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4-Traders Homepage  >  Equities  >  Nyse  >  International Business Machines Corporation    IBM

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International Business Machines : IBM Says No to Home Work -- WSJ

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05/19/2017 | 08:48am CET

Pioneer of 'telework' tells employees they must return to office or find another job

By John Simons 

International Business Machines Corp. is giving thousands of its remote workers in the U.S. a choice this week: Abandon your home workspaces and relocate to a regional office -- or leave the company.

The 105-year-old technology giant is quietly dismantling its popular decades-old remote work program to bring employees back into offices, a move it says will improve collaboration and accelerate the pace of work.

The changes comes as IBM copes with 20 consecutive quarters of falling revenue and rising shareholder ire over Chief Executive Ginni Rometty's pay package.

The company won't say how many of its 380,000 employees are affected by the policy change, which so far has been rolled out to its Watson division, software development, digital marketing, and design -- divisions that employ tens of thousands of workers.

The shift is particularly surprising since the Armonk, N.Y., company has been among the business world's staunchest boosters of remote work, both for itself and its customers. IBM markets software and services for what it calls "the anytime, anywhere workforce," and its researchers have published numerous studies on the merits of remote work.

In the past, IBM has boasted that more than 40% of employees worked outside traditional company offices, and a May 4 post on the company's Smarter Workforce blog stated that "telework works."

IBM may be part of a broader rethink of remote work under way at large companies, as corporate leaders argue that putting workers in the same physical space hastens the speed of work and sparks innovation. Employers tread a fine line, however, since workers rate flexible-work programs highly, and research has found telecommuters often work more effectively than their cubicle-bound counterparts.

Yahoo Inc.'s decision to call telecommuters back to the office in 2013 set off a furor among employees and workplace experts. Yet more recent decisions at Bank of America Corp. and Aetna Inc. to greatly reduce telecommuting have elicited little outrage.

Big Blue's leaders want employees to work differently now, said Laurie Friedman, a company spokeswoman. The company has rebuilt design and digital marketing teams to quickly respond to real-time data and customer feedback, collaborations that happen more easily when teams work shoulder to shoulder, Ms. Friedman said, adding that the "vast majority" of IBM's telecommuters have chosen to join their teams in person.

Workers in affected IBM divisions have been given 30 days to decide whether to move to company-maintained office space that can be hundreds of miles away from their homes.

For example, marketing employees were invited to move to offices in Atlanta, Austin, Boston, Raleigh, New York or San Francisco, or leave the company. Some were given the option to move to Chicago. Those unwilling to move were also given 90 days to seek another role within IBM.

The changes have stunned longtime IBM employees like marketing manager Ron Favali. The 15-year company veteran has spent the past 12 years working from an office in his home outside Tampa, Fla., and considered himself a remote-work success story.

His team uses IBM's Sametime instant-messaging voice and video chat software to stay connected and on task, despite being scattered in three states. Working remotely came with career trade-offs, he said. "I was never going to be named vice president of marketing for anything, but I'm OK with that." He has declined IBM's offer to return to a company workspace, and will leave the company next month to start a marketing firm out of his home.

Companies began offering generous remote work policies because they expected large savings in office and real-estate costs, said Jennifer Glass, a University of Texas professor who studies telecommuting and advises companies on remote-work strategies. Those savings haven't materialized, Ms. Glass said, so workers are being called back to the office.

Relocating offices or asking employees to move can sometimes be read as layoffs in disguise, since a certain percentage of workers won't be able to relocate.

IBM says its co-location plan isn't a cost-saving measure. Ms. Friedman noted that the employees who can't join an in-person team can apply for one of more than 5,000 open jobs in the U.S.

Working from the master bedroom in her Ogden Dunes, Ind., home, Penny Schlyer helped market IBM mobile software and services for companies reliant on workers who aren't bound to a desk, such as retail employees, financial advisers or doctors.

Her seven years telecommuting with IBM could have been plucked from one of her marketing campaigns: She has logged work hours from the sidelines of her sons' sporting events and used Sametime to communicate with her colleagues.

She was dismayed when IBM requested the 48-year-old mother of three move to the company's New York City office. "The irony is definitely not lost there," she said.

Though IBM offered to pay for the move and make a small cost-of-living adjustment to her salary, Ms. Schlyer declined. "I could never afford to live in New York City, and probably not anywhere close."

She has found a new job leading product marketing for SA Ignite, a Chicago-based software company, but her office won't change; she is still in the master bedroom.

Write to John Simons at [email protected]

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Financials ($)
Sales 2018 80 091 M
EBIT 2018 14 993 M
Net income 2018 10 930 M
Debt 2018 33 206 M
Yield 2018 4,02%
P/E ratio 2018 12,86
P/E ratio 2019 12,68
EV / Sales 2018 2,19x
EV / Sales 2019 2,17x
Capitalization 143 B
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Mean consensus HOLD
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Average target price 170 $
Spread / Average Target 10%
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NameTitle
Virginia M. Rometty Chairman, President & Chief Executive Officer
James J. Kavanaugh Chief Financial Officer & Senior Vice President
John E. Kelly Senior VP-Cognitive Solutions & Research
Martin Jetter SVP-Global Technology Services
Sidney Taurel Independent Director
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