10 June 2009

Head Count as Value Metric: IBM's Understated Impact

IBM Watson Portal in 2015
The value of a company can be measured in several ways. Market capitalization is one, but that metric often misses the economic impact of a firm. As General Motors and Chrysler enter bankruptcy reorganizations, shedding thousands of jobs in the process, some comment that in other sectors, U.S. industry remains strong. This may be true when market cap is considered, but the head count for Google vs. General Motors shows the weakness in a metric that only looks are market value. Even after the BK, GM is expected by some to keep 23,000 salaried workers, where as Google today only has 20,000 employees. As Pingdom (May 2009) noted, at 400,000 workers, "IBM has more employees than Microsoft, Intel, Dell, Cisco, Apple, Amazon and Google all put together."

Contrast this with profit per head count, which says little about a firm's indirect contribution to employment, or to the societies where those workers spend, raise children and diffuse IBM's corporate culture into local customs and practices. Consider the possible impact that IBM's current game-based Tivoli promotion might have in places where games may be seen as a leisure time activity for decadent Western teens.

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