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IBM’s HR takes a risk

With a $100 million restructuring effort, HR at IBM has a lot to prove – and it relishes the challenge.
When Sam Palmisano took over as IBM’s chairman and CEO in 2003, the worst was over. His predecessor, Lou Gerstner,
handed over a company in much better financial shape than it was in 1993 when Gerstner took the helm and the company
was nearing bankruptcy.

With solid financial footing, Palmisano was able to focus on his vision for IBM, the company where he spent his entire
career. Palmisano set out to re-create IBM as a globally integrated enterprise that broke away from the pack on the strength
of its human capital—not solely on its portfolio of products.
When Palmisano announced his signature Business Transformation initiative, he called for IBM to establish an ‘on demand’
global supply chain that provides customers with IBM products and services – software, hardware, business processing,
consulting and more – wherever and whenever they need it. He then eliminated layers of management bureaucracy and
moved the workforce closer to its global clients so that the company could compete on service delivery.
Today, under Palmisano, the IT giant generates more than $90 billion in revenues. With 330 000 employees, it is among the
15 largest publicly traded companies in the world.

Central to its resurgence is IBM’s recognition that human capital is its most distinctive and manageable asset. Companies
that rely on technological or manufacturing innovation alone cannot expect to dominate their markets indefinitely.