Reference no: EM132282870

IBM Offers Training (and Pay Cuts) to Employees to Learn New Technologies Some employees in IBM’s Global Technology Services group received e-mails from the company informing them that a recent evaluation had identified them as an employee who had not kept pace with acquiring the necessary skills and expertise needed to meet changing client needs, technology, and markets. As a result, IBM requires them to dedicate one day a week or up to 23 total days between October 2014 and March 2015 to focus on training. During this time, the employee will take a pay cut, receiving only 90% of their base salary. Once training is completed salaries will be restored in full. Employees can either take the training or look for job opportunities within IBM that better match their current skills set. Employees have reacted negatively toward the program. Some feel the program with its pay cut is unfair because their work has received positive evaluations from their managers. Also, employees noted that all workers in their group were being assigned to the same training program regardless of their individual skill levels. A few employees believe that the training program is a cost-cutting exercise that is being presented as a training program. A spokesperson for IBM emphasized that the salary cut and retraining program was not standard practice across IBM but affected only a few hundred employees in the U.S. technology services outsourcing business. The purpose of the program is to help employees develop key skills in areas such as cloud and mobile computing and advanced data analytics. Because the program can help employees in the long term to increase their billable hours with clients, IBM believes the salary cut is a co-investment cost shared by both the employees and the company. IBM calculated that it will lose one day of billing clients each week that the employees are in the training program, which matches the 20% of the compensation of the employees involved. So the 10% salary cut actually splits the difference.

QUESTIONS Do you believe this program is strategic? Why or why not? Should employees’ salaries be reduced for the time they attend training programs? Provide a rationale for your answer. What other ways might IBM convince the affected employees to update and gain new skills?