Like the Business Roundtable statements that changed over time, the message from companies such as IBM shifted as well.
Watson published a seminal text in 1963 called “A Business and Its Beliefs: The Ideas that Helped Build IBM.” In it, he wrote that IBM’s philosophy could be contained in three beliefs: One, the most important, was respect for the individual employee; the second, a commitment to customer service; and third, achieving excellence.
He wrote that balancing profits between the well-being of employees and the nation’s interest is a necessary duty for companies. Watson took pride in the fact that his father avoided layoffs, even through the Great Depression.
“We acknowledge our obligation as a business institution to help improve the quality of the society we are part of,” read the text of IBM’s corporate values.
Under Watson’s watch, IBM introduced groundbreaking computers that shot his father’s company to the top of the technology world. Even into the 1980s, there was a saying that IBM’s products were so reliable, “nobody ever got fired for buying IBM.”
But by the time Louis V. Gerstner Jr. took over IBM in the early 1990s, the company was in trouble. Its main advantage in the PC business was eroding, and expenses were high compared with those of competitors.
Months into his tenure, Gerstner cut about 60,000 workers, at the time one of the biggest layoffs at a U.S. corporation.
In 1994, Gerstner outlined his own set of eight principles, a clear break from the old document. Near the top was that the company’s primary “measures of success” were shareholder value and customer satisfaction. The last one: “We are sensitive to the needs of all employees and to the communities in which we operate.”
Gerstner pulled off a turnaround considered legendary by those who study business history.
The culture at IBM was irrevocably changed, too. The chief executives who followed Gerstner have pushed the company hard to hit ambitious financial targets designed to please analysts on Wall Street. In the process, the iconic IBM charted a path that other companies have followed.
One of the most influential changes took place in 1999, when IBM overhauled its pension plan under Gerstner to help cut costs, shocking longtime employees.
Guyer, the former IBM software developer, said she still remembers the surprise of getting a letter in the mail showing her cash balance for retirement after about two decades at the company: $30,000.
“It was like, ‘Oh, my God, we’ve been totally ripped off,’ ” she said.
IBM employees later filed a class-action lawsuit over the pension changes. In 2004, the company agreed to pay $320 million to current and former employees in a settlement.