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HP sued by own sales reps

The omega of commissionware

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IT vendors are often not much better than their customers when it comes to doing information technology, and sometimes, they are worse. This appears to be the case with a sales force commission tracking system called Omega used by Hewlett-Packard, which has screwed up commissions so badly that three former employees of the company have taken HP to court.

The Wall Street Journal last week broke the story about the Omega commission calculation system not paying employees correctly. Omega is a legacy commission system that was created by minicomputer maker Digital Equipment. It was adopted and used by Compaq when the PC and server maker ate DEC in 1998. Like many legacy applications, Omega managed to survive another decade even as HP bought Compaq in 2002, but maybe it is time to get a different system for the people who are selling servers, storage, and systems software at HP, where Omega is used.

The exact nature of the glitch in the Omega commission system has not been divulged, but HP has confirmed that about 2,000 of its 23,000-person salesforce have been affected by the issue, and according to the WSJ report, salespeople in the "business technology group" have not been paid their proper monthly sales commissions this year.

There is no business technology group at HP, but there is the Technology Solutions behemoth, which is comprised of the Enterprise Storage and Servers group and the HP Services group. The Omega application apparently started choking last November and can't keep up with HP's sales volume, and after numerous fixes, it's still not working right.

According to a follow-up story in the WSJ, former HPers Jeffrey Johnson, Jennifer Riese, and Shaun Simmons have banded together and filed suit against HP in the US District Court for the Northern District of California in San Francisco, alleging that as many as 50,000 employees might have been shortchanged on bonuses and commissions because of errors in the Omega system.

HP has issued a statement saying that the lawsuit "exaggerates the scope of the previously acknowledged issue" and that it will be defending itself in court.

That may be the least of HP's problems. A company whose salespeople think they are not being paid correctly is a company that is not selling as well as it needs to in a recession. You can sure bet that Mark Hurd and the other top brass at HP get paid on time and that there are no mistakes in their checks.

Maybe Hurd should tell the HP sales force that he won't take pay until the Omega system is fixed and really fixed. And if HP's financials show any slippage in the current or in future quarters, you can also bet that some lawyer is going to launch a shareholder lawsuit that claims HP didn't fix its commission system and that caused it to report bad numbers that in turn hurt its stock price. ®

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