Executive Summary
IBM is the worlds leading producer of computer softwares and hardwares. The company has been in operations for more than a decade. However, given the current economic conditions, it has been imminent that the company comes up with strategies that ensure that it remains sustainable and profitable in the short run and in the long run. To achieve this, it has been essential for the company to focus on and modify its human resource in order to ensure that it global operations are effective and efficient.
Introduction
IBM is an international company that has operations in over 160 countries worldwide. The company has been in operation for over a decade now. In the process of its operations, the company has managed to be a leader in creativity, technological advancement and innovation (Palmisano, 2010).
However, to achieve the current popularity and success that the company is enjoying, IBM has come up with and implemented a number of strategies in its operations. This has ensured that the operations of the company are effective and efficient hence enabling it to achieve its short term and long-term goals and objectives. At the same time, the company has always managed to satisfy the diverse needs of its customers given its wide range of activities in different business segments ranging from computing to consultancy.
However, never have companies and business entities faced challenging situations that at the present moment. The business world is highly dynamic, characterised with demanding customers, increased competition from local and foreign firms, rapid change in technology, increased costs of productions and a global economic crisis (Lesser and Blumberg, 2007).
Therefore, to become sustainable and profitable, it is essential for firms to come up with effective and efficient strategies that will ensure that they will stand at a competitive edge over their rivals in their respective industries.
IBM Business Context
International Business Machine (IBM) is a multinational corporation that deals with the development and manufacture of computer hardware and software (Bartlett and McClean, 2006). IBM also offers consultation services. Other services that the company offers include infrastructure and hosting services (Austin and Nolan, 2010).
The company mainly deals in the building and development of mainframe computers and nanotechnology. This has been the trademark with which IBM has been related with for the last several decades. IBM was founded as Computing Tabulating Recording Company in 1911 (Applegate, 2009). This came about as a result of the amalgamation of three different companies. These were:
- Tabulating Machine Company
- International Time Recording Company
- Computing Scale Promotion
In 1924, the company changed its name to International Business Machines (IBM), a name that it is using up to the present moment. In the course of its operation, IBM has developed a distinct organization culture, which is reflected in its products, services, and operation. It is due to this fact the organization is normally referred to as the Big Blue (Garr, 2009).
In the 2010/2011 financial year, IBM had a total revenue turnover of $106,916 million and a net revenue of $15,885 million. Still in the same year, the company had a market capital of $232,891 million and a return on investment of $31,065 million (Maney, 2003).
It is due to this fact that Fortune Magazine ranked IBM as the second largest company in the United States in terms of the size of its workforce. This is because the company had 433,362 employees and fourth in terms of market capitalization. The same magazine ranked IBM as the 19th most profitable company in the United States in terms of revenue earned (Hemp and Stewart, 2011).
Given its long period of operations and its magnitude, it is inevitable for such a company to avoid challenges (Daniels, 2009). However, the company has always come up with quick, effective, efficient and responsive measures to ensure that it stands at a competitive advantage over its rivals within the technology industry and to be sustainable and profitable in the short run and in the long run. One of the measures that IBM has been using to stand at a competitive edge is mergers and acquisition.
In 2009, IBM acquired SPSS (Boudreau, 2010). IBM had acquired PwC in 2002. In 2005, IBM sold Lenovo and ThinkPad. To facilitate its operations, the company has an effective and efficient organization structure and culture that aims at ensuring that it achieves its vision, mission goals, and objectives.
Competitive Advantage
Technology is evolving at a very fast rate (Cascio, 2010). As a result of technological advancements, firms have expanded their operations into overseas markets to expand their market share and increase their profitability. This has increased the level of competition in almost each and every economic segment.
At the same time, the needs, preferences, and expectations of consumers all over the globe are changing at a tremendous rate. This has put a lot of pressure to multinational firms such as IBM in the process of trying to keep up with the pace of these changes and advancements in addition to achieving their short term and long-term goals and objectives.
To stand on a competitive edge, Randy MacDonald, IBMs the Human Resource Vice President in 2003 realised that it is essential for the firm to come up with strategies that will enable the firm to overcome the human capital challenges that it was facing (Dowing, 2005). Together with the then CEO of the company, Sam Palmisano, they realised that the global market was evolving at an alarming rate.
It was thus essential for IBM to modify its operations to ensure that the firm is capable of meeting the market needs and demands. To explain the best means through which the organization can achieve this, Sam came up with a new term, Globally Integrated Enterprise (GIE) (Cappelli, 2008). He stated that businesses should soon start to operate on a global level. It was thus essential for IBM transform its operations to reflect to these trends before their clients adopt GIE.
To achieve this, IBM needed to modify most of its operations. This included its supply chain, its IT systems and networks, marketing strategies, and its product development processes. However, from a careful analysis, it is evident that all these operations rely on one main factor; the human capital of the company and the challenges that its human resource management was facing. For efficiency, IBM had to improve its operations on a national level, then to a multinational level and finally integrate it globally.
However, IBM is operational in more than 160 countries worldwide thus implementing these changes in each and every brand will result in redundancy, duplication of efforts, and inefficient utilization of resources. Therefore, to optimize its operations, Sam and Randy saw that it was wise to optimize IBMs operations on strategic locations in the globe and to integrate its operations horizontally and globally (Robson, 2009).
These changes have been effective since they have improved the level of operations of the organization as a result of the company conducting the correct tasks at the right places at the right time with the best personnel.
International Human Resource Management (IHRM)
IBM is a multinational corporation. It is operational in all the continents of the world. Thus, in the course of its operations, the company normally meets with customers and clients who come from different cultures and backgrounds. In most cases, the expectations, tastes, and preferences of these people will normally vary.
In the course of operations of an organization, it is evident that talent and human capital are vital to its long run success (Wright, 2009). IBM is one of the few companies that have realised this and to have a competitive edge over their rivals, the company has developed a strong team that not only comes up with effective and efficient products and services to its clients but they also possess the expertise and deliver practical solutions to their clients.
To achieve this advantage, IBM has come up with strategic measures that impart necessary knowledge and skills to its vast workforce. Motivation and strategic deployment have also been put in place. These are but some of the human resource management strategies that have been put in place to ensure that the talent of its workforce is natured and developed.
However, to ensure that IBMs operations are effective in the different regions of the globe, the company has adopted the IHRM strategy. IHRM can be defined as a management strategy that focuses on a wide array of functions, processes and activities that operates on more than one nation (Antony, 2008). It is the strategy that is used in the management of human resources at a global level (Smith, 2008). The following approaches can be used with regards to IHRM:
- Ethnocentric approach – Home country approach
- Polycentric approach – Local approach
- Regiocentric approach – Regional approach
- Geocentric approach – Global approach
With respect to this, a firm has the option of recruiting the following kinds of employees:
- Parent country nationals (PCNs)
- Host country nationals (HCNs)
- Third country nationals (HCNs)
IBM has been using the IHRM concept due to its global operations. To ensure that its operations are effective and efficient, the company has adopted the geocentric approach (Weatherly, 2005). Here, the most qualified personnel are chosen to hold specific positions within the organization.
However, due to the fact that different clients from different regions have different needs, IBM has come up with a concept of deploying HCNs on subsidiary offices while PCNs and TCNs are located at the headquarters (Boudreau and Ramstad, 2007). This ensured that the products and services offered by the company meets the expectations, needs and preferences of their clients from different regions in the world. ‘
IBM has also appreciated the ideology of corporate social responsibility (CSR). The main aim of IBM is to make the world a better place through technology and innovation. Thus, to achieve this, IBM is always involved in programs that aim at improving communities. IBM has been investing in local secondary schools to improve the quality of education and creating technological awareness and e learning. In addition, the company has been offering over 3,500 internship positions annually to nature and develop the talent of the youths.
IBM is also gender sensitive and ensures that women are part of its workforce. As of 2011, 18% of its workforce comprised of women (Cummings, 2009). This figure is expected to increase in the coming years. Finally, IBM has been facilitating a number of projects and has facilitated open door policies to ensure that the views and ideas of its employees and stakeholders are adhered to and implemented in order to ensure that the company has a competitive edge over its rivals and is sustainable in the short run and in the long run.
Global Talent Management Challenges
As it has been depicted, operating on a global level brings about global challenges on the human resource department of IBM. One of the main challenges that IBM has been facing is its constant expansion (Harvey, 2010). IBM has been expanding into new territories in order to increase its influence in the technological industry as well as expanding its market share. However, in this process, the company has to adhere to the requirements, culture, and norms of the new environment.
To ensure that the company overcomes this issue, IBM has been striving to achieve employee loyalty. It is due to this fact that the company has incorporated HCNs in its operations especially at the local level. These individuals have a better understanding of the indigenous people hence they play an essential role in in-depth relationship building with local clients (Weiss, 2012).
These employees normally undergo rigorous training and adopt the experiences of the old work force to ensure that they perform their roles and duties as per the expectation of the corporation. In addition, there are learning, motivation and development avenues that ensure that all IBM employees develop the necessary knowledge and skills that are required to ensure that IBM stands at a competitive edge over its rivals.
It is with regards to this that IBM has also adopted Schulers et al strategic HRM model (Schuler et al, 2008). By adopting this model, IBM considers exogenous and endogenous factors while developing strategic multinational corporation models. Industry and national characteristics are examples of exogenous factors while the structure of international operations, the organization structure, competitive strategies, and the international management experience are some of the endogenous factors.
The fact that IBM has a clear understanding of its internal and external operating environment has always played a critical role in ensuring that it formulates effective and efficient strategies that enable it to be sustainable both in the short run and in the long run (Cunneen, 2008).
Once knowledge about the internal and environment is available, IBM normally develops inter-unit links and comes up with international operations strategies that will ensure that its operations are effective and efficient both locally and globally (Mullins, 2005). To achieve this, IBM formulates strategic IHRM functions and policies. Some of the functions include:
- Market orientation
- Resource allocation
- Selection of strategic locations for global operations
On the other hand, some of the policies that the company formulates may focus on:
- Staffing (PCNs, HCNs, and TCNs)
- Flexibility of operations
- Compensation policies
- Research and development plans
After the development and implementation of these policies and strategies, the overall results that IBM enjoys are cost reductions, presence of effective and efficient operations, local, regional and global sensitivity and the development of learning and transfer strategies that improve the knowledge and skills of its employees worldwide (Seleshi, 2010).
Human Resource Planning
The strategies that have been mentioned above cannot be successful without careful HR planning. In this process, IBM normally balances between labour demand and labour supply (Bradford, 2011). The following table shows some of the considerations that are put in mind at this stage (Davis, 2012).
An understanding of these factors makes it easier for the human resource department to analyze the impacts of the business on its operations and workforce. At the same time, a clear understanding of labour demand and supply is always arrived at. This increases the efficiency of talent location and re-location improving the management of employee cost.
However, for the HR to be effective in its operations, it has incorporated all of the Torringtons 7Cs. IBM has a strong organizational culture that is based on teamwork and respect among employees and focuses on satisfying its clients (Dow, 2010).
The company uses cosmopolitan techniques to control its international operations and compensates its employees who work overseas. IBM is a competent organization comprising of qualified employees in diversified fields. These employees coordinate together through teamwork that is based on effective communication and consultations when in doubt.
Organizational Capabilities
Organization capability refers to the ability of a firm to undertake a particular activity (Stacey, 2007). IBM has a vast workforce that is highly qualified, motivated, and dedicated to their work and satisfying their clients. Due to this fact, the organization has become a leader in creativity and innovation standing at a competitive edge over its rivals (Mullins, 2005).
IBM is competent in understanding the needs and expectations of its clients from all around the globe. Through this, IBM has developed core competent strategies that have enabled the organizations operations to be effective and efficient. This has made the organization to be sustainable in the short run and in the long run.
Conclusion and Recommendations
The market, needs, and desires of customers are changing at a high rate. Therefore, for IBM to ensure that it stands at a competitive edge over its rivals, it has come up with a number of policies and strategies that mainly rely on human capital and resource management. IBM has thus come up with Globally Integrated Enterprise (GIE), a strategy that has transformed its HR department to meet the global needs and desires of its clients. The strategy has been successful and has ensured that IBM remains a leader in the technology industry.
However, to sustain its operations in the long run, IBM needs to incorporate more HCNs in its operations as one of its CSR strategies. The company also needs to come up with means through which it can identify and develop talent within and outside its organization in order to maintain its role as a leader in the technology industry. Therefore, there is still need to further improve its IHRM in order to carter for its global operations in order for the organization to be effective and efficient.
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