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March/April 1992 - By Andrew W. Singer

Is IBM’s ‘Open Door’ still ajar?

Certain management practices have an important effect on morale, efficiency, productivity, and on corporate ethical standards as well. International Business Machine Corporation’s Open Door program is arguably such a practice.

Initiated back in the 1920s by the legendary Thomas Watson Sr., the Open Door is essentially a way of dealing with employee grievances. When workers can’t get satisfaction from their immediate managers—a machinist doesn’t think he is being treated fairly, for example—they can take the problem up the organizational ladder, to the chairman of the company, if necessary.

Most of the Open Door complaints that reached Thomas Watson Jr. when he was IBM’s chairman from 1956 to 1971 could probably have been resolved at a lower management level. “But I listened anyway,” he recalls in his autobiography. “I learned an awful lot about the problems of the working man, and I gained a visceral sense about IBM that enabled me to hear a complaint and say, ‘Something’s wrong here.’”

 But recently critics have questioned whether the door really is as open as it was in the past—whether the current chairman and CEO, John F. Akers, is as prepared to “listen” as some of his predecessors. For its part, IBM asserts the Open Door program is alive and well.

‘A sham’

Two employee lawsuits against the company—one in Michigan, the other in New Jersey—have focused attention on the Open Door. Until now, the giant computer maker has been reticent about explaining the actual workings of the Open Door, at least for publication; it regards this as proprietary information.

“The Open Door is a sham,” declares Noel A. Gage, partner in the Southfield, Michigan, law firm of Gage, Beach & Ager, who represented an IBM employee, Joseph Martin, in a race discrimination lawsuit against the company.

 “The IBM Open Door is the fox watching the chicken coop,” echoes Nancy Erika Smith, partner in Smith, Mullin & Kiernan, a law firm in West Orange, New Jersey. Smith challenged the integrity of the Open Door process while representing a former employee of the company, Richard Rathemacher, in an age discrimination action, a suit she won. “I have at least 100 people who have contacted me” about grievances brought initially under the Open Door, says Smith. “The IBM Open Door is really a joke.”

Both cases attracted an unusual amount of attention because they included testimony from Akers. The IBM chairman was questioned, among other things, about the Open Door.

A formal process since the 1950s

In the Open Door process, if a complaint cannot be resolved by immediate management, then “it will be investigated by someone not in the organizational line,” an objective individual who will listen to both sides of the issue, explains Andrew McCormick, an IBM spokesperson.

It has been a formal program at the company since the 1950s. “The Open Door is part of IBM’s culture,” says McCormick. Although the majority of cases are addressed at the local level, a percentage does reach the chairman’s office. McCormick declined to specify the number.

According to IBM’s employees manual:

    “Should you have a problem which you believe the company can help solve, discuss it with your immediate manager, your manager’s manager, your personnel manager, or your branch or site manager. You will find that a frank talk with your manager is usually the easiest way to deal with the problem.

    “If the matter is not resolved or is of such a nature that you prefer not to discuss it with your location management, you should go to the senior management in your business unit.

    “Finally, if you feel that you still have not received a satisfactory answer, you may cover the matter with the chairman by mail, or personally if the chairman finds it appropriate to the resolution.”

A rubber stamp?

In a company with more than 300,000 employees, 200,000 of them in the United States, it is presumptuous, of course, to extrapolate from just two lawsuits. It is understood that within a company of IBM’s size there will always be grievances that are not happily resolved. Still, the cases cited above do shed some light on how the Open Door works in practice.

While Open Door grievances do indeed reach the Chairman’s office, John Akers’ involvement in such matters appears to be slight, even though his name appears on letters that are sent to complainants that explain the resolution of their cases. Attorney Smith puts it more bluntly:

‘‘He rubber stamps what someone else does.”

Ethikos asked IBM spokesperson McCormick if Akers ever meets personally with Open Door complainants who petition his office. “It could happen,” answers McCormick, “if he decided that [a matter] bears further investigation.”

Does the chairman, in fact, ever meet personally with complainants? “I don’t know.” As with any other business issues, the chairman must rely on his staff, McCormick says. “But if it appears to be something with which he disagrees, he will look at it further.”

The Martin case

Joseph Martin, an IBM salesperson in the Detroit area, brought a race discrimination suit against the company in the late 1980s, charging that he was given an unfair job evaluation and passed over for promotion because of his race. (IBM denied the charges, saying Martin had performance problems that resulted from substance abuse.) In 1986 he filed an Open Door grievance. About a year later, convinced that he had suffered retribution for filing his first complaint, Martin filed a second Open Door, this time to the Office of the Chairman.

In a letter addressed to Chairman Akers, Martin wrote:

    “....Mr. Akers, in my brief tenure with the IBM Corporation, I have learned that it is not the IBM way to white-wash an issue. Every ounce of training and experience I have received as an IBM employee has taught me to deal with the issue head on and in a forthright manner. It is because of this background that I am convinced that the investigation of my concerns was not handled in a forthright and objective manner. In short, the investigation was a farce.”

In a deposition taken from Chairman Akers at IBM world headquarters in Armonk, New York, July 27, 1990, Martin’s attorney, Noel Gage, tried to show that the Chairman’s response to his client’s Open Door grievance was to “put a rubber stamp to a form letter.”

    GAGE: Take a look at paragraph 12 of the sworn affidavit by Margaret Dadakis [an assistant in the Chairman’s office], please, and it states in part, does it not, sir, that Mr. Akers’ only involvement was his review of the summary and signing the letters prepared for his signature. Do you see that?

    AKERS: I do.

    GAGE: Was she telling the truth when she signed this document under oath?

    AKERS: I expect she thought she was.

Gage asks Akers to read from the Dadakis affidavit, which describes the process for handling Open Door grievances that reach the Chairman’s office:

    “Upon completion of the investigation, the investigator’s findings and recommendations are briefly summarized in a typical one-page analysis by the administrative assistant. A summary is often prepared and typically takes the form of a four by six-inch slip. In some instances, the administrative assistant’s analysis and summary is then reviewed by the executive assistant, the individual responsible for the supervision of all of the administrative assistants in the chairman’s office. The administrative assistant provides the CEO with a final draft of a letter to the complaining employee, which is prepared for the CEO’s signature.

    “If the summary is sufficient and the recommendation appears reasonable, the CEO signs the recommended letter, which is then sent to the employee; in almost all cases, the CEO does not review either the one-page analysis or the investigative report. In the normal course of business, in my experience, when Mr. Akers had a question regarding an Open Door, he typically would not review the investigative report, but would request that the administrative assistant supervising the Open Door give him a brief oral report. I specifically remember that Mr. Akers did not request such a report on Martin’s Open Door.

    GAGE: Now, my question to you is, sir, is Miss Dadakis’ sworn testimony correct wherein she says in almost all cases you don’t review either the one-page analysis or the investigative report?

    AKERS: She doesn’t really know how I do it because she’s not present when I do it.

    GAGE: I am asking you whether or not she’s told the truth.

    AKERS: I think she thinks she has.

    GAGE: And has she?

    AKERS: Well, as I just said to you, I review the summary in all cases. In some cases I review more than the summary and in some cases I have an oral discussion of the case.

    GAGE: Is it true, sir, that in almost all cases you do not review either the one-page analysis or the investigative report, yes or no?

    AKERS: In almost all cases I do not review beyond the summary.

    GAGE: Thank you.

‘A pretend circumstance’

It would be useful to know how many Open Door grievances are filed a year, and how many actually do reach the chairman’s office, but as indicated, IBM does not share this information. Whatever the number, attorney Gage is convinced that the chairman’s involvement is perfunctory. “It’s a pretend circumstance on his part,” he says in an interview. “He signs his name, or he has someone sign it for him. The implementation as promised is a sham.”

Asked about this, John Boudreaux, an IBM spokesperson, says, “I think a reference has been made by some that the chairman personally does the investigation. The policy does not say that. The chairman has the prerogative of the investigation.” Nor would it be feasible in a company the size of IBM for the chairman to involve himself in every grievance that reaches his office.

Do individuals in the company think that the chairman personally looks into their cases? “It’s hard to say what the individual expectation is,” answers IBM’s McCormick.

Could a situation arise that misleads employees like Martin into thinking that the chairman himself will examine their cases? “We can’t speak for a consensus of employees,” says Boudreaux. But employees are mistaken if they think that the chairman is personally involved in every complaint.

Do complainants, in fact, get back a form letter from the chairman? “They get back a letter with the chairman’s decision on the complaint,” answers Boudreaux.

Lincoln Electric’s open door

IBM’s isn’t the only “open door” policy in corporate America, although it is one of the oldest and best known. Lincoln Electric Company, a Cleveland-based manufacturer of arc-welding equipment—and, like IBM, a company with a reputation for good employee relations—has had an open door program for many years.

When Ethikos visited the company in 1988, President Donald F. Hastings indicated that he met personally with six to eight employees a week to discuss their grievances. Lincoln has about 2,500 employees overall.

Does Hastings still meet with that many? He admitted that he had cut the number down. “The load did get too heavy.... You have to have some sort of filtering system.”

Lincoln Electric now has a vice president of human relations who handles initial calls. Nonetheless, Hastings still meets personally with 10 to 12 open door complainants a month.

“I spoke with two people yesterday,” he says in a recent interview. “One was quite emotional.” Hastings spent about half an hour with that individual. “When they get me, I’m glad, so they know we have a system here.”

IBM’s workforce is more than one hundred times larger than Lincoln Electric’s. A question arises: If even Lincoln Electric’s president found his open door workload too heavy, what is one to make of a leviathan like IBM? Could IBM simply be too large to run an open door program that involves the chairman?

Asked about this, Hastings speculates that if a company were to run an open door process “with more than we have here”—2,500 employees—“you’d have to have a pretty good system.”

Still, “I would think that if IBM is professing this policy, that some people do [in fact] get through to Akers. And if they don’t, I would recommend he let a few get through.” The effect on the company can be quite profound when the word gets out that some employees have really seen the chairman.

That was affirmed by Thomas Watson Jr.:

    “Many employees did not want to take a complaint all the way to me, but the very existence of the Open Door was a morale builder. It made them feel free to approach a personnel manager or the man running the plant when they had a problem. As IBM grew, we tried to take more and more Open Door cases at the division-chief level, with only charges of serious mismanagement that might reflect unfavorably on IBM coming to my office. But even so my office handled two or three hundred cases each year, with each case typically taking several days to resolve. The bulk of this work fell to my administrative assistants, who were chosen among our most promising managers.... Periodically I’d see complainants myself, so that word would get around that the head man was indeed available.”

The issue of retaliation

With an Open Door program it is important that employees feel that they will not suffer retaliation for using the process. This is the case with any organizational grievance procedure, of course, including ombudsman offices. Yet here too plaintiffs’ attorneys raised questions.

“The so-called confidentiality of the Open Door is fairly non-existent,” asserts Smith. “IBM has its own personality. Either you’re an IBMer or you’re not, and once you file an Open Door it follows you around the rest of your career.” It is virtually impossible to secure advancement within the company after filing an Open Door grievance, she charges.

Asked about this, McCormick refers to an IBM document stating that management must be alert to the possibility of retaliation in such cases. “We’re sensitive to that concern,” although employees have to recognize that an Open Door action is not an anonymous complaint. “But we do restrict knowledge of it to those people who have a need to know.”

 Is there follow-up to ensure that retaliation doesn’t occur? “There’s follow-up in the sense that if a decision is made, and action taken, there is follow-up to see that the action was taken.”

 There is no formal mechanism to see that retaliation isn’t occurring, but McCormick adds that if an employee feels that bringing an Open Door results in retaliation, he or she can always bring another Open Door.

 “It’s not our experience that retaliation does occur.”

 Retaliation against employees for using the open door? “That’s felt from time to time here,” acknowledges Lincoln Electric’s Hastings, which is why “we’re careful not to let any retaliation take place. We monitor their performance-merit pay for three years” after a grievance has been brought to ensure that no negative pattern has emerged.

‘The Open Door is working’

 Overall, IBM’s Boudreaux insists the Open Door is functioning as advertised. “The Open Door is working. It’s an effective communication channel and policy.”

The company, he notes, has a high reputation for treating its employees well, and IBM is regularly included in magazine surveys of “best companies to work for,” published by Working Woman, Black Enterprise and Hispanic Magazine, among others. The number of employee lawsuits brought against the concern is low, Boudreaux notes, adding that until the Rathemacher case, IBM had never lost a discrimination lawsuit. (The Martin case was settled out of court.)

It might be anticipated, in the company’s defense, that as Big Blue restructures and deals with its present financial woes—1991 was the first year ever the firm lost money—its human resources policies, including its no-layoffs practice, will be subject to closer scrutiny. Critics will be looking for the first faltering in the company’s treatment of employees.

And perhaps the company simply has gotten too big to have an Open Door policy that runs up to the chairman of the company. But if that is the case, IBM ought to say so: To pronounce that what worked in the time of Watsons Sr. and Jr. is no longer viable today.

One would hope, however, that that is not the case—that the computer maker will preserve and sustain what, in Thomas Watson Jr.’s words, is a “most unusual method for shortening the distance between the sales man or factory man and top management.”

Andrew Singer is Co-Editor of ethikos.
Reprinted from the March/April 1992 issue of ethikos.
© 2005 Ethikos, Inc. All rights reserved.

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