It’s a cloudy day in Birmingham, Alabama, and Meg Whitman, CEO of Hewlett Packard Enterprise, has invited a handful of her top regional sales general managers to have dinner.
Some of her big corporate sales captains were there, too, including Dan Belanger, vice president of the East Coast region, and Jeff DiLullo, vice president of sales strategy and operations.
During the meeting, she has uncharacteristically put away her phone and set aside her PC.
She’s glued to the conversation, not checking emails and texts – a rare thing for her. (Whitman says she even wakes up in the middle of the night to check her email.)
The regional sales managers are lambasting her.
Thousands of members of the salesforce have not been properly paid since Hewlett Packard split itself apart the previous November, they tell her. That’s six months of wacky pay. It’s gotten so bad that some salespeople couldn’t make their mortgages and were facing foreclosure. Others were behind in their alimony payments.
HPE even wrongly told one salesperson that he owed the company over $130,000 after the first quarter from taking a “draw,” one person told us. A draw is when salespeople take an advance against their future commissions, but they risk having to pay the company back if they don’t hit their sales goals. The amount of money a salesperson can take as a draw is limited. There’s no way he could have racked up $130,000 in debt a few months into the year, even if he had sold absolutely nothing, this person said.
Multiple people told us that HP had miscalculated $40,000 to $50,000 of many salespeople’s pay simply because the software it used for tracking their compensation worked so poorly.
‘The frozen middle’
Whitman first got wind of problems with the software that helps salespeople track their pay in March, a program called myComp. So she assembled this team to meet with her to sort it out.
She was shocked to discover the level of dysfunction with myComp and how long it’s been going on, several people said.
- YouTube/Inside the Magic
She sees it as another example of HP’s stymied culture, what Whitman internally describes as the “frozen middle” – the 20,000 to 30,000 people inside the company who are stuck in the past and resist change.
“She’s trying to thaw these people out and get them moving again,” one former HP employee said.
In truth, the wacky compensation tracking was a problem for HP for years, long before the split, these sales managers told Whitman at the meeting.
But splitting HP into two companies with two separate IT systems, and the acquisition of Aruba, a wireless networking company HP bought for $2.7 billion a year earlier, caused the situation with myComp to get really, really bad, they say.
As one person close to the company says, the way the myComp software was set up was “overly complicated,” where sales data could be put in one day and withdrawn the next.
As one HP salesperson described it to Business Insider, “Some days I’m at 95%. Some days I’m at 34%. This is not just me – this is every person I know. Not just my team, but within the whole entire sales [team], anyone who sells hardware at HP.”
By some estimates, 4,000 salespeople were affected by the faulty myComp compensation tracking, one person close to the company told us.
Still ‘a nightmare’
After that dinner meeting, Whitman sprang into action immediately. She had an apology email sent to the team from various sales execs, including Antonio Neri, an executive vice president reporting to Whitman, one person said.
Executives told salespeople that Whitman was aware of the problem and it was “top of mind” for her. They said that she brought all the people responsible for compensation and the myComp program together, told them to fix it, and said she would review the situation quarterly.
She also told them to pay the salespeople what the company owed them.
In June, salespeople got their “true up” checks, which were supposed to include all the money HPE owed them.
- Flickr/Ingrid Richter
And those payments were often wrong, multiple people said.
Some folks were underpaid, others were overpaid and left with the fear that HPE would demand the money back. A source close to the company said that seniority had nothing to do with it; senior salespeople were in the same boat as everyone else.
“I know guys who run big accounts threatening to leave. Then, after eight months, they ‘true up’ everyone, and it’s wrong. It’s like, come on. It’s like a full-time job tracking this,” one HPE salesperson said.
Another said: “Meg found about the problem circa mid-March. She was well aware of it by mid-April. She pulls out all the stops – tells people in operations, finance, all the stakeholders, to make it right. Then they ‘trued up,’ and it’s still a nightmare.”
One reason the system was so broken is that HPE sells some products to smaller customers through third-party partners known as value added resellers, or VARs. These VARs order products through distributors, not directly from HPE, and HPE salespeople are supposed to be compensated for those sales as well. But the company doesn’t have a precise way of tracking which salesperson should be credited for which sale.
One sales manager described it like this: “The problem is there are no real numbers to deal with. Not a daily bookings report. Not even a weekly [point of sale] report coming out of distributors.”
In a statement to Business Insider, HPE acknowledged that the company had a problem paying people their earned commissions after the split, leaving them on the “draw” system for months longer than is typical.
But it says that it has fixed the situation for the vast majority of the people who were affected:
“It is common for sales employees, at Hewlett Packard Enterprise and other companies, to be paid on a draw before they start receiving their actual incentive compensation. While our recent separation into two companies contributed to temporary delays in the transition from draw to incentive-based pay for a subset of our Americas-based sales representatives, we have worked to simplify the process and at this time the issue is resolved for almost all of our sales representatives.”
A salesperson appears to go off the rails
The whole situation got some ugly exposure last month after a top salesperson apparently sent an email to Belanger, the East Coast sales boss, and copied Whitman and a bunch of people outside of HPE who work at the distributors.
The email used some salty language to describe HPE’s execs and complained how they can’t pay their salespeople.
That email “went all over the industry,” one person said.
Others say the email was spoofed, meaning it didn’t really come from the person it said it was from. Still, it served its purpose by exposing some of HPE’s internal struggles.
On top of that, Whitman is in the process of splitting HPE again: the huge Enterprise Services unit will be part of a new company formed with onetime rival CSC. And the pressure is on not to have that situation aggravate this one.
As for those who have been waiting eight months be paid correctly, one salesperson said:
“This is a serious issue in the organization. They are pushing us hard to make our third-quarter numbers, and we’re saying: ‘We’re busting our asses for you, and you can’t make this right for us?’ I like HP. I want to stay here because I believe in the products. But I can’t stay here if I’m not getting paid properly.”