Cathie Lesjak, the CFO of HP, said “You want to make sure that you are investing in the most efficient way that you can”. Despite being a multinational information technology corporation making $115 billion in revenue in 2009, Hewlett Packard has announced a cut in investment towards research and development (R&D). As shown in the diagram below, it shows that investment into R&D as a percentage of revenue has dropped from approximately just over 7% to just below 4%.
What are the effects of this? Well, the expectancy theory suggested by Victor Vroom is a common example in this case. He states that employees will perform according to the outcome. If employees think they may get a job cut, expectancy theory justifies that this will decrease the employee’s motivation.
Though promoting a positive working environment to build teamwork skills, it is more important to resolve conflicts. Because of the limited amount of capital, differences in ideas may well lead to dysfunctional conflict that will hinder the group’s performance.
So what could HP?
Money is not an important motivator; HP can use other ways; one of which is by creating an effective benefits plan. Through benefits plan, each employee is able to select the right benefit package that suits them just the way they want it. An intrinsic rewards system can be awarded occasionally (monthly) as expectancy theory tells us performance and rewards are closely linked by motivation. A way conflicts could be tackled with is through problem solving. This is when both party come to a resolution that both party is happy for. It is not advisable to attack this issue by forcing or yielding.
As Cathie said, it is about quality not quantity. The less money they have to spend forces them to use the capital more wisely. They enforced the idea that they would “refocus” investment in R&D to ensure it will maximize long-term impact on the company.