In an on-going age-discrimination lawsuit, a former Big Blue executive has suggested the firm fired old-timers in pursuit of a ‘trendy’ and ‘cool’ image, so it could compete with the likes of Google and Amazon.
This saga has been quietly building in the background for quite some time. The first complaints were presented to the courts in 2018 by Shannon Liss-Riordan, with the ex-IBM employees suggesting they were culled for no reason aside from the fact they were too old. This is of course a big no-no.
The latest revelation from the courts is from Alan Wild, the former-VP for Human Resources, Employee Relations and Engagement. According to Bloomberg, Wild is suggesting Big Blue has fired between 50,000 and 100,000 employees over the last five years in the pursuit of creating an image which will attract the younger generations.
This is where IBM has suffered over the last couple of years. It might have been one of the most successful technology companies of the 20th century, but it certainly doesn’t maintain this perception in the 21st. When graduates leave MIT or Stanford, first port-of-call is likely to be firms like Google, Facebook, Tesla, Twitter, Amazon, or a host of other forward-looking technology giants who have dominated headlines.
Big Blue might be on the rise currently, but this was only after 23 consecutive quarters of year-on-year revenue decline. This company went through a very painful process of realigning attention from the unpopular, unprofitable and declining legacy operations, through to its future-proof ‘Strategic Imperatives’ unit.
In Wild’s evidence presented to the courts, which are currently sealed documents, IBM began to correct its ‘seniority mix’ in 2014, firing older employees and hiring millennials. Perhaps part of this was to ensure its employees were suitably tooled to tackle the new challenges presented by the digital economy, but if you believe Wild’s alleged comments, the purpose was to have a compounding effect on attracting more fresh graduates into the midst.
According to an extensive investigation launched by Pro Publica last March, IBM had culled 20,000 US employees aged at least 40. This number represents 60% of the total number of total cuts across the period. Although the claims are unconfirmed to date, IBM allegedly told some staff their skills were no-longer needed, before hiring them back as contractors for less cash, and encouraging the older employees to apply for new roles internally, while secretly telling hiring managers not to hire them.
These are very serios accusations from both Pro Publica and Wild, though there are plenty of other testimonies which back up the claims.
In January, Catherine Rodgers presented her own evidence to a court in New York. Rodgers was previously a VP in the Global Engagement Office, while also serving as the most senior executive in Nevada. Rodgers was dismissed from IBM, after almost 30 years of service, in 2017 aged 62.
In Rodgers affidavit, she claimed she raised concerns to Steve Welsh, IBMs GM of Global Technology Services, that the firm was ‘engaging in systematic age discrimination by utilizing several methods to eliminate thousands of its employees’. As part of her role, Rodgers had access to lists of individuals who were being cut as part of ‘Resource Action’ initiatives in her business group, noting that all were over the age of 50 while the younger employees were not impacted whatsoever.
Having spoken to managers in other groups, many of whom had workforces made up of employees from younger generations, the layoffs were not as serious. Considering Rodgers’ division was exceeding targets and running under budget, the request from more senior executives caught her by surprise.
“IBM’s upper management encouraged us to inform the employees who were being laid off that they should use IBM’s internal hiring platform to apply for other jobs within the company, but at the same time, IBM implemented barriers to those employees actually being hired for openings,” Rodgers said in her affidavit.
“For example, if a manager wanted to hire someone who had been laid off, there was a multi-layer approval process. (This multi-layer approval process would not apply if a manager wanted to hire someone who had applied from outside IBM.) Even as Vice President, I could not make such a hire without approval by the Global Resource Board and IBM’s upper management.”
IBM has consistently denied reports it targeted older employees for lay-offs, pointing towards the number of people it hires each year. This statement does not prove innocence by any stretch of the imagination, it simply confirms the firm has been hiring new employees to replace the culled ones. In fairness to IBM, it is not proven the firm has targeted older employees and embarked on a campaign of age-discrimination.
What is worth noting is that the number of IBM employees globally has been decreasing steadily over the last few years. Statista estimates IBM had 350,600 employees at the end of 2018, down from 366,600 in 2017, 380,300 in 2016 and 377,700 in 2015. In 2012, IBM employed 434,250 people across the world. These numbers do not prove or disprove the allegations but are good to bear in mind.
IBM has managed a significant turnaround over the last few years. From irrelevance to a cloud business which is almost dining at the top table. It is threatening to compete with the likes of Amazon, Microsoft, Google and Alibaba, though it still has a lot of work to do. That said, it is in a much more comfortable position than previous years. The question is whether it has managed the process legitimately.