HP further cuts EDS salaries
Hewlett-Packard is cutting salaries of EDS workers another 10 percent beyond what it first announced in February, ZDNet reported Friday.
Last month, the company announced salary cuts for all employees, ranging from 2.5 percent for nonexempt employees to 20 percent for the CEO, ZDNet said. HP also said it was making changes to employee benefits to save money.
According to a Friday memo obtained by ZDNet: "Unfortunately, we need to take additional action. Specifically, we have decided to make a temporary, additional reduction in base salary affecting EDS business unit employees in the United States and Puerto Rico."
The temporary salary reductions will go into effect next month and end in May, according to the memo, and workers who make less than $40,000 annually are excluded.
Hewlett-Packard acquired EDS in a multibillion-dollar deal last year.
Natalie Weinstein is an associate editor who works out of Austin, Texas. She spent a decade as a reporter and editor in the newspaper industry before joining the CNET News staff in 2000. E-mail Natalie. 
But can you confirm that it was really sent from HP/EDS Management?
This doesn't make sense, on many levels, particularly coming less than a month after the original.
The wording of this almost makes it seem like a hoax.
They say temporary don't really say for how long,
Kind of say Temporary "For April".
Sounds like it could be an April fools joke????
Not sure who "EDS Worldwide Marketing - Communications" is.
And why they would be the ones sending an email like this.
Not sure why they would sign it "Sincerely, The EDS Senior Leadership Team".
Not sent form Mark Heard or Joe Eazor.
Doesnt make sense.
I can't explain why it was sent from the Marketing group. (Typically used by the Marketing group to announce special Employee pricing on HP products). We can speculate that it was an attempt at abscuring the message, or that HP simply felt that it might better grab our attention.
As a pre-accuisition EDS employee, I don't really know if HP typically uses the Marketing group mailings for such announcements.
And I make less than $40,000. It's getting nasty out in the real world.
I've heard a number of conspiracy theories behind the additional 10% cut:
1) It won't be temporarily 1 month. I happen to believe this one. 1 month seems awfully arbitrary to me. I think it's probably to soften the blow of "until further notice."
2) EDS/HP still have 10,000-14,000 more layoffs to go to reach that magic 24,000 layoff target from when the companies merged. By decreasing salary for 1 month, then hitting the other 14,000 people with 60-day notices in April it allows them to reduce their severence packages. (This also seems like a realistic reason behind the salary cut.)
As an employee I am thankful for my job; but I can't help but think I'm just sittin' in a broken-down car on railroad tracks staring at a freight train headed straight for me. First, my raise was taken away. Then my pay was cut. Then it was cut again. Well...it was a good ride while it lasted....
I can also buy in to cost reductions.
Having said that, this business I conn't really understand this business decision.
The first cut was very broad brush. Like a management decision without having to really think about priorities.
This one, presumably is targetted at EDS US because labor laws will allow it.
There is no doubt that it will lead to short term cost savings.
But it almost seems punitive.
Is management sending the message that they want EDS US employees to quit?
That just doesn't make sense. EDS is a services company.
Revenues are directly related to the number of employees.
EDS will not have the resources to deliver Business that is being won this quarter.
One could argue that EDS will simply ramp up with cheaper resources.
I am sure that can work for some services like call centers, but it just hasn't worked out very well for high value/high margin services like ap dev. Similarly, alot of EDS work is Govt and Offshore is not viable.
So, next quarter EDS may either be in breach of contract, have hostile customers or be in a situation where they have hired sub-contractors at even higher rates.
All of this leads me to the question. "So why did HP acquire EDS". $14 Bil is a significant amount.
The stated reason was to expand services revenue.
This has happened by default and really proped HP's number last quarter.
But now by targetting EDS employees with this targetted punitive salary cut.
They are setting the stage where EDS top services folks will be walking.
The customer realitionships will go along with them, as will the ability to win hi-margin work.
I am sure somebody has a vision for where they want this $14B investment to go.
But it is way less than obvious to me.
Actions to date suggest that HP may chase any of the value it acquired through EDS aquisition out the door during the first year and end up with nothing but low cost, low value, low moral employees. Which sounds more like a liability than a compelling services story to me.
To EDS Business Unit Employees in the United States and Puerto Rico:
Since becoming part of HP last year, we have accomplished a great deal and should be proud of what we have delivered together. Our service excellence remains high, and we have closed a number of significant deals. Our execution during the transition phase has been outstanding. As we move from the integration phase into the transformation phase, we know from experience with our own client projects this will be the most difficult part of our journey.
Our goal is to transform the business into a future state, which will grow faster than the market and enable us to take share from our competitors. We will then be able to deliver above-industry benchmark returns to our shareholders and price deals that win more business while providing flexibility to invest in innovation, delivering greater value to our clients.
The gap between where we are today and accomplishing our goals is widened by the current economic climate. As a result, we need to take temporary actions to get us through this difficult period. Our customers expect EDS to be a financially strong partner and, as employees, we expect a healthy company as well. With this in mind, we announced specific actions on March 9 to reduce our cost structure and enable the business to improve operating profit and grow as we enter fiscal year 2010.
Unfortunately, we need to take additional action. Specifically, we have decided to make a temporary, additional reduction in base salary affecting EDS business unit employees in the United States and Puerto Rico.
Base salaries for all United States and Puerto Rico employees in the EDS business unit will be temporarily reduced beyond those reductions previously announced by HP on February 18, as follows:
An additional, temporary reduction of 10 percent in base salary effective for April 2009
Base salary will not be reduced for employees below an annualized, full-time equivalent income of $40,000 by this additional, temporary action
In May 2009, base salary for United States and Puerto Rico employees in the EDS business unit will be reinstated to the levels of base salary effective on March 16. This includes reductions previously outlined in HP?s February 18 announcement. While we have no plans for an additional base salary reduction, we will continue to closely monitor the performance of our business and make further adjustments as required in the coming months.
We recognize these are tough actions, and you can be assured we made this decision after much thought and assessment. We ask for your support and understanding as we work through these very difficult times. We are confident we will strengthen our position in a consolidating market. We will be one of the industry?s strongest and safest pairs of hands, trusted by our clients to solve their technology challenges.
Sincerely,
The EDS Senior Leadership Team
Dear EDS/HP executive management, WHAT ARE YOU THINKING?! You can't expect anyone to believe that this is for any reason other than to pad your own executive bonuses. Please remove heads from you know where! It's 9-5 now, no more 60-70hr weeks outta me. Going to need a part-time gig after this, thanks.
I don't expect HP to move EDS, what was a viable services organization, to the next level - that requires a management team that is not predominantly composed of printer cartridge salesmen. I do see this as a move to further reduce the workforce without having to go through the expensive and time consuming severance process. A cumulative 15% salary rollback that will likely be permanent based on the "fine print" in the announcement combined with no pension plan and no 401k will drive people out of the company. So much for the management objective of 'retaining and rewarding our talented people'.
I have never seen employee morale so low as it was after Eazor's speech, nor have I seen my coworkers as bitter about our treatment at the hand of HP. I am certain that as soon as more outside employment options open up, a mass desertion of EDSers will ensue. Unfortunately, we're currently trapped in this cycle of abuse from our EDS high-level leadership.
Overall, I felt the entire meeting was disingenious and insulting. No questions that I knew were asked were answered without the old softshoe tap dance.
Specifically, the topic around how those would be impacted outside the US/PR was brought up. He never did tell us how they were contributing to the cost issues - only that they had their own plans in place. It is obvious to me that since the US/PR have no protective labor laws in matters such as this, HP is going to take advantage of this and screw its employees where it can.
Thanks HP, I appreciate you helping your US/PR employees out in this manner. Also, for allowing us to now choose which bill gets paid on time or is deliquient.
From the same sources it is evident that Mark Hurd's 20% paycut cost him roughly $288,000 per year. <gasp> The poor guy! But don't worry, HP's un-lusterous leader will be ok. His next $24 million dollar bonus should reduce the agony of that loss. Or maybe he'll make it $26 million to cover his loss.
We know where Mark's bonus money came from; Employee benefits, training, travel, and pay. But here's what I want to know; when the employees have been bled dry and the outsource services business collapses, will he be drinking prune juice on his yacht and laughing at the board of directors for letting him drain the company of it's most valuable assets and leaving them with nothing but non-performance lawsuits? <'suckers!'>
HEY! What are you doing reading this? Aren't you supposed to be bustin' your bumm so Mark can get another multi-million dollar bonus? Get to work!
- by Grumpyz77 September 24, 2009 1:54 PM PDT
- What you EDS folk's missed was all the prior bloodletting of HP employees just before the acquisition of EDS. This behavior is old news around HP. After the HP board revolt that lead to Fiorina's demise the make up of HP's board still didn't go in the direction that the legacy shareholders wanted. (Hewlett and Packard must be spinning in their graves as there families are weeping at what HP has become.) Following the HP/Compaq merger (where Compaq really bought HP using HP's money. The HP you see today is really Compaq.) there were over 100,000 people laid off world wide. Now the world is a great big place but it doesn't matter how you cut it; 100,000 people is a whole freaking city. Once again, the non-unionized (read the America's) was left with the brunt of the bleeding. Y'all need to get use to it; this IS business in the new century. The days of companies caring a damn about its people are over. Executive bonuses (and the ability to pay them) are now the biggest asset of any corporation. If you think this behavior is unique to HP then you need to get out more. Stop whining and got find your next job and thank GOD for Wal-Mart where someday we will all be competing for the same greeter's position.
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