taken by the board members. Thus the overall situation of the company was deteriorating in all respect and required a significant change in the corporate management in order to recover from this state. The managers have to play significant role in this change process where Meg Whitman has planned for various steps to be taken in order to achieve the short term as well as long term goals of the company. She has planned to implement a successful succession planning program within the organization which would help in further enhancement of the performance of the organization. Another important step to be taken by the company would be the execution of an appropriate compensation plan which would help in motivating the employees and strengthening their relationship with the company. An effective corporate governance strategy is required to be planned for reducing the impact of the corporate management issues. References Bloomberg Businessweek. (2013a). Ray lane, hewlett-packard, and the state of corporate governance. 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