IBM: Restore Trust & Equity to Support IBM Families & Communities
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Summary and Purpose of Our Open Letter
This Open Letter is long, but its message is simple: “Set an example that others can follow.” Be worthy of your esteemed brand and heritage. Our founder’s son exemplified IBM’s foremost principle: “Show respect for the individual.” Today we have serious concerns about very low morale among IBMers and its adverse impact on growth and shareholder value. We believe the essence of what that makes IBM exceptional and innovative—its values and culture—is jeopardized by recent edicts issued by headquarters that have resulted in business disruptions, unfair labor practices, concerns about corporate governance, and departure of long-term employees with valuable, and sometimes irreplaceable skills.
However, we have confidence that IBM’s Board and its CEO will recognize the urgency for addressing our process and human capital concerns. This letter identifies six specific areas for IBM corporate reform that are essential for returning IBM to greatness and growth:
- Rescind the forced relocation (colocation) of thousands of IBMers that is disrupting daily company business and the lives of employees, their families and communities. It’s also causing massive attrition of highly-skilled IBMers.
- Restore IBM’s flexible work-at-home policy. Banning work from home on Friday’s is counter-productive.
- Make IBM retirement plan contributions equitable and competitive by contributing 401k company matching payments in regular pay cycles.
- Pay respect to employee loyalty by once again calculating severance based on years of employment instead of the current plan that pays one month’s salary regardless of whether an employee joined IBM within the previous year or thirty years ago.
- Cease and desist providing quarterly earnings guidance to Wall Street analysts. This policy adopted by former IBM CEO Sam Palmisano has resulted in the entire company marching to a quarterly drumbeat
- Establish a Board level special committee supported by an independent consultancy to prepare an appraisal available to all shareholders that evaluates the effectiveness of IBM corporate governance.
While IBM remains a U.S. headquartered company, the vast majority of IBMers reside outside the United States; IBM’s business interests span the globe, therefore, we all have a stake in IBM’s success and its leadership example. This matters not only because its technology and services touch all of us, but also because its corporate governance and labor practices are the bellwether for norms adopted by all major corporations.
Call to Action Below Open Letter
Target Participants: IBMers past & present, their families & friends, clients, shareholders, and concerned community members. Note, current or recently separated employees may choose to sign/post comments anonymously or have a family member or friend sign "On behalf of my IBMer [specify relationship]." To post anonymously, click anonymous box when you sign. See privacy disclosures below letter.
Ms. Ginni Rometty
Chairman & CEO, IBM Corporation
590 Madison Ave
New York, NY 10022
Dear Ms. Ginni Rometty:
The purpose of this petition is to express our concerns about unfair labor practices and policies that inhibit IBM’s ability to continue leading in innovation; to deliver sustainable long-term shareholder value; to recruit and retain top talent; and to promote high-value job growth in the geographies where IBM operates. Many loyal current and former IBMers share concerns about these corporate actions that are damaging morale and resulting in the departure of long-term employees with valuable, and sometimes irreplaceable skills.
First, we will briefly paint a picture of IBM’s severe morale problem. Second, we share our proud vision of our institution; what drives us to focus on making IBM better for our clients and the world; and what that says about who we are as IBMers. Third, we express concerns about specific policies that we consider detrimental to individual employee productivity, inconsistent with our values and company research, and ultimately, damaging to long-term shareholder value.
- (I) Morale Problem is a Shareholder Concern
- (II) Our Vision of IBM – Our Values and Culture Make Innovation Possible
- (III) Our Respectful Dissent against Adverse & Unreasonable Corporate Policies
By expressing our dissent toward adverse corporate policies, we in no way disparage the great institution that we take great pride in being affiliated with as current or former employees, clients, shareholders or connected community members. Indeed, dissent is inherent to IBM’s diversity, which enhances every aspect of its business. While never the loudest in proclaiming its commitment to diversity, IBM remains steadfast with concrete actions affirming diversity of thought, ethnicity, gender, sexual-orientation, race, age, and religion.
(I) Morale Problem is a Shareholder Concern
In today’s IBM, many employees are just keeping their heads down trying to avoid a layoff (resource action) before completing their successful job search or vesting of their health and retirement benefits. IBM has a substantial morale and leadership problem. Each quarter brings another round of layoffs, divestitures, reorganizations or broken promises. This dark cloud of uncertainty impairs our vision to imagine the possible; our ability to innovate; and our focus on clients. The result is that the average IBMer believes that they could be terminated regardless of their individual performance, skills, and contributions. Symptoms of anxious people worried about their jobs include anxiety; sycophancy; undue focus on peer ranking; and unwillingness to collaborate and to be bold and take risks. All of these distractions afflicting IBMers detract from their important work that is ultimately responsible for delivering returns to shareholders, a group that includes tens of thousands of IBMers who have participated in our employee stock plan.
(II) Our IBM Vision – Our Values & Culture Make Innovation Possible
Whereas not long ago IBMers had a clear vision of their mission, reinforced by an optimistic culture welded by trust and bonded by common values, today many IBMers who contributed their life’s work both as employees and investors are cast out unceremoniously like broken cogs along with one month’s pay as severance. Though somewhat diminished, what made IBM great for a century still permeates IBM’s culture, and therefore hope remains for leadership to preserve what is right, just, and good for the company’s resurrection as the foremost leader in technological innovation.
As the world’s largest globally integrated technology company, IBM pioneered and created best practices for high-performing teams to deliver quality remote services to clients as well as work together with our colleagues in a distributed model where IBMers bring together the best of IBM on teams that span the breadth of humanity—time zones, national boundaries, cultures, languages, technical and business skills, and senses of humor. Historically, no other company in world could match the power of IBM in supporting governments, enterprises, and a young U.S. President make good on his pledge to explore the depths of space. Early generation IBM mainframes powered the Apollo space missions..
IBM is more than simply an employer and IBMers see themselves as more than just employees. IBM is a public institution. As IBMers, we strive to be engaged citizens of the world; innovating how we think and work; collaborating across cultures, time zones, and borders; and, in doing so, we make a positive impact locally and globally. Through our client work, IBM creates public goods that touch—and often inspire—billions of people. IBMers see themselves as mission-focused, ethical, and dedicated to doing the right thing to make our clients successful. This is true no matter what Division we reside in or platform we work on—be it in our Systems & Cloud Platforms or our Watson Artificial Intelligence Platform; be it in Research, Software, Sales, Systems, Corporate, Consulting or Global Services. Many IBMers have gotten extraordinary opportunities to bring together the breadth of IBM capabilities on global teams that focused on strategic client projects.
To this day, our modern mainframe platform makes ‘real-time’ possible. It provides the engine for our global economy. Mainframes are the mission critical infrastructure for just about every credit card swipe, bank ATM withdrawal, payment transfer, online travel reservation, national population census, federal tax refund, package delivery, driver license registration, and large industrial inventory system. When low latency and data currency matters, this highly scalable and secure platform makes advanced analytics on transactional data possible and protects the largest commercial blockchain implementations.
We are proud of IBM’s contributions to technological innovation, which helped create new markets, new industries, and new human experiences from space explorations to everyday conveniences like electronic payments. What underpins our technological prowess is culture imbued with optimism, a mission focus, genuine concern for clients and society, and esprit de corps cultivated in an organization where individuals are cherished; trust in all relationships is paramount; and equitable treatment for all IBMers is table stakes.
Our distinguished heritage embodied by our founder, Thomas Watson, and then by his son, is a result of their bold leadership not only in doing business and building machines, but also in advancing society. They achieved this goal by making IBM stand apart as a beacon and shining example of how ethical business practices with clients, employees, and their communities is always in the long-term interest of shareholders. Our investors benefit from IBM’s untarnished legal record, burnished reputation with corporate and government clients, and esteemed brand that is respected worldwide. But earning this respect sometimes meant sacrificing short-term profits and taking risks. For example, when a group of governors from the southern United States demanded that IBM have racially segregated facilities consistent with local prejudices, our founder’s son responded by promulgating Policy Letter No. 4, which set forth IBM’s official policy of non-discrimination almost a decade before the 1964 Civil Rights Act. T.J. Watson, Jr. then took the additional step of having his letter published in local newspapers as a means to be unequivocal about what IBM stands for. His letter is worthy of the son or daughter of any great leader.
Moreover, IBM pioneered in the hiring of women, people with disabilities, and citizens of the world from all faiths, creeds, ethnicities, races, and sexual orientations. Indeed, some have called Watson brash in his commitment to social progress. For example, after Watson personally advocated for enrolling women into IBM’s vaunted sales training program, he fumed that no hiring manager selected any of the successful female graduates. So to ensure success of his civil rights agenda, he said if hiring managers would not hire women, then they would hire no one. Then he ordered a horrified executive to fire all of the male graduates in the midst of the Great Depression. Consequently, managers hired women graduates, and the executive sequestered most of the male graduates from Watson’s ire until his righteous indignation had subsided.
(III) Our Respectful Dissent against Adverse & Unreasonable Corporate Edicts
Just as our founder’s moral compass guided his actions, we, the signatories of this petition, are equally passionate about the future of the International Business Machines Corporation.
For our mutual aid and protection, we petition you to do what is right for IBMers, their communities, clients, shareholders, and society, on the basis of equitable treatment and fairness:
(1) Rescind the forced relocation (colocation) of thousands of IBMers in North America, the United Kingdom, and the rest of the world that is disrupting the lives of IBMers, their families and communities. This corporate edict issued by IBM headquarters produced three unfortunate consequences. First, headquarters expropriated business unit managements’ prerogative to recruit and retain talent in their markets according to actual business requirements. Second, the exodus of IBMers has diminished IBM’s capability to deliver value to clients and shareholders. Third, IBM is being drained of irreplaceable technical and business expertise that damages our long-term competitiveness in the markets where IBM competes.
The stated corporate intent of ‘colocation’ is that “a new way of work” requires teams to be housed in the same physical offices, which may have benefits when feasible, but the reality remains that most IBMers will continue to work as members of global teams because our capability centers are distributed around the globe. So the “old way” will continue to be the “new way” for most as the colocation edict is implemented across business units and functional areas like marketing. The implementation of IBM’s colocation policy is also suspect because managers are told to share nothing in writing except a short headquarters-approved email. Managers are not even allowed to list possible relocation cities in an email. IBM is literally shifting people from New York City to Raleigh on one hand, and shifting others from the City to Raleigh on the other, including people in the same functional area. No cost of living adjustments are provided for those unfortunate IBMers being asked to relocate from low-cost areas to high-cost ones like San Francisco or New York City.
The unstated intent of the colocation edict is a brute force layoff of higher-paid IBMers over the age of 40, which is explicitly prohibited age discrimination under the Employment Act of 1967. Whether or not the policy is technically legal, it indisputably violates the spirit of the law because of its disparate impact on workers who are established in their communities and made their choice of where to live under terms and conditions of employment that promoted working remotely. Now headquarters is requiring IBMers to reside 50 miles from only a select group of ‘hub’ offices that vary based on their IBM Division. No matter whether the IBMer actually works with people in that office, they are expected to be there every day.
(2) Restore our flexible work-at-home policy that IBM’s own research shows is highly effective after an established track record of several decades. The findings are that our flexible work-at-home policy results in higher employee productivity and engenders greater employee loyalty and satisfaction inherent in an organization that trusts its people to do their job and measures performance based on quality of work versus perceived facetime in office. By denying IBMers the flexibility to manage their time, we impose business and environmental costs stemming from lost work due to commutes to offices, additional vacation time taken for handling personal matters, and ultimately, attrition of talented employees who easily find employment elsewhere that allows for work-at-home on Fridays.
Home offices are even more attractive today because IBM is requiring marketers, researchers and developers to conduct thought-intensive work in open floor plans that offer no privacy, no bookshelves, and no cubicle walls. Rather than vibrant, well-lit creative spaces with game areas, huddle rooms, and whiteboards, IBM provides long rows of tables topped with headsets so sensitive client calls and in depth thinking can permeate crowded space.
(3) Make IBM retirement plan contributions equitable and competitive again by restoring company 401k match contributions to regular pay cycles instead of a one-time, year-end contribution that is contingent on being employed as of December 15 of the calendar year. The current policy withholds and often denies matching contribution to employees who are laid off before that date. Our 401k program should match peers in our industry and the Fortune 100 list.
(4) Pay respect to employee loyalty by once again calculating severance based on years of employment instead of the current plan that pays one month’s salary regardless of whether an employee joined IBM within the previous year or thirty years ago. Moreover, tell the truth to employees about their standing when they receive notification that their job is impacted by a resource action (RA). IBMers are told they must continue to work for 90 days, at which point their employment will be severed if they cannot find another role within IBM. In fact, an IBMer who is RA’d is placed on an internal no-hire list, meaning their search for another role is pointless. Furthermore, many ‘open’ positions are available only to external candidates regardless of an IBMer’s RA status.
(5) Cease and desist providing quarterly earnings guidance to Wall Street analysts. This policy adopted by former IBM CEO Sam Palmisano has resulted in the entire company marching to a quarterly drumbeat. Even though IBM competes in highly competitive and dynamic market segments often characterized by inherently lumpy cash flows, management has set unreasonable expectations that IBM quarterly earnings are as predictable as those of a monopoly electric utility characterized by captured customers and reliable rate hikes by public utility commissions. The quarterly drumbeat promotes Wall Street interests but is not responsive to client needs. It results in dysfunctional and counter-productive end-of-quarter mania that can incent our sales leaders to sign unfavorable deals at quarter-end while losing sight of IBMer’s purpose of creating client value through development of projects with their clients that help them build long-term sales pipeline.
(6) Establish a Board level special committee supported by an independent consultancy to prepare an appraisal available to all shareholders that evaluates the effectiveness of IBM corporate governance; its alignment with industry best practices; and specifically, its adherence to corporate governance principles for U.S. listed companies established by the Investor Stewardship Group, a collective of some of the largest U.S.-based institutional investors and global asset managers. For the benefit of all IBM stakeholders, it is imperative that such an appraisal be conducted in a timely manner given 20 consecutive quarters of declining revenue; a major reduction of IBM holdings by IBM’s largest investor, Warren Buffet; and adverse impacts on widely-held, index mutual funds that millions of Americans contribute to monthly for their own retirement savings.
Thank you in advance for taking our petition under consideration. We thank you for your leadership and moral compass in the years ahead.
Loyal IBMers Past & Present, Clients, IBM Shareholders & Community Members
Call to Action
Signing this petition is a first step for you making a commitment to a positive transformation of IBM. Second, share this with your friends and colleagues. Don’t simply click; make a point of having a conversation with them about issues addressed here. Third, call your elected representatives to share your concern about IBM’s well-being. Do this especially if you live in a major IBM community like Bangalore, Chennai, Tokyo, Toronto, Guadalajara, Sao Paulo, Upstate New York, Raleigh-Durham, Austin, New York City, or San Francisco. There are too many to list. Finally, if you are employed at IBM, organize a group of colleagues to speak with your business unit management team; voice your concerns at IBM town halls; and remember, you’re not alone. We joke that IBM stands for I’m By Myself or that we’re just a serial number, but joking aside, we all remember our excitement when we first joined IBM; our enthusiasm about our latest business solutions and successful client engagement; and our pride in being part of something great.
- (1/) IBM 100 years – Always ahead: http://bit.ly/IBM-100-Mainframe
- (2/) IBM Technology Helps NASA Propel First American in Space: http://bit.ly/2utGWha
- (3/) Set an Example, Non-discrimination - Policy Letter#4: http://bit.ly/policy4_video
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