IBM blazes the trail for a ‘liquid’ workforce

News broke earlier this year that technology and consulting giant IBM planned to eliminate up to 8000 jobs from its 20,000-strong workforce in Germany. Behind the projected layoffs is a program called Liquid, which has been designed to make IBM’s staffing arrangements more flexible by replacing permanent workers with external ones, as required.

Germany is just the test market. After the rollout in Europe’s largest economy, the initiative – a radical reorganisation of existing work structures – may be applied to Big Blue’s operations worldwide.

According to a 25-page internal IBM strategy paper, which was leaked to the German business daily Handelsblatt, Liquid aims to provide a more flexible organisation, to better suit the digital age. Only a small circle of executives – those who develop IBM’s strategy and interact with clients – will retain the traditional steady jobs at the IT giant.

All other staff will be hired on a project-by-project basis, sometimes only for days, sometimes for months, depending on the task at hand. Workers can offer their services on a platform derived from the model of online auction house eBay. Not only IBM, but companies from across the world will be able to access these virtual kiosks in a search for freelancers.

To make these free-floating hubs of creativity work, IBM plans to develop a system to certify individuals. Depending on their skills and training, all suppliers will be sorted into different colour-coded categories from blue to gold.

Any IBM-certified freelancer can book into the training programs the company offers to enhance their chances of scoring jobs on the platform. The ensuing work contracts will be global, not regional, meaning that national labour laws will not apply. Compensation for people in the “talent cloud” will either be defined by time invested or by the achieved outcome.

The modern organisation

Workforce networks and cloud computing are changing the shape of the modern organisation and, consequently, the future of work. IBM is the “lightning rod” in a development that will dissolve the boundaries between companies and industries, according to Judith MacCormick, a post-doctorate research fellow at the Australian School of Business and partner in the Sydney office of executive search firm Heidrick & Struggles.

MacCormick sees as many challenges as opportunities in the new development. One standout issue is the protection of intellectual property (IP) if members of an organisation’s workforce are also engaged by its competition. “It will create conflicts of interest when one employer asks about the work practices or strategic decisions of another,” predicts MacCormick.

Another potential issue is keeping up the level of engagement with a freelance workforce. “People do not only work for money, but also for social reasons,” MacCormick points out. “Under the proposed new structures, executives might struggle to get the best out of people if they do not manage to instil some sense of belonging.”

IBM’s German general manager, Martina Koederitz, has offered only a general comment on the Liquid project: “For decades IBM has explored how working environments in our industry change with a changing business model. In 2011, we won the employability award, in the 1980s we started to allow our staff to work from home and we were the first organisation to offer a shared desk system. We are leaders in being a modern organisation – for the benefit of our employees and our customers.”

Koederitz has a point. The traditional employment model – working nine to five and for years with the same employer – is declining in almost all advanced economies. In Germany, only 50% of the workforce has such a job. All others are casuals, freelancers, sole traders, consultants, or can be booked via “temp” or casual employment firms. In Australia, 70% of workers are employed full-time, according to Australian Bureau of Statistics figures (August 2011).

Katie Burford, an IBM spokesperson for Australia, supported Koederitz’s comments with a brief statement: “Change is constant in our industry and transformation is a permanent feature of our business model. Consequently, some level of workforce remix is an ongoing part of our business. Given the competitive nature of our business, we do not publicly discuss the details of our staffing plans.”

Freelancers-to-go

IBM’s management may be a frontrunner in pushing the trend, but the corporation is neither the first nor the only organisation wondering about the future of work. Signs of a new order have been emerging for some time and the shift is particularly prevalent in the IT sector.