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Reward Systems and Productivity at IBM


Subject Business Pages 4 Style APA


Intensive competition has forced organizations to revise their approaches to managing human resource. This involves adjusting the reward systems to motivate employees and in return, enhance their productivity. For instance, organizations are improving their traditional reward packages to attract and retain multigenerational talent. Ayers (2015) reiterates this point noting that organizations need total reward systems, perceived supervisor support and perceived organizational support to influence the performance of employees and the organization as a whole. IBM has been successful in aligning its reward system to its organizational goals. Backed by this basic understanding of reward systems and productivity, this paper explores how IBM aligns individual and organizational performance.

International Business Machines Corporation, (IBM) is a multinational company that operates in the technology industry. It maintains a large and multifaceted system of operations that involve many stakeholders. They include more than 400,000 employees across 175 countries, shareholders, 14,000 suppliers from 100 countries, public officials, community organizations and non-governmental organizations (NGOs) (IBM 2020). As illustrated in appendix 1, IBM uses a matrix organization structure characterized by three divisions; product-type division, functional-based segments, and geographical divisions. At the helm of IBM’s leadership is Virginia Rometty, who serves as the CEO. The divisions which are spread across different geographical regions are headed by Directors. In total, the organization has 8 directors. The directors are answerable to the CEO. In addition, IBM has functional-based divisions led by vice presidents. These employees report directly to the CEO. Some of the positions include chief financial officer, cognitive solutions, corporate strategy, global and European Union (EU) markets, human resource, systems, operations and IT, legal and general counsel, industry platforms and marketing (Nancy, 2020). Under these positions, there are related departments such as treasurer, credit and control among others. The vice presidents are also answerable to the CEO in terms of the innovation, AI research & quantum, corporate citizenship, semiconductor research, design and cloud brokerage engineering.

The company’s ethical code is enshrined in the IBM’s Business Conduct Guidelines (BCGs). It requires employees to maintain a strong commitment to ethical decision making and conduct. To the other stakeholder, the document outlines basic principles and values to be followed (IBM 2020). For instance, it emphasizes the need to achieve the highest standards of corporate social responsibility (CSR). Through the BCGs and IBMs Corporate Responsibility Report, the management pledges to empower and support its employees. It further elaborates the need to work closely with suppliers and clients in sourcing and delivering the highest quality of product (Industry Week, 2020). The company commits to highest standards of corporate governance and corporate citizenship that gives back to the communities. To the public officials and NGOs, the company endeavours to operate with integrity and in a transparent manner.

IBM has a performance appraisal program that aligns the reward system to organizational goals and employee’s knowledge. According to reports by Indeed (2020), IBM has an average annual salary of $36,359 for machine operators while the average salary for sales executives is $154,013. The average hourly pay for laboratory technicians ranges from $10.05 per hour to $75.00 payable to senior consultants (Indeed, 2020). In addition to these average pays, IBM offers its employees with tips, bonuses and other remunerations to encourage innovation and productivity. Apart from aligning reward and remuneration systems with productivity, the organization effectively manages communication systems, education/ training systems, reward systems and conflict management systems thus reducing organizational politics, fostering conflict resolution, and enhancing the performance of the whole organization. As illustrated by McEwan (2015) the alignment is part of organizational development initiatives taken by organizations to unite the different business divisions and align their focus to a common goal. By working in unison and together with the other stakeholders, IBM has managed to expedite organizational change processes. In addition, these initiatives have fostered the innovativeness of the organization as evident with its ability to produce many differentiated technology products through its research and development centers around the globe.

In particular, IBM invests in communication systems to encourage real time communication and knowledge sharing. Secondly, it has a conflict management system to ease tension among stakeholders (Smit, Stanz & Bussin, 2015). The company has an elaborate employee education and training system which is tied to the reward system to encourage employees to improve themselves and be more productive. IBM has a modern reward system that helps attract, hire and retain multi-generational talent vital to its innovation agenda. Victor and Hoole (2017); Hoole and Hotz (2016) reinforce this statement noting that organizations that have reliable organizational reward systems nurture trust and confidence in the workplace while also fostering work engagement. Using this approach to reward has helped IBM reduce its rate of employee attrition as its human resource is adaptable to the increasing pressures of the global work environment.

In conclusion, this paper acknowledges the significance of aligning reward and remuneration systems with other systems in the organization as a way of fostering productivity. The organizational structure adopted by IBM has enabled the organization to create many positions which encourages employees to work hard to merit for promotions. The organization also has a remuneration system that rewards employees based on their contribution. For instance, those in senior positions and job groups requiring expertise and experience earn more. This strategy is important in rewarding merit while encouraging the other employees to work harder to increase their salary range. This analysis justifies the strong correlation between reward systems, productivity and the realization of organizational goals.



Ayers, R.S. (2015). Aligning individual and organizational performance: Goal alignment in federal government agency performance appraisal programs. Public Personnel Management, 44(2), pp.169-191.

Hoole, C. and Hotz, G. (2016). The impact of a total reward system of work engagement. SA Journal of Industrial Psychology, 42(1), pp.1-14.

IBM. (2020). Our approach to corporate responsibility. Retrieved from: https://www.ibm.com/ibm/responsibility/2015/at_a_glance/our_approach.html

Indeed. (2020). IBM Salaries in the United States. Retrieved from: https://www.indeed.com/cmp/IBM/salaries

Industry Week. (2020). Being Ethical Has Its Perks: World’s Most Ethical Companies. Retrieved from: https://www.industryweek.com/leadership/companies-executives/article/22027217/being-ethical-has-its-perks-worlds-most-ethical-companies

McEwan, B. (2015). Organizational Development: Begin with a Healthy Infrastructure. Organization Development Journal, 33(3).

Nancy, N. (2020). IBM Org Chart: More Than A World Leading Tech Firm. Retrieved from: https://www.orgcharting.com/ibm-org-chart/

Smit, W., Stanz, K. and Bussin, M. (2015). Retention preferences and the relationship between total rewards, perceived organisational support and perceived supervisor support. SA Journal of Human Resource Management, 13(1), pp.1-13.

Victor, J. and Hoole, C. (2017). The influence of organisational rewards on workplace trust and work engagement. SA Journal of Human Resource Management, 15(1), pp.1-14.




Figure 1: IBM’s Organizational Structure (Nancy, 2020)

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