IBM Cuts 600 Workers; Corporate Citizenship Questioned

March 7, 2011 Dan Burger

The relationship between IBM and its employees returned to below freezing temperatures last week as Big Blue handed out pink slips to more than 600 workers, according to the Alliance@IBM, a union group that represents many IBM employees but is not recognized by IBM when it comes to negotiations.

This latest round of terminations are spread among IBM facilities in Rochester, Minnesota; Research Triangle Park and Raleigh, North Carolina; Poughkeepsie and East Fishkill, New York; Lexington, Kentucky; and San Ramon, California. IBM does not provide information that ties the number of employees terminated with specific locations.

Company policy at IBM prohibits any and all official discussions of firings, layoffs, and reallocation of human resources, so no confirmation or denial of the number of terminations or their locations has been uttered by an IBM spokesperson or communicated via press release. In the past, IBM sources have indicated its global business model calls for job balancing, which typically involves a loss of jobs in the United States, while new hires are made in emerging markets such as India and China. According to IBM, the company provides opportunities for employees who face termination to transfer to other U.S.-based facilities.

“IBM plays a game with people,” claims Lee Conrad, national coordinator at Alliance@IBM. They say employees have 30 days to find another job within the company. Very few people–maybe 10 percent–find another job. IBM’s goal is to get people out of the company. Once somebody is marked as a ‘resource action person’ they can’t find another job. The doors are closed.”

In its report on the job losses, the Poughkeepsie Journal noted the total number of jobs being eliminated was 612. Reporter Craig Wolf said the job count was established by viewing federally mandated documents IBM presented to the employees who were let go. His article stated most of the lost jobs were in the United States, but some Canadian jobs were eliminated as well.

Since the Journal article was published on March 1, the number of IBM job reductions has risen to approximately 650, according to Conrad. He gets the number from the Resource Action Package that terminated IBM employees receive, which lists the ages, titles, and number of people terminated. The cuts began February 28 in the Global Business Services division. Specific departments within that division are listed on the Alliance@IBM Web site.

The Alliance@IBM has “a few hundred” dues-paying members, but about 4,500 supporters according to Conrad. IBM has about 400,000 employees worldwide, with somewhere around 100,000 in the United States. Workers in Germany are covered by very strong unions, and other European countries similarly are covered by relatively strong unions. So the process of firing employees is more involved and can be more expensive, too.

IBM’s recent history of firing workers while this country is struggling through the worst job crisis in many generations (see Related Stories at the conclusion of this article) has drawn fire from workers who believe the cuts are unfair and often based on age discrimination rather than merit. And communities with long-term IBM relationships are angry as well as the ripple effects of job losses strain municipal services as well as other businesses in the communities.

On its corporate citizenship page, IBM says its primary focus of its activities is on developing initiatives “to address specific societal issues, such as the environment, community economic development, education, health, literacy, language and culture. We employ IBM’s most valuable resources, our technology and talent, in order to create innovative programs in these areas to assist communities around the world.”

At a time when unemployment is a huge issue in this country, some voices are saying a little more community economic development on U.S. soil would be the correct form of corporate citizenship.

To that point, IBM has its new global services delivery facility in Dubuque, Iowa, as a red, white, and blue example of corporate responsibility. Two years ago, Dubuque’s courtship of IBM sparked a cooperative project that has resulted in 900 new jobs and the promise that more will be added. In its discussions with city officials, IBM originally said this facility would employ 1,400 by the end of 2010. The state of Iowa and the city of Dubuque gave IBM a $52 million incentive package to put the wheels of IBM corporate citizenship in motion. For more details on this, see the recent article in the Dubuque Telegraph Herald that chronicles the accomplishments to date and the future plans for IBM in that town.

There is also a new global services delivery center in Columbia, Missouri. Wages paid at Dubuque and Columbia are about $20,000 less per year than what is paid at a comparable facility in Fishkill.

Those on the short end of IBM’s human resources stick have several things they’d like to point out.

One is that employees losing jobs are predominantly workers over the age of 50 with much higher salaries and benefit packages that are much richer than those being offered to the younger hires. If this is strictly a cost-cutting measure, those out-of-luck employees say discounting the contributions of long-time workers and disrupting the economic well-being of communities is an odd way to demonstrate corporate citizenship or loyalty to an employee who provided a valuable service to the corporation and did a job that was expected of him or her for many years.

IBM’s point of view, as related by employees who have lost jobs, is that these decisions are made because people have skills that are either out of date or no longer in demand as IBM moves toward the future. You can find bulletin board postings from recently unemployed workers at the Alliance@IBM site.

We all know people who haven’t kept their skills current some by their own choice and others because the company did not support their education and training.

Those believing they are being cast off because cheaper labor can be found elsewhere are angry about the lavish bonuses being paid at the executive level. When a company slices mid-level jobs while rewarding managers with unprecedented financial gains, it’s a bitter pill to swallow. Add to that the financial reports for IBM highlighting the company’s billion dollar profits, and you get a deteriorating employer-employee relationship that is noticed as much by those who remain on the payroll as those who have had the rug pulled out from under them.

“What we are finding here,” Conrad believes, “is that IBM is shedding jobs and moving the work offshore. There needs to be a full disclosure of that.”

IBM likes to sell its hardware, software, and services by touting the productivity gains it can provide. Maybe it should take a closer look at how its human resources policies can have a significant effect in undermining productivity in the workplace.