1. Introduction IBM is one of the most successful technology and consulting companies in the world. In 2012, its brand name is in second place in international brand equity rankings, just behind Coca Cola. With its 433,362 employees it is operating in 170 countries and able to generate profit of $15. 85 billion per year. The company itself has been founded in 1911 trough a merger of three technology companies. In 1924, the company’s name was changed to International Business Machines, abbreviated to IBM.
Initially, the company was engaged in tabulating equipment and data management and later on was able built a strong market position in the computer and semiconductor production. The IBM PC, introduced in 1981, was one of the company’s major successes. In the 1990s, however, the enterprise experienced stagnating earnings from its operations and therefore developed a transformation strategy. From 2000 onwards, IBM changed its business model towards technology services and consulting. This shift has enabled IBM to achieve a rise of EPS from $3. 32 to $13. 44 in 2011.
Simultaneously to this strategic shift, IBM has also changed its international structure and moved from a multinational to an integrated enterprise, thereby saving $6 billion. This paper will analyze the HRM implications of this strategic shift. For this purpose, it will first elaborate on the business model and the strategic focus of the company. Second, it will consider the strategic HRM focus and the general blueprint that IBM has developed for its workforce. Third, it will outline a variety of HRM practices in the fields of knowledge management, compensation and HRM effectiveness. . IBM Business Model 2. 1 Customer Value Proposition At the core of its business stands IBM’s desire to help clients to become more innovative, efficient and competitive through the application of business insights and IT solutions (10 K-filing 2011). The company’s regular clientele mainly consists of institutions, both in the commercial as well as in the governmental and educational sector. IBM offers hardware, software and service integrated solutions (KM Worlds, 2011) that support the client to deepen the knowledge about his business through the smart use of information technology.
This knowledge enhancement creates value by reducing the operational costs and presenting further revenue opportunities for the client on the one hand, and ensuring superior financial results to IBM’s shareholders on the other hand. 2. 2 Key Resources In general, IBM’s key resources consist of intangible assets rather than tangible products, processes or manufacturing capabilities. Its human capital pool and research and development capabilities can be considered as the by far most important of these intangible assets.
Concerning the human capital pool, IBM employs 433,362 high-skilled people, thereby being the world’s second largest employer, behind Wal-Mart Stores (2,200,000) and even before McDonald’s (420,000) and Hewlett-Packard (349,000) (Fortune, 2011). IBM’s workforce has steadily increased in recent years with growth rates of 6,8% in 2010 and 1,5% in 2011 and the firm invests heavily in the development and compensation of its workforce. Since 2002, it has paid over $100 billion in non-salary benefits to its employees.
However, in the following years, crowd sourcing could lead to IBM drastically downsizing its workforce and utilizing subcontractors for the work currently performed within IBM. Its permanent workforce could shrink by more than 75% of its current state as a result of the HR transformation process. IBM’s second major assets are its R capabilities. Alone since the year 2000, IBM has invested $70 billion into research and development and has created 10 global research labs. These major investments paid off in 47,000 patents that IBM could generate within the last 10 years.
Roughly 70% of these patents were issued for IBM’s software and service. For the major pillars of its current 2015 strategy, Business Analytics and Cloud, IBM employs 400 and 1000 researchers respectively. The IBM computer Watson, a learning system generating answers in normal language, is one of the major breakthroughs of IBM’s R investments. Further, research and development was conducted in the field of nanotechnology, systems, analytics as well as the cloud. In general, R investments are concentrated around high-value, high-growth opportunities in order to sustain IBM’s technology leadership position.
Not only enable the R&D invests IBM to accumulate a great amount of knowledge about state-of-the-art technology and define new technology; due to its history, it also holds huge knowledge about storage capacities, computing power and semiconductors, as IBM’s business was formerly centered on computer production. Furthermore, since its foundation in 1911, IBM has created unique relationships with its clients and knowledge of the markets and has therefore gained strength in the field of Sales and Distribution.
This strength exhibits all characteristics that a resource needs to provide a sustainable competitive advantage: They are valuable, rare and costly to imitate due to high path dependency. IBM operates in 170 countries with the G7 countries and a number of developed countries as its major markets. IBM’s brand name is also a major asset of the company. In current reports, IBM ranks second just behind Coca Cola and possesses aggregated brand equity of $69. 905 billion in 2011. This strong brand equity contributes to the relationship and the trust clients have towards IBM. . 3 Key Processes IBM utilizes the above-mentioned assets to operate in five segments, namely the Global Technology Services (GTS), Global Business Services (GBS), Software, Systems and Technology (ST) and Global Financing (GF). The GTS division deals with providing IT infrastructure services along four major dimensions, namely strategic outsourcing services, Global Process Services, Integrated Technology Services and Maintenance. These services range from consulting on IT projects to the development of a complete IT infrastructure for a company.
Within the GBS division, IBM employs the IBM software in order to consult its clients in strategy, process and technology questions. It entails a broad range of services, from Strategy & Change over Supply Chain Management, Customer Relationship Management to IT-services. By offering such a huge product portfolio, IBM is able to cover the complete value chain of its clients and provide all-integrated services for them. Whereas the former division deals with the applicability of the software, the Software Division itself is devoted to the development and writing of the IBM software.
Particularly in this field, IBM employs its complete human capital and R&D capabilities, formerly explained under the key resources. The salient software that enables IBM’s clients to integrate processes, communication and logistics within their companies are Lotus Software, Rational Software, Tivoli Software and Security System Software. The Systems and Technology division takes advantages of IBM’s knowledge about computing power and provides clients with the opportunity to employ huge storage capabilities and computing power. Similarly, it assists clients with the latest semiconductor technology, product and packaging solutions.
In contrast to the other four segments, the Global Financing division is not engaged in primary software development and client consulting, but rather acts as IBM’s bank. It offers financial instruments to the firm’s clients to facilitate the purchase and licensing fees for IBM’s products. Besides these segments and on the operations side, IBM uses its R&D capabilities to identify new market trends and continuously innovate. To support innovation, IBM heavily engages in the acquisition of companies that possess unique technological skills. In 2011 alone, the company paid $1. billion for acquisition and plans to expand its acquisition to a total amount of $20 billion by 2015. What can be considered as one of the major efforts of the last year is the vertical and horizontal integration of IBM’s operations. These efforts are part of the enterprise transformation strategy aiming to make IBM the premier globally integrated company. For the vertical integration, the company attempts to control the whole value chain of its product. It has therefore invested in advanced semiconductor manufacturing in Fishkill, New York, and a global delivery centre in Columbia, Missouri.
Roughly $35 billion are spent through the supply chain in an effort to procure materials and services globally. For the horizontal integration, IBM currently integrates its nationally fragmented units and has realized gains of $6 billion over the last years through increased productivity. 2. 4 Profit Formula The profit IBM is extracting from its operations can be considered along three dimensions, namely along the segments, the actual products and the markets. Concerning the segments, Software, although not the biggest revenue driver (23,49% of total revenue), generates $14. 07 billion of profit margin and thereby accounts for 43,68% of the company’s profit. The reason is its high margin of 88,5%. GTS, Systems and Technology and GBS are following with 28,31%, 14,95% and 10,99% respectively. Global Financing falls behind and only constitutes 2,07% of profits. Value is created to the client through hardware/financing, services and Software at IBM. Over the last decade, Hardware/Financing has sharply lost importance and today only accounts for 16% of segment profit ($3. 6 billion) compared to 41% for services ($9. 3 billion) and 44% for software ($10. 0 billion).
The traditional G7 countries and other developed countries are still the most important revenue and profit drivers. New growth markets currently account for only 22% of geographic revenue. However, the portion is rising and is expected to be 30% by 2015. In terms of overall profit growth, the growth markets ($1. 9 billion) – namely BRIC countries, but also Africa and Latin America – are only close behind the major markets ($2. 2 billion). To sum it up, software sales and licensing as well as operations in the major markets are the greatest profit drivers with the growth markets steadily increasing. . 5 Challenges and Opportunities Before IBM engaged in its transformation in 2000, it had mainly focused on computer and semiconductor production. Business and Technology services only constituted a minor part of the strategy. Since 2000, the company has sharply expanded its technology services and nowadays builds its business model around these services. In 2011, 85% of its pretax income came from software and services compared to 65% in 2000. Especially in recent years, a significant amount of new technologies has evolved.
Cloud Computing, Information Management Systems and Open Source are only some examples of these new trends. As IBM fundamentally relies on anticipating trends and utilizing newest technology to deliver value to its clients, these trends exposes IBM to unique opportunities and challenges in adopting them. Simultaneously, the major G8 countries, which were and currently are IBM’s main revenue drivers, have stagnated in the last years. In contrast, nearly 40 growing countries grew at double-digit numbers in recent years.
These emerging markets will be responsible for 60% of global GDP growth in the upcoming years. But not only do the BRIC countries account for this number, but other emerging markets as well. IBM estimates that 60% of growth markets revenue is earned outside the BRIC countries. As these countries are still at the elementary stage of their technology revolution, they become opportunities for technology companies currently operating in mature markets. 2. 6 Strategy In effort to address these challenges, IBM has developed a four-pillar strategy laid down in its 2015 roadmap.
The first three pillars refer to new technology trends that IBM is responding to, namely Cloud Computing, Business Analytics and Smarter Planet. The Cloud refers to IBM’s engagement in creating the enterprise cloud. Only from 2010 to 2011, it has been able to more than triple its cloud revenue. Currently, 1 million enterprise users are active in the cloud, enabling IBM to analyze $100 billion in commerce transaction each year. Similarly, business analytics enable the clients to analyze and mine data and realize relationships concerning their respective customers preference and patients outcome.
Almost 9000 consultants are employed by IBM to deliver a revenue increase of 16% from 2010 to 2011. Whereas the former two services are targeted at commercial clients, Smarter Planet enables governmental institutions to operate more efficiently. IBM classifies these services as the “infusion of digital intelligence into the world’s systems” (annual report IBM, 2011). In 2000 cities, the company is engaged in developing Smarter Law Enforcements, Smarter Water and Sewer Systems and Smarter Transportation, as well as further services.
Also in this segment, IBM is reporting a rapid growth of almost 50% compared to 2010. The last pillar of the strategy addresses the emerging markets. In 2012, IBM operates in 170 countries. The emerging countries are becoming increasingly important and currently contribute 22% to its geographic revenue. Until 2015, the company aims to increase this percentage to 30% and has recently invested in 100 of these new markets, among them China, Brazil and Africa. 3. Strategic International Human Resource Management
For some time now, IBM is undergoing a transition from a multinational orientation to a globally integrated organizational structure. In the old model, every country unit followed its own policies, procedures and processes. Thus, high inefficiency and redundancy was present in the organization. In 2003, Randy MacDonald, the senior vice president of human resources at IBM, and Sam Palmisano, IBM’s CEO at the time, recognized the need to shift from a product to a process driven organizational model, and thus become more globally integrated.
This shift became necessary because the organization had to react to the increasing globalization of its supply chain. This change in the company’s orientation also implies a change in the importance of the firm’s HR function and the role of strategic international HRM (SIHRM). Taylor, Beechler, and Napier (1996) define SIHRM as “the general philosophy or approach taken by top management of the MNC in the design of its overall IHRM approach”. Therefore, IBM had to make sure there was a good fit of the firm’s new strategy with its overall goals. Taylor et al. 1996) pointed out the tension that exists in strategic international HRM between the concepts of integration and differentiation. Integration is described as the need for interunit linkages, which implies some form of overall company strategy that unites all individual country units. Differentiation on the other hand is necessary for successfully operating in the local environment, thus it means adapting the product or service to the specific local needs and requirements. Taylor et al. (1996) identified three generic orientations, which they call the adaptive, exportive, and integrative orientations.
A company that focuses on the adaptive view is emphasizing the need to differentiate, and therefore tries to adapt to the local environment. There is little or no interunit exchange of ideas on HRM policies and practices, so the units work rather autonomous. The second approach is exportive, which means that the parent company transfers the parent firm’s HRM system to all its affiliates, which leads to high internal consistency. The integrative orientation is a combination of both the adaptive and the exportive view, and thus tries to balance the dual need for integration and differentiation.
IBM initially believed that the firm’s HRM practices are context generalizable, and followed a rather exportive orientation in the past. However, the shift from a product to a process view and the increasing need for global integration also required changing the firm’s orientation in order to build an integrative SIHRM model. The new objective of the HR department therefore was to place business functions where they are best located and allocate the right people to the right job at the right time. The program that is supposed to facilitate this process is called the IBM Workforce Management Initiative (WMI).
The aim is to build a HR and talent management system that will enable the effective and smooth management of human resources across the various business units (IBM Case Study, 2010). Randy MacDonald started the HR reorganization process by separating core from noncore, back office tasks (IBM website, 2010). The idea behind this process was to enable HR professionals to focus on core activities that are value adding for the business, such as designing policy and internal business consulting. The noncore administrative services are now being performed by the IBM Managed Business Process Services (MBPS).
This centralization helped to create a global system that enables IBM to manage international projects globally and allows the HR department to implement changes throughout the organization much quicker and more homogeneously than it was possible in the past. Nowadays, country and regional HR managers at IBM both work together in order to adapt to local needs, while still keeping it in line with the overall company strategy. On the other hand, administrative roles are standardized and are being done by global employee service centers, which is also more useful for managing international assignments and employee records.
This way, HR professionals are able to focus on core activities such as talent management and are able to make use of synergies by exchanging ideas on best practices throughout the organization. Farndale et al. (2010) have studied the various structures and roles of HR departments in multinational corporations through the use of case studies on 16 MNCs, amongst which has also been IBM. The researchers describe IBM’s transition from a HQ-dependent to “a more interdependent transnational orientation” (Farndale et al. , 2010), which is in line with the integrative orientation described by Taylor et al. (1996).
Interdependence as a mixed approach is a much more complex relationship than the pure models of independence or dependence on the firm’s headquarter, and therefore formal control mechanisms become less useful. The researchers suggest the use of informal mechanism, for example the creation of a strong company culture and company-wide knowledge management. IBM recognized the need for more integration and interdependence, and starts to give more autonomy to local businesses and therefore more possibilities to adapt to local needs. Rather than giving orders that have to be obeyed, the parent company’s HR department develops broader principles.
The local units then are able to apply these guidelines, as they deem right. 4. Blueprint Among the several blueprints Baron and Hannan (2002) propose, in the opinion of the authors of this article, IBM used to follow a commitment blueprint until around 2000, primarily because of its focus on attracting people based on their personal belonging and identification with the company. IBM selected people based on values and cultural fit and has been known as a place that was committed to its employees. It has been awarded as one of the best companies for workingwomen and used to have a “no layoff” policy until the 21st century (Boudreau, 2010).
IBM was able to build a reputation as an employer with enlightened human resource practices and was therefore able to attract talented young people with the right fit between personal and organizational values. The shift from a product based company to a solution based company in the year 2000, however, also forced IBM to change its HRM blueprint to the star blueprint in order to be more in line with the new direction and strategy of the company. Among other things, the proposal to reduce IBM’s workforce by 299,000 workers made clear that a commitment blueprint is not feasible anymore.
Even though IBM plans to re-hire those workers as partners, a committed workforce as it used to be cannot be expected in the future. IBM now focuses on attracting the most talented workers with long-term potential, that can be trained and developed to current and future needs (Boudreau, 2010). Moreover, due to IBM’s consultancy work, IBM provides challenging and interesting work for its current and prospective employees. All these findings are in line with the star blueprint proposed by Baron and Hannan (2002).
Despite the fact, that changing the blueprint of a company is accompanied by a negative effect on organizational performance (Baron & Hannan, 2002). Earnings per share rose sharply after the change in IBM’s blueprint. Moreover, financial performance and pre tax income increased from 2000 until 2010 (IBM, 2011). All in all, it is reasonable to say that IBM successfully changed its blueprint from commitment to star. 5. Knowledge Management at IBM It becomes obvious from the above discussion that IBM critically relies on its human capital pool and its research and development capabilities.
In order to exploit these intangible assets, knowledge management is essential to the company’s success. “IBM […] requires true enterprise-wide knowledge exchange and collaboration”, as KMWorlds puts it, one of the most advanced evaluators of corporate knowledge management. In 2005, IBM has been awarded the KMWorld’s reality price for its efforts towards knowledge management since 1994. Parallel to Hansen et al. (2005), IBM’s efforts towards knowledge management will be considered along two lines: within-team networks and intersubsidiary networks.
Concerning the first aspect, the company has launched a number of tools and collaboration platforms that enable teams to effectively cooperate and exchange knowledge. Among the most salient of these initiatives are the Collaboration Central, Bluepages and Xtreme leverage. Whereas Collaboration Central is a company-wide portal providing remote teams with currently 50,000 online team rooms to share information and work collaboratively, Xtreme leverage is a tool providing software sellers with access to intellectual capital, expertise locations and community facilities for IBM’s global software brand.
Concerning intersubsidiary networks (ISN), KnowledgeView, the worldwide asset Reuse Program, Bluepages and Jams are excellent examples of IBM’s knowledge management. To provide a summary of these tools, KnowledgeView is a knowledge-sharing centre targeting Business Consulting Services and enables exchange of information and experience among all consulting units. In contrast to the general nature of the information, specific business success stories are entered into the worldwide asset Reuse Program and are accessible to all employees.
Bluepages offer an opportunity to search for personal profiles throughout the company supporting the employees to find a group of experts to work on a specific business solution. Lastly, Jams aggregates information on specific business topics. Besides these major initiatives, IBM has heavily invested into wikis, called QED wiki, and Dogear, a social bookmarking system. All these ISNs increase the “knowledge sought” (Hansen et al. , 2005) by employees at IBM.
Similarly, the opportunity not only to exchange explicit, but also tacit knowledge through personal meetings enabled by Bluepages sharply decreased knowledge transfer costs (Hansen et al. ). To coordinate all these networks, the enterprise has established “IBM collaboration and knowledge”. This department led by Karen Ughetta consists of 10 employees continuously aiming to find new ways, in which knowledge can be transferred within the company. Collins et al. (2006) argue that such efforts improve the social climate of a company and via increased knowledge exchange and collaboration lead to superior financial results.
These argumentations seem appropriate when considering IBM. Only to provide some examples, the Worldwide Asset Reuse Program has led to $81 million in cost savings and a $63 million increase in asset revenue as well as a $2. 6 billion increase in service revenue. Xtreme leverage has enabled employees to reduce the finding time for experts from 1 week to 8 hours and therefore opportunity cost savings of $50 million. And KnowledgeViews lead to the faster exchange of knowledge and consequently saved $42 million in opportunity costs. 6. Actions and Interest Alignment
The concept of action alignment is defined as the alignment of employee actions with the objectives of a firm’s strategy. Aligned actions therefore, are not part of the routine job, but rather the ability and capability to understand the big picture of the company and its environment and contributing to the attainment of firm goals (Colvin & Boswell, 2007). To achieve action alignment, employees need to have the awareness of the firm’s strategic objectives and a shared mindset towards it. According to Colvin and Boswell (2007), specific strategies need specific employee capabilities.
IBM tries to achieve this by either hiring the right employees through assessment centers, talent forums or firm acquisitions or by training and developing existing employees to obtain the capabilities needed to attain IBM’s strategic goals. At IBM China, for example, training and development consists of cross-cultural mentoring programs, individual development programs and management training. Moreover, IBM makes use of several online training programs, including a global campus, which gives employees the opportunity to choose among different online classes.
In the year 2008, IBM spent about $1700 per employee to ensure that workers have all required capabilities (IBM. com, 2012). In addition to capabilities, employees also need to have the opportunity to apply their knowledge and capabilities (Colvin & Boswell, 2007). IBM achieves this by empowering employees and giving them a say with regard to value formulation and feedback rounds. The “Your IBM” program is aimed at new employees and tries to spread the history, values and goals of IBM in order to create a shared mindset among all employees, ensuring that every employee has the opportunity to contribute to the firms well-being (IBM. om, 2012). However, without interest alignment, action alignment, in form of capabilities and opportunities, will not realize its full potential. Colvin and Boswell (2007) define interest alignment as the set of extrinsic and intrinsic benefits that employees derive from their work and employment. Extrinsic benefits mainly consist of compensation, but also include employment security and opportunities for career advancement. Intrinsic benefits, on the other hand, include the employee’s belief in the organization’s strategy it is seeking to achieve.
By reason of IBM’s 100th anniversary, IBM recently issued a one-time equity grant to nearly 400,000 non-managerial employees to recognize the commitment of its workforce and therefore increase the extrinsic benefits of its employees (IBM. com, 2012). IBM also uses profit sharing and pays bonuses to non-managerial employees. Software engineers and IT specialists derive around 3% of their total salary from profit sharing and bonuses. On the contrary, jobs like computer programmers and computer system analysts do not derive any compensation in form of profit sharing or bonuses except the one-time equity grant mentioned earlier.
All those compensation packages are in line with the reasoning of Colvin and Boswell (2007) about how to align employees’ interest with the organization. In addition to compensation, employment security is also part of the extrinsic benefits. Peacock (2010) notes that IBM wants to reduce its workforce from around 399,000 permanent employees to 100,000 by 2017 to complete their HR transformation. This move is grounded on IBM’s overall transformation from a product-based firm to a solution-based firm, which requires more global flexibility (Boudreau, 2010).
Even tough, IBM would re-hire the 299,000 workers as contractors, this still does not assure the same employment security as permanent employment. In this regard, IBM is not in line with the reasoning of Colvin and Boswell (2007) and would to some extent decrease the extrinsic benefits to employees. Contrary to that, Noe et al. (2010) state that employees these days know that companies cannot provide the same employment security they used to provide. Employees rather desire employability, i. e. they want the company to provide training and development to help ensure that they can find other employment opportunities in case of lay-offs.
IBM training and development practices are consistent with the concept of employability and it can be assumed that although IBM cannot ensure employment security, the training they offer gives their employees the security of employability. On top of compensation and employability, IBM offers wide arrays of medical benefits to its employees. These practices not only increase the extrinsic benefits, but also increase the intrinsic benefits in form of lifting IBM’s image. Colvin and Boswell (2007) state that intrinsic benefits increase when employees perceive that the organization has an image, which reflects their own personal social identity.
By promoting education in weak communities, by being environmental friendly and by offering health care plans to its employees, IBM does lots of things to ensure that its image is consistent with the social identity of its employees (IBM Corporate Responsibility Summary, 2010). All in all, based on the evidence in the discussion above, it is reasonable to assume that action alignment and interest alignment between IBM and its employees is rather high. The preceding discussion mainly describes the alignment between IBM and its non-executive employees.
In the proceeding section, this paper now analyses the compensation package of IBM’s executives with the help of Stroh et al. ’s (1996) determinants of variable pay. Stroh et al. found that managers in highly programmable jobs will receive a lower proportion of their compensation in the form of variable pay than managers in less programmable jobs, whereas managers in highly turbulent organizations will receive a higher proportion of their compensation in the firm of variable pay than managers in more stable organizations.
Moreover, there is evidence that managers in organizations with human resource policies that encourage long-term relationships will receive a smaller proportion of their salary in form of variable pay than managers in organizations without such policies. In the case of IBM, one can say that due to nearly 100 acquisitions made by IBM (IBM. com, 2012) and the turbulent environment IBM is operating in, organizational turbulence is rather high.
Managers’ task programmability can be regarded as low since IBM offers most of its solution in form of consultancy. Lastly, based on the fact that IBM wants to be more flexible and therefore needs to cut its workforce by 299,000 workers, it is reasonable to assume that IBM human resource policies do not encourage long-term relationships. Taken everything together, one would expect a large proportion of total managerial compensation to be variable in form of bonuses, profit sharing and stock-grants.
Appendix 1 shows that in 2011, IBM’s CEO and Chairman Palmisano received 92% of his total compensation in form of variable pay (29% annual incentives and 63% performance share) and IBM’s Vice Presidents received 87% of their total compensation in form of variable pay (20% annual incentives and 67% performance share). Overall, this is consistent with the findings of Stroh et al. (1996). 7. The use of HR Measures and Indicators It is important for HR departments to track how effectively and efficiently their practices and programs have been implemented throughout the organization.
This helps them to justify their existence, since “HR departments are increasingly expected to operate as a business within a business” (Ulrich, Younger, & Brockbank, 2008). By measuring the impact of HR practices, the firm is also able to recognize deficits and counteract them. The shift within the HR profession towards a focus on strategic HR also implies the assumption that certain HR practices have an influence on overall firm performance (Huselid, Yackson, & Schuler, 1997), and therefore might even be a source of competitive advantage to the firm. Ulrich et al. 2008) recommend to not only base the evaluation on traditional measures such as the cost and benefits of certain activities, but instead to judge the performance of the HR activities based on the impact they have on overall firm strategy. In recent years IBM has undergone a transformation from a traditional multinational enterprise to a more flexible and global structure, which IBM calls a globally integrated enterprise (GIE). The company therefore needs to develop a diverse workforce with a global mindset, which is supported by common corporate values.
For a GIE to be successful it is necessary to have a collaborative environment that takes multiple diverse views into account, as well as a less hierarchical and more flexible organizational structure. IBM does this by employing employees at all career stages and let them participate in the decision making process. An example of this employee involvement was a global online “jam”, where the employees themselves discussed about the company culture and developed specific corporate values (IBM, 2010) as well as skills required to work successfully in a GIE.
The HR team should identify some measures to determine the success of the implementation of this new corporate identity. It is important to assess the skill development and improvements in relevant employee competencies over time and measure improvements in employee satisfaction, which could be done through frequent and extensive employee feedback. The HR department also recognized that in order to put these new global skills and views into action, employees needed “exposure to a wider range of global experiences” (IBM, 2010). This would be especially valuable if it happens earlier in the careers.
IBM developed a global mobility and international assignment framework, which offers specific programs and online tools to facilitate this globalization process. In order to assess the impact of this new framework, IBM should track the number of participants in these global experience projects, the number of available places for such projects, and the retention rate of former expatriates. Corporate HR departments frequently face the threat of the not-invented-here syndrome, as local units might feel overwhelmed by orders from outside.
In order to prevent this reluctance, the HR department at IBM has created an integrative approach that fits to the strategic HRM perspective the company has taken on in recent years. The HR department takes all sorts of sources into account, such as corporate HR professionals, regional managers and general staff members. 8. Conclusion In recent years IBM recognized the need to shift from a product view to a process oriented view, which includes a focus on providing services and solutions. This shift was necessary due to the increasing globalization and the stagnating computer market.
The shift in IBM’s business view also required a change in IBM’s perception of its HR department. It is not longer seen as a mere department that supports business by executing traditional HR tasks such as selection, training, and reward, but has become a strategic part of the company. IBM has moved from an international organizational structure to a globally integrated company, and the HR department successfully developed a framework that facilitates the collaboration of corporate as well as regional and country-based HR teams, in order to guarantee a consistent company culture and create a globally integrated enterprise.
This point of view is also reflected by IBM’s change from a commitment to a star blueprint. IBM now provides interesting and challenging work for its employees and is more focused on selecting talented employees with a long-term potential than on employees with the best values and cultural fit. IBM’s HR department should make use of specific measures to track the effects that its operations have and justify any efforts with regard to creating a integrative, global workforce for the company in the future.
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