International Business Machines (IBM) Italia, Italy Changing attitudes
IBM is an American-owned multinational information technology (IT) company. In 2004, it recorded sales of $96.5 million, and it has around 329,000 employees worldwide. IBM Italia operates in the hardware, software and services sectors, including finance. It has around 8,300 employees, 1,000 of whom are executives, and the remainder office workers. Around 2,500 employees (30%) are women and more than 3,200 employees (40%) are aged over 45 years. IBM Italia’s largest centres are in Milan (its headquarters), Rome, Padua, Bologna, Florence, Genoa, Naples and Palermo.
IBM is moving from the production of IT equipment to the supply of IT consultancy services. It has also decided to centralise decision-making at its US-based head office, reducing branch office autonomy. Thus, IBM Italia is currently reorganising and reducing its workforce by around 500 employees. This has adversely affected the company’s relationship with the trade unions, a relationship that is usually agreeable though not always cooperative.
Despite this, IBM Italia is actively managing diversity issues – including age balance – in its workforce. It also appreciates older employees’ skills and experience, even as it recognises that they cost more.
The original initiative
The original initiative began in 1991and relates to policies focusing on employees’ transition to retirement. This formed part of a broader initiative aimed at increasing IBM Italia’s cost efficiency. Accordingly, the company created satellite companies and outsourced functions to these companies. It also transferred part of its workforce to these companies, taking care not to discriminate on age grounds.
One such satellite company was Sernet – a business consultancy set up as a result of a partnership between IBM Italia and around 10 of its former managers. These managers had extensive experience and top professional profiles, were aged between 55–65 years and had retired from the company to join the satellite company. This initiative not only reduced costs for IBM Italia, it also allowed the company to retain its access to skilled professionals. Moreover, it enabled the Sernet employees to gradually withdraw from the workplace and to ease into retirement.
The collaboration between Sernet and IBM Italia proved initially successful. Always with a view to reducing costs, IBM Italia used the satellite company as a retirement incentive for its ageing top managers. Nevertheless, the bond between the companies gradually weakened and ended in 1996. While it lasted, however, IBM Italia sent around 100 older managers to the smaller company, thus reducing its workforce while allowing its former employees to extend their working lives.
Good practice today
As part of a cost-reduction programme in the early 1990s, IBM Italia created several satellite companies to aid part of its workforce in making the transition to retirement. The company guaranteed the satellite companies a market for one to three years, after which they were to become completely autonomous.
Sernet, a business consultancy that was among the first of these satellites, was set up to give experienced managers approaching retirement a chance to gradually withdraw from the workforce, while maintaining the parent company’s access to their skills and reducing its costs. Although the initiative was pioneering at the time, other types of work flexibility are now widespread, and IBM Italia no longer feels obliged to guarantee retirees economic support for post-retirement work. Sernet still exists but no longer has a formal link to the parent company.
IBM Italia’s current initiatives are separate from the original initiative. One initiative involves the company’s participation in a project developed by the Harmony Laboratory of the School of Business Management at Bocconi University in Milan, aimed at managing staff diversity through work on groups vulnerable to discrimination. The company independently decided to participate in the project, although it did inform the trade unions that it was doing so.
A 2004 study on company workers aged over 45 years aimed to develop a management approach targeted at its older employees. It addressed the question of whether the company should try to motivate older employees and make the most of their valuable experience, or whether it should address economic criteria only and employ younger workers instead of older workers, as the latter tend to cost more to employ.
Although innovative in the Italian context, this question has increasing relevance for a multinational company like IBM. As a result of several workshops on ‘age as a factor of discrimination: business cultures and stereotypes’, the study was carried out at IBM Italia. The results emphasised the positive features of older workers, among them their stronger identification with the company, greater motivation to work and relevant experience. The study ended only recently and the company is still analysing its findings and their implications for its employment policies, especially those that will define its approach to older employees.
The analysis has been delayed, partly because of changes in the parent company that might involve reorganisation, including staff cutbacks. IBM Italia reduced its workforce by 510 employees earlier this year. Diversity management takes second place to dealing with issues, including disputes with trade unions.
Nevertheless, the initiative is innovative in an Italian context and will probably have positive effects – e.g. in terms of a better work environment and improved internal industrial relations – as soon as the issues relating to the recent staff reductions are resolved. These recent redundancies were not influenced by the findings of the initiative, which in fact emphasised the positive features of an older workforce.
Previous initiatives for all employees, including older workers, dealt mainly with training, work–life balance and health promotion issues, e.g. improving life-style habits, care of older family members, child-rearing, etc.
Despite these measures, the trade unions today appear dissatisfied with their relationship with the company, which they believe has become less collaborative (e.g. in finding solutions together) through the years. The unions feel that the company tends to decide on workplace issues unilaterally and merely informs them of decisions already taken.
Dr. Patrizia Sangalli, Human resources (Email: email@example.com)
Alfio Riboni, Labour union representative, Fiom Cigl RSU IBM
Dr. Renato Gazzola, Vice-president of Sernet (Email: firstname.lastname@example.org)
Annual report available at http://www.ibm.com/annualreport/2004/annual/ch.shtml
Other publications available at http://www.ibm.com/news/us/publications/