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Da: Forum; Documents in Englisk; Politica aziendale e risultati economici

Patterns of inefficiency

After the crisis at the beginning of 90’s, IBM has reinforced the policy of linking employee income to Company results (Variable Pay etc). Even Unions’ bargaining in Italy has contributed to this connection, with "Premio di Risultato" (Premium based on Results) agreement, signed for the first time in 1998 [1] and then renewed in 2000[2]. These components of employees’ wages come on top of the traditional share offers, another obvious source of shared interest between the Company and the stock holders-workers.

Independently of the (sometimes tough) discussions inside Italian Unions regarding advantages and risks for the workers in accepting such a policy, we now have a de facto situation in which all IBM employees have a direct interest in the Company’s performance. For this reason, Union Representatives in IBM, in order to represent, defend and advise the workers who have elected them in Works Committees (Rappresentanze Sindacali Unitarie, RSU), have to analyze such performance and signal difficulties and mistakes in achieving it[3]. This means adding a new topic to the traditional bargaining matters but, then again, someone has dubbed it  New Economy...

The National Metal Mechanical Workers agreement, in Italy, has provided for commissions (Osservatori paritetici in sede aziendale, Company joint observators[4]) that could deal with this matter; the European Works Council[5] could also be a suitable Forum for it. But the real obstacle is that Company decisions are made and policies discussed far from Italy and Europe: they are worldwide directives taken at Armonk, USA. For this reason we hope to participate in a worldwide debate on these topics, that concern hundreds of thousands employees in more than 140 countries around the world.

The following is an initial contribution to such a debate, focusing on some inefficiencies in the internal information system .

Lack of a Workflow Management System

One of the most urgent needs for IBM is the creation of a company-wide workflow management system. At the present time, the innumerable rules about business management are not implemented in an automatic system and are only written in English (or in some other national idiom) somewhere. This means that:
  1. There is not a strong control of completeness and consistency amongst the rules (to translate a bureaucratic system of rules into a formal language, or code, is a good way of checking whether it works or not).

  2. The document flow is carried out “manually” (copying and pasting fragments of text or tables, forwarding notes and so on) which is highly error-prone and a large waste of time, energy and attention.

  3. There are few consistency checks between data, and automatic updates are infrequent.

  4. The documents are sent to “persons” not to company-wide defined “roles”, with continuous problems rising from job changes, dismissals and so on.

  5. It is not clear whether IBM has a policy concerning electronic signatures (in Italy there is a law relating to it). However, IBM Italia is certainly not a paperless company (This was dramatically revealed by 2000 fire in South Building, Segrate, Italy.)

  6. Automatic checks and statistics on bureaucratic work are very difficult to obtain. Consequently, it is very hard to increase productivity; paradoxally, bosses try to track operational efficiency by requesting “manually” calculated statistics, that subtracts time from essential activities and itself represents a good example of an inefficient way of working.

  7. The lack of rationally defined and proficient security controls leads very often to completely withholding access to internal applications from controlled companies, joint ventures and so, making cooperation with them more expensive and less efficient.

  8. The internal mail system is overstressed and at the same time there is a pathological creation of thousands of DB’s which are only used for small groups and/or for short periods of time.

  9. Legacy applications are maintained due to a lack of a suitable alternative; the internal Information System looks like an archeological site, with layers of applications for each technological era. Even when these applications are substituted by newer applications, it appears only to satisfy the needs of narrow functional areas, without a global vision (that should led to choose or design a company-wide ERP).

  10. Many single functions, inside IBM, are pushing their own IT solutions in order to satisfy their needs and goals; so the former IBM Information System is turning in an archipelago for ill-connected islands, each of which is ruled by different technical platforms, standards, non-company-synchronized archives, user interfaces, and reporting.

From the employees’ point of view, this means that a significant part of work time is spent in activities with a very poor professional content (imagine having to describe them in your curriculum, for instance).

The Wall of Armonk

IBM has often followed a policy of adopting tools for internal use which are different from the rest of the world, or continuing to use tools that the rest of the world has refused or abandoned. We do not wish to name them, to avoid useless polemics, but we present this situation as well-known to the average employee.
This means that:
  1. Internal skill upgrading does not create Human Resources assets immediately useful for added-value operations on the external market; in other words, it is more a cost than an investment.

  2. External experience cannot be easily imported into the IBM Information System, renouncing to the advantage of “cross fertilization” with other environments.

  3. Internal development costs are not shared (or only to a very limited extent) with other customers; used-only-by-IBM tools have a very slow pace of development, if any, with a negative effect on Company’s efficiency.

  4. Not using widely-accepted, state-of-art tools leads to poor practical experience of the world in which IBM’s customers live, and compels them to buy it expensively from external experts and consultants. However, nothing can really substitute the direct experience of using those tools.

  5. When important information is stored in these only-internally-used tools, the communication and information sharing with external subjects (customers, suppliers, consultants …) becomes a continuous source of delays, reworking and misalignments.
From the employees’ point of view, this means that spin-off is more difficult because other employers are not prone to hire people trained on products that they either ignore or do not want to use.

Conclusion drawn from the first two points

IBM should change its mindset as a self-supplier of IT solutions. It should decide to make use of the best-in-the-world solution both for itself and for the market, or to buy the best products and make its people learn from them. A fundamental step is to drop the middle and high management myth that IBM’s internal processes are too complicated and are unique in the world. Under the shelter of this legend,  ten of thousands of women and men waste their time in activities that a well-designed information system could do instead, and far better. These activities have very little value in terms of personal curricula and external labour market, and represent a well-hidden but dramatic loss of money and efficiency for the whole company.

The Human Factor

About ten years ago, IBM Italia decided that most of the secretarial support was superfluous, because the electronic systems could offer a more proficient and cheaper help – maybe the same thing happened in other countries. This opinion reveals a substantial misunderstanding about both how to use humans and machines and how to save money.
  1. Taking into account the drawbacks mentioned before, technology can substitute parts of many traditional secretarial tasks, such as distribution of documents; but even in this trivial case, we can observe that only a thinking being can distribute the right documents to the right people at the right time. The alternative is the daily waterfall of “CC” messages that springs from the e-mail system.

  2. More generally, even if technology offers a valid alternative to secretarial support, as a minimum it requires a continuous change of the mind framework – for instance, scheduling and rescheduling a meeting while preparing an offer, with a significant loss of concentration and mental overload; that is, it is not important that organizing. a meeting requires four hours without technological support and forty minutes with technological support; however, it requires a switch from “my-task” to “meeting-thinking” and then another switch from “meeting-thinking” to “my-task”, sometimes scores of times in a day if the meeting is troublesome. In other words: the greater efficiency of the system generates more decisions and increased complexity; so now we need more secretarial support than before, and not less.

  3. On the contrary, IBM has hidden the cheaper, but measured, work of secretaries inside the more expensive, but not measured at this level of detail, time of professional and low level bosses. (High level bosses, of course, have more and more secretarial support and personal assistants).

Not Invented Here

Let us suppose there are two IBM managers, in a middle-sized country, that have to cope with a recurring annoying problem of some kind. The first one is smart and pro-active, and so decides to invest some resources to solve his problem; the second one is conservative and apathic and decides to do nothing. The winner is very often the second, because after a certain time the centralized “Company solution” arrives that obliges the first manager to throw away his/her investment and reconvert the way of working of his/her employees, while the second one has just to follow the rules, having done nothing before. This systems has at least three bugs:
  1. It is very difficult on the periphery to understand if and when a problem is going to be addressed by the center; rumors and contradictory pre-announcements may circulate for years while the unsolved problem is always there.

  2. Very seldom, in IBM’s history, has the center adopted a solution originating from the periphery, and even in these rare cases they have been adopted as a temporary measure while awaiting the official solution, with little or no advantage for the function that has made the investment to solve the problem. (And the official solution is not always better than the provisional one).

  3. On the periphery, this system systematically rewards and pushes inert managers versus creative ones: and the results are apparent to everybody.

Tender is the Night

At the beginning of 2001, an IBM Italia works council has repeated a 1996 survey about the de facto work time of IBM employees[6]: it is apparent that this has increased from 1996 by about 5% -10%, and fifty hour weeks and public holiday and vacation working is more and more diffuse. If this happens, troubled times are on the horizon for the quick-and-dirty solutions preferred by the management.

Milan. May the 1st 2001

[1] The text of this agreement (in Italian) is available at: http://www.rsuibm.org/980722pr.htm

[3] An other step in this direction has been the study of IBM Account Sheet, comparing Italian and WT figures; see (in Italian): http://www.lomb.cgil.it/bilibm_d2.pdf