In the summer of 1970, the electronics industry was sliding into recession, and Hewlett-Packard was making more than it could sell. Orders were running roughly 10 percent below what the company's plants could produce. Inventory had climbed by about $23 million in a single year, an increase of about one third. Every company in the industry faced the same arithmetic, and most of them reached for the same answer.
HP had been founded in 1939 by two Stanford friends, Bill Hewlett and Dave Packard, who started in Packard's garage in Palo Alto with $538. By 1970 it was a major manufacturer of electronic instruments, and it was being run largely by Hewlett, because Packard had left in January 1969 to serve as Deputy Secretary of Defense in Washington. The decision about how to absorb the slump fell to Hewlett. The standard playbook was obvious. Cut ten percent of output, cut ten percent of the people, and wait for orders to come back.
Hewlett named that option plainly and then set it aside. "The traditional way would simply be to lay off ten percent of the people," he told employees. He said he did not think that would be fair. HP thought of itself as a team, and on a team you do not send a tenth of the players home so the rest can stay comfortable. If the company needed ten percent less work, he reasoned, the fair thing was for everyone to do ten percent less and be paid ten percent less.
Starting in July 1970, most HP employees in the United States worked nine days out of every two weeks, taking every other Friday off without pay. It became known as the nine-day fortnight. The reduction applied to plant workers and engineers, secretaries and supervisors, managers and company officers. A few divisions with heavy backlogs kept their normal schedules, because cutting their hours would have made no sense. Everyone else shared the same cut on the same terms.
Hewlett framed it carefully. He did not want the burden to land hardest on the people with the smallest paychecks, the ones a layoff usually hits first. Spreading the reduction across every pay level meant the people at the top felt it too. It was a temporary measure tied to a specific problem, and the company said so. The schedule ran for several months, and as orders recovered, HP returned to full-time work.
The program fit a way of running the company that people inside HP called the HP Way. Hewlett and Packard believed that ordinary employees, treated with trust and respect, would do extraordinary work. Managers practiced what Packard described as management by wandering around, getting out of their offices to talk informally with the people doing the work. HP kept an open-door policy, so employees could take a concern up the line without fear. Executives, including Hewlett and Packard, worked in open offices rather than behind closed doors, and the company shared profits broadly with its workforce.
The nine-day fortnight showed what that trust was worth in a crisis. HP came through the 1970 recession without the layoffs that swept the industry. It kept the skilled engineers and technicians it would need when demand returned, and it did not have to hire and train replacements. Above all, it proved to its own people that the company's values were not just for good times. Employees who had shared the sacrifice had every reason to believe the company would stand by them again.
The story has a sobering second act. Over the following decades, HP grew enormous, and the HP Way came under strain. In the early 1990s the company used voluntary early retirement and severance programs to trim thousands of jobs. After its 2002 merger with Compaq, HP cut tens of thousands of positions, and many longtime employees felt that the culture Hewlett and Packard had built was gone. A value is only as strong as the leaders who are willing to pay for it.
Most managers will never face a decision as large as Hewlett's. But almost every team eventually hits a hard stretch: a budget cut, a lost customer, a slow season. In those moments, people watch one thing above everything else. They watch who pays. If the pain falls only on the people with the least power, they learn exactly how much the talk about teamwork was worth.
So when hard times come to your team, start by asking whether the burden can be shared rather than dumped. Can overtime, hours, or extra assignments be spread more evenly? Can you take on some of the unpleasant work yourself? Tell your people the truth about the problem, the way Hewlett told his: what is happening, how big it is, and what you are going to do. Then make sure your own sacrifice is visible before you ask for theirs.
In good times, build the trust you will need later. Walk around. Keep your door open in fact, not just in policy. Learn what your people are dealing with before they have to come and tell you. Trust is not created during a crisis. It is spent during one, and you can only spend what you have saved.
In 1970, HP had a ten percent problem and a choice about who would carry it. Bill Hewlett decided everyone would, starting with the people at the top. That decision bought the company something no layoff could have bought: proof that it meant what it said. Give your people that kind of proof, and you will not need to demand their commitment. They will offer it.