Management In Action

IBM Wants Its Employees Back in the Office

International Business Machines Corporation (IBM) started in the early 1900s as a manufacturer of machinery such as commercial scales, industrial time recorders, and meat and cheese slicers.¹³¹The company invented the first personal computer (PC) in 1981. The PC was a landmark in transitioning the use of computers from the military and government to the desks of everyday people.¹³²IBM made a major strategic move into services and software when it sold its PC division to Lenovo in 2004.¹³³The company had 380,000 employees and revenues of more than $78 billion in 2017.¹³⁴

IBM has experienced 20 consecutive quarters of declining revenue. It also missed analysts' revenue expectations in 2017,¹³⁵and the stock lost approximately 30 percent of its value between 2013 and 2018.¹³⁶Although CEO Virginia "Ginni" Rometty attributes these results to "her selling off legacy businesses and to unavoidable currency hits,"¹³⁷others think that group dynamics and teleworking are partly a cause.

THE COMPANY SAYS ITS TEAMS CAN'T KEEP UP

CEO Rometty "is on a protracted mission to make IBM a cloud-based 'solutions' business,"¹³⁸but the transformation is having trouble keeping up with "the competitive tech marketplace that has become significantly more agile and nimble over the past decade," said an analyst toNBC News.¹³⁹IBM was already a distant third to Amazon and Microsoft in cloud computing and was losing ground to Google as of 2017.¹⁴⁰

What's slowing the company down? Some IBM executives blame a lack of team collaboration and innovation due to teleworking. Chief Financial Officer Martin Schroeter told investors in 2016 that it's about "get[ting] the teams back

together as opposed to so spread out," saying that remote working is not doing IBM any favors when it comes to being agile.¹⁴¹

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This is an interesting conclusion given that IBM was a pioneer of remote work, according toThe Wall Street Journal.¹⁴²More than 40 percent of IBM's workforce in 173 countries worked remotely in 2009.¹⁴³The company's own Smarter Workplace Institute stated in 2014 that remote workers "tend to be happier, less stressed, more productive, more engaged with their jobs and teams, and believe that their companies are more innovative as a result of flexible work

arrangements."¹⁴⁴IBM again boasted in 2017 that "telework works" in its Smarter Workforce Blog.¹⁴⁵

IBM gave a surprising ultimatum to thousands of employees a week after the blog was written: Come back to the office in the next 30 days, or leave the - company.¹⁴⁶The organization also released a statement

toCNN Technologysaying, "In many fields, such as - software development and digital marketing, the nature of work is changing, which requires new ways of working. . . . We are bringing small, self-directed agile teams in these fields together."¹⁴⁷

IBM's decision may be grounded in science, especially when it comes to collaboration, creativity, and trust. Studies show that proximity boosts collaborative efficiency, according toThe Atlantic: Collaborative efficiency is the speed at which a group successfully solves a problem.¹⁴⁸IBM wants to see more collaborative efficiency. The company's VP of Communications, Carrie Altieri, told theHuf ington Postthat "For areas of the business where heavy collaboration and co-creation are key for time to market like development or marketing, we want those employees working together."¹⁴⁹

Some experts also say that working in close proximity has a positive effect on creativity and trust. An IBM team needs to exhibit functional conflict in order to be creative, according toInc.magazine. Functional conflict is based on the premise that teammates can argue passionately about a topic without letting it become personal and emotional. This ability depends on the existence of significant trust among team members, whichInc.argues can primarily be gained in face-to-face interactions.¹⁵⁰

IT'S ALL IN THE PROCESS!

Critics say IBM got it wrong and that team processes are the issue, not working remotely. "Unfortunately, the move is just smoke in mirrors; it's an illusion that they've made progress when all they've really done is shuffled people around into different boxes," said aForbesconsultant. He

believes having a set of consistently enforced virtual norms trumps the need to be located in the same space (co-location).¹⁵¹Virtual norms can include check-ins by team members. A daily meeting (or even two) might be required to ensure team cohesiveness, according to an expert atEntrepreneur Media. Frequent meetings also provide an opportunity for teams to lay down some goals and expectations for each team member and ensure that those expectations are being met. This check-in will promote shared accountability, particularly in remote teams.¹⁵²

IS COLOCATION THE RIGHT SOLUTION?

Some experts, such as Stephane Kasriel, the chief executive of Upwork, contend IBM's decision will backfire and adversely affect team morale and corporate performance.¹⁵³Ron Favali is a prime example. Favali is a 15-year IBM marketing veteran who has spent the last 12 years working from a home office outside Tampa, Florida. His team uses IBM's Sametime instant messaging voice and video chat software to stay connected and on task, despite being scattered across three states. Favali may not be able to move to Atlanta, Austin, Boston, Chicago, New York, or San Franciscoall locations to which IBM "invited" its marketing team to relocate. His morale dropped so much after the directive that he toldFox Businesshe is leaving the company.¹⁵⁴

Kasriel believes IBM's move will cause other talented employees to leave, ultimately diminishing the quality of its teams. He says that IBM's " . . . best talent will easily find new jobs with companies that are more open to

remote work."¹⁵⁵All told, the loss of talent will put IBM further behind its competitors.

A mass exodus of talent would recall the fall of another giant. Yahoo CEO Marissa Mayer decided to discontinue remote working in 2013.¹⁵⁶That decision " . . . didn't really help Yahoo," said Sara Sutton, the founder and CEO of Flexjobs.com.¹⁵⁷Mayer was ranked byCNBCas the "least likable" CEO in technology after the decision.¹⁵⁸

What would you do if you were Ginni Rometty?

FOR DISCUSSION

Problem-Solving Perspective

1. What is the underlying problem in this case from the perspective of CEO Ginni Rometty? a senior leader from human resources?

2. What are the causes of this problem?

3. What advice would you offer to solve the problem? Explain.