How many employees can IBM sustain? At Dec. 31, 2013, IBM reported 431,212 employees for the company and wholly-owned subsidiaries. In February 2014, there were projections that 13,000 to 15,000 employees would be released within the year. The estimate for 2015 of 26% further reductions calculates to leave about 300,000 IBMers worldwide. This leads to three questions about the current situation (and potential other cases with similar circumstances).
- 1. How many employees, worldwide, can a company sustainably afford?
- 2. Where should global resources be geographically deployed?
- 3. Can science guide us on sustainable ranges of scale for organizations?
The domain of business is a social science, so corporate decisions lead to paths where alternatives (i.e. the path not taken) can never be tested in reality. Thus, much of the thinking below is speculative.
1. How many employees, worldwide, can a company sustainably afford?
Let’s look at history, published in annual reports. IBM reported 412,113 employees at Dec. 31, 1989. Under John Akers as CEO, the organization was trimmed down to 301,542 employees by the end of 1992. Lou Gerstner joined as CEO in April 1993, and job actions were announced by July.
The employees to be cut, mostly from overseas operations, will be given incentives to leave, but just what the financial package will be has not been determined. The $8.9 billion charge includes funds to pay for 25,000 additional job cuts under an early retirement program announced this year that has drawn 50,000 participants — twice as many as expected — and for 35,000 job cuts over the next 18 months. [….]
Of the $8.9 billion pretax charge for streamlining I.B.M., $2 billion is to pay for the additional 25,000 workers who took advantage of the company’s early-retirement program that began in 1993. Some $4 billion will go to pay for the 35,000 workers who will be trimmed over the next year to 18 months. The remaining $2.9 billion will go to retire surplus factories, equipment and office buildings [Lohr, 1993].
At the end of 1994, IBM reported a population of 219,839 employees. With a successful recovery by March 2002 for the handover from Gerstner to Palmisano, IBM reported that its employee population had grown to 319,876.
How many employees can IBM sustain? At Dec. 31, 2013, IBM reported 431,212 employees for the company and wholly-owned subsidiaries. In February 2014, there were projections that 13,000 to 15,000 employees would be released within the year. The estimate for 2015 of 26% further reductions calculates to leave about 300,000 IBMers worldwide. This leads to three questions about the current situation (and potential other cases with similar circumstances).
- 1. How many employees, worldwide, can a company sustainably afford?
- 2. Where should global resources be geographically deployed?
- 3. Can science guide us on sustainable ranges of scale for organizations?
The domain of business is a social science, so corporate decisions lead to paths where alternatives (i.e. the path not taken) can never be tested in reality. Thus, much of the thinking below is speculative.
1. How many employees, worldwide, can a company sustainably afford?
Let’s look at history, published in annual reports. IBM reported 412,113 employees at Dec. 31, 1989. Under John Akers as CEO, the organization was trimmed down to 301,542 employees by the end of 1992. Lou Gerstner joined as CEO in April 1993, and job actions were announced by July.
The employees to be cut, mostly from overseas operations, will be given incentives to leave, but just what the financial package will be has not been determined. The $8.9 billion charge includes funds to pay for 25,000 additional job cuts under an early retirement program announced this year that has drawn 50,000 participants — twice as many as expected — and for 35,000 job cuts over the next 18 months. [….]
Of the $8.9 billion pretax charge for streamlining I.B.M., $2 billion is to pay for the additional 25,000 workers who took advantage of the company’s early-retirement program that began in 1993. Some $4 billion will go to pay for the 35,000 workers who will be trimmed over the next year to 18 months. The remaining $2.9 billion will go to retire surplus factories, equipment and office buildings [Lohr, 1993].
At the end of 1994, IBM reported a population of 219,839 employees. With a successful recovery by March 2002 for the handover from Gerstner to Palmisano, IBM reported that its employee population had grown to 319,876.