IBM 1993: The Biggest Layoffs in US History

October 30, 2018

IBM has always valued its employees, company culture, and values. However, due to economic turmoil and an increase in competition, IBM had to layoff the largest amount of employees in US history. In order to survive, IBM had to change its base core values.

FULL TRANSCRIPT

Anna Gillam: The IBM Country Club in Endwell,

Anna Gillam: New York was the literal epicenter of company culture.

Anna Gillam: Employees had access to an 18 old golf course,

Anna Gillam: school, bowling alley, restaurant.

Anna Gillam: Essentially a slate of awards

Anna Gillam: for loyal and professional service.

Anna Gillam: This is the country club today.

Anna Gillam: It's a shadow of its former self.

Anna Gillam: Gone are the amenities,

Anna Gillam: the decor, and most importantly, the employees.

Anna Gillam: So, where did they go?

Anna Gillam: First seven decades, IBM was considered a model employer.

Anna Gillam: Working there men having a job for life.

Anna Gillam: Something changed.

Anna Gillam: In 1993, IBM in

Anna Gillam: practically one swift motion cut 60,000 employees,

Anna Gillam: the largest layoff in American history.

Anna Gillam: International Business Machines,

Anna Gillam: or Big Blue got its start in 1911,

Anna Gillam: selling machines that automated

Anna Gillam: everyday business transactions,

Anna Gillam: like tabulating machines for punching cards.

Anna Gillam: By the mid century,

Anna Gillam: IBM shifted its business model and

Anna Gillam: became a top supplier for mainframe computers.

Anna Gillam: During that era, Tom J. Watson Jr. took over as CEO.

Anna Gillam: In 1962, he established three company beliefs;

Anna Gillam: customer service,

Anna Gillam: excellence, and respect for the individual.

Anna Gillam: Watson even wrote a book,

Anna Gillam: A Business and Its Beliefs,

Anna Gillam: detailing the essence of respect for the employee.

Anna Gillam: The IBM policy on job security

Anna Gillam: has meant a great deal to our employees.

Anna Gillam: From it has come our policy to build from within.

Anna Gillam: We go to great lengths to develop our people,

Anna Gillam: to retain them when job requirements change,

Anna Gillam: and to give them another chance if we find them

Anna Gillam: experiencing difficulties in the jobs they are in.

Anna Gillam: For more than seven decades,

Anna Gillam: IBM never laid off any workers.

Anna Gillam: Through economic turmoil and competing innovation,

Anna Gillam: IBM endured, and so did its company culture.

Anna Gillam: But this principle was largely a privilege.

Anna Gillam: After World War II,

Anna Gillam: when nations were rebuilding,

Anna Gillam: American corporate control was getting stronger.

Anna Gillam: This gave companies like IBM

Anna Gillam: a greater ability to value their employees.

Anna Gillam: And value them, they did.

MALE_1: The kind of work we do with

MALE_1: requires people who have initiative,

MALE_1: and a strong sense of personal responsibility.

MALE_2: Because we believe it's the right thing to do.

MALE_2: We know that IBM can be a tremendous force for good.

MALE_3: We also realized that we had

MALE_3: a special resource in the skills by IBM people.

Anna Gillam: But there was a seismic shift in the 1970s.

Anna Gillam: With the Vietnam War, an oil crisis,

Anna Gillam: and rising inflation, the economy

Anna Gillam: tumbled and took all the major corporations with it.

Anna Gillam: IBM was holding firm to its values.

Anna Gillam: But it was also losing revenue and shrinking in stature.

Anna Gillam: Other companies began to produce similar technology,

Anna Gillam: and then competition increased.

MALE_4: 64K memory,

MALE_4: at a price that will put a computer in every home,

MALE_4: a business and school years

MALE_4: before anyone ever dreamed. [MUSIC]

Anna Gillam: In the 1980s,

Anna Gillam: IBM tried to protect

Anna Gillam: its mainframe business against new competition from PCs.

Anna Gillam: It didn't work. For decades,

Anna Gillam: the company valued two voices most.

Anna Gillam: The customer and the employee.

Anna Gillam: But now they needed to recognize

Anna Gillam: someone else, the shareholder.

Anna Gillam: And the shareholder was not happy.

Anna Gillam: In 1993, the company of

Anna Gillam: 300,000 posted an $8 billion loss.

Anna Gillam: At the time, the biggest in American corporate history.

Anna Gillam: IBM needed to recover.

Anna Gillam: For the first time in 82 years,

Anna Gillam: IBM hired an outsider to lead the company.

Anna Gillam: And so Louis Gerstner,

Anna Gillam: a former exec at American Express was instated.

Anna Gillam: It was a herculean task.

Anna Gillam: He needed to cut billions in expenses.

Anna Gillam: So, he did the unthinkable.

Anna Gillam: He laid off 60,000 employees.

Anna Gillam: Even today, no other company

Anna Gillam: has laid off that many workers.

Anna Gillam: Dramatic as it may have been,

Anna Gillam: IBM found that interacting the employee for

Anna Gillam: life cycle would allow the company to survive.

Anna Gillam: From 1993 to Gerstner's retirement in 2002,

Anna Gillam: IBM's market capitalization rose from

Anna Gillam: 29 billion to $168 billion.

Anna Gillam: For this reason, he is often

Anna Gillam: considered the savior of IBM.

Anna Gillam: So perhaps when the company laid off 60,000 workers,

Anna Gillam: it was ushering in a new era.

Anna Gillam: In the past, IBM put its employees first,

Anna Gillam: but now company practice had to

Anna Gillam: adapt to a competitive global market.

Anna Gillam: This global market no longer allowed

Anna Gillam: the job security IBM once offered.

Anna Gillam: It no longer allowed for country clubs.

Anna Gillam: The IBM Country Club in Endicott,

Anna Gillam: New York was opened to the public in 1995,

Anna Gillam: and closed in 2002.

Anna Gillam: [MUSIC]