International Business Machines: Strategies and People Issues

By Group 3

06 Amit Papneja09 Sravya Arekatla12 Chhavi Aggarwal

13 Chhavi Gupta50 Swetha Sri M.59 Vidhi Verma

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Question 1: Compare and contrast the HR strategies of the

three CEOs of IBM – John Akers, Lou Gerstner and Sam

Palmisano – on hard-soft dimensions of HR Strategy.

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John Acker’s HR strategies

View of Employees•A tight fit between HR and Business strategy

•Expected to wear familiar dark suits and white shirts

Are Employees a resource?•Yes •Change their jobs as and when required

Focus•Human resource policies•Sophisticated Human resource planning

•Recruitment and Training •Performance Objective system•Extensive training on people management

HR Mgmt. Emphasis•Calculative•Pay better than rate of competitors•Life time employment•Audit of staff function held every two yearss

Reflects•Crude Unitarism

Combines•Scientific Management

Type•Prescriptive model•Decision making and people management delegated to line managers at lowest possible level

Shows•Rational Strategy•Social contract between employee and employer

Style•Paternalistic and Hierarchical

Hard Model

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Lou Gerstner’s HR strategies

View of Employees•A tight fit between HR and Business strategy

•High focus on reviving the business• Improving customer relations and decentralization

•Diversity Management

Are Employees a resource?•Yes •Major staff reductions

Focus•Knowledge Management• Information sharing as one of the parameters in PMS to determine compensation

HR Mgmt. Emphasis•Calculative•Cost reduction through reduction in global workforce

•Raising cash by selling assets

Reflects•Alignment of Business

Combines•Scientific management and rational strategic management

Type•Prescriptive model• Individual accountability•Sense of urgency

Shows•Strategic alignment of all the processes

Style•Measuring results

Hard Model

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Sam Palmisano’s HR strategies

View of Employees• Focus on people and their

relations with management• Emphasis on employee

development

Are Employees a resource?• Yes • Resourceful humans

Focus• Empowerment• Trust, collaboration

HR Mgmt. Emphasis• Different organization

structure

Reflects• Neo pluralism

Combines• Human relations• Japanese Management

Type• Collaboration

Shows• Emergent Strategy• New Technology and

process management

Style• Global Integration

Soft Model

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Question 2: Discuss fully the italicized statement of Czarnecki,

the HR Manager brought in by Lou Gerstner: “IBM did

deliberately foster paternalism, with a social contract between

employee and employer. But economic realities forced us to

rethink the relationship. Now we’re no longer asking people for

total commitment to us. They’re eager to stay, but prepared to

leave.”

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KEY CHANGES TO HR BY GERSTNER’S TEAM

Look to the marketplace

Single salary structure changed to different salary

structures with merit budgets for

different job families.

Allowed IBM to pay employees in different job

families according to market-oriented

rates.

Fewer, faster jobs in a flatter organization

Traditional salary grades scrapped in

the USA

Number of separate job titles cut from 5000 to less than 1200

Reward for performance

New compensation system: managers given budget and told to differentiate between ‘stars’ and

‘acceptable performers’ on the

grounds that otherwise the stars would not stay too

long.

Reference: Price, Alan; Human Resource Management in a Business Context (Third Edition), (2007), Thomson Learning

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EVOLUTION IN SOCIAL CONTRACTS

1961: Progress report to Employees, Thomas J. Watson, Jr.

"I feel strongly that there are some priceless ingredients in this business which we will never change—things such as our concern for the individual, our sense of fair play and our belief in services. For our fine reputation as a company is based on

nothing more and nothing less than respect for the individual, integrity and personal values of our people. You are, in fact, the IBM company."

2007: NY Times Report by Steve Lohr

IBM reinvented social contracts with its workers

Whether a person stays with the company for a long career or just for a few years, IBM is a place where people can enhance their skills and be more competitive in a

labor market buffeted by globalization and rapid technological change.

http://www.marketingprofs.com/articleshttp://www.taipeitimes.com/News/editorials/archives/2007/07/29/2003371794

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Question 3:

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Question 4:

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Question 5:

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THANK YOU