How Hewlett-Packard defined the startup work culture

By February 23, 2018Compensation & Benefits
Compensation & Benefits How Hewlett-Packard defined Remove term: startup work culture startup work culture

A few weeks ago, we had the idea to do some research into the history behind some of the perks that seem to define startup work culture. Of course, it’s the Googles and Facebooks of the world that come to mind when we start talking about nap pods and free lunches – but where did these perks actually get their start? Where did the idea for free food really come from? How did beer cart Friday get going?

But as we started doing the research, we discovered something interesting.

As it turns out, a lot of these perks come from one company: Hewlett-Packard.

Even in its earliest days, founders William Hewlett and David Packard were committed to the employee experience and the value of that startup work culture.

“The philosophy, part of a broader cultivation of employee loyalty and respect called the H.P. Way, inspired legions of technology companies, like I.B.M. and Apple, to believe that happier employees were more productive,” wrote the New York Times. Such now-common perks as casual Fridays and employee stock options eventually emerged from this movement.”

Here are a few examples of the now ubiquitous perks (and a few less common ones) that seem to have gotten their start at Hewlett-Packard.

Beer cart Fridays

These post-week drinks might seem like a relatively new invention, but at Hewlett-Packard, they started in the ‘40s – and back then, it was called the Beer Bust.

“The beer bust likely began during the war as a way to let the employees, exhausted after a week of long hours and high quotas, blow off some steam,” explains Michael S. Malone in Bill & Dave: How Hewlett and Packard Built the World’s Greatest Company.

“In a world of rationing, children who needed watching in the evenings, tight budgets, and limited entertainment, a glass of beer and some crackers and cheese at the end of the shift on Friday must have been a welcome benefit.”

Especially as the company continued to grow after the war, the Beer Bust was a way to level hierarchies within the company, Malone says. “There was an unsaid agenda as well, which was to let Bill and Dave and their executive team talk directly to every company employee without the filter of a supervisor or manager.”

Bonuses

Hewlett-Packard did not invent the Christmas bonus. Cash gifts date back to the early 1900s (according to the New York Times, J. P. Morgan & Company gave employees a full year’s salary as a Christmas present in 1902).

How Hewlett-Packard defined Remove term: startup work culture startup work culture

But what is unique about HP is that they started giving out bonuses almost immediately after the company was formed. Hewlett and Packard formalized their partnership in 1939, and started giving out $5 Christmas bonuses the following year.

This eventually led to a profit-sharing program: twice a year, after the second and four quarters, either Hewlett and Packard would get on the company loudspeaker to announce a percentage that each employee’s paycheck would be multiplied.

“Even into the late 1970s, long after Christmas bonuses had been moved to the department level, one of the two founders would still pick up the microphone and announce to tens of thousands of employees in company plants across the planet the bonus percentage – to nods, cheers, and pumped fists,” writes Malone.

Flexible work arrangements

In the early 1970s, Hewlett-Packard became the first company in the United States to offer flextime – and later in 1994 became one of the first companies to encourage telecommuting.

But even before these formal policies were in place, the company was committed to making life easier individual employees.

“I was told about the early publications department, where Mary Hurt worked as a ‘repro-typist.’ Later, she and the other graphics people transferred into my Marketing Group in the Microwave Division. It seems that Mary’s marriage was such that she was raising three or four kids all by herself, and this was causing serious time constraints on her being home to watch the kids and being at HP to do her graphics work,” writes John Minck, a former Hewlett-Packard employee and company historian.

“Bill found out about the situation, and told the managers to make whatever arrangements were necessary, so that Mary could work at home on her special company type-setter typewriter, until such time that the kids were old enough to help in the family’s responsibilities. Mary never forgot that exceptional act of humanity.”

Health insurance

In 1942, Hewlett-Packard established a health insurance plan for all its employees after an employee contracted tuberculosis.

“Bill and Dave stepped in and supported the family financially. Then they took the extraordinary, yet characteristic, step of establishing a catastrophic health insurance plan for HP employees – a commonplace now, but a radical innovation at the time,” writes Malone.

Free coffee and snacks

Coffee breaks were something of an institution at Hewlett-Packard starting in the 1950s.

“Twice a day, the chimes would ring, and everyone would leave their desks, or production people their stools, and drift to the end of the production line, where there were coffee pots and large trays of donuts or on some days, Danish rolls,” writes Minck.

“These breaks were all company furnished, and used to amaze customers, we were touring through the plants, that employees didn’t have to pay for any of it.”

Minck also explains how they hired a business intern one summer to study the cost-effectiveness of paid coffee breaks:

“He factored in the time saved for hundreds of employees, who didn’t have to walk to some central dispensing station, to wait in line for a machine, wasting production time. . . For the office areas, and the engineering stations, he also factored in the communications value of standing around the coffee pot, and seeing people from other departments, like marketing people talking to engineering, and so forth. Managers were there, and the air was very informal. Sure, there were lots of personal experiences covered, ball games, skiing, boating, vacations, etc., but there was lots of business transacted as well. We were quite impressed that this formal study actually put numbers on the cost to HP for the outlay of food and 10 minutes of employee time. Not surprisingly, the study showed the costs to have a very high payoff factor.”

Free vacation land

This is one of the more unique perks you might not see at any companies today: Little Basin, a parcel of land an hour away from Palo Alto that Hewlett and Packard bought in 1955. They cleared the land (“With Packard helping run the tractor and Hewlett helping on the saw,” writes Malone) to create a recreation area that could hold about 2,000 people at one time for company picnics. The surrounding redwood forest was left untouched, and made available to HP employees and their families to use for camping.

“It is hard to fully measure the impact of Little Basin on the collective morale and memories of generations of HPers,” writes Malone.

“For many families, Little Basin was a beloved place to camp on weekends – and very often the most vivid memory many children had of their parents’ work life. It was part of the added value – like the stock options and the annual bonus – that made working at Hewlett-Packard different from anyplace else – and yet another reason to stay with the company even in the face of better offers elsewhere.”

(Images via hp.com and hpmemoryproject.org)

See also:
How GE replaced a 40-year-old performance review system
Management lessons from NASA’s James Webb
A brief history of the tie

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