Statement – second massive restructuring in 2016, just six weeks after first job cuts
Just six weeks after IBM announced the first significant workforce rebalancing action of 2016 in Europe, an additional and even bigger European restructuring was presented at the Extraordinary Meeting on March 16th 2016. The total foreseen HC impact of this second reduction is almost 50% higher than the first round of job cuts, which was presented at the Extraordinary Meeting on January 27th 2016. The combined impact of both restructuring actions varies by country, but primarily Western-European countries are confronted with reductions which sometimes exceed 10% to 15% of current staff. Over the past 3,5 years IBM conducted almost ten restructuring actions in Europe, which sliced roughly 25% of jobs in especially the Western-European countries.
The EWC requested but did not receive any insight in the financial business case or master plan of these restructurings. The presented country numbers have moved up and down over the past weeks, without much coherence and consistency. There are indications that IBM will continue with additional HC actions later this year. The EWC requests IBM management to provide complete information and especially accurate reduction numbers for the full year, to be able to play its role. Furthermore, the EWC questions again the need for massive restructuring in relation to the state of IBM’s business in Europe. As also mentioned in the EWC’s previous statement, Europe was the best performing IBM-geography in 4Q and FY 2015 and again the only one delivering growth.
New in IBM’s restructuring approach is the strong focus on involuntary reductions. The company applies in several European countries only the legal minimum notice period and redundancy payment, irrespective of the years of service of individual employees. During this notice period IBM expects employees to continue their work for the company ‘as usual’ while looking in parallel for alternative job opportunities. This approach is planned to be applied broadly around Europe. The EWC believes that IBM clearly explores the legal boundaries country by country, aiming at minimizing severance payments and making significant savings. To the EWC this is not acceptable.
The involuntary approach triggers extremely negative sentiments, unrest, stress and disengagement amongst the European workforce. In various European countries, IBM employees started to share their views in blogs and write for example that “their executive community have found new and exciting ways to screw [their] employees into the ground”. It is heard that employees and representative bodies in various European countries consider to start court cases against IBM. The EWC wonders if IBM is aware of the destructive impact of the chosen approach to the company’s brand image and reputation. The restructuring news was covered already by several news media around the world and could resonate negatively in the market, possibly damaging engagements with existing and new customers. The EWC believes that IBMers should leave the company as ambassadors, not as opponents or enemies.
The EWC can never accept involuntary approaches around Europe and strongly opposes this way of rebalancing resources. The EWC has never agreed with restructurings, but could not be against a voluntary, fair and respectful approach. Now IBM clearly seems to break with that tradition and choses to apply involuntary, US based methods in Europe as well. The EWC recommends local representative bodies to refrain from cooperating with local IBM management to design, implement and agree with such involuntary scenarios in Europe.
The EWC believes that there are much better, voluntary alternatives to conduct resources rebalancing actions. IBM management should give priority to offering voluntary severance packages and never fall back to involuntary approaches. The EWC is convinced that the planned reduction can be fully met in a voluntary way. Social Plans with voluntary approaches should be designed, eg. actively support internal redeployment options, allow so called domino’s between IBM Business Units, offer Bridge to Retirement arrangements and promote several elements from the HR Toolkit. Furthermore the EWC encourages IBM to be more creative and for example design sustainable ‘social contracts’ to ensure that IBMers with less relevant skills in our industry could be bridged collectively to new careers at companies and customers in other industries, eg. automotive, domestic appliances, aeronautics or retail.
In addition, employees staying with the company should be offered a clear career outlook and perspective, with attractive job opportunities, clear role descriptions, financial rewards and possibilities for re-skilling and up-skilling.
Financial technics and affordability with short term pay back times should never become the dominant decision making criteria for collective dismissals. The EWC requests that this strategy cease and a more forward looking, voluntary approach to growing the business by engaging employees is pursued. The EWC expects to be informed and fully involved.
On behalf of the European Works Council,
Marc Born, Secretary
Copenhagen – 16th March, 2016