IBM Establishes Individual Learning Accounts for Employees

By Staff Report

Jul. 26, 2007

IBM has launched a new program to help its employees upgrade their skills and broaden their perspective so that they can do individually what the company as a whole has been doing for years—compete in the global economy.

In an early evening speech Wednesday, July 25, in Washington, IBM chief executive Samuel J. Palmisano announced that the firm has established individual training and education accounts for employees with at least five years of service.

An IBM worker can put as much as $1,000 annually into the portable account, which would be similar to a 401(k) retirement fund. The company will make a 50 percent match on the employee contribution.

The accounts are one element of what IBM calls its Global Citizen’s Portfolio, a three-year, $60 million initiative designed to help employees bolster their skills and careers.

Another component is a leadership development program that will bring together IBM staff from around the world to tackle problems in developing countries in partnership with nongovernmental organizations.

The final piece of the program, called enhanced transition services, will help IBM employees find second careers in government, nonprofit, educational and economic development organizations when they leave the company.

Palmisano’s goal is to give IBM employees more agility in adjusting to global economic demands.

“To be competitive, any individual—like any company, community or country—has to adapt continuously, learning new fields and new skills,” Palmisano said at an IBM conference on global leadership. “We’ve set off down the path of empowering and enabling our people to make decisions and to act. We call this lowering the center of gravity of the company … pushing decision-making authority out and down.”

Giving employees more control over their training and career direction will increase their engagement, according to Palmisano.

“We believe that this kind of program will help us attract the smartest and most creative workforce,” he says.

IBM requires high-caliber people as it transforms itself from a traditional multinational company, with country-specific operations, to a “globally integrated enterprise,” Palmisano says.

“We used to have separate supply chains in different markets,” he says.  “Now we have one supply chain, a global one. Where we used to think about our human capital—our people—in terms of countries and regions and business units, we now manage and deploy them as one global asset.”

But millions of workers around the world aren’t being deployed in the global economy—they’re being deactivated. IBM is hosting the Washington conference in part to address fears about diminishing income and job prospects that are becoming rampant in both developed and emerging economies.

One way to address the anxiety is to weave a stronger safety net to help workers bounce back when they lose their jobs, says C. Fred Bergsten, director of the Peterson Institute for International Economics in Washington. The organization is helping sponsor the forum.

Ideas that Bergsten promotes include wage insurance, portable health insurance and pensions, and trade adjustment assistance.

These programs help workers absorb the impact of global competition. “The hit will not be so acute, will not be so damaging,” Bergsten says. “We are going to have to do more.”

Beyond paying attention to those left behind, advocates for the global economy need to do a better job explaining its benefits, according to conference participants.

For instance, IBM is just as likely to place an operation in the U.S. as it is to locate it in India, Palmisano says. Lowering costs is only one factor in the decision. Local labor market skills and infrastructure are also key.

“The important thing is we’re trying to have this integration of competency and value,” Palmisano says.

As countries develop those traits, they have to remain globally engaged. “Economies grow faster if they’re more integrated and open,” says Timothy Geithner, president and CEO of the Federal Reserve Bank of New York.

Economic gains are also spread more broadly over time, Geithner says.

Palmisano asserted that companies have to articulate such arguments. “If we don’t make the case, the case will be made for us,” he says. “And we won’t like the outcome.”

To avoid that result, Palmisano proposed changing negative attitudes.“The most productive way to think about this—both for business growth and for societal health—is not ‘What will globalization do to me?’ Rather, it’s ‘How can I get work and investment to flow to me?’ “

Mark Schoeff  Jr.

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