Magazine article Management Review

IBM Ponders the 'L' Word

Magazine article Management Review

IBM Ponders the 'L' Word

Article excerpt

Question: When is a downsizing not a downsizing?

Answer: When the financials turn it into a "targeted incentive program."

IBM, the American company that most closely emulates the Japanese model of a caring, womb-to-tomb corporate monolith,is learning that when the going gets tough, sometimes the tough need to be asked to get going IBM reported its first loss ever in 1991. Its workforce, which has dropped by 65,000 people since 1986, is expected to fall by a minimum of 15,000 more this year.

CEO and chairman John Akers said last December that if conditions worsen, IBM's full employment practice could be placed under review and layoffs might result. Purists will argue that IBM's full employment policy has never been a guarantee--it always has been a process of the prosperity enjoyed by the company. Skeptics point out, however, that no layoffs have been an IBM tradition for 50 years--and that this is the first time the IBM chairman has uttered the "L" word in public.

Last year, IBM announced a severance package that offers a modest two weeks' pay for every year of service, plus numerous other options, to a large number of employees who choose to depart. …

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