Signs that IBM may be preparing for a round of job cuts
- 28 January, 2015 23:24
IBM tries to keep its layoffs out of the public eye as much as possible, although it fails miserably at this. The company took the unusual step of denying that it was on the cusp of a gigantic layoff amid reports of a possible new round of job cuts that may begin this week.
The Alliance at IBM, a Communications Workers of America local, is expecting another round of layoffs, and late Tuesday said some employees have received "urgent requests" to meet with managers Wednesday. The alliance, which is informed by its IBM employee members, has a solid track record of signaling what's coming.
Adding to the layoff concerns are reports the alliance received from employees that evaluation scores for some are being lowered. The evaluation process is "used more as a hammer to force people out of the company," said Lee Conrad, the national coordinator for the alliance. This year's evaluation process "seems to have a little more urgency to it," he said.
Other than to slap away what it sees as erroneous reports about possible job actions, IBM won't comment on whether there will be layoffs this week or any other. It doesn't talk about its workforce actions. When it does have layoffs, it will point to new jobs added and thousands of open job postings to explain that when it makes cuts it is a "rebalancing." But with IBM, there's a lot more going on.
A philosophy set forth by former IBM CEO Samuel Palmisano, called the "globally integrated enterprise," led IBM to disburse operations, creating delivery centers worldwide to meet the new types of challengers posed by foreign competitors, as well as to satisfy the needs of emerging markets.
Palmisano argued that the multinational corporate model of "networks of national hubs" is inefficient and stymies innovation, while a globally integrated model will bring "enormous economic benefits to both developed and developing nations."
The shift to global integration was also a social necessity, and without it "discontent with globalization will only grow." In the worse outcome, people will gravitate "toward more extreme forms of nationalism, xenophobia and antimodernism," Palmisano said.
Palmisano outlined these views in a 2006 article he wrote for Foreign Affairs, the same year that IBM employed about 124,500 in the U.S. out of a worldwide workforce of 355,800.
In 2010, IBM stopped breaking out its U.S. headcount and said it would only provide a global number. The last official number from IBM for a U.S. headcount came just before this change, when the company put its U.S. workforce at 105,000.
The alliance now estimates IBM's U.S. headcount is in the 80,000 range, but that's unconfirmed. By 2012, IBM's headcount in India exceeded its U.S. headcount, something of a symbolic shift. But IBM India's operation has been affected by cutbacks as well, according to reports in the Indian press.
IBM, at the end of 2013, had just over 431,000 employees globally, a 21% increase since 2006, but that figure doesn't reflect the recent sale of the x86 server business to Lenovo.
There was speculation about a major layoff was triggered by Robert Cringely, who in a column for Forbes, said IBM was getting ready to cut 26% of its workforce or about 112,000. This unverified report was carried by enough news media services to prompt IBM to confront it.
In a widely distributed rebuttal, IBM wrote, in part: "If anyone had checked information readily available from our public earnings statements, or had simply asked us, they would know that IBM has already announced the company has just taken a $600 million charge for workforce rebalancing. This equates to several thousand people, a mere fraction of what's been reported."
IBM's somewhat steady trimming of its U.S. workforce is something the company can manage because of the sheer size of its U.S. workforce, said David Lewis, who heads OperationsInc, a Norwalk, Conn.-based human resources consulting firm. In a company of this size, employees believe that a layoff won't happen to them.
"To be blunt, they are probably very good at it," Lewis said of IBM's layoff process, and the company knows what to tell the surviving employees. "You never make the cardinal sin of telling everybody that this will never happen again," he said.