If my foresight were as clear as my hindsight, I should be better off by a damned sight.
If my foresight were as clear as my hindsight, I should be better off by a damned sight.
IBMers Aren't Buying What IBM Is Selling
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Published July 30, 2021
Updated April 6, 2022 |
At one time, Thomas J. Watson Jr. believed that IBM would gradually become an employee-owned corporation.
"There is enormous strength in proprietorship—people develop strong attachments to the things they own, especially if they can influence whether those things succeed or fail—and it seemed imprudent to let the ownership of a business rest with people [capitalists] and institutions [bankers] that are not directly involved.
"Remedying this situation would have to be an evolutionary process, but as I imagined it, gradually, over two or three generations, a business would, by law, shift into the hands of employees [through stock ownership]."
"Remedying this situation would have to be an evolutionary process, but as I imagined it, gradually, over two or three generations, a business would, by law, shift into the hands of employees [through stock ownership]."
Thomas J. Watson Jr., Inception of IBM ESPP in 1958, "Father, Son & Company"
IBMers Aren't Buying What IBM Is Selling
- Touching an Employee's Heart and Mind
- Research Produces an Employee Engagement ESPP KPI
- The IBM Employee Stock Purchase Plan
Touching an Employee's Heart and Mind
The only way to know if you have truly touched a man’s heart is when he reaches into his back pocket for his wallet. An Old Televangelist Witticism
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A New IBM Employee Engagement Key Performance Indicator (KPI)
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Corporate stakeholders watch for returns on their investments
In the late 20th Century—1993, Wall Street believed that IBM was a “dead man walking.” As I wrote in THINK Again: The Rometty Edition the employees did not. They, which included me at the time, believed in our company and our fellow employees . . . just not the corner office. Employees were still engaged, employee-owners and the 1993 employee stock purchase plan (ESPP) participation was outstanding as IBMers still believed in the company and themselves. |
Consider this 86% employee participation rate from a hundred years ago when evaluating IBM's performance in the chart(s) below.
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In the 21st Century, consider this three-decade-long employee stock purchase plan (ESPP) trend when deciding where to deposit your next investment as either a customer, an employee or a shareholder.
Fear of unemployment and social-media, performance-based appraisals may mute IBM's employees, but they are speaking loud and clear in other ways: in their productivity and with their wallets. Maybe the Drucker Institute and the Wall Street Journal will one day look deeper into IBM's real problems because they recognize some dire corporate symptoms: a three-decade decline in employee stock purchase plan participation and a two-decade decline in employee revenue and profit productivity.
Doing so would surely help their credibility because since 1993, while IBM’s full-time headcount had increased by almost 40% [pre-Kyndryl], the number of shares purchased by its employees has fallen by 90%.
Doing so would surely help their credibility because since 1993, while IBM’s full-time headcount had increased by almost 40% [pre-Kyndryl], the number of shares purchased by its employees has fallen by 90%.
- In 1993, 256,000 full time employees purchased 9.8 million shares.
- In 2020, 356,000 full-time employees purchased 1.0 million shares—“approximately.”
- In 2021, 282,100 full-time employees purchased 1.0 million shares—“approximately.”
IBM's 2021 Annual Report included this change to its employee stock purchase plan (ESPP): "Effective April 1, 2022, the company will increase the discount from 5 percent to 15 percent off the average market price on the date of purchase for eligible participants under its ESPP."
Looking forward to investigating if this improves employee stock purchase participation in 2022.
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The IBM Employee Stock Purchase Plan: 1993-2021 |
The IBM Employee Stock Purchase Plan: Competitive View |
* See footnote to understand why 2005 was included above as a noteworthy date in the IBM ESPP plan.
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Footnote: In 2005, Sam Palmisano as part of his ongoing employee-benefit, cost-reduction measures, reduced the employee stock purchase plan (ESPP) discount percentage from 15% to 5%. From discussions with fellow employees at the time, many long-term employees stopped their employee stock investments and started selling their shares. The new discount did not compensate for the risk of ownership . . . and Enron (2001) was fresh on many fellow employees' minds.
This is from the 2005 Annual report:
Prior to April 1, 2005, . . . the share price paid by an employee . . . was the lesser of 85 percent of the average market price on the first business day of each offering period or 85 percent of the average market price on the last business day of each pay period. Effective April 1, 2005, the company modified the terms of the plan such that eligible participants may purchase full or fractional shares of IBM common stock under the ESPP at a five percent discount off the average market price on the day of purchase.
This is from the 2005 Annual report:
Prior to April 1, 2005, . . . the share price paid by an employee . . . was the lesser of 85 percent of the average market price on the first business day of each offering period or 85 percent of the average market price on the last business day of each pay period. Effective April 1, 2005, the company modified the terms of the plan such that eligible participants may purchase full or fractional shares of IBM common stock under the ESPP at a five percent discount off the average market price on the day of purchase.