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Highlights—November 19, 2005
- Washington Post: Management
Visionary Peter Drucker Dies. By Patricia Sullivan.
Excerpts: "There is only one valid definition of business purpose: to create
a customer," he said 45 years ago. Central to his philosophy was the belief that
highly skilled people are an organization's most valuable resource and that a manager's
job is to prepare and free people to perform. Good management can bring economic
progress and social harmony, he said, adding that "although I believe in the
free market, I have serious reservations about capitalism." [...]
In 1997, he predicted a backlash to burgeoning executive pay,
saying, "In the next economic downturn, there will be an outbreak of bitterness
and contempt for the super-corporate chieftains who pay themselves millions." Mr.
Drucker demanded that public and private organizations operate ethically and decried
managers who reap bonuses by laying off employees. "This is morally and socially
unforgivable, and we will pay a heavy price for it," he said.
- Forbes: China's
Secret Weapon. By Travis Bradberry. Excerpts: What
are business leaders in China doing that Americans aren't? A great question and one
that TalentSmart researchers grew tired of asking each other. So, they spent the
summer measuring the leadership skills of 3,000 top Chinese executives from the public
and private sectors. The executives completed the Chinese translation of the American
EQ test, the Emotional Intelligence Appraisal . The researchers compared the Chinese
executive's scores, to those from a matching sample in the U.S.
Emotional intelligence, or EQ, has been the subject of a flood
of research during the last decade. It's the single-biggest predictor of a leader's
success, regardless of industry. EQ is that "something" that is a bit intangible
in each of us. It gives a succinct name to how we manage behavior, navigate social complexities
and make decisions that achieve positive results. And today, it can be measured.
The TalentSmart study revealed American executives lag far behind
the Chinese in the two, most critical EQ skills: self-management and relationship
management. In a nutshell, these skills amount to a key ingredient in China's economic
success and a serious threat to America's ability to compete in the global marketplace:
What is it, specifically, that Chinese executives are doing
that Americans aren't? They are living the qualities that American executives only pay
lip service to. The typical American leader is not willing to expend much energy in
seeking feedback, getting to know his or her peers and following through on commitments
for the sake of others. Making business personal is nothing new in China. Executives
ordinarily schedule dinner meetings with their staff to talk about business trends,
career aspirations and family. People expect their leaders to set an eminent example
in how they make decisions, connect with others and improve. There is genuine shame
in not fulfilling these duties because people really care about them--everyone knows
- Wall Street Journal: IBM's
Marketing Chief Resigns. By Charles Forelle.
Excerpts: International Business Machines Corp.'s marketing chief, Abby Kohnstamm,
will step down to "pursue a combination of personal and business interests," the
company said in a memo to employees Monday. Ms. Kohnstamm, 52 years old, worked for
former IBM Chairman Louis V. Gerstner Jr. at American Express Co., and he brought
her to IBM in 1993. Her first major effort was to consolidate all of IBM's advertising,
scattered among some 80 agencies, to one, Ogilvy & Mather. She helped develop
IBM's long-running "eBusiness" campaign, and she oversees Big Blue's iconic
message board post by "ibmaccountant". Full excerpt: Abby
was not that strong a player, she was part of the "elite ones" brought
in by Gerstner. Her success has been mixed, just like American Express where the
Optima Card was her brainchild (and a subsequent mess). Bringing together all advertising
is a sign of a consolidating aging company, and that was her first priority. The
communications team has progressed slowly downward during her reign as marketing
chief. She did a little to overcome the fragmented image of the different server
technologies, stratified services and US versus world trade advertising.
The only one left of the imported Gerstner alleged "dream
team" left now is Harreld. He seems to be having a hard time exploiting his pedigree.
That's because the market is wising up to what were the artificial forces that made
the stock price rise during the Gerstner period. Interesting that she gets a consulting
gig like Lou post-IBM. Must have been part of the departure contract. No big loss other
than options expense and forward pricing exposure.
- Joint Economic Committee Democrats: Two-Tiered
Pension System Protext Executives, But Not Average Workers [PDF]. Excerpts: Newspapers and magazines regularly
report on the growing gap between executive compensation and the earnings of average
workers. Less widely documented is the divergence between executive retirement packages
and retirement benefits available to rank-and-file workers. With fewer companies
offering traditional pension benefits based on years of service and salary, workers
are being asked to take on more investment risk and shoulder more responsibility
for retirement planning. Recent increases in the number of pension plans at risk
of defaulting further add to workers’ uncertainty over their retirement prospects.
Executives, meanwhile, are receiving increasingly generous and
more secure retirement benefits outside of regular pension plans. This two-tiered
pension system exacerbates the insecurity facing average workers, because executives
who are less dependent on the same pension plan as rank and- file workers have
less incentive to sponsor those plans and ensure that they can pay promised benefits.
In the past, executives participated in the same pension plan offered to the average
worker. Upon retirement, everybody received the same type of guaranteed benefit,
usually based on years of service and final average salary. Increasingly, however,
companies have cut back or eliminated their regular, defined benefit pension
plans, replacing them entirely or in part with defined contribution plans, which
transfer most of the economic risk onto workers (See box, “Three Types of Pension
In many cases companies have converted traditional defined benefit plans into
cash-balance plans, often at the expense of long-tenured employees. [...]
At the same time that companies have scaled back traditional
defined benefit plans for average workers, they have preserved and enhanced the
retirement security of their highest-paid employees by creating special executive
retirement packages outside of their regular pension plans. For example, I.B.M.
and Bank of America—both
of which have recently been sued over cuts to their regular pension plans—have
reportedly promised their CEOs annual pension benefits worth at least $3 million.
The rise of executive retirement plans threatens to exacerbate
these trends. As fewer executives rely on regular pension plans, their interests
are no longer aligned with those of the ordinary worker. Moreover, because executive
compensation is increasingly linked to performance measures such as profits,
executives may actually have an incentive to cut regular pension benefits. Freezing,
eliminating, or converting traditional pension plans all have the effect of wiping
away large pension obligations. That translates into increased company earnings,
which in turn justifies higher levels of executive compensation. In fact, a review
of SEC filings by The Wall Street Journal found that many companies adopted nonqualified
executive retirement plans at the same time that they were reducing regular pension
- Workforce Management:
Lobby to Preserve Benefit Levels.
As companies cut retiree health care benefits, retired workers are asking Washington
to intervene. Excerpts: Some of Ed Beltram’s retired colleagues are seeking
employment not because they miss going into an office each day, but because someday
they might want to go to a doctor’s office. Beltram, who was a human resources
manager at Lucent Technologies for 28 of his 31 years with the telecommunications
company, says that some Lucent retirees have seen their monthly health care premiums
rise from $42 per month in 2001 to $516 per month and a projected $690 next year.
In January, the company stopped subsidizing medical coverage for dependents of management
retirees who retired after March 1, 1990, and made more than $65,000. [...]
Since 1993, the number of companies with 500 or more employees
offering health coverage to pre-Medicare-eligible retirees has dropped from 46 percent
to 28 percent, while Medicare-eligible coverage declined from 40 percent to 20 percent,
according to a study by Mercer Human Resource Consulting. "Even at the companies
that are maintaining the benefit, retirees are paying more for that coverage," says
Derek Guyton, a Mercer health care principal. "Retirees are going to have to start
thinking about saving money to pay for health benefits."
- Wall Street Journal: Behind
'Shortage' of Engineers: Employers Grow More Choosy. Job Hunters Face Long Lists Of Requirements as Web Brings Flood of Résumés.
Two Hires From 158 Applicants. By Sharon Begley. Excerpts: Many companies say they're
facing an increasingly severe shortage of engineers. It's so bad, some executives
say, that Congress must act to boost funding for engineering education. Yet unemployed
engineers say there's actually a big surplus. "No one I know who has looked
at the data with an open mind has been able to find any sign of a current shortage," says
demographer Michael Teitelbaum of the Alfred P. Sloan Foundation. [...]
At a forum on innovation and education held at the Library of
Congress last April, Microsoft Corp. Chairman Bill Gates said, "There just aren't
as many graduates with a computer-science background. [That] creates a dilemma
for us, in terms of how we get our work done." Last year the National Science Board,
part of the National Science Foundation, warned that the U.S. faces "an emerging
and critical problem of the science and engineering labor force." In fact, the
number of students graduating with a bachelor of science degree in computer science
rose 85% from 1998 to 2004, according to figures compiled from universities by
the Computing Research Association. The number of bachelor degrees in engineering
rose to 72,893 in 2004 from 61,553 in 1999, according to the American Society for
message board post by Kathi Cooper (of Cooper v. IBM fame).
Full excerpt: Your management chain wouldn't even know when monitoring is done. Being
in Business Controls, I knew the team that specialized in forensic computing. They
are the ones that teach the FBI (and other organizations) how do the voodoo that
they do so well, as well as do it to you. I was monitored since 2000. Once in a while,
they would screw up (contaminate) my email and I would have to call them (copy Randy
McDonald) and tell them to back off as they were interrupting my job duties again.
Over the years, whenever a major news article came out about
Cooper v. IBM, I would always receive tons of internal email from employees with
questions and such. However, when the settlement notice was mailed to over 1/4
million IBM'ers, I received only one email. The forensic team made sure IBM'ers could
not reach me regarding the suit. Oh, that one email that they let slip through didn't
have anything in the subject field and the comment was 'Thanks Kathi. Great job. Thanks
again.' Since they weren't entirely sure if it was lawsuit related or not, they let
it go through. My point is this. Big brother at IBM is watching and capturing. Count
message board post by "kyrosl". Full excerpt: No, there are other
factors, but free, quality health care is the major factor affecting life expectancy
and infant mortality. Free, NO QUESTIONS ASKED pre-natal care is the key ingredient
that allows other western countries to have infant mortality rates 50% or more
lower than us. And don't think the reason is because they don't have an underclass.
The underclasses in Europe rival that in the US, with drug abuse rates and teen
pregnancies worse than the US.
Theoretically, the poor in the US have access to free medical
care via Medicaid. The reality is completely different. States, who shoulder a considerable
part of the cost, are constantly trying to cut Medicaid costs. They do this by erecting
all shorts of barriers, checks, and bureaucracy in delivering Medicaid, so that getting
it, if you are young, pregnant, and marginally educated, is quite a daunting task, and
most give up. So, effectively, there is little to no pre-natal care for the young and
poor in this country, which is reflected in infant mortality rates.
Ironically, when a poor woman gets into labor, care is available,
because hospitals are not allowed to turn away women in labor. But without pre-natal
care the result is a huge number of preemies, low birth weight, and drug-damaged
babies, which cost a fortune to care for during infancy and the rest of their lives:
the system maximizes revenues to the medical care complex rather than delivering
quality health care.
message board post by "kyrosl". Excerpts: The reasons I like
socialized health care are:
- There should be no doubt by now that it is far cheaper per capita than what we got
in America and in general delivers health care at least as good as what we got here.
It does this mainly in two ways. First, by avoiding the exorbitant 40 cents of each
health care dollar that our make-believe "free market" system spends on health
care bureaucracy (as opposed to low single digits in single payer systems). Second,
by delivering cheap preventive care and avoiding the exorbitant costs of health care
when problems become critical due to lack of readily available free preventive care.
A crack preemie costs hundreds of thousands of dollars from birth to 1 year old. Compare
that to the couple thousand that comprehensive prenatal care costs.
- Our government already spends half of every health care dollar on Medicare, Medicaid,
and Veterans medical. In other words we are already half way to socialized medicine,
and with the baby boomers joining Medicare, soon we will surpass the half way mark.
But because of the suffocating influence of the medical/insurance complex, the care
we get out of those dollars is far less than what other countries get for the same
money. If we were running our system like them, the government would have been able
to insure every single American without spending a single dime more than it does now
on Medicare, Medicaid and Veterans. Of course, this means that whole industries whose
only purpose is to shuffle paper and try to prevent people from getting care will
have to disappear.
- The medical/insurance complex is the single biggest flaw in America's competitive
arsenal. We spend more than 15% of our GDP on medical, while other advanced countries
with older populations than us spend typically less than 10%. I dread what will happen
when the boomers join Medicare. It's a competitive disadvantage that's hard to overcome,
in spite of our much greater economic flexibility. Companies like Ford, GM, and IBM
would be far more competitive and be willing to keep a lot more workers here in the
US, if they didn't have to worry about medical coverage.
Essentially "free"* socialized medicine is such a slum dunk for an advanced
country that it's very hard for outsiders to comprehend how America managed to be the
only one to not have one. That is, until they realize the lobbying and public opinion
shaping power of the medico-insurance establishment that feeds on the more than half
trillion dollars we waste every year on medical paper shufflers and hanger-ons.
* I keep saying "free" but of course, some payment
by those that can afford it will be needed to keep under control those that consider
a visit to the doctor as a social activity. The key advantages are the single payer
system that eliminates intermediary paper shufflers, and preventive medicine that
eliminates a considerable number of critical cases among the uninsured and marginally
insured that swell costs so much for the rest of us.
- New York Times: The
Deadly Doughnut. By Paul Krugman. Excerpts:
Before we turn to the larger issue, let's look at how the Medicare drug benefit
will work over the course of next year. At first, the benefit will look like a normal
insurance plan, with a deductible and co-payments. But if your cumulative drug expenses
reach $2,250, a very strange thing will happen: you'll suddenly be on your own. The
Medicare benefit won't kick in again unless your costs reach $5,100. This gap in
coverage has come to be known as the ''doughnut hole.'' (Did you think I was talking
about Krispy Kremes?)
One way to see the bizarre effect of this hole is to notice
that if you are a retiree and spend $2,000 on drugs next year, Medicare will cover 66
percent of your expenses. But if you spend $5,000 -- which means that you're much more
likely to need help paying those expenses -- Medicare will cover only 30 percent of
your bills. A study in the July/August issue of Health Affairs points out that this
will place many retirees on a financial ''roller coaster.'' People with high drug costs
will have relatively low out-of-pocket expenses for part of the year -- say, until next
summer. Then, suddenly, they'll enter the doughnut hole, and their personal expenses
will soar. And because the same people tend to have high drug costs year after year,
the roller-coaster ride will repeat in 2007.
If all of this makes the drug bill sound like a disaster, bear
in mind that I've touched on only one of the bill's awful features. There are many others,
like the clause that prohibits Medicare from using its clout to negotiate lower drug
prices. Why is this bill so bad? The probable answer is that the Republican Congressional
leaders who rammed the bill through in 2003 weren't actually trying to protect retired
Americans against the risk of high drug expenses. In fact, they're fundamentally hostile
to the idea of social insurance, of public programs that reduce private risk. Their
purpose was purely political: to be able to say that President Bush had honored his
2000 campaign promise to provide prescription drug coverage by passing a drug bill,
any drug bill. Once you recognize that the drug benefit is a purely political exercise
that wasn't supposed to serve its ostensible purpose, the absurdities in the program
make sense. For example, the bill offers generous coverage to people with low drug costs,
who have the least need for help, so lots of people will get small checks in the mail
and think they're being treated well.
- New York Times: Health
Economics 101. By Paul Krugman. Excerpts: Several
readers have asked me a good question: we rely on free markets to deliver most goods
and services, so why shouldn't we do the same thing for health care? Some correspondents
were belligerent, others honestly curious. Either way, they deserve an answer. [...]
It comes down to three things: risk, selection and social justice.
First, about risk: in any given year, a small fraction of the population accounts
for the bulk of medical expenses. In 2002 a mere 5 percent of Americans incurred
almost half of U.S. medical costs. If you find yourself one of the unlucky 5 percent,
your medical expenses will be crushing, unless you're very wealthy - or you have
But good insurance is hard to come by, because private markets
for health insurance suffer from a severe case of the economic problem known as "adverse
selection," in which bad risks drive out good. To understand adverse selection,
imagine what would happen if there were only one health insurance company, and everyone
was required to buy the same insurance policy. In that case, the insurance company could
charge a price reflecting the medical costs of the average American, plus a small extra
charge for administrative expenses.
But in the real insurance market, a company that offered such
a policy to anyone who wanted it would lose money hand over fist. Healthy people,
who don't expect to face high medical bills, would go elsewhere, or go without
insurance. Meanwhile, those who bought the policy would be a self-selected group
of people likely to have high medical costs. And if the company responded to this
selection bias by charging a higher price for insurance, it would drive away even
more healthy people. That's why insurance companies don't offer a standard health
insurance policy, available to anyone willing to buy it. Instead, they devote a lot
of effort and money to screening applicants, selling insurance only to those considered
unlikely to have high costs, while rejecting those with pre-existing conditions or other
indicators of high future expenses. [...]
I'm not an opponent of markets. On the contrary, I've spent
a lot of my career defending their virtues. But the fact is that the free market doesn't
work for health insurance, and never did. All we ever had was a patchwork, semiprivate
system supported by large government subsidies. That system is now failing. And a rigid
belief that markets are always superior to government programs - a belief that ignores
basic economics as well as experience - stands in the way of rational thinking about
what should replace it.
- New York Times: A
Private Obsession. By Paul Krugman. Excerpts: "Lots
of things in life are complicated." So declared Michael Leavitt, the secretary
of health and human services, in response to the mass confusion as registration for
the new Medicare drug benefit began. But the complexity of the program - which has
reduced some retirees to tears as they try to make what may be life-or-death decisions
- is far greater than necessary. [...]
Here's some background: the elderly have long been offered a
choice between standard Medicare, in which the government pays medical bills directly,
and plans in which the government pays a middleman, like an H.M.O., to deliver
health care. The theory was that the private sector would find innovative ways
to lower costs while providing better care. The theory was wrong. A number of studies
have found that managed-care plans, which have much higher administrative costs
than government-managed Medicare, end up costing the system money, not saving it.
But privatization, once promoted as a way to save money, has become a goal in itself.
The 2003 bill that established the prescription drug benefit also locked in large
subsidies for managed care. [...]
Everything we know about health economics indicates that private
drug plans will have much higher administrative costs than would have been incurred
if Medicare had administered the benefit directly. It's also clear that the private
plans will spend large sums on marketing rather than on medicine. I have nothing against
Don Shula, the former head coach of the Miami Dolphins, who is promoting a drug plan
offered by Humana. But do we really want people choosing drug plans based on which one
hires the most persuasive celebrity? Last but not least, competing private drug plans
will have less clout in negotiating lower drug prices than Medicare as a whole would
have. And the law explicitly forbids Medicare from intervening to help the private plans
negotiate better deals.
|Vault Message Board Posts
inferno" by "Dose of reality". Excerpts: Countries have immigration laws
that are meant to preserve their national identity. The fact that we now have technology
to allow for virtual teams and the ability to take what has customarily been service-oriented
brainwork and reduce it to thoughtless scripts (as in the typical off-shore help desk),
does not mean that the global talent pool is converging. It just means that we have
taken the work and simplified it for the rest of the world. We've cheapened both the
price and the quality.
Apply this concept to the onshore model, and you have the
H1 Visa program. We have a conventional immigration policy that limits cultural dilution.
We have had it ever since my ancestors emigrated here, and everyone played by the
rules. The H1 program was supposed to address technology labor shortages. The problem
is that there are no real shortages. We just have a pool of foreign applicants that
are further to the left on the cost/quality curve, and are circumventing the spirit
of US immigration laws. Companies prefer to have a large fleet of Yugos that are indentured
servants, than a more skilled fleet of BMW’s that have job mobility. It is all
about power and control, and has nothing to do with global talent. Of course, what
it tells me about the typical Indian Visa holder is that they would rather serve in
heaven than rule in hell!
- "raises?" by "crash_burn". Full excerpt: In recent years,
the raises for B7 and higher are either zero or negative. From the PwCC acquisition,
raises were -25%, -7%, and -3%. There is no budget for raises for next year.
Band 6s do have some bump. Bonuses are sickly amusing....after all the work
to get good scores, the bonus pool for your group may be so low, your bonus
might buy you lunch.
Refugee" by "boris_". Full excerpt: We (people like me
from India) are economic refugees. Millions of Indians have settled in the
US, UK, Canada, Australia, Middle East, etc. It is no shame in admitting the
truth - we are here because our country sucks. It is written in our constitution
- Satyamev Jayate (truth always prevails).
I know a lot of my fellow Indian co-workers who would
sell their wife to get a Green Card. Why? Because of higher standard of
living here. According to the UN, there are 350 million hungry people in
India (that's 35% of our population). More than 50% percent of people in India
are homeless. They either live on sidewalks or mudhouses, or shanties made of
tin. If you travel to any big city like Bombay, Delhi, Kolkatta, and Bangalore
you can see thousands of people defalcating in the open, especially along the
railway tracks. You can see people living in leftover water mains, under flyovers,
in ditches, in flimsy shanty towns. Unfortunately, a lot of my fellow upper caste
Indians in the US, sing praises of their motherland while refusing to accept
the miserable existence of an average Indian person. A lot of it is because these
upper caste people lived a privileged life in India. They never experienced
the miserable life that an average person (most likely lower caste hindu) lives
on the Alliance@IBM Site:
- Alliance@IBM: Attention IBM employees:
IBM is blocking e-mail to and from the Alliance@IBM e-mail address firstname.lastname@example.org 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 10-22-05. By Janet Krueger. 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.
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. On August 16, 2005, after the August 8 fairness
hearing, Judge Murphy issued an order finalizing the settlement agreement. On August 30, 2005, IBM began the
appeals process by issuing their notice of appeal.
- From the Visitor's
comment page and the Job
Cuts Status & Comments page.
- Comment 11/12/05: What's going on in Tucson? I was given notice a month
ago that I had to work on site full time to improve my performance. At
the same time I was offered a separation package. A few weeks later IBM
announced how great their employees have it with a life work balance program
and even held a special diversity webcast to advertise it. Is it coincidence
that my long time work at home performance is no longer considered satisfactory
- was a 2 (consistently exceeds), now a 3 (must do more)? Or, could it
be that my age is beyond the magic threshold! -Anonymous-
- Comment 11/16/05: Comments : I would like to talk with the person in
Tucson who received the notice to return to the office full-time and need
a copy of the severance package. If interested, please send an email to:
email@example.com Thanks so much, Steve -Anonymous-
- Comment 11/17/05: IBM recently transferred their Claim Storage Management
and Systems operations to Brazil replacing four overworked American workers
with twelve South Americans. We found out yesterday that they will be transferring
their Global Billing operations to China in January. What are they thinking
transferring sensitive data overseas? The GE Financial account will be
transferring parts of their operation to India within six months. I wonder
how the stockholders would feel if they knew the true risks that IBM management
is taking with the company? India is known for data theft and in my opinion
this represents a grave risk to IBM's clients and stockholders. -Anonymous-
- Comment 11/18/05: At SVL Lab a small development group (DB2 Everyplace
- about 10 developers) is being out sourced to China. It's the the real
deal folks! They are telling the IBMers that they will have jobs but they
are not offering anything concrete and want these guys to "train" their
Chinese replacements!!! Can you believe that ... what gall! -Anonymous-
- Comment 11/18/05: Location : Raleigh, North Carolina. Apologize for the
secrecy. However, I am a IBM employee who found out today from someone
who signed a confidentiality agreement on Monday, that there will be a
large number of additional jobs moved to Brazil soon. The effect, obviously,
will be a significant number of IBMers in building 307 at the RTP site
will be released. My interest is to ensure it is reported, no other. The
employees need to know. It is not fair to go through the holidays under
the assumption life is good, only to find out on January 1 there are no
jobs left in the US. Please report, contact the news agencies and ensure
people can plan their holidays at least knowing there is a chance there
may be no jobs left next year. I do know management met on 11/14 and confidentiality
agreements were signed. I am an ex-manager with a lot of contacts and was
told by a friend. This is a confidential tip to ensure people are able
not only to plan their holidays, but their associated expenses. I hate
when IBM does this. -concerned IBM employee-