HP didn't actually fire all the employees it threatened to cut

Meg WhitmanBusiness InsiderHP Enterprise CEO Meg Whitman

HP’s plan to shift workers off its payroll and have them work as contract workers for a partner named Ciber isn’t going exactly as planned, multiple sources have told Business Insider.

HP didn’t actually follow through with its threat to fire all of the employees if they refused the new job offer. A few of the employees who refused the new offer are now being asked to stay on at HP as if no layoff ultimatum ever happened.

To recap: HP told several hundred employees in its Enterprise Services division, HP’s consulting unit, that HP had lined up a new job for them.

They would by hired by HP’s partner, Ciber, and continue working with HP customers as contract laborers.

On the one hand, a job offer is better than a pink slip. On the other hand, the new job wasn’t all that great, employees complained to us. The new job came with a severe pay cut, often 30% -50%, employees told us. Plus, they would become new employees at Ciber, losing their seniority, with severely reduced vacation days and a loss of other benefits.

Employees were also told it was a take-it-or-leave it deal. They couldn’t negotiate and if they refused Ciber’s offer, they would be let go without layoff severance.

HP is the process of laying off over 80,000 people. It has shed over 51,000 already and the layoff package for most of them has been 1 week of pay for every year of service. But those who refused the Ciber deal were told they’d get two weeks severance whether they had worked for the company for two years or twenty years, and be sent on their way.

HP employees stage a revolt

Some HP employees ignored HP’s “non-negotiable” rule and complained to management. Some made cases for why this was bad for HP’s customers. Some talked to Business Insider, too.

HP apparently listened and renegotiated the deal with Ciber to make sure salaries were on par with the current salaries at HP.

But even with that change employees would still have to give up their seniority and other benefits, one person involved told us.

So, some HP employees still refused the Ciber offer. Most of these people were fired as promised, HP told us.

But in a handful of cases, we were told, HP changed its mind and decided the employee was valuable enough to keep on staff.

This is the second layoff ultimatum we’ve heard about at HP since August. The first one dealt with workers who were asked to take jobs at contract agency Adecco. Same deal: they would become contract workers for HP with fewer benefits, loss of seniority, and many were offered lower pay.

That group didn’t seem to stage as much a revolt, and one person told us that HP never changed the conditions and never upped any of their salaries.

30,000 more employees to cut

After HP splits into two companies on November 1, this business unit will face another huge round of layoffs. HP Enterprise will shed 25,000 to 30,000 more people, most of them from the Enterprise Services division, CEO Meg Whitman confirmed last week.

HP Enterprise, Hewlett PackardHPHP Enterprise Discover event

On top of that, HP is also shipping most of the jobs in this business unit offshore. Whitman wants 60% of the Enterprise Services division jobs to be in low-cost areas of the world, compared to less than 40% today.

Employees in this unit fully expect HP to line up more take-it-or-leave it contract jobs, they tell us. So we’ll see how HP handles the next one, if it really does materialise.

Rumours inside the company are that Whitman is looking to sell the ES division altogether, although Whitman has been telling Wall Street that ES is “essential” to the future of the new company.

In the meantime, HP has real business reasons to reduce costs in this unit and improve profitability. Revenues have been shrinking in the unit for years, and profit margins have been all over the map.

Whitman has told investors she is stabilizing the unit and promised to bring margins up to 7% to 9%. She’s doing that through restructuring the “labour pyramid,” she says — i.e., hiring less-expensive workers.

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