Due to COVID-19, most European IBMers have been working from home for more than a year now and a significant number have not returned to their office since the beginning of the pandemic in early 2020. After considerable disruptions at the start, and renewed lockdowns and curfews over the past months in nearly all European countries, working from home has become the ‘new normal' to most colleagues. The IBM EWC is grateful to IBM for ensuring that employees around Europe can continue to work from home. However, the team believes that IBM's corporate rule of ‘20 infections per 100.000 per day' before a return to the office is possible again, is significantly more restrictive than local government policies. As also mentioned last year, the membership observes that the vision of organisations regarding working at office locations has fundamentally changed. The team expects that IBM is also revisiting its office strategy and work practice and requests again to be actively informed and involved in IBM's vision, scenarios and concepts, including the anticipated implications for Kyndryl.
The first quarter of 2021 was transitional and disruptive around Europe with several major actions executed simultaneously. First of all, much time was dedicated to the implementation of the massive Resource Action and the local negotiations of social plans. Overall, up to one fifth of European employees had to leave the company. The approach varied country by country. Today, this action has been concluded in the vast majority of European countries. The loss of so many valued colleagues at a critical moment in our history, has created many negative sentiments all over Europe. The IBM EWC believes that several open vacancies could have been fulfilled by skilled and motivated IBMers who were in the scope of the Resource Action. Due to time pressure and corporate instructions, these opportunities seemed insufficiently explored, with negative implications to the careful handover of work and continuity of operations. For various job roles, even external hiring or contracting of work has been initiated, which costs, in the view of the IBM EWC, more time, effort and money than re- and up-skilling current employees.
In parallel, a new Go To Market model was introduced in most European countries in 1Q 2021, focusing on two main segments of so called S1 and S2 customers; S2 customers will be covered primarily by eco-system partners and IBM Digital Sales. As a consequence, the number of face-to-face sellers had to be reduced drastically. However, the IBM EWC believes that today, the company is still highly dependent on its traditional sales force and that it requires significant time and investment to recruit new eco-system partners and to develop and build up new partnerships. The membership also concludes that too many face-to-face sellers were dismissed before a robust and sufficient eco-system footprint has been created. The new Go To Market model is positioned as the growth engine for IBM Technology, unfortunately the first business results in 1Q 2021 of our new model were not as expected. The IBM EWC observes that the staffing levels especially in the Business Partner eco-system and IBM Digital Sales units are insufficiently growing or even declining and urges IBM senior management to invest and enlarge these units, to be fully equipped and ready to take over the role of our traditional face-to-face sellers.
During the presentation of IBM's corporate financial results, it became apparent that the performance of IBM in Europe in 1Q 2021 was disappointing overall. The EWC membership is very concerned about the revenue trend of our strategic Cloud & Cognitive Software (C&CS) business in Europe. Notwithstanding IBM's corporate results in C&CS, Europe continues to deliver below budget and is again losing share in a growing market of utmost strategic importance. Despite significant revenue growth of Red Hat and expanding market share in Europe in the quarter, this contribution does not, in absolute terms, compensate the decline in IBM's C&CS revenue. Compared with other geographies, the European NPS scores are low also. The IBM EWC believes that there is a clear correlation between the number of employees, IBM's visibility and footprint in the market and the financial results. The membership requests IBM senior management to retain current staffing levels and to attract additional employees especially in our Cloud & Cognitive Software business to return to growth.
Also in the first quarter, the spin-off of GTS Infrastructure Services into a new, independent company named Kyndryl, became more visible and prominent. IBM conducted a so called ‘workload assessment' and scoping exercise, to determine how much time European employees spend working on GTS IS related activities and as a consequence will transfer to Kyndryl, either by law or on a voluntary basis. The IBM EWC requests that IBM senior management provide insightful, consolidated data and breakdowns regarding the European headcount numbers and groups of employees transferring to the new company, and to apply ‘business need' as a secondary criterium only, to be used just in the case of voluntary transfers. It was reconfirmed during this week's WebEx session, that current terms & conditions of employment for the European employees in scope will one-on-one, transfer to Kyndryl, respecting and applying the European TUPE (Transfer of Undertakings Protection of Employment) 2001/23/EC rules. Pension schemes in particular may differ, based on country laws and regulations. IBM senior management said that it will, in such cases, harmonise possible differences with comparable and competitive remuneration packages. European Works Council
The IBM EWC welcomes and appreciates the transfer of acquired rights, but also observes that this approach is not always transparent and well known in all European countries at the moment. Therefore, the membership requests IBM senior management to pro-actively communicate and inform employees about their scoping and to formalise transfer conditions, to ensure their motivation, retention and a smooth spin-off. The membership also urges IBM senior management to apply September 1, 2021 as one consistent and uniform transition date for all European countries. This not only provides uniformity and consistency, but also allows sufficient time for local teams to ensure customer consent before the actual start of transfer of employees into Kyndryl legal entities. The IBM EWC requests IBM senior management provide continued support to the EWC's experts and timely access to relevant European data points to assess the financial viability of both Kyndryl and new IBM in Europe.
After the spin-off of Kyndryl, GBS will form the new IBM Services organisation. GBS has designed a revised operating model as part of its ‘Transform 2 Grow' (T2G) program. The new model aims at optimising and simplifying the current approach, by reducing and consolidating the number of Growth Platforms and Service Lines. IBM senior management stressed that no negative employment implications are foreseen. Instead, hiring new employees with strategic skills is a key priority to support the new design. The new operating model is evolving and should become visible in the second half of this year. The IBM EWC requests that IBM senior management actively inform and involve European practitioners about this new operating model, to provide clear guidance in which strategic areas additional skills and certifications are required, and to allow local teams to create and further optimise their own practice within the global design, to ensure local relevancy. This applies especially to smaller and medium sized countries, where the new model cannot always be fully implemented, due to limited staffing levels and/or local demand.
GBS is rapidly building and extending its expertise around the solution areas of IBM's competitive cloud hyper scalers, given the size of that market opportunity with high customer demand. In the view of the IBM EWC, the new operating model should provide a more explicit alignment of IBM Services with IBM's overall strategic focus on hybrid cloud, AI and Red Hat Open Shift solutions as well. The team wonders if IBM plans to fully abandon the labour intensive Services market and might aim at another spin-off in the near future. In the broader context, the IBM EWC believes that it is of utmost importance to urgently revisit the identity of ‘new IBM' and to visibly reposition the company as the distinct and essential leader in hybrid cloud and AI. GBS said it started to work on its branding positioning already. The membership finds it crucial to align and orchestrate all rebranding actions and to invest in actively informing and promoting our refocused identity, our core competences and our relevant and differentiated solutions and offerings around Europe. The team recommends IBM senior management to launch a dedicated brand awareness campaign across Europe, both internally and in the market.
The IBM EWC believes that reward and recognition contribute to employee engagement. The team was informed that IBM will change the global metric of the Growth Driven Profit-sharing (GDP) program as per this year, with ‘Operating Cash Growth' becoming a new indicator to fuel GDP. In the view of the membership, at the beginning GDP was experienced as an attractive program, but eroded significantly over time due to revised criteria and metrics. The IBM EWC regrets the latest change, as also this metric cannot be influenced in any way by individual employees around Europe and anticipates that GDP will most likely be perceived as even more out of their daily scope and thus less motivating and rewarding. The team is also disappointed, that more than half of the European employees were excluded from a salary increase in May and noted that primarily colleagues in ‘hot roles' qualified for an increase. Some business units were fully excluded from an increase, e.g. Finance & Operations, which is experienced as unfair and demotivating. AI tools such as ‘Compensation Advisor' are programmed to advise managers which employees on their teams could be included for or excluded from an increase. The IBM EWC has the clear impression that being in the right role or business unit, counts more than the contribution that is delivered. Especially in current times, the team believes that all employees, irrespective of their role, should have been fairly rewarded. The membership requests that IBM senior management provide insightful data regarding the distribution of the salary increases around Europe by band, manager/non-manager, business unit, age group and gender.
The overall gender pay gap in the EU-27 countries in 2020 was 14.1% according to the latest Eurostat findings. The IBM EWC was informed that at IBM in Europe, men and women are paid equally, in line with IBM's pay equity commitment as it was formulated already in 1935 by IBM founder Thomas J. Watson Sr: “Men and women will do the same kind of work for equal pay. They will have the same treatment, the same responsibilities and the same opportunity for advancement". The membership is pleased to understand that this commitment is strictly applied around Europe. At the same time, the IBM EWC believes that mostly men work in higher positions and seem to have better career and growth opportunities than other groups. The team requests IBM senior management to ensure a better balance. Assuming that recruitment and promotion practices are part of the solution, we request access to relevant statistics to assess the situation at IBM in Europe.
IBM European Works Council
Via WebEx – May 21, 2021