Unions Criticize IBM’s Earning Per Share Focus

April 28, 2014 Dan Burger

Workforce rebalancing, IBM‘s term for erasing higher paid and higher skilled employees in more economically advanced regions while adding to its workforce with lower skilled and lower paid employees from less economically advanced regions, is a short-term win that leads to a long-term loss. And that loss could be the disappearance of IBM as we know the company today. That’s the warning message being delivered to the IBM board of directors just ahead of the stockholders’ meeting Tuesday, April 29.

The message, which calls for a reorientation of IBM, comes from an amalgamation of employee advocacy groups: the Global Union Alliance @IBM, the UNI Global Union, the IndustriAll Global Union, and the IndustriAll European Trade Union.

The organizations recently elected a global steering group to lead the coordination of IBM union matters in future. The steering group says this is part of a new strategy to fight the continuing job cuts and the “deteriorating working conditions” that now exist. IBM employees in every region of the world fear for their jobs, the unions assert. And what was once a company that built human capital is now a company with a strategy that human capital is a commodity.

From the union perspective, IBM has “mutated into a machine focused solely on profit. Earnings-per-share became the corporation’s most important goal and a lack of appreciation of its own workers now threatens to undermine the corporation from the inside out.”

In a statement circulated by the unions to draw attention to IBM’s former emphasis on employee contributions to the success of the company, it notes a comment by former IBM CEO Sam Palmisano made in 2003 that “the greatest invention ever created by IBM is the IBMer.”

Times have changed and not for the better. The IBM work environment has gotten progressively worse is the point being made by the unions, and the policies now in place need to be disengaged. Investments in the workforce have been set aside while job cuts have been prioritized. Money spent on buying back shares of its own stock and paying dividends is money not invested in the workforce, the unions allege. Since 2000, IBM has generated a net income of $153 billion, while over the same period $138 billion was allotted to share purchases and dividends.

It is not right and not sustainable. Take away the promise of a higher reward for job performance and add the threat of job loss results in disincentives for workers. Merit deserves rewards if a skilled workforce is the goal. The union wants a voice in this and the steering committee has an opinion for the board to consider.

Among the requirements for corporate rehabilitation are particulars such as:

A company strategy focused not solely on earnings per share, but also on the appreciation of IBMers’ contribution to the cause.
Improved working conditions, fair evaluation systems, and appropriate participation of all IBMers in the success of the corporation by salary increases and other benefits for its employees.
Meaningful investments instead of focusing on the earnings per share.
Worldwide recognition of trade unions as partners in social dialogue and partners for collective agreements.

Reversing the corporate strategy of creating profits at the expense of employees is very much the underdog in this battle. The unions are actually very limited in what they can do. Raising the level of awareness of economic factors such as downsizing workforces, moving employees from full-time to part-time, adding more contracts for work that used to be done in-house and on-premise, and trading a skilled workforce for a less expensive workforce is their most positive outcome in the current economic environment.