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. Last Updated: 07/27/2016

Hewlett-Packard Plans to Slash 14,500 Jobs

SAN JOSE, California -- Hewlett-Packard's plan to cut 14,500 jobs and overhaul its retirement benefits not only chisels away at its high corporate costs, but also its reputation as one of Silicon Valley's most employee-friendly firms.

The computer and printer maker once known for treating employees like family said Tuesday it would save $1.9 billion a year as it trimmed its global work force of 151,000 by 10 percent over the next 18 months, a necessary step to stay competitive with efficient rivals, executives said.

The company reasoned that it was expensive to keep workers employed at unnecessary or redundant tasks and offer generous retirement benefits when competitors do not. But that puts the company in conflict with at least part of the corporate culture known as the "HP Way."

"An HP identity crisis? Kind of," said Frank Gillett, an analyst at Forrester Research. "They need to rebuild who they are and what they stand for. Part of that has got to be what their compact with the employee is."

But other analysts -- and HP executives -- point out that a company with lofty goals and philosophies benefits no one if it is not making money.

"We know that only by having a competitive cost structure can we compete aggressively in the marketplace, thereby growing the company for our employees, customers and shareholders," said CEO Mark Hurd, who has been on the job four months.

HP did not specify where jobs would be lost. But executives said support jobs would be most affected -- in information technology, human resources and finance -- as they weeded out inefficiency.

Hurd was hired away from NCR with a mandate to perform painful surgery that HP's board had sought but failed to obtain from Carly Fiorina. The board fired Fiorina as CEO in February.

Tuesday's was just the latest move by HP to become more competitive in an industry dominated by lower-cost rivals. Critics contend that such moves have obliterated the workplace philosophy of William Hewlett and David Packard -- the college friends who founded HP in 1939.

But HP executives point out that the "HP Way" also includes achieving profits, market leadership and growth as well as the commitment to employees.

Though the cost cutting runs counter to some parts of HP's culture, it is reinvigorating others, said Cindy Shaw, a Moors & Cabot analyst.

"One of the things that's been lost and underappreciated is that Hewlett and Packard themselves very much held people accountable," she said. "Over the last decade or two, the accountability thing was falling out of the company culture."