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Highlights for week ending July 19, 2003
- "Alex", a former IBM Canada employee has started his own Yahoo!
message board to document his IBM layoff experience and to offer advice to other IBM employees,
primarily Canadian IBMers. (His experience doesn't sound all that different than of IBM U.S.
employees, though). Here are links to a few of the interesting messages from his new message
- Austin American-Statesman: IBM
nurtures talent up the career ladder. Hiring tech workers right out of college, keeping them
happy gets high priority. Excerpts: The company has a formalized method for spotting, developing
and promoting its smartest and hungriest young workers, as well as a career ladder that allows
engineers and other technical employees to advance without having to move into management. Many
technology companies have programs to nurture and reward their highest-performing workers, but
few do it as methodically and as consistently as IBM does. And unlike many of its peers, IBM
has maintained its programs even during down cycles in the computer industry. ... Several of
the company's high-achieving workers said they have considered career options outside Big Blue,
but they have found no good reasons to leave, especially now that the Internet bust has made
joining a startup a far more perilous career choice. "I grew up believing that if I did
the right thing for the company and did the best I could, the company would take care of me,
and I think that has happened," Larson said. "I never wanted to be a zillionaire."
- "rcd_1992" comments.
Excerpt: Let me give you something to chew on. What the article is describing (In glowing
terms) is the IBM "fast track" system. It's been "in place" pretty much
for ever. Flavors change from company to company, time to time, and "purpose".
Think of it like the "training" Prince Charles gets as heir apparent, Or Marshall
gave Ike (read the history books.) The rules are...
- Wall Street Journal: Firms
Had a Hand In Pension Plight, by Ellen Schultz. Excerpt: A lot of big companies call it
a looming crisis: They suddenly need to pour millions of dollars into their pension plans, because
there isn't enough cash in them to meet the legal requirements. Now Congress is moving to offer
companies relief, and the White House is planning a remedy of its own. But what companies aren't
saying is that some of them contributed to the problem themselves. They did so through a variety
of strategic moves to plump up earnings or cut costs, at the price of reduced funding for their
pension plans. Over the past decade, U.S. companies have siphoned off billions of dollars in
assets from their pension plans. They've used the cash to pay for retirees' health coverage,
the costs of laying off workers and even fees to benefits consultants. Meanwhile, many employers
have been putting less money into pension plans in the first place, because they adopted structural
changes that made the plans appear better-funded on paper. Converting to a hybrid known as a
"cash balance" plan, for example, reduced the sums that companies needed to put into
the plans, or even were permitted to. ...
Besides other ways companies have tapped surplus pension assets, they've used some assets to
hire the very consultants who taught them how to tap. For instance, Internal Revenue Service
filings show that International Business Machines Corp. used $18.4 million of pension assets
in 2001 to pay fees to Watson Wyatt, a consulting firm that helped it convert to a cash-balance
plan. This was seven times the fee Watson Wyatt got when it first began working for IBM in 1995.
In comparison, investment-management fees paid out of IBM pension assets declined about 5.5%
over the period. If link is broken, view
Adobe Acrobat version [PDF--51 KB].
- PlanSponsor.com: IMHO:
Reality "Check?" It's hard for plan sponsors to catch a break in the headlines
these days. (Free registration may be required). Excerpt: The most recent pummeling
was contained in yesterday’s online edition of the Wall Street Journal, where Ellen
Schultz manages (again) to find fault with cash balance programs. Schultz so routinely beats
THAT drum it would be laughable, if it weren’t so consistently one-sided. ... However,
this time she has managed to concoct what can only be described as a vast conspiratorial
tapestry on the part of employers (and their consultants) to gorge themselves on the pensions
of hard-working Americans.
- Watson-Wyatt Worldwide: Pension
Plan Sponsors Looking for Funding Relief from “Perfect Storm” Conditions. Excerpt:
Over the last few years, the investment climate has been marked by the equivalent of a perfect
storm, leaving many defined benefit plan sponsors with underfunded plans. Unless we see extraordinarily
healthy investment performance very soon, plan sponsors will have to make significant contributions
to their pension plans over the next few years."
- Minnesota Public Radio: Private
pension plans in Minnesota coming up short. Excerpt: The consulting firm Milliman USA recently
analyzed the pension plans at 100 of the nation's largest companies, and found 87 of them don't
have the money they'll need to pay retirees what they've promised. At the end of 2001, the pension
plans Milliman studied had a small surplus. By the end of last year they were $157 billion short.
Author John Ehrhardt says it's a big switch from the 1990s. "Where companies were looking
at pensions being an income producer, they're now looking them as an expense," Ehrhardt
says. "You're seeing these (companies) that went 10 years, maybe longer, without having
to make a contribution to the plan, now for the first time in five, maybe 10 years they're having
to make a contribution."
- Washington Post: The
Pension Time Bomb. Excerpt: The pension time bomb is ticking -- and could ultimately explode
in a savings-and-loan-like crisis. An aging workforce and the collapse of the stock market have
combined to create massive underfunding of traditional corporate pensions." ...What's needed
is an overhaul of pension rules to ensure adequate contributions and disclosure. The PBGC cannot
afford a string of big failures. It would turn to Congress for a bailout, whose costs would
compound the expense of Social Security and Medicare (even before any drug benefit). The general
corporate response to these dangers is to minimize them and to argue that pensions will recover
with the economy and stock market. Maybe. But the arguments sound eerily like the first reaction
to the savings and loans problems of 20 years ago. The temptation then was to delay and hope
for the best. It was an expensive error.
- Washington Post Editorial: Fixing
Pensions. Excerpt: Now, some in Congress are pushing a "fix" that would, in essence,
define part of the problem away by reducing the amount of money that companies have to put into
their plans. This approach -- contained in a measure proposed by Reps. Rob Portman (R-Ohio)
and Benjamin L. Cardin (D-Md.) -- would ultimately put more funds at risk of not having enough
money to pay workers what they are owed ... But the first step to fixing the pension system
is to work out an approach based on factual, accurate projections of future costs, not convenient
fictions that may boost corporate profits now but create more problems down the road.
- Testimony of the Honorable Peter R. Fisher, Under Secretary for Domestic Finance, U.S. Department
of the Treasury, Before the Subcommittee on Select Revenue Measures, Committee on Ways and Means,
and the Subcommittee on Employer-Employee Relations, Committee on Education and the Workforce,
United States House of Representatives: The
Administration's Proposal for Accurately Measuring Pension Liabilities. Excerpt: Our complicated
system of funding rules has been constructed, in part, to dampen the volatility of firms' funding
contributions. Yet current rules fail to do so. After years of making few or no contributions
at all, many firms are facing precipitous increases in their annual funding requirements."
- Wall Street Journal: The
Politics of Pension Promises. Excerpt: Congress wants defined-benefit pension plans to flourish.
It has a choice: Tweak the rules to make it easier for companies to make promises, even if that
allows them to set aside less money in coming years to back pensions and pretend plans are sounder
than they truly are? Or tweak the rules so that companies have to do more to stand behind their
promises, including setting aside more money and revealing more financial data to workers? Employers
and unions, backed by politicians of both parties, prefer the first option. The Bush administration
is arguing for the second
- CBS Evening News: Top
Brass Perks Gall Workers. Excerpts: For Chuck Starcher, a mechanic at Delta airlines, the
bad news came in a letter, estimating just how much the airline plans to cut his pension every
month: right off the top, the company is slashing $1,100. As CBS News Correspondent Wyatt Andrews
reports, he's not happy, because Delta is cutting the pensions of workers while guaranteeing
full pensions for top executives. A year and a half ago, Delta quietly committed $65 million
for executive pensions, including one for CEO Leo Mullin. The benefit is called an executive
trust; Starcher calls it a raid. ... Guaranteed pensions for the very executives ordering cuts
for everyone else, strikes many as the greatest double standard in the economy.
comments. Full excerpt: The man at Delta said they created the Executive Trust to "provide
stability, keep management focused, and keep leadership in place." What a bunch of
hooey. Kind of reminds me of when Tom John Bouchard replied that IBM just simply could not
afford IBM's defined benefit pension. RIght he was, after Gerstner established the SERP
and EDCP in 1995, separate executive retirement trusts, same as Delta. Bouchard was right,
after the executives got their 65% of salary averaged over 5 years results in a pension
for life ($12,500,000 salary average results in $8,125,000 annual pension for life). See
Table 2 of SERP in the annual proxy report 2002 at http://www.ibm.com/annualreport/2002/proxy/proxy_3.htm.
The numbers in table 2 are LIFETIME ANNUAL PENSION PAYOUTS!
- Wall Street Journal: Employers
to Face Many Choices, Including Cutting Some Benefits. Excerpt: For the nation's employers,
adding a prescription-drug benefit to Medicare would fulfill a longtime goal. Heavy lobbying
by a coalition of trade groups and big employers including General Motors Corp., Ford Motor
Co., Cargill Inc., Bank of America Corp. and International Business Machines Corp., has been
critical to the drafting of separate Medicare drug bills in the U.S. House and Senate. "We
spent a long time educating House and Senate lawmakers about our issues," says Kate Sullivan,
health-care policy director for the U.S. Chamber of Commerce, a business advocacy group in Washington.
"The business community will be very strongly in support." Once a bill is passed,
employers would face many new choices. Many might be tempted to scale back their retiree drug
benefits to the skimpier level likely to be offered by Medicare. Most companies provide a far
more comprehensive benefit than either plan would. The companies could choose to supplement
the Medicare benefit to maintain their retirees' current level of coverage. The Congressional
Budget Office has estimated that 37% of retirees now covered by a company plan would lose employer-provided
drug benefits under the Senate bill, and 31% under the House proposal. "I don't know why
a company wouldn't do something along those lines," says Ken Thorpe, chairman of the department
of health policy and management at Emory University in Atlanta who served in the Department
of Health and Human Services in the Clinton administration. "There's no incentive to retain
what you currently offer." If link is broken, view
Adobe Acrobat version [PDF--53 KB].
- Wall Street Journal: To
Save on Health-Care Costs, Firms Fire Disabled Workers. Excerpt: Across the corporate landscape,
disabled workers are becoming an increasingly common casualty of the drive to cut costs. As
recently as three to five years ago most companies paid health benefits for the long-term disabled
until they were 65 years old, according to James Curcio, a senior consultant for Washington
Business Group on Health, a trade association that helps companies contain health-care costs.
At 65, federal Medicare benefits kick in. But as health-insurance costs and the number of disabled
employees climb, more companies are firing them. A Mercer Human Resource Consulting study last
year found that 27% of the 723 companies surveyed dismiss employees as soon as they go on long-term
disability and that 24% dismiss them at a set time thereafter, usually six to 12 months. (Dow
Jones & Co., which publishes The Wall Street Journal, terminates employees six months afterward.)
The survey found 15% keep the disabled on as employees with benefits until age 65. If link is
Adobe Acrobat version [PDF--120 KB].
- CBS Evening News: White
Collars Join Jobless Ranks. Excerpt: "My name is Dorothy." "Hi Dorothy!"
It sounds like any recovery meeting anywhere in America. "My name is Daryl." "Hi
Daryl." But, as CBS News Correspondent Jerry Bowen reports, the problem is not addiction:
it's unemployment. And these are some of America's best and brightest managers and mid-level
executives auditioning at Taco Tuesday in Lake Forest, Calif., where hi-tech talents who once
earned six-figure salaries are praying for the miracle of six degrees of separation: someone
who knows someone who knows someone with a job opening.
- Jane Bryant Quinn: Retire Early? Think Again.
In 15 years, the normal retirement age will be 70 or more, because that’s what it is going
to take to keep your lifestyle high, bills paid and wallet full. Excerpt: To avoid becoming
a generation of Wal-Mart greeters, middle-aged boomers have to plan. It’s easier to keep
a job at 65 than look for one at 75, when your money is running out.
- New York Times: White
House E-Mail System Becomes Less User-Friendly. Excerpts: In the past, to tell President
Bush — or at least those assigned to read his mail — what was on your mind it was
necessary only to sit down at a personal computer connected to the Internet and dash off a note
to email@example.com. ... Under a system deployed on the White House Web site for the
first time last week, those who want to send a message to President Bush must now navigate as
many as nine Web pages and fill out a detailed form that starts by asking whether the message
sender supports White House policy or differs with it. ... Some experts in Internet usability
think the new method for sending messages is not doing much to enhance communications between
the White House and the public. "Over all, it's a very cumbersome process," said Jakob
Nielsen, an authority on Web design who helps run a consulting group, Nielsen Norman Group,
in Fremont, Calif. "It's probably designed deliberately to cut down on their e-mail."
The White House said it was taking its Web usability critics in stride. "When it comes
to a Web site, it's a bit like a movie," Mr. Orr said. "Some will say it's a tour
de force; some will say it fell flat." ... "This is the most ridiculous Web form for
contacting someone I have ever seen," said Mr. Matzzie, who is a professional Web site
designer. If link is broken, view
Adobe Acrobat version (PDF--27 KB).
Coverage on H1-B and L1 Visa and Outsourcing Issues
- Business Week Commentary: Is
a Stealth Immigration Policy Smart? Excerpt: Should trade treaties be used to regulate
U.S. immigration policies? That's the question critics are asking about the two new trade
pacts the Bush Administration signed this spring with Chilean Foreign Minister Soledad
Alvear and Singapore Prime Minister Goh Chok Tong. With little public discussion, the
White House agreed to create new visa categories to allow thousands of professionals from
each country to work in the U.S., on top of existing visas such as H1(b)s.
... Supporters of the new visas argue that developing nations will fill many of these jobs
one way or another. "If [the U.S.] can't import people, then jobs will just be exported
from the U.S.," says Kiran Karnik, president of NASSCOM, India's largest software-industry
association. U.S. employers also say they stand to benefit
- CNET News.com: Oracle
to double its India work force. Excerpt: Larry Ellison, Oracle's chief executive,
made the announcement on Thursday while addressing key Indian customers via satellite
from Oracle's global headquarters at Redwood Shores, Calif. Oracle's Indian subsidiary
has two large development centers at Bangalore and Hyderabad, where 80 percent of its
more than 3,000 employees work. The company said it has about 6,200 customers in India
and its products are supported in 13 major Indian languages. American technology companies
are increasingly shifting part of their research efforts to India--lured by the large
numbers of highly trained software and hardware engineers and by lower development costs.
- Wall Street Journal: Outsourcing
Abroad Draws Debate at Home. Excerpt: Forrester Research Inc. predicts that American
employers will move about 3.3 million white-collar service jobs and $136 billion in wages
overseas in the next 15 years. Concern about the impact on the nation's economy and its
workers is prompting union protests and congressional hearings. At least five states introduced
legislation aimed at keeping jobs in the U.S., among other things, by blocking companies
from using foreign workers on state contracts. The House Small Business Committee held
a hearing last month on outsourcing, just one week before high-tech workers protested
outside New York's Waldorf-Astoria, site of an outsourcing conference. In Seattle, high-tech
workers rallied outside the city Chamber of Commerce, where local officials were meeting
with a British outsourcing firm.
- Seattle Post-Intelligencer political
cartoon. Caption: If there was justice in the world..."Sorry, the board is outsourcing
your job to a guy in India who'll be CEO for a tenth of your salary."
- TomPaine.commonsense: Offshore’s
Rise by Ralph Nader. (Editor's note: This article is worth a read even if you dislike
Ralph Nader). Excerpt: In the past four decades, many millions of manufacturing jobs in
this country have been shipped overseas or to South America. This transfer was supposed
to be part of the "win-win" process of free trade. But 27 straight years of
growing trade deficits with the rest of the world makes one wonder: who's winning? Conventional
economists and their Republican and Democratic converts try to cushion this job export
machine by saying that the large majority of jobs in this country are white-collar, not
blue-collar. The implication is that white-collar jobs are not as easy to export. Well,
welcome to the computerization age. U.S. companies are rushing headlong to export computer
programming work to countries like India, Malaysia and now China, where English-language
proficiency and cheap labor cut costs by more than two-thirds. Payroll processing, airline
passenger billings, insurance computer applications and new software design are only some
of the labor that is done in foreign countries for U.S. companies.
- BBS News: Jobs protest at
BT's India move. Excerpt: Unions have been angered by BT's plans to open a new call
centre in India. "The export of call centre jobs hurts the most vulnerable section
of the workforce in the poorest regions of the country," said Communication Workers
Union (CWU) general secretary Billy Hayes. The union said more than 200,000 jobs could
be exported from the UK over the next five years.
- WashTech News: Reps
Smith and Inslee Request GAO Study on Offshore Outsourcing. Excerpt: A Washington
state congressman requested a federal study yesterday that would attempt to determine
to what extent the rising trend of offshore outsourcing is affecting the loss of U.S.
tech jobs. Rep. Adam Smith (D-Wash) delivered a written request late Thursday morning
to General Accounting Office Comptroller General David Walker in Washington, D.C. Smith
said in a news release yesterday that he wants the GAO to investigate the impact offshore
outsourcing has on U.S. high-tech workers, aerospace engineers, and various levels of
state and federal government workers whose jobs have been sent offshore. Fellow Washington
state congressman Jay Inslee co-signed the request.
This week on the Alliance@IBM
- e4engineering.com: High-tech
workforce shrinks by 560,000. Excerpt: A study released today by the AeA, a US-based
high-tech trade association representing more than 3,000 member companies, shows a decline
of 560,000 high-tech jobs in the US over a two-year period from January 2001 to December