The latest Global Competitiveness Index 2016–2017 presented by the World Economic Forum (September 2016) shows that more than half of the top 25 countries is European. These countries have the highest overall score based on indicators such as efficiency, innovation and productivity. The index underlines that Europe is an excellent place to do business and to establish new innovative missions. Also for IBM, Europe delivered an attractive financial contribution in 3Q 2016. Where the revenue performance was in line with the corporate results, the bottom line result was significantly better than worldwide. Europe made again a significant contribution to IBM’s free cash flow.
The European Works Council believes that additional focus is required in the strategic business areas to fuel sustainable growth. The EWC calls for immediate, additional investments to accelerate the re-skilling and up-skilling of current employees and to attract and retain new experienced colleagues in the strategic areas in Europe. These investments in education and skills development should always be protected from drives to further optimise costs and improve financial ratios.
Over the past years IBM started a crucial transformation. New skills are acquired and have to be developed, and the company continuously optimised expense levels by applying several resource balancing programs and staff reductions. The EWC strongly opposes against involuntary measures as it observes that the numerous and significant dismissal and separation rounds have had negative impact on employee morale and engagement. IBM states that a new ‘job-to-job’ approach must avoid large write offs.
The EWC welcomes the first ‘kick off’ discussion on the overall outline and context of this new approach and believes that additional dialogue is required. The EWC needs full and concrete insight in for example IBM’s European future skills requirements, transition models, demographics and concrete employment implications for the respective Lines of Business to be able to actively engage in the discussion and prepare for proper consultation. The European Works Council considers internal redeployment as the natural guiding principle of job-to-job, the primary focus should be on retain & reskill rather than on outplace & dismiss.
The EWC believes that further discussion and dialogue on the subject is crucial to design and develop alternatives and tailor made solutions which offer a win-win. As IBM’s transformation will continue, longer term agreements should be designed comprising sustainable solutions. Flexibility in accounting and budgeting rules is key to ensure that alternative approaches can be actively supported. In addition to re-skilling and up-skilling programs, possible ideas to further explore could be flexible and part time retirement schemes, programs to support employees to start their own business or ‘ 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. Alternative approaches should always be designed from a social and human perspective and need.
IBM has initiated global changes in the current operating model, which will also affect Europe. Decision making power is delegated back from the geographic (IOT) level to the local market (IMT and country) teams for several parts of IBM’s businesses, with more flexibility to relocate budgets and resources. A dedicated General Manager for IBM Europe has been appointed to ensure that the new model is applied well and will encourage teamwork. The EWC requests IBM management to provide written information on this initiative and to ensure that possible negative implications to the colleagues who work today in pan-European roles are limited and will be addressed and solved adequately in case they have to return to their home countries.
In 2013 GBS Europe opened Client Innovation Centres (CIC) for local delivery at highly competitive rates in three Western-European countries. Today there are around ten CIC’s operational in this geography and the EWC expects that the number will go up further in the coming years, not only within GBS but most likely also in GTS. The EWC welcomes the creation of new jobs around Europe. CIC’s are presented as independent and non-integrated legal entities. The EWC concludes that in reality they are fully integrated and aligned with IBM’s management system, go-to-market model, compliancy processes, labour claiming procedures and tools, and Profit & Loss reporting and consolidation within GBS and GTS.
Furthermore the EWC believes that CIC’s operate in contradiction with the original design and are not complementary but overlapping, thus cannibalising, on the GBS Delivery main line scope of work. The EWC requests IBM management to provide full insight and clarity regarding the JRSS split strategy that applies to the CIC and GBS Delivery missions. Employees working especially in the GBS Delivery organisation should be enabled to understand what the relevant and ‘hot skills’ are today and in the quarters and years ahead of us. They can then proactively monitor their skills profiles and timely initiate re-skilling and up-skilling to ensure their sustainable employability. The EWC also requests IBM management to maintain the original CIC design to employ young European graduates and early professional hires and to minimise the use of the ‘Host Country Assignment Model’ (HCAM) which brings in IBMers from Global Delivery Centers outside of Europe.
The EWC also requests full insight in IBM’s co-location strategy, where employees instead of working virtually and remotely using the latest technology are now requested to work physically together in locations that are not equipped to house large numbers of employees.
IBM European Works Council
Brussels – November 10, 2016