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Herman Trend Alert: They Know Not What They Do October 1, 2014

On September 12, 2014, "Computerworld", a well-respected Information Technology trade magazine, broke the startling news. Selected members of IBM's Global Technology Services strategic outsourcing group were sent an internal memo alerting them to a 10 percent salary cut, disguised as "a co-investment in training".  The reason given: "an assessment has revealed 'that some managers and employees have not kept pace with acquiring the skills and expertise needed to address changing client needs, technology, and market requirements'."

Not surprisingly, the affected employees are upset. For decades, there has been a tacit understanding that employees would be paid for time spent in training. Big Blue's recent decision flies in the face of this long-accepted practice.
 
Under this new system, employees will spend one day per week, "developing skills in key growth areas such as cloud, analytics, mobile, and social".  At the same time these workers' salaries will be cut for the period of time between mid-October and the end of March, approximately six months and they are to dedicate up to 23 working days, focusing on learning and development.

Like a similar situation at Publix Supermarkets, it would seem that IBM is inviting the "chosen" employees to quit, In the words of one of its employees, "exempting IBM from [having] to let them go and [having] to pay severance".

We suspect this situation has been faced by many other organizations, some of which have handled the need for retraining differently---either by paying for the up-skilling or by offering the employees a desirable severance package. *

Like the move made at Yahoo by CEO Marissa Mayer to eliminate telecommuting, this move on the part of IBM makes little sense, when taken in the bigger picture. To charge employees for training is "outrageous and unacceptable". It will further erode employee morale and will, no doubt, alienate some customers, who valued their relationships with the affected employees.
 
The action taken by IBM is shortsighted and irrational.  We do not expect this move by IBM to be copied by other employers. Instead, wise employers, facing this condition, will assemble their employees and ask them to come up with solutions---a process which has worked for years.
 
* On a side note, once when AT&T wanted to get rid some of its "overpaid" employees, it offered packages that were so popular that more people took them than they wanted. Then they had to hire back some of those employees as consultants at a premium.

Special thanks to author Ed Gordon, "Computerworld", and the "New York Times" for their coverage of this important issue.
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To read this Herman Trend Alert on the web: http://www.hermangroup.com/alert/archive_10-1-2014.html.
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Herman Trend Alerts are written by Joyce Gioia, a Strategic Business Futurist, Certified Management Consultant, author, and professional speaker. Archived editions are posted at http://www.hermangroup.com/archive.html 
 
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