Gerstner reshuffles IBM's management Chairman creates panel, cuts bureaucracy

Louis V. Gerstner Jr. reshuffled IBM's management yesterday by creating an 11-member executive committee he hopes will enable the various parts of the big computer company to work together more smoothly with less bureaucracy.

The move, explained in an IBM memo released yesterday, was a clear signal that Mr. Gerstner believes the company's future lies in making the organization work better rather than in remaking it by overhauling it top to bottom or selling off major businesses.


jTC Mr. Gerstner, who became chairman and chief executive in April, is also heavily relying on longtime International Business Machines Corp. executives to revive the struggling company.

In naming the executive committee, Mr. Gerstner has chosen his "first team." And eight of the 11 members of the top decision-making panel are longtime employees of IBM, while the three who joined the company recently are Jerome B. York, chief financial officer; Gerald Czarnecki, senior vice president for human resources, and Mr. Gerstner.


"Gerstner is showing that he respects many key IBM insiders by bringing several of them so close to him," said Ulric Weil, an industry consultant in Washington.

Separately, Frederick W. Zuckerman is expected to be named IBM's treasurer tomorrow. Mr. Zuckerman is currently a senior vice president and treasurer of RJR Nabisco Holdings Corp., where Mr. Gerstner was chief executive before he joined IBM.

The names of the eight longtime IBM employees on the executive committee were generally not a surprise. But most notable was the selection and duties of John M. Thompson, 50, a senior vice president in charge of IBM's minicomputer business.

He was not only placed on the executive panel, but he will also oversee both minicomputers and the mainframe business. Left off the committee was Nicholas M. Donofrio, 48, the senior vice president who heads the mainframe division. Mainframe sales, IBM's lifeblood for years, have fallen sharply.

Letting one executive oversee both mainframes and minicomputers, some analysts say, is a recognition that these two large businesses are under threat from newer technologies and that the big machines must find a different role.

Machines using microprocessors, the computer-on-a-chip that serve as the electronic brain of work stations and personal computers, are increasingly eating into the traditional mainframe and minicomputer businesses.

The big machines, analysts say, must be adapted to serve as data-storing hubs in the increasingly popular setups known as client-server computing, in which people using desktop machines work as teams linked by computer networks and share data that resides on hubs, or servers.

"Underneath IBM's organization change is a product strategy," said Sam Albert, a consultant in Scarsdale, N.Y. "In his talks with customers, Gerstner has learned that the company must move faster into the client-server world than it has in the past."


Having two big hardware businesses report to the top through a single executive probably makes sense, if only because hardware accounts for less and less of IBM's sales, according to John B. Jones Jr., an analyst for Salomon Bros. in San Francisco.

This year, Mr. Jones estimates, hardware sales will account for 47 percent of the company's revenues of $61 billion, with software, services and maintenance representing the rest.

In 1990, by contrast, hardware sales accounted for 64 percent of IBM's revenues of $69 billion.

Some analysts said that an 11-member executive committee seemed a large and unwieldy forum for making decisions.

Still, the new setup does reduce the number of reporting layers for most product, service and marketing units. For example, there had been two layers of management between Robert J. Corrigan, head of the personal computer business, and Mr. Gerstner.

Now, there is one: James A. Cannavino, senior vice president, who will oversee PCs, work stations and related software.