International Business Machines Corp. (NYSE: IBM), already reeling from a badly damaged share price and years of falling sales, was hit with major research that showed a pattern of age discrimination. A nonprofit media outlet published a story titled “Cutting ‘Old Heads’ at IBM.” In it, the authors’ primary conclusion:
As it scrambled to compete in the internet world, the once-dominant tech company cut tens of thousands of U.S. workers, hitting its most senior employees hardest and flouting rules against age bias.
There have been years of such accusations, some of which were brought to 24/7 Wall St., and presumably other media outlets, by employees who claim they were diminished and their jobs moved outside the United States.
As the company stumbled against competitors such as Microsoft and Amazon, the article’s authors point out:
The company reacted with a strategy that, in the words of one confidential planning document, would “correct seniority mix.” It slashed IBM’s U.S. workforce by as much as three-quarters from its 1980s peak, replacing a substantial share with younger, less-experienced and lower-paid workers and sending many positions overseas. ProPublica estimates that in the past five years alone, IBM has eliminated more than 20,000 American employees ages 40 and over, about 60 percent of its estimated total U.S. job cuts during those years.
The news once again will raise the question about the tenure of CEO Ginni Rometty, who has presided over the demise of IBM. The company has suffered quarter after quarter of falling revenue. She has tried unsuccessfully to make IBM a leader in cloud computing. In the meantime, its older software, services and hardware businesses have suffered. In some cases, IBM’s products and services compete in sectors of the tech industry that are disappearing.
Rommetty took over the company at the start of 2012. IBM will need to make a case that she was unaware of the discrimination. Even if it can, the fact remains that some of the discrimination took place on her watch, which is another large blow to her reputation.