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Highlights—October 15, 2005
- Molly Ivins, courtesy of the Salt Lake City Tribune: Making pensions
disappear is a new corporate art form. Excerpts:
The entire political world is agog: Tom DeLay indicted, Scooter Libby in danger, Karl Rove rumors abound, Miers' nomination
in doo-doo. So I'm writing about . . . pensions. They're just so sexy, I couldn't resist. Of course, the word pension
is a terminal turnoff for anyone under 60 - so redolent of the blue-rinse perm set. As one whose idea of financial planning
consists of playing bingo at the Safeway, I'd prefer to be out listening to reggaeton, myself. Still, when you're getting
screwed, you really should know about it. [...]
Envision this, oh mod, rad, chic young people: Until 20 years ago, about the time you were born,
most geezers approaching retirement had a traditional defined-benefit pension plan. The longer you worked at a company and
the more money you made, the more you got at your retirement. Employers kept increasing their contributions to these plans,
and whatever risk that came with them was assumed by the employers.
Gone with the wind. For years, companies have been cutting their contributions and moving more and
more of the market risk from themselves to their employees. They switched to ''defined-contributions'' plans, like the
401(k), where the employee chooses the investments and assumes the risk (think of the stock market in recent years).
The Bush administration has approved a change that makes it legal for companies to modify their
pension plans in a way that usually discriminates against older workers who were covered under the earlier plans. But
this is the just the beginning. Making your pension disappear is a new corporate art form. There is, for example, the ''wear
away.'' The Star Tribune gives this example: Say you've been working for a company for 20 years, at the end of which
you are entitled to a pension of $2,000 a month. But, your company decides to ''revise'' the plan and, lo, suddenly you
have to have worked for 40 years to qualify for $2,000 a month.
Technically, the company has not reduced your pension
benefit - it is just holding the benefit in place until time ''wears away'' the difference between the new terms and
the old terms. [...]
''The biggest byproduct of these changes is fear,'' said the Star Tribune in its series. Fear may
be a more dangerous emotion than anger. It turns life into an ''every man for himself scramble'' without unity, community,
caring or sharing. In fact, every one of us comes into this world naked and helpless, and most leave it in the same condition
- and we are dependent on one another every single day in between. The ''stand on your own feet and take care of yourself''
attitude the right wing keeps pushing is not only cruel, but stupid, too.
- CIO Magazine: Backsourcing PAIN. By Stephanie Overby. Excerpts: JPMorgan Chase's decision to first outsource
IT and then bring it back in-house stands as a cautionary tale for any CIO considering an outsourcing megadeal. When David
Rosario got the official notice at the end of 2002 that his job would be outsourced to IBM, he was not surprised. Rumours
had been circulating for months at JPMorgan Chase, where he had worked as a network engineer since 2001, that the company
would be signing away much of IT to an external services company. The $US5 billion IBM-JPMorgan contract was heralded
at the time as the largest outsourcing deal on record, and it received a great deal of publicity in the mainstream and
trade press as the wave of the future. JPMorgan itself had trumpeted the deal as a "groundbreaking" partnership
that would cut costs, increase innovation and benefit its IT workers.
But Rosario and other employees soon discovered that they would have to reinterview at IBM for their
positions. During that process, Rosario was told that his job at IBM would be secure for the foreseeable future. Others,
however, were not so lucky. They were told by Big Blue that their jobs would likely be gone within a year or two. As
a result, some left as soon as they could. Rosario stayed. [...]
Lucky for Rosario, he had become skilled at reading the IT tea leaves, and had already secured a
job for himself in another area of the company as an IT architect. But not before all the to-and-fro took its toll on
lost my trust in management a long time ago," he says. "I don't believe anything they say or do. I know they'll
put a spin on anything, as long as it allows them to keep retention up for just as long as they need to." Rosario is
just one of thousands of employees affected by JPMorgan's decision to outsource to IBM and its subsequent move to bring
the work back in-house. And he is not the only one who suffered such whiplash. In interviews with a number of current
and former employees, CIO repeatedly heard stories of diminished morale and decreased productivity over the past several
On December 20, 2002, JPMorgan announced its seven-year outsourcing arrangement with IBM - including
data centres, help desks, distributed computing, and data and voice networks - with great fanfare. "We view technology
as a key competitive advantage," stated Thomas Ketchum, JPMorgan's vice chairman, in a company press release. "Our
agreement with IBM will create capacity for efficient growth and accelerate our pace of innovation while reducing costs,
increasing quality and providing exciting career opportunities for our employees." The deal would help JPMorgan create "significant
value" for its clients, shareholders and employees, Ketchum promised. Less than a year into the relationship, then-CIO
John Schmidlin said at a Gartner outsourcing summit that his only regret was that they hadn't signed the deal with IBM
Fast-forward to September 15, 2004, when JPMorgan announced the premature end of the contract with
IBM with equal flourish and similar promises. In another company press release, Austin Adams, the former CIO of Bank
One who took over for Schmidlin as CIO for the $US1.1 trillion merged bank, said: "We believe managing our own technology
infrastructure is best for the long-term growth and success of our company, as well as our shareholders. Our new capabilities
will give us competitive advantages, accelerate innovation, and enable us to become more streamlined and efficient." [...]
The fact that JPMorgan officials gave basically the same reasons for the retreat from the mega-outsourcing
deal that they had proffered for inking the deal in the first place left some employees confused and resentful. "Morale
was not high," says one former consultant who managed server support at JPMorgan and was let go. He asked not to be
named. Some workers had been hit by the outsourcing where it hurt even more - in their paycheques. Though many employees
(such as Rosario) saw only the company name on their paycheques change, others (typically consultants) took significant
pay cuts by moving to IBM. "The five people in my group [all consultants] - which included network, systems and database
administrators - were all told that they had to reapply for their jobs," says Scott Kirwin, who worked as an independent
consultant for JPMorgan in New York from July 2002 until April 2003. "A lot of them did, but they were hired at salaries
that were 20 percent less." [...]
The problem was with the way things did - or, more accurately, didn't - get done. "The contract
between Bank One and IBM had enough vagueness within it that IBM could charge for anything that wasn't already being
done within the bank before the deal began," he says. "Our IBM managers said if something wasn't stated specifically
in the contract - a particular task or a type of support - they wouldn't have us do it unless the bank paid them more.
So a lot of things didn't get done." For example, every time Bank One needed him to add or remove a user because of
a new hire or fire, he and his team of 50 had to go onto all 1500 servers to add or remove that person. There was a
Tivoli module that could have been added to help manage user accounts more efficiently, and he notified his IBM manager. "If
you can find a way to make the bank pay for it, then we'll do it," he was told. The module was never added. Another
Bank One systems administrator who was hired on by IBM says he also saw several examples in which IBM declined to implement
additional improvements because Bank One would not pay for them. [...]
Others saw the same things at other IT locations. During the 21 months when IBM was in charge, "Things
that used to get done no longer got done," says a database administrator who was hired by IBM from JPMorgan in Columbus,
Ohio. In fact, it seemed that even ordinary office products were hard to procure in a timely manner. "Even office supplies
had to be approved two levels above my boss," Rosario says. "[IBM] even delayed getting batteries for our pagers,
and some project managers had to go and buy their own reams of paper at Staples." Rosario adds that during the last
six months of the JPMorgan outsourcing deal, IBM halted all projects. An IBM spokesman declined to comment, citing contractual
- Los Angeles Times: Shut
Out on Healthcare After Storm. Many hurricane victims don't qualify for aid if
their insurance coverage vanished with their jobs. By Ricardo Alonso-Zaldivar. Excerpts: Like most of those whose lives
were upended by Hurricane Katrina, 52-year-old school bus driver Emanuel Wilson can thank the federal government for the
fact that he has money to pay rent. He's also been given food stamps to make sure he can buy groceries. And if he had
young children, the government would almost certainly be helping them get back to school. But what Wilson needs is chemotherapy,
and that is something the government seems unable to help him with. Wilson was being treated with monthly chemo injections
for his intestinal cancer before the hurricane.
He has been denied assistance largely because, before the storm, he had what the government says
it wants every American to have: health insurance. The New Orleans man's plight illustrates one of the most perplexing twists
in the still-faltering federal effort to help Gulf Coast hurricane victims: a seemingly inconsistent approach to victims'
healthcare needs that appears to punish those who had taken the most responsibility for their own care.
The New Orleans man's plight illustrates one of the most perplexing twists in the still-faltering
federal effort to help Gulf Coast hurricane victims: a seemingly inconsistent approach to victims' healthcare needs that
appears to punish those who had taken the most responsibility for their own care. Under the present rules for Katrina victims,
if you are destitute, the government will pay your medical bills. Ditto if you are severely disabled or have children. But
if you're an adult who had a job that included health benefits and you lost that job because of the storm, the government
can't seem to help. That's true even if, as with Wilson, there is every prospect that you can get your old job back as soon
as things begin returning to normal.
- Yahoo! message board post: "No
hope for good employees" by "ibmgrunt". Full excerpt: I had my mid year
review with my manager and he was telling me how in the spring when he does the next round of reviews, he has been told
he HAS TO give 3's. He said it's not about performance anymore. It's about who contributes the most. It seems they got rid
of all the poor performers and when he asked how can he give 3's when everybody he has is a good performer, they told him
to give the 3's to the people that contribute the least. If everybody contributes, who contributes a little more? I said
if you get a 3 you are pretty much doomed and as a manager he said to me, "I KNOW". It's getting harder and harder
to survive these wrongful corrupt reviews !! What do we do if we get a 3 if we don't deserve it? I've been a 2 or better
for 7 years. Looks like there is just no hope for us anymore.
- "drbeaker2" responds. Full excerpt: This has been going on since 1992 or so. We all need to accept it. We were told
over 10 years ago that it was foolish to be loyal to IBM any longer (as there would be no loyalty from IBM), or to expect
lifetime employment at IBM.
Once you get your first bad review, you may have many years more at IBM yet, or maybe only 1 more
year. But they do seem to be getting rid of people faster and younger these days. If you are on any kind of pension,
then you are at a competitive disadvantage with very new (or future) IBM employees, who have nothing at all for the first
year (not even 401K contributions from IBM).
And it doesn't matter how hard you work, how many hours you put in, how great your skills are,
how loyal you are, etc. If you are part of any pension plan, your days are probably numbered, it's just a matter of when
it becomes your turn to go in the next 5 years or so when IBM expects to get rid of at least half of it's employees with
So take care of #1 (you). Look around the industry at other companies and careers. Be mentally
ready for when and if the axe falls someday. We have to stop depending on an IBM job as the most important part of our
work lives. Working at IBM is just a (temporary) job now, not a life-time career. Make plans for you work life
It's a shame, as IBM used to be a great place to work. Now, its a terrible place to work with
low employee morale and no teamwork. High contributors, working 70 hours per week, with key skills, are being sent out
the door. Why? Because they cost more than someone with no skills or experience, and because there are "savings" from
getting rid of someone with a pension, that pads executive bonuses.
And let's face it, that's the number one priority at IBM now, not service to the customer, not
respect for the individual, just bonuses for executives.
- New York Times: I.B.M. to Put
Genetic Data of Workers Off Limits. By Steve Lohr. Excerpt: As concerns grow
that genetic information could become a modern tool of discrimination, I.B.M. plans to announce a new work force privacy
policy today. I.B.M., the world's largest technology company by revenue, is promising not to use genetic information in hiring
or in determining eligibility for its health care or benefits plans. Genetics policy specialists and privacy rights groups
say that the I.B.M. pledge to its more than 300,000 employees worldwide appears to be the first such move by a major corporation.
- CNET News: IBM Research turns
60. By Michael Kanellos. Excerpt: IBM Research is celebrating 60 years of breakthroughs in computer science, physics
and semiconductor design on Tuesday, as it steps up its efforts to scientifically study how organizations operate. Originally
housed in a renovated fraternity house at Columbia University, the then-named Watson Scientific Computing Laboratory has
become one of the pre-eminent technological research centers in the world--and it has given IBM an edge over competitors
in many fields. Five IBM employees have won Nobel Prizes for, among other achievements, the discovery of electron tunneling
and the invention of a microscope that captures images of individual atoms. Add to that seven National Medals of Technology,
five National Medals of Science and four A.M. Turing Awards.
- Yahoo! message board post by
"retired_in_89". Excerpts: As to my version of reality, is it twisted
because I seek a return to respect for the working people, integrity all the way up to the CEO, and honesty? For those
of you who only seek to look to the next quarters earnings I have news for you. The dismantling of America's industrial
base and the transfer of decent paying jobs to third world countries all for the sake of that next quarter's bottom line
is akin to the guy on the SciFi channel who is pulling the hair out of his head and thinks he is accomplishing something
while all the while he is dissolving himself from the bottom up.
- Wall Street Journal: Tata,
Infosys Profits Soar. Indian Outsourcing Firms See Strong Demand From Europe.
By Eric Bellman. Excerpts: The outsourcing leaders continued to hire thousands of new employees to help fill growing
global demand for their services. Infosys hired a record 8,026 employees during the quarter, while Tata Consultancy hired
- Yahoo! message board post by
Kathi Cooper. Excerpt: Your salary at IBM consists of what you take
home and what stays on their books. The piece you take home is called labor. The piece that stays on their books is called
burden. Burden consists of several pieces like occupancy, medical benefits, and pension benefits. Pension benefits are
traced separately, by headcount by year. IBM tracks pension plans, tracks, and records your pension separately. It is
deferred compensation I'd get mad if I were you. Someone snookered you into thinking it was a gift and entitlement.
Stupid. You earned it. They recorded it. Then they took it. Kathi Cooper Bean Counter for IBM since 1979.
- New York Times: Bush's Pledge?
The Joke's on the Poor. By Bob Herbert. Excerpts: Mr. Bush is the standard-bearer
par excellence of his party's efforts to redistribute the bounty of the U.S. from the bottom up, not the other way around.
This is no longer a matter of dispute. Mr. Bush may not be the greatest commander in chief. And he may not be adept at sidestepping
the land mines of language. ("I promise you I will listen to what has been said here, even though I wasn't here.")
But if there's one thing the president has been good at, it has been funneling money to the rich. The suffering wrought
by Katrina hasn't changed that at all.
One of the first things the president did in the aftermath of Katrina was to poke his finger in
the eyes of struggling workers by suspending the requirements of the Davis-Bacon Act in the storm-ravaged areas. Passed
during the Great Depression, the law requires contractors on federally funded construction projects to pay at least the
prevailing wage in the region. This is one more way of taking money from the working poor and handing it to the wealthy.
A construction laborer in New Orleans who would ordinarily be paid about $9 an hour, the prevailing wage in the city, can
now be paid less. So much for the president's commitment to fighting poverty.
Poverty has steadily increased under President Bush, even as breathtaking riches (think tax cuts,
cronyism, war profiteering, you name it) have been heaped upon those who were already wealthy. Class divisions are hardening,
and economic inequality continues to increase dramatically.
|Vault Message Board Posts
- "90% Indians on three major
Australian-based project" by "sgp". Full excerpt: Is this normal globally or this is specific
to IBM Australia? While the local Australian IBMers were being retrenched or force to sit on the bench, the Australian
BCS partners are using IBMers from India for major projects in Australia. I've seen 80-90% of project teams in
3 major Sydney or Melbourne SAP projects staffed with Indian consultants. I am not talking about off-shore call
center works. These are Australia-based projects. IBM Australia is using Aussie government loop-hole in obtaining
working visas (visa class 457) for the Indians. These visas are reserved for skilled IT workers that can't be
found in Australia. We are talking about SAP skills here and we have 20% IT unemployment rate in Australia. Maybe
this is legal and fatten the partners' pocket but I think this is immoral and unethical towards Aussie consultants.
for Retired Piglets" by "ancientblueconsultant". Full excerpt: In addition to Dose's
good comments, I must warn that individuals who are retired long term piglets who are under the Blue Pig's defined
benefit plan could lose their retirement if they returned. I am personally aware of at least 2 individuals who
were recruited, and when they started working again lost their retirement rights under the old plan. You have
to ask and get the answer in writing to make sure you aren't getting screwed. Same for any past departure payments,
Future Health Account and any of the other of the myriad of complex instruments built by the same people who built
the arcane complex accounting systems used to obfuscate and hide the truth.
- "SO as a
place to work" by Mike Rudd. Full excerpt: From the Alliance@IBM web site,
check out this
article on the effects on Customer environments, innovation and employees from engaging IBM SO:
Then ask yourself if this is the kind of environment you want to work in: pissed off Customer, demoralized employees
and mendacious and nit-picking IBM contract managers disguised as Project Executives who live to blame the PM (you)
for all the Customer dissatisfaction.
Couple that with increasingly aggressive legal enforcement of the letter of the contracts instead
of being concerned about the Customer's welfare and quite frankly IBM SO is doing its best to lose further deals
by oxidizing its reputation. We lost a deal in Ohio because the super-aggressive Sales force, including the former
president of ISSC, totally turned the Customer off. Their feedback was "IBM is not a company we want to do business
you Dan Colby.
Now to further help you make your decision, the PM arm of SO is run by a totally political female
who laid off 20% of her staff at the beginning of this year and no longer has enough people to staff the few deals IBM
has won. But she is a master of pushing other people in front of the bullets she deserves herself, so her employees are
the lowest of the low on the morale index. SO is no better than BCS. It just employs people with lower expectations so
we don't gripe near as much.
on the Alliance@IBM Site:
- Systems Group layoffs taking place now 10/12-13 in Austin, Rochester and San Jose - IBM-hired security guards
are escorting employees off the sites.
- Alliance@IBM: Attention IBM employees:
IBM is blocking e-mail to and from the Alliance@IBM e-mail address email@example.com from
inside the company. Please send your job cut information and other correspondence from
your home e-mail. You can also contact us the following ways: Phone 607 658 9285 or Fax
607 658 9283.
- IBM Pension
Lawsuit FAQ about Cooper v IBM, Updated 6-21-05. Excerpt: Below is a list of frequently
asked questions about the class action lawsuit against IBM's 1995 and 1999 pension
plans. The answers are my personal opinions, have not been verified with either IBM
or plaintiffs’ counsel, and should not be construed as legal advice. On July
31, 2003, a federal district court judge ruled in favor of the employees in this case.
IBM will appeal portions of the ruling. On September 28, 2004, IBM and the legal team
on Cooper v IBM announced that an agreement had been negotiated that settles some of
the claims and set the amount of damages that IBM will pay to the class if IBM's appeal
of the district court's age discrimination rulings is unsuccessful. Click on any question
to jump to the answer. Or scroll down and read them all.
- From the Visitor's comment page:
- Comment 10/12/05: After talking with friends about insurance one day, the thought came to me I'd bet that
almost every IBMer has home, car, and certainly health insurance to protect against unexpected loss. The loss
of one's job often means the loss of one or all of these, yet how many of us have taken steps to ensure we
do not lose our jobs unexpectedly? I've seen dozens of my colleagues laid off. It was a severe burden on all
and some did lose their homes; all lost health insurance at least for some time. All were 2 performers right
up to the end and never thought about what they had to lose. My epiphany was to see the Alliance as a way
to help insure homes, cars, benefits and jobs from unexpected loss. -Anonymous-
- Comment 10/12/05: Two of my friends work at a company whose computer systems were recently outsourced to
IBM. I asked them how it was going and they replied "This place is going to hell in a hand basket." It
seems all IBM does is assimilate data centers and run them into the ground. They install numerous levels of
management; yet cut the workers who actually know and do the work. All I can say to any company stupid enough
to sign up with IBM is that you get what you pay for. Don't expect any improvements or worthwhile modifications
to your computer systems. -Anonymous-
- Comment 10/12/05: I visit your site periodically out of curiosity since I was laid off by Big Blue over
three years ago, after 25 years with the company. I realize that I'm one of the fortunate ones, having had
degrees and experience prior to starting at IBM that gave me the chance to restart a career in my original
profession of environmental science. Today, I'm in a far better place, both from how interesting the work
is, and in monetary reward. However, till this day, it does bother me that I was effectively released during
the same month I was to attend the awards conference for being the outstanding Lead in our geographic area
for the year. I do feel badly for the few overworked IBMers left in the old office and for others who were
released several years short of retirement. I am proof, however, that there is life after IBM. -Anonymous-
- Comment 10/12/05: I just received this note from IBM based on its tax deductions for giving 25th anniversary
gifts to employees. "An employer may deduct up to $400 per year for Employee Achievement Awards given
to any employee under a non-qualified plan and up to $1,600 per year for Employee Achievement Awards given
to any employee under a qualified plan". Doesn't IBM do anything just out of the goodness of the heart?