In recent years Hewlett-Packard has gone back and forth about whether it should retain or drop its computer division. In 2002 Carly Fiorina led the acquisition of (merger with) Compaq, a rival computer company. Some felt that this bold move diverged from a long-standing strategy based on innovation. Selling computers is viewed as almost a commodity business-to succeed in this market requires a low cost strategy. Historically, HP has been a company known for innovation as a primary strategy. Its mea-surement and computer peripherals businesses (e.g., printers) were successful largely because of first-to-market benefits driven by an innovative culture. Clearly the acquisition of Compaq caused some challenges for HP's Human Resources group.

Almost from the start the board questioned the Compaq acquisition. Eventually Ms. Fiorina was asked to leave. In the aftermath of the CEO change, the battles have continued over keeping Compaq versus divesting. Using what you learned in Chapter 9 about the linkage between strategy and HR policy/practices, suggest the difficulties that HR faced after the Compaq acquisition. Recent news about HP indicates they will keep the computer business. Suggest things you might do as a benefits manager at HP that would both balance low cost mandates and in-novation aspirations. How might you structure communications, cost saving/controls, and new design issues to both save on benefit costs and reinforce innovation? Each suggestion should be mindful of both constraints. When you are done, indicate the challenges of being both a low-cost provider and innovator under the same corporate roof.