One of the notable innovations of technology giant IBM may be the creative language it’s come up with to describe what happens when people are told they’ve just lost their jobs.
It’s called a “resource action.”
It can be a verb, too, like hearing at the coffee pot that five IBM technical writers were just “resource actioned,” or even “RA’ed.”
Unfortunately for IBMers, one of the things the company is best known for now is all the resource actioning it’s been doing.
As of earlier this month, IBM had just over 75,000 employees, or “resources,” in the United States. That’s down from 134,000 only 10 years ago and well over 200,000 in the 1980s. This figure is according to Alliance@IBM, an affiliate of the Communications Workers of America. The company itself long ago discontinued its practice of disclosing its U.S. staff count.
Not long ago, IBMers feared another major round of job cuts, as news of “Project Chrome” leaked into the business media. In January, the well-known technology writer Robert X. Cringely confidently reported that Project Chrome would take out perhaps 120,000 jobs worldwide, or 26 percent of the total workforce. That drew a forceful rebuttal from IBM.
The financial community also thought he was wildly off the mark. Analyst Amit Daryanani of RBC noted that the company had said that restructuring expenses for 2015 should be below 2014. And last year the restructuring costs of about $1.5 billion covered the severance and others costs for cutting only 15,000 jobs. Daryanani guessed 10,000 to 12,000 jobs would get eliminated this year.
That’s what it’s come to at IBM. Cutting the jobs of 12,000 people gets shrugged off as business as usual.
The erosion of the employee base has been devastating to some well-known IBM towns, such as the company’s birthplace, Endicott, N.Y. There the payroll is down to 700 from a peak of 11,000. The story is similar in nearby New York towns, like Poughkeepsie.
What happens with this big company matters here in Minnesota, too. Another of those well-known IBM towns is Rochester.
Why IBM’s presence in Rochester comes to mind now is that IBM CEO Virginia Rometty just stopped there, her first visit since becoming CEO in 2012.
KTTC-TV of Rochester reported that employees gathered in a big town hall meeting, bracing for the worst. Her brief visit — happily — turned out to be mostly about raising spirits. And it certainly seems likely that spirits there could have used some raising.
The current worker count there is 2,677, said Lee Conrad of Alliance@IBM. That’s down from 3,224 in 2012 and about 4,200 at the end of 2008. Conrad added that he’s not sure how many of the current Rochester workers are IBM employees, vs. temporary or contract workers.
Rochester has been an IBM town since 1956, and in the early 1990s, IBM Rochester peaked out at about 8,100 employees in 3.6 million square feet of space. But the Rochester operation’s area of focus has become less central for the company.
“It’s an old hardware facility, and IBM has been getting out of hardware these last few years,” Conrad said. “So Rochester’s been taking some hits.”
In talking with Gary Smith, who has led the Rochester Area Economic Development group since 1989, he sounded hopeful that IBM will remain a powerful regional economic engine.
It’s still producing lots of new patents, Smith said, as product development work there continues. Another good sign is the degree to which local IBM managers have once again become active in civic affairs, with one of them volunteering to help lead an economic development planning effort.
On the other hand, IBM continues to struggle to reinvent itself as primarily a provider of software and services. The company reported in January that in its most recent quarter, revenue fell 12 percent. That marked the 11th quarter in a row of declining revenue.
Asked whether anyone in Rochester should expect stability at recent employment levels, Conrad responded that “nothing is stable at IBM anymore.”
This is quite a fall for a company that was easily one of the most celebrated in the history of American business. Its widely admired CEO, Thomas J. Watson Jr., was invited in 1962 to share a bit of how its success was achieved, in lectures that were later turned into a slim volume called “A Business and Its Beliefs — The Ideas That Helped Build IBM.”
Watson had succeeded his dad as CEO in 1956, and he described just three key IBM beliefs, beginning with what he called the most important, “our respect for the individual.”
He illustrated one of his points by telling the audience a story from early in his dad’s career, when the elder Watson went out on weeks of sales calls and came home completely skunked. He had to tell the boss he had nothing to show for his work.
The boss wasn’t happy, but then he volunteered to go on the road with Watson the next week. At least then if they fail, the boss said, they will have failed together.
That’s the kind of lesson in managerial respect for people that leaves a lasting impression, Watson said.
And as he explained in his lectures, executives who hoped to see their company endure had to be prepared to change just about everything — except the core principles that were important in building the company in the first place. Of course here that means respect for the individual.
IBM’s future from here looks to be challenging, as older businesses decline and new lines of business struggle to take off. IBM certainly can’t guarantee a job when there’s no guarantee of enough business to keep a person busy, in Rochester or anywhere else.
But it’s also not too late for the company to go back to core principles.
A great place to start would be banning the word “resource” from ever being used to talk about the people who come to work there.