The IBM Country Club in Endwell,
New York was the literal epicenter of company culture.
Employees had access to an 18-hole golf course, pool,
bowling alley, restaurant, essentially,
a slate of rewards for loyal and professional service.
This is the country club today.
It's a shadow of its former self.
Gone are the amenities, the decor,
and most importantly, the employees. So, where did they go?
For seven decades, IBM was considered a model employer.
Working there meant having a job for life.
Something changed.
In 1993, IBM, in practically one swift motion,
cut 60,000 employees, the largest layoff in American history.
International Business Machines, or Big Blue,
got its start in 1911 selling machines that automated
everyday business transactions like tabulating machines for punching cards.
By the mid century,
IBM shifted its business model,
and became a top supplier for mainframe computers.
During that era, Tom J Watson Jr took over as CEO.
In 1962, he established three company beliefs: customer service,
excellence, and respect for the individual.
Watson even wrote a book,
A Business and its Beliefs,
detailing the essence of respect for the employee.
"The IBM policy on job security has meant a great deal to our employees.
From it has come our policy to build from within.
We go to great lengths to develop our people,
to retain them when job requirements change,
and to give them another chance if we find them
experiencing difficulties in the jobs they are in."
For more than seven decades,
IBM never laid off any workers.
Through economic turmoil and competing innovation,
IBM endured and so did its company culture.
But this principle was largely a privilege.
After World War II while nations were rebuilding,
American corporative control was getting stronger.
This gave companies like IBM greater ability to value their employees,
and value them they did.
The kind of work we do requires people who have
initiative and a strong sense of personal responsibility.
Because we believe it's the right thing to do,
we know that IBM can be tremendous force for good.
We also realized that we had a special resource in the skills of IBM people.
But there was a seismic shift in the 1970s with the Vietnam War,
an oil crisis, and rising inflation.
The economy tumbled, and took all the major corporations with it.
IBM was holding firm to its values but
it was also losing revenue and shrinking in stature.
Other companies began to produce similar technology,
and then competition increased
Sixty four K memory at a price that will put a computer in every home,
business, and school years before anyone ever dreamed.
In the 1980s, IBM tried to protect
its mainframe business against new competition from PCs. It didn't work.
For decades, the company valued two voices most,
the customer and the employee.
But now, they needed to recognize someone else,
the shareholder and the shareholder was not happy.
In 1993, the company of 300,000 posted an eight billion dollar loss.
At the time, the biggest in American corporate history.
IBM needed to recover.
For the first time in 82 years,
IBM hired an outsider to lead the company.
So, Louis Gerstner, a former exec at American Express was instated.
It was a Herculean task.
He needed to cut billions in expenses,
so he did the unthinkable.
He laid off 60,000 employees.
Even today, no other company has laid off that many workers.
Dramatic as it may have been,
IBM found that interrupting the
employee-for-life cycle would allow the company to survive.
From 1993 to Gerstner's retirement in 2002,
IBM's market capitalization rose from 29 billion to 160 billion dollars.
For this reason, he is often considered the savior of IBM.
So, perhaps when the company laid off 60,000 workers,
it was ushering in a new era.
In the past, IBM put its employees first,
but now company practice had to adapt to a competitive global market.
This global market no longer allowed the job security IBM once offered.
It no longer allowed for country clubs.
The IBM Country Club in Endicott,
New York was opened to the public in 1995 and closed in 2002.
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