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    Highlights—May 13, 2006

  • Forbes: Annual Meetings Treated As Day to Detest. By Bruce Meyerson, Associated Press. Excerpts: It happens only once a year, and yet so many headstrong corporate CEO's can't seem to cope with being in a room with shareholders for a few hours at the annual meeting.
    And so every year, companies resort to all sorts of tactics: running lengthy videos, limiting questions, and simply making it harder to get there or even get in. All these measures, none illegal, help minimize the presumed imposition of forcing top executives to listen rather than talk - or maybe talk, but only to answer a lowly shareholder - for just one day.
    While it's easy to understand a more defensive posture among flashpoint names such as Halliburton Co. or Wal-Mart Stores Inc., which tend to draw protests at every step, this control-freakish streak seems to arise at companies of all stripes.
    Companies that have shown heavy-handed tendencies this meeting season include major corporations like Target Corp., Amgen Inc., and International Business Machines Corp., all of which attract a wide array of investor activism on governance, labor, environmental and social issues. [...]
    Some strategies, such as holding the meeting in an odd location, can make it harder to attend. IBM held its meeting in Tulsa, Okla., while Verizon Communications Inc.'s was near Kansas City - far from the New York headquarters of either company. [...]
    At IBM's meeting, CEO Sam Palmisano took just five questions, two hand-picked from Web submissions, before adjourning the meeting with several people waiting at the microphones. The computer maker didn't respond to requests for comment. [...]
    It's hard to imagine a time when someone like documentarian Michael Moore might possibly show up with a video camera and get into the annual meeting, as he once did with General Motors Corp. But it's a shame to think that companies are so uptight about facing shareholders that they approach the annual meeting like a political convention, another one-time forum for debate that's been transformed into a staged, vapid pageant. It is, after all, only once a year.
    (Editor's note: Coverage of the 2006 IBM annual shareholders' meeting is available in the April 29 and May 6 edition of these highlights.)
  • In a Yahoo! message board post, "ibmgrunt" responds to the the following question: My company is being out-sourced to IBM. We are in the process of being interviewed for possible job options with IBM. I am in the Systems Administration sector. Is this a good sector to be in? Are tasks like this going to India? "ibmgrunt" responds: System Admins are being targeted heavily this year. IBM has a 30,000 person data center in India gearing up to replace all system admins and it has already started. I know one group going in July and they are scrambling to find jobs right now. We currently manage 50 machines to one admin right now. IBM's plan is to have 250 machines to one Indian in Bangalore. I saw powerpoints predicting huge savings in system admins. They are doing it with new tools they developed so the indians can watch one screen and push buttons to do everything. Of course we know these tools don't work as great as they sound and they will have tons of problems but IBM doesn't care about the quality of service anymore. All they care about is the almighty buck.
  • Yahoo! message board post by Helen Woodson. Full excerpt: Hi, Everyone, I just joined this group using my real name; I used a pseudonym when I was still working at Big Blue.
    I remember that, during my sixteen years' service in both Arkansas and California, it was common practice that an employee would receive the lowest satisfactory evaluation for the first appraisal after hiring on, changing position, or being promoted. The reasoning, as it was explained to me by my manager, was that a new hire or a person new in a position was on a learning curve. And a newly-promoted employee got a lower evaluation because it was like skipping a grade in school; it was expected to take a while for the person's performance to increase to the level expected at his higher rank.
    I never saw this documented, but it seemed that everyone knew it; it was unwritten in stone. I do know of one individual who got a "2" after a change, but this is the only person I've ever known who managed this.
    Can anyone throw some light on this? Have you ever seen this custom documented? Do you have personal knowledge of this practice?
    The reason I'm looking into it is that I'm suing IBM. I was laid off from my position and had 30 days to find another, which I did. I am alleging that my disability was a factor in my selection and that my move from a development group to a Level 2 support group was an adverse employment action. IBM made a motion to dismiss, claiming the intra-company transfer was not an adverse employment action. But I convinced the judge that it was, and he denied the motion, assuming for the purposes of the motion that all the facts which I allege were true.
    Here are some of the things I am alleging and which I now have to prove:
    • A software development position is more favorable to one's career than a Level 2 support position.
    • Developers have advantages that Level 2 people don't have ( no weekends on-call, flexible schedules, independence, autonomy.)
    • An involuntary transfer is a disadvantage to an employee because of the practice of giving the lowest satisfactory evaluation on the first appraisal after a job change.
    If anyone has information about any of these practices at IBM, it would be most helpful if you would contact me. I'm also interested in any provable facts which demonstrate patterns of disability or age discrimination, particularly in Suzanne Chesney's organization, based in Tucson. Thanks in advance and best regards.
  • Ithaca Journal: Pension freezes put workers in a bind. By Brian Tumulty, Associated Press. Excerpts: Besides Verizon, well-known employers such as General Motors, IBM, Sears, Alcoa, Northwest Airlines, Sprint Nextel and Unisys have announced pension plan freezes, many of them just in the last few months. Unlike pension plan terminations of the past, when companies such as Bethlehem Steel and United Airlines were in bankruptcy and struggling for survival, many of the recent freezes are occurring at profitable companies looking to save money and be more competitive. [...]
    Through the end of 2003, about 2,900 of the nation's 31,000 private sector pension plans had frozen their benefits, according to a study the PBGC released in December. Industries where the freezes were most common: fabricated metals, apparel, textiles, rubber, plastics, primary metals and retail trade.
    A few — like Alcoa — have targeted only new hires, leaving the pensions of current employees untouched. Some, such as General Motors and Verizon, have large unionized work forces that are unaffected by the freeze. Others, such as IBM and Sears, are freezing the pensions of all employees. When a pension is frozen, it essentially stops growing. And workers need to make up the difference out of their own pockets.
  • Economic Policy Institute: Bush Administration Forces Companies to Negotiate Worse Benefits. By Monique Morrissey. Excerpts: Similarly, the new policy not only limits retirement benefit costs, but it also restricts new employees and new union contracts to “market-based” retirement plans—specifically 401(k)-style defined-contribution plans rather than traditional defined-benefit pensions. No matter that traditional pensions are more cost effective and that, unlike 401(k)s, they provide a guaranteed retirement income for life. What matters to Bush Administration is that it is cheaper to make workers pay for their retirement plans with the added benefit of allowing the finance industry to make more money off of the individual 401(k) accounts. [...]
    It bears repeating: the DOE is preventing private companies from negotiating the best health benefits they can get for their money. What is the rationale for limiting not just costs, but benefits? The DOE doesn’t say, but we suspect it has something to do with health savings accounts, the idea being that Americans are somehow over-insured and health care costs will go down when people are forced into high-deductible plans that make them think twice before seeking medical treatment. Like privatizing Social Security, that is a bad idea.
  • Boston Globe: Energy Dept stands by pension cost-cutting. By Susan Cornwell. Excerpts: The Department of Energy said on Monday it was standing by its decision to stop covering the costs of traditional pension plans for new hires by department contractors, saying this was "consistent with sound business practices." The department stirred controversy with its announcement last month that starting early next year it would reimburse contractors only for the costs of defined contribution plans -- such as 401(k) plans -- when new hires are concerned. [...]
    Under the decision those contractors that sponsor traditional defined benefit pension plans with a fixed payout at retirement would need to close these plans to new hires by next March, or forego reimbursement from DOE for the associated labor costs for the new hires.
    Democrats and labor groups have criticized the DOE decision. It has also been questioned by some analysts who ask why officials in one government department are halting traditional defined benefit pensions, even as Congress is trying to pass legislation to shore up the pension system.
    Senate Democrats wrote last week to the department and President George W. Bush to complain that the new policy was an outrage and urge its reversal. "This policy is a direct attack on Americans' retirement security," the letter from Senate Minority Leader Harry Reid of Nevada and seven other Senate Democrats said.
  • Tampa Tribune: Panel Moves to Block DOE Pension Change. Excerpts: A House Appropriations subcommittee on Thursday moved to block the Energy Department from implementing a revamped pension plan for new contractors' workers until Congress has a chance to review it. [...]
    Rep. David Hobson, R-Ohio, chairman of the subcommittee, said he wanted a chance to review the changes and determine their impact on new contractors working for the department. Meanwhile, a group of Democratic senators including Minority Leader Harry Reid of Nevada introduced legislation Thursday to block the pension policy change. Sen. Edward M. Kennedy, D-Mass., said the DOE action "is broadcasting a message that American workers' secure retirement and good health care should be put on the chopping block."
  • Wall Street Journal: A Rapid Buildup. Traditional pension plans are disappearing. So, why are they expanding among small firms? By Tara Siegel Bernard. Excerpts: Traditional pension plans may be going the way of the three-martini lunch at big companies, but they're increasingly popular for sole practitioners and small-business owners.
  • Courier News: Responsibility remains. As pensions disappear, companies still play key role in retirement saving. By Bruce Meyerson, Associated Press. Excerpts: Whether you view it as a betrayal of workers or as an economic necessity, the traditional pension plan appears destined for extinction as more companies move to reduce their future financial obligations to retirees.
    One can rail against the apparent hypocrisy that these decisions are made by well-paid executives with posh retirement benefits, of course. But digging deeper, some companies are being more responsible than others, sculpting pension alternatives to reduce the risk that future retirees won't have enough savings. [...]
    Less apparent, but maybe more important, are some key nuances to how companies structure these pension alternatives: Are they adopting defaults that automatically enroll workers in a 401(k), automatically divert some salary into that account, and automatically allocate those savings to a logical investment?
    To compensate, the computer maker doubled the 401(k) matching contribution for recent hires, and will do the same for all workers starting in 2008, paying dollar for dollar on up to 6 percent of salary that an employee defers into the account.
    To compensate, the computer maker doubled the 401(k) matching contribution for recent hires, and will do the same for all workers starting in 2008, paying dollar for dollar on up to 6 percent of salary that an employee defers into the account.
    More significantly, IBM is adding a lump sum contribution of up to 4 percent of salary regardless of whether an employee defers any pay into the 401(k). That means IBM's share of a worker's retirement savings could reach 10 percent of salary -- or more than three times the rate typical of many 401(k) plans.
  • Yahoo! message board post by Glenn McGinnis: "Randy is after the 2's". (Editor's note: Mr McGinnis's comments are in regard to the Human Resources Webcast of March 2, 2006 hosted by Randy MacDonald, Senior VP, IBM Human Resources. [PDF--785 KB]. Excerpt: I especially liked the bullet that stated "Major steps taken in all geographies to address costs associated with overly competitive retirement programs which now should provide us more compensation flexibility going forward."
    So, we retirees are part of an overly competitive retirement program eh!!!
    The statement should have read: "Major steps were taken in all geographies to weasel out of previous retirement commitments and allow criminal levels of overly generous executive compensation to flourish."
  • Yahoo! message board post by "west_coast_retired_guy". Full excerpt: I showed Randy's presentation to a friend of mine who used to be a "1" performing Senior Marketing rep. He said he'd never seen such crap in his IBM days and was glad he no longer was with the company. Same here for me.
  • Computerworld: As outsourcing gathers steam, computer science interest wanes. Computer science degree enrollments are trending down and down. Excerpts: What’s become routine as well is declining interest among U.S. college students in computer science. The Washington-based Computing Research Association (CRA) recently reported that the number of bachelor’s degrees in computer science fell 17% in the 2004-05 academic year from the previous year to 11,808 at Ph.D.-granting universities. Those schools represent about 30% of the total undergrads in the U.S. The same trend may also be affecting academic programs that combine business and IT skills training. [...]
    In the fall of 2000, Missouri State had 982 students enrolled in its undergraduate information systems program and another 216 in its computer sciences program. In the fall of 2005, the enrollments had dropped sharply, to 310 and 161, respectively. Meinert sees the same problem at other schools and says it has consequences for employers: “a shortage of highly qualified entry-level IT professionals.”
  • San Jose Mercury-News: Shortage of skilled workers is a convenient mirage. By Christopher R. Moylan. Excerpts: Know any scientists or engineers who have been laid off in the last five years?
    Most readers would be able to answer "yes" to that question, but you'd never know it from reading op-ed pieces by local academics and senior managers from industry. "Technology companies are starving for skilled employees," wrote IBM's Jeanette Horan (Mercury News, May 2). "The supply is low." Her solution, like that of San Jose State's engineering dean Belle Wei (April 27) and former Autodesk CEO Carol Bartz (March 24, 2005) is to close what Wei refers to as "this alarming gap" by pressuring more women to major in technical fields. Others, such as SpikeSource CEO Kim Polese (May 1), use the excuse of a shortage of high-tech workers to justify eliminating "excessive restrictions on immigration" and allowing businesses to import higher numbers of foreign workers. Whether the cry is for more H-1B visas or more female engineers, the goal is the same: a dramatic increase in the supply of high-tech workers. The problem with these proposed remedies is that they address an employee shortage that does not, in fact, exist.
    Thousands of highly trained scientists and engineers still roam Silicon Valley looking for work after having been cut adrift by the same types of people who now claim that they can't find anyone to hire. And thousands more are now working in different fields at substantially lower salaries, having given up searching for an equivalent to their previous positions. "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," said demographer Michael Teitelbaum in the Wall Street Journal's Nov. 16 front-page story, "Behind 'Shortage' of Engineers: Employers Grow More Choosy." In a column titled "A Phony Science Gap?" (Feb. 22), the Washington Post's Robert J. Samuelson explained in detail why "it's emphatically not true, as much of the alarmist commentary on America's 'competitiveness' implies, that the United States now faces crippling shortages in its technological elites."
    Do these bogus claims of a scarcity of skilled technical workers constitute a campaign to avoid having to pay market price for white-collar labor? Yes, but there's more to it than that. Corporations legitimately can anticipate a shortage of such workers in the future, because their own actions are setting the stage for one. [...]
    It's amazing that Horan's IBM made it through the Great Depression without laying off a single employee, but somehow couldn't survive the eight prosperous years of the Clinton administration without axing tens of thousands of workers. Parents used to tell their children to major in engineering or science in order to get a secure job. Now children sit around the dinner table and hear about layoffs, current and anticipated. [...]
    When the time comes for students whose parents grew up in the United States to choose a college major, they will remember those dinner-table conversations. When the best students, being rational, start to desert science and engineering, businesses will have nobody to blame but themselves. The solution will be the same one that existed before the Reagan administration, as Harvard economist Richard Freeman told Samuelson: ``If we want more (scientists and engineers), we have to pay them better and give them better careers.''
  • New York Times: Social Security Endures. Excerpts: Buried in the newly released 2006 annual report on Social Security, there is good news on the program's long-term health. But don't expect to hear President Bush talking about it. His main comment on the new report is that the system is "going broke." He apparently still wants people to believe that their only options are ending up with nothing from the government in old age or relying on financial markets. That's a false choice and Americans recognized it as such when they rejected his push last year for private accounts.
    Projected "cost rates" in this year's report show smaller annual deficits in Social Security than had previously been assumed, starting around mid-century. The 75-year projection ends in 2080 with a shortfall that is less than last year's estimates by $57 billion, in today's dollars. That's important, because the smaller the deficit, the less drastic the reforms needed to keep the program going strong.
  • New York Times: Executives Take Company Planes as if Their Own. By Geraldine Fabrikant. Excerpts: Richard D. Parsons, chairman and chief executive of Time Warner, owns a small vineyard in Tuscany that produces a Brunello di Montalcino selling for $80 a bottle, adorned with a crest of the Parsons family. Twice a year, he boards one of his company's four jets to visit his 20 acres in Italy. When he does, Time Warner shareholders pick up the bill. [...]
    Because the value of a trip counts as personal income for the executives, some companies are even paying the executives' taxes on trips. Others are agreeing to provide leisure travel for retirees, like Sanford I. Weill, who just departed Citigroup as chairman. Edward E. Whitacre Jr. will travel on the corporate plane once his contract is up as chief executive of AT&T, as will Peter F. Chernin after his tenure as president of the News Corporation. [...]
    Corporate jet travel is an especially delicate topic in Washington. Lawmakers travel heavily on corporate fleets for fund-raising, and their campaigns reimburse the corporations at very low rates. Under federal rules, they usually use the price of a first-class ticket, considerably less than the price of operating the private jet. Only if there are no commercial flights must a politician calculate the value using much higher charter rates.
  • New York Times: G.O.P. Lawmakers Agree to Extend Tax Cuts. By Edmund L. Andrews. Excerpts: House and Senate Republicans reached agreement Tuesday on a $69 billion bill that would extend President Bush's tax cuts for investors for two more years and temporarily block a big jump in the alternative minimum tax. [...]
    But critics said the agreement's tax benefits would overwhelmingly favor the nation's wealthiest taxpayers and fudged the true cost of some measures. Senate Republicans passed a tax-cut bill last fall that prevented an increase in the alternative minimum tax, a parallel tax intended to stop very wealthy people from taking too much advantage of special tax breaks. Partly because it is not adjusted for inflation, it is engulfing millions more families each year.
    Preventing an increase in the alternative minimum tax would cost $34 billion for just one year, so Senate Republicans decided to postpone an extension of the tax cut on stock dividends that would cost about $20 billion over just two years.
    House Republicans did the reverse, passing a bill that extended the tax cuts for investors, leaving the alternative minimum tax in a separate bill that could have been blocked by a filibuster in the Senate. [...]
    Opponents of the tax cut for investors, which reduced the rate on dividends and capital gains to 15 percent, said the new tax bill would overwhelmingly benefit the very wealthiest taxpayers.
    The Tax Policy Center, a joint venture of the Brookings Institution and the Urban Institute, recently estimated that the top 10 percent of income-earners would get 81.8 percent of the benefit from lower taxes on investment profits and 73 percent of the benefit from freezing the alternative minimum tax.
  • New York Times Editorial: The Republican Agenda for 2006: Tax Cuts for a Favored Few. Excerpts: A puzzling aspect of Congress's latest tax-cut package is why its overwhelmingly Republican supporters believe that its passage will be a big win for them and their party. There's nothing in it for most Americans, and yet all Americans will pay its cost: $69 billion over the near term. That price tag will be reflected in incessant budget deficits, which will further impair the government's ability to meet Americans' needs, and force the government to borrow more, mostly from abroad, to plug the budget gap. [...]
    After five years of duplicitous fiscal policy, Americans are catching on. And Republicans who see tax cuts as an automatic vote-getter may be in for a rude shock. Some two-thirds of Americans now say that the president's priorities, which clearly include ever more tax cuts, do not reflect their own.
  • New York Times Editorial: The Republican Agenda for 2006: Tax Increases for Everyone Else. Excerpts: One way or the other, tax increases are coming. The nation's budget deficits are too big to outgrow, and the latest tax cuts — which Congress is likely to sign off on today — will dig the hole deeper. Neither Congress nor the public has the stomach to slash government programs anywhere near enough to bring spending in line with revenues. The only real question, then is this: Whose taxes will be raised in the future to pay for today's tax giveaways?
    Here's a hint: If Congressional Republicans get their way, the people who benefit the most from today's tax cuts — mainly wealthy Americans with lots of investment income — will get special protection from future tax increases.
  • New York Times: Senate Approves Extension of Bush Tax Cuts. By Edmund L. Andrews. Excerpts: The Senate voted 54 to 44 on Thursday to pass almost $70 billion in tax cuts, mostly for the nation's wealthiest taxpayers. The action ensures that virtually all of President Bush's tax cuts will be locked in place until after the next presidential election. [...]
    The vote, largely along party lines, was a significant victory for Mr. Bush and beleaguered Republican leaders, who had viewed the tax cuts on stock market profits as a defining party issue and had credited them with jump-starting economic growth and reducing unemployment over the last three years. [...]
    The overwhelming share of the tax cuts the Senate voted to extend will flow to the wealthiest taxpayers. People earning $1 million a year would save about $42,700, and reap about 22 percent of the total tax cut, according to the Tax Policy Center, a research group in Washington. People earning $40,000 to $50,000 a year would save about $47 and receive less than 1 percent of the benefits.
    Democrats charged that the measure not only favored the rich but also failed to extend middle-income tax breaks, among them a deduction for college tuition payments, that expired at the end of last year.
Vault Message Board Posts
Vault's IBM Business Consulting Services message board is a popular hangout for IBM BCS employees, including many employees acquired from PwC. Some sample posts follow:
  • "IBM's idea on high performance" by "civilliberty". Full excerpt: I don't think IBM understand what really motivates a workforce. I for one don't think highly of a company that uses fear to get more out of its staff. Haven't verified the below , but thought it interesting: (Editor's note: The following was originally posted on the Alliance@IBM Web site's comment area.)
    Comment 5/08/06: More information from inside IBM from HR Sent anonymously: "In late March I wrote to you about the Workforce Development Metric and the compensation scoring pools for Integrated Operations. You will recall that the Executive Annual Incentive Plan and the Employee Performance Bonus Plan are subject to a qualitative scoring adjustment by the Chairman's subjective determination of IO's performance relative to the Workforce Development Metric (WFM). Three of the four WFD elements are carried over from 2005: Employee Satisfaction Index, Executive Diversity and Development Discussion completion. The fourth metric, Performance Attrition (PA) is being introduced this year. PA is being introduced to better reflect managers' efforts to drive overall performance management. It is defined as: PA = Management Initiated Separations (MIS) + Employee Initiated Separations (EIS) of employees with PBCs of 3 or 4 + voluntary separations of employees with PBCs of 2 counseled out due to declining performance.
    IBM has set an objective to achieve a three year objective of 3.5% by YE 2008. The annual scoring will be determined as follows:
    • 2006: only YTY progress will be measured to focus on making significant improvement (minimum 20%) over YE 2005 results
    • 2007: YTY progress and distance achieved towards the 3.5% target will be scored
    • 2008: achievement of 3.5% target will be scored as make or miss
    It is clear we need significant progress each year to achieve 3.5% by YE 2008 - more than 20% especially in 2006. Below are the recommended annual milestones to help us achieve the PA YE 2008 objective. For our delivery organizations (i.e. ITD, BTOD) the year end 2005 financials were restated based on 'GTS with Delivery' (GTS, BTO, ITD, BTOD). While the Workforce Development Metric scoring will be at this combined level, we will see progress monthly by organization through our own HR scorecards. ISC's pool will remain separate.
    GTS with Delivery
    Baseline - 2005
    Baseline - 2006
    Baseline - 2007
    Baseline - 2008
    Americas
    1.5
    2.0
    2.7
    3.5
    AP
    2.5
    3.3
    4.4
    5.9
    NE
    1.2
    1.6
    2.1
    2.8
    SW
    0.7
    0.9
    1.2
    1.6
    Total
    1.5
    2.0
    2.7
    3.5
    To support the implementation and tracking of the third element of PA, a new separation code will be introduced to capture the separations of PBC 2 employees with declining performance, a group we have not been able to capture in the past. The HR IT teams in each of the geographies are working towards 2Q implementation in major countries. To achieve this three year objective, we will:
    • Monitor progress on a monthly basis.
    • Ensure our management team is educated on this new metric and is working to achieve their objectives.
    • Ensure our HR Partner team is available to provide advice and counsel for managers who are achieving their objectives.
    With this new metric, added accountability, and this new separation code, we are well positioned to make additional significant progress toward building and maintaining a high performance culture at IBM. Our long term success will require focus and a concerted effort by our management team, and we will work with you to ensure we accomplish our goals."
    Thank-you,
    Robbin L. Suess, Vice President,
    Human Resources,
    IBM Integrated Operations
    Sent to Alliance@IBM anonymously
  • "On Hiring and Firing" by "Dose of reality". Full excerpt: The idea of counseling out weak performers is actually not bad. However, putting a top-down mandated target on it is asinine. What happens if I have hired well, and developed staff well, and my counterpart in another area hasn't? If I am compelled to hit the 3.5% target I could throw some babies out with the bath water, and my counterpart will likely keep staff that are less capable. This actually punishes leaders who hire and develop well!
    This metric approach to hiring/firing is even more dysfunctional with diversity initiatives.
    There is a fine line between allowing a workforce to be diverse in general and forcing it to be diverse with artificial metrics and quotas. When you enforce the latter, it has to be done at a lower organizational unit level and is a backdrop to every hiring decision.
    That inevitably leads to an irrelevant factor entering into the hiring decision (we all agree that being a woman, Asian, or gay has no impact on one’s ability to perform right?) The odds of the most qualified candidate also having the right demographic to move the diversity needle in the right direction are very low, so if demographics enter into the decision, we will tend to not hire the right candidate. That’s my problem with the way diversity is applied here.
    It’s also a bit inconsistent. We tout our global presence and our need to succeed in foreign markets, but what do we do if the local cultures aren’t as liberal as we are? We have a commitment to local business and general investing stakeholders that should supersede our need to export a decidedly suspect diversity policy. How many female managers should we target for Saudi Arabia?
  • "Go back to the definition" by "Dose of reality". Full excerpt: We're not talking about total attrition - look at the definition:
    PA = Management Initiated Separations (MIS) + Employee Initiated Separations (EIS) of employees with PBCs of 3 or 4 + voluntary separations of employees with PBCs of 2 counseled out due to declining performance.
    EIS of 3's and 4's are rare for bad performers. The ones that fall into this category and elect to leave are usually decent performers that pissed someone off and received a bad rating. Truly bad performers usually hang around and wait for severance.
    Similarly 2's with declining performance are usually staff that have mentally checked out due to active job search, and never make it to counseled out status.
    That leaves MIS, and if I find 1 in a 100 that I have to put in that category it's a lot.
  • "Interesting point Dose" by "civilliberty". Full excerpt: I do agree with you on the counseling out weak performers - it doesn't make sense to keep people who are genuinely an ill fit for the company (and essentially that's what I would call a weak performer, not some arbitrary designation from management to fit a performance based bell curve). My concern is really three-fold:
    1. An innate rebelliousness in myself that won't be shoe-horned into submission through fear.
    2. A basic belief that it is wrong to treat people in this manner.
    3. Do unto others as you would have them do unto you - I have always yielded my best with an encouraging team leader or manager, but rarely so when the person above just simply doesn't care.
  • "Right" by "Dose of reality". Full excerpt: There is a parallel between managing and parenting.
    The vast majority of children who turn out "bad" do so due to parent neglect. I have to laugh when I hear parents bemoaning the fact that they have problem children. How do they think they got that way?! Except in a few very extreme cases, it is due to parent neglect or negligence.
    It is the same with employees. You can't just assume that an employee will turn out all right just by their navigating along through a bunch of generic company policies. It requires active involvement from the manager. Absent that, miss ratios of 25% or more are very common.
    The difference is that in the case of employees, you can pick your raw material; with kids, you and they are born with it. However, "picking" is another area where the process breaks down in companies. Too many managers hire based on the wrong criteria, or delegate hiring to subordinates who don't have a clue about how to draw the essence of a candidate out during an interview. My hiring criteria starts and ends with character. Second is a convincing passion, or at least an interest in doing the work. The vast majority of candidates have the basic skills or aptitude to do the work - that part is just a check the box exercise, but I will look for one or two talents in each applicant that are in the far right side of the tail, and try to get a blend of people with different strengths.
    As I said in an earlier post, if I miss on more than 1 in a 100 it's a lot for me, but it takes a lot of hard work to get there. Most of the managers in this business prefer to scapegoat their staff instead of develop them, but that just goes back to the character issue.
  • "Power centers within IBM" by "wonderaboutibm". Excerpts: Major institutions, including IBM, are for the most part run for the advantage of their elites -- in the case of IBM, the senior mgmt. In the past, there was a social compact with lower level employees and other stakeholders, and a certain altruism among the power elites, that promoted enough good will and shared enough of the corporate resources, so that all came out ahead. But in the last twenty years or so, the power elites, including the cabal controlling IBM, have lost their sense of altruism and what is left is the greed. For the time being, at least, our power elite holds the wealth levers and is taking all for themselves. How else to describe all the options and restricted stock being issued for them while open-market stock is being sopped up?
  • "Counter-comp" by "Dose of reality". Excerpts: Counter-comp Author: Dose of reality Date: May 6, 2006 8:02 PM EST It really isn't a problem that IBM's strategic comp targets are not stated, since there is a preponderance of anecdotal evidence that tells us exactly where it is - low, stagnant and under attack. I don't have a big problem with the target entry comp, which is probably slightly on the high side of middle tier industry companies, yet significantly below blue chip consulting firms. The problem with IBM comp is the small percentage of staff that are allowed to get a raise above low single digits as compared to the percentage of staff that are high performers. That imbalance kills motivation and drives attrition.
    While benefits are not significantly worse than market, it is the reduction of benefits with no commensurate change in demands that upsets staff. Trying to benchmark the benefits package and moving to a new benchmark without considering the impact of the benefits CHANGE on staff is really dumb. Not only are you upsetting the equilibrium in the employment compact of individual staff, but the psychological impact of being taken advantage of is enough to make otherwise satisfied employees leave the company on general principle.
    Expectations for performance in terms of quality may be higher at other firms, but expectations in terms of productivity or utilization is higher at IBM, and again it is the yearly increases that cause the most immediate harm.
    Your last paragraph is the one that really depicts the fatal flaw with IBM HR. It is a combination of faulting people for behaving rationally to external factors, and denying that they should react the way that they do. The fact that people complain should be a signal to IBM that there is a problem. Instead IBM just arrogantly assumes that IBM is all right, but the world is all wrong. Only with IBM logic could anyone interpret mass discontent on compensation as evidence "that they are over paid by ibm for their limited skill sets and cant find a better job". If you cycle in another class of recruits, what makes you think that the reaction won't be the same from them. Does the expression "beating your head against a wall" mean anything to you?
    I know what is happening in the broader market, and the moves we have made in the comp and benefit area are moving us to the bottom middle of the pack. No one is looking to "live like a rock star". They are just trying to be rewarded commensurately with their relative effort and performance. This is HR 101.
  • "Agreed" by "MythAndMeaning". Full excerpt: Dose, I agree and this is redolent of the forced ranking nonsense that has plagued us for years. We laid off all the low performers yet are arbitrarily required to 3-rate a percentage of remaining staff. And we cannot 1-rate enough deserving staff. To me this kind of manage-by-numbers is yet another symptom of the utter and complete disconnection between HR and ours lines of business. Unable to partner with us constructively and usefully, RM and his organization shove this sort of stupidity down our throats. (And he whines publicly that he doesn't have the same direct access to SP as his peers... hmmm). As a manager, I (and my peers) feel that HR adds zero value to what we do. They screw up everything they touch, to be blunt.
  • "Corporate Socialism" by "Dose of reality". Full excerpt: It's just another example of the unholy alliance between HR and finance. While they should be ying and yang, they are ying^2. The forced rankings are meant to yield a sanitized, predictable evaluation distribution that maps back to the business plan, and superimposes the same compensation distribution across all of BCS, regardless of the relative profit contribution of a particular region/industry/practice cell. It is IBM corporate socialism at its worst.
  • "Possibilities are endless (almost)..." by "deep_eye". Full excerpt: It is entirely conceivable that yes, you do actually work for IBM, do like your job, coworkers, etc., ad nauseam. I have never disputed the fact that there are almost certainly specific areas, positions, sub-groups etc., in IBM and perhaps even within BCS itself that for a select, miniscule group of individuals is their personal equivalent of Nirvana. Maybe you have just started your career at IBM and maybe you have been there for 10 years; I neither know nor care which case applies. You may have some realistic benchmarks to compare your employment experiences at IBM with, or not, in any event, it is tangential to the argument at hand. In a related vein, there are numerous historical records of slaves who enjoyed slavery, Russian citizens who thought the world of Stalin (despite his tortures, executions and pogroms) and even South Africans for whom apartheid was no big thing - what does that prove? That these aberrations should have continued because a handful of individuals thought they were just dandy?
    The evidence that I and other "malcontents" present is that of the proportionately much larger group(s) within IBM and BCS for whom the working experience is just this side of hell. My own experience and that of the 40 odd others from PWCC that I entered IBM with, reflects a far more desperate reality. Of those 40+ souls, exactly 1 currently remains at BCS today. Seems a little high for normal attrition rates, wouldn't you think? Don't strain your already overworked cortex - they left for the reasons that I and the other "malcontents" constantly and continuously depict on this board. Oh and by the way, I was hardly a deadweight, waste-of a-seat type. In fact, in what can only be described as a high order ironic-comedy, I received another feeler from an IBM HR stooge asking if I would like to "return to the newer, better, IBM."
  • "My idea of fun..." by "deep_eye". Full excerpt: It actually went all the way to a phone interview. I told them that I had come to realize what I had at IBM and how much I missed being in servitude to the pig (hell, they lied straight-faced to me for months & months - turnabout is fair play in my book). However, I indicated that I absolutely would have to receive a substantial (read 75%), salary boost (this over the existing 42% jump I received when I flew the blue coop), a guaranteed annual bonus and my say of which projects I could accept and which I could not. The flunky they had assigned to me indicated that they would try to “work with me” on these issues, could not “promise anything” but “would try.” That was the last that I heard from them. I have heard stories from others ex’s of internal and external recruiters dangling all sorts of promises and half-truths for “pre-experienced” IBM serfs. My read? Per some of Dose’s posts, they must be getting desperate for proven talent. Based on the level of the posts I’ve read from the wannabees, apologists, trolls, et. al., on this board, they are in dire need of it………
  • "Second the motion" by "DM Bingham". Excerpts: Let me agree vociferously with deep-eye's post and in addition make my own intentions plain. IBM is a moral vacuum. Ancientblueconsultant gave us an overview of the kleptocracy's membership selection criteria and rituals about 18 months ago. Let me give you the headline he stated then: the candidates allowed to proceed to the sensitive and senior levels of IBM have been for YEARS prescreened to be sure they have no independent moral compasses of their own.
    Therefore my intention on this Board is to tell the truth as clearly as I can because the TRUTH is what these morally autistic feebs detest the most. What I tell are the facts behind the lies that comprise this Company's financial statements.
    One of the factors we all learned in Finance 101 is that the QUALITY of the EARNINGS is the paramount factor in assigning a PE ratio to forward or trailing earnings reports/expectations in order to arrive at a share price. By consistently telling the truth behind the financial fables IBM belches I hope to help drive the share price down to the point where the major institutions who own IBM step in and kick out the thieves or the market itself sends this whole circus spinning into the ground a la Enron.
    Do you understand what ancientblueconsultant said today? The Company is engaged in outright tax evasion. Under the terms of Sarbanes-Oxley Palmisano should be in prison. Therefore deep-eye is right: " IBM performs a tremendous ethical disservice by presenting itself as a legitimate, worthwhile, and respectable entity for employment " (and let me add, for investment as well.)
  • "Internal navel-gazing" by "phooey69". Full excerpt: I feel like ranting today, so please bear with me. Recently, one of our executives had a periodic review meeting. Like most review meetings, the executive showed a Powerpoint slide show with various slides, and talked about various aspects of the business. As the presentation went on, I could not help but wonder how IGS has changed over the past few years.
    How did the presentation go? It was all about stuff that I'm sure is interesting...to someone. Internal issues...organizational structure, with lots of pretty org charts. An increase in VPs...a VP here, a VP there, a VP everywhere I guess. Increased focus on metrics and measurements...what a surprise. Redesign of our processes...how long has that been going on? A new structure for managing our investments...OK, that's always helpful. Staff promotions...OK, congratulations. Our partnerships with the IBM brands...OK. Blah, blah, blah...
    Don't get me wrong, details like this can often be interesting. Also, executives deal with this stuff all the time, so it's understandable that they love to talk about it. But is this what IGS has become?
    When I started with ISSC (back in the Denny Welsh days), the focus was on the customer, and what we could do for them. Metrics and investments and organization were important, to be sure, but in the end, the idea was to leverage IBM resources to provide services to the customer. Today, we seem to be focused on ourselves more than the customer. Take the aforementioned topics to excess, and we end up doing a LOT of navel-gazing.
    To a large degree, this is what mature organizations do...they do a lot of work trying to do internal improvements. However, in this case, I wonder if we have concentrated so much on internal changes that we are losing focus on the actual heart of the business? The part where you do stuff for the customer and make money?
  • "Presentations" by "Frank_Reality". Full excerpt: It used to bother me that after spending 90 minutes in these all hands meetings, my coworkers and I had not even an inkling of what the presentation intended to communicate and how it would impact us. It doesn't bother me any more because these grand schemes, strategies, initiatives, and organizational adjustments are totally irrelevant to my day to day activities. So now I join in remotely via webcast and multitask doing real work while the blah blah blah drones on and on.
  • "The price of success" by "Dose of reality". Full excerpt: When a company achieves a long run of excess profits, one of two things can happen, depending on the efficacy of corporate governance. Either the profits are used to reward the shareholders, or it goes to reward and entrench the leadership. In the case of IBM, we all know what happened. The windfalls were used to establish a spoils system, and build a cash cow that was inevitably end-dated. The last few years have been nothing more than an attempt to squeeze a few more years out of the cow's teat.
    Finance power centers, HR without the H, staff exploitation and deception, higher targets, and internal metrics to track it all are just the symptoms. The root cause is a layer of self-serving executives, backed up by a weak complicit board.
  • "The eternal realist" by "Dose of reality". Excerpt: You must realize that this company is the ultimate in a command and control hierarchical structure. It puts the military to shame. I came into this company with high expectations from the integration, and a vision about how much value we could help create. After six months of listening to and engaging the dullards, I came to the realization that all of the old-timers here did. IBM exists to make it easy for a select upper echelon to make a lot of money as quickly as possible, and there isn't anything that I could do within this environment to make it any better.
    No one on the inside of any stature has any vested interest in changing the status quo. Their power emanates from the very things that I would want to change. If a few majors like me got together with a colonel or two and try to change anything here, what do you suppose would happen?
    This company's primary self-defense mechanism is an absolute intolerance for independent thought. There is no possibility for a quiet revolution - there are too many checkpoints to pass to make any real changes.
  • "A repost pt 1" and "A repost pt 2" by "Dose of Reality". Excerpts: Let me take a first pass at where the "go-to market" conflicts are, and how they could be dealt with, starting from the most mundane to the more complex: [...]
    • Cross-selling – Implement formal, rules based credit for lead sharing with real incentives. The model should lean toward inclusiveness, instead of the current system of exclusivity, arm-wrestling and “my daddy can beat up your daddy” that occurs whenever we have contention and competition for sales credit.
    • Derivative sales. – Formalize internal transfer pricing for hardware and software that is sold as a direct result of consulting or other service work. Sales commissions on these easy pickings should not be the same as they are on sales leads that are developed by the salesmen. Some of that should be given to the group that initiated the relationship and overall contract. [...]
    • Take the power centers out of central finance and HR and put them into the business. Cut 75% out of corporate functions and put business analysis functions in the divisions, and geographic/industry/practice area profit centers. Allow independence in compensation decisions at an appropriate level of cross-section in those dimensions. If my practice produces x amount of profits, I should be given x% of it and allowed to disseminate the spoils as I see fit.
    • Similarly, put the PBC process and determination of relative ratings allocations in at the same level as the above. This would allow reward to be matched with performance at a granular enough level to make it meaningful and attainable for those who can perform at a high level, and are motivated to do so. Otherwise we just have a classic "Tragedy of the commons" situation where the tendency is to hope that someone else produces, since the expected value of your own high effort doesn't justify expending the effort.
    • Evaluate salesmen on net profit, not gross revenue. With the current system, they are motivated to sign the contracts at all costs, regardless of the feasibility of delivery. Better yet, at an appropriate "director" level, sales, delivery, and customer satisfaction should be combined into a single role and a balanced set of metrics should be used to evaluate them. We have to stop pitting salesmen against delivery teams and the customers.

News and Opinion Concerning Health Savings Accounts, Medical Costs and Health Care Reform
  • USA Today: Ask 3 hospitals how much a knee operation will cost… …and you're likely to get a headache. Telling patients to be better shoppers just isn't working. By Julie Appleby. Excerpts: From the president of the United States to the president of the biggest employer in town, it seems as if everyone is urging Americans to become better “shoppers” for health care. Get a high-deductible insurance plan. Open a health savings account. Call around and find the best deal on medical treatments, then pocket the savings. Sounds great: But just try it.
  • PBS-TV: NOW Program, courtesy of The Foundation for Taxpayer and Consumer Rights: Payment Due -- Healthcare Headaches in America; Transcript of Show on Junk Health Insurance Plans Bill (S. 1955 - Enzi-R-WY). Excerpt: The numbers are staggering -- 45 million Americans have no coverage. Most of those folks are working but their employers either don¿t offer health insurance or what they offer is too expensive. So some families grasp at straws -- cheaper policies that appear to offer the coverage they need, but don't. You're about to meet some people who learned in hardest possible way what can go wrong when an insurance policy and an illness don't line up. This at a time when there's new legislation in Congress that, if passed, would be the biggest reorganization of health insurance in decades. Consumer groups are worried it could make things worse. Peter Meryash produced our report.

New on the Alliance@IBM Site:
  • Human Resources Webcast. March 2, 2006. Randy MacDonald, Senior VP, IBM Human Resources. [PDF--785 KB]. Excerpts:
    • 2006 Compensation & Benefits: Major steps taken in all geographies to address costs associated with overly competitive retirement programs which now should provide us more compensation flexibility going forward.
    • Mixed results with Managed Attrition and MIS; not driving the desired behavior
    • Performance Attrition = MIS, PBC 3 & 4 resignations and PBC 2 managed out
    • The US pension change does not have an impact on ESI (Employee Satisfaction Index)
  • Job Cuts Status & Comments page:
  • From the General Visitor's Comment page:
    • Comment 5/08/06: After reading the comments from inside IBM HR and reviewing the Randy McDonald presentation, things began to come in sharper focus. IBM US employees will be shown to the door based on PBC ratings which have been set based on a quota arrangement for years. The fear factor will "motivate" employees to higher performance. I, for one, refuse to live (and work) in fear. I have lost any remaining respect for IBM management as these actions are dishonest, unethical, and repugnant. I would be of the opinion that this "anonymous" update was probably a well calculated " leak" on the part of HR management to "get the word out." How can anyone say that IBM is a great place to work any longer? - Anonymous-
    • Comment 5/08/06:I just read through the HR presentation. Even more scary than the MIS targets to me were the charts related to the latest Employee Sat Index and how HR was using those numbers to show NO IMPACT on ESI from announced changes in the pension!!! There's no background data on the numbers of people surveyed in the various populations or what the actual questions were that are behind the numbers and conclusions. The charts don't say whether HR is happy with the 63% or if they have targets to drive it lower to help with their attrition goals. In the old days an employee sat of about 63% would have been considered a DISASTER and there would have been an immediate aggressive action plan to drive it up. - Anonymous-
    • Hey Sam, You were hired about the same time I was. I am sure that you remember how we were told "IBM pays a little less, but that is all right because we get lifetime medical benefits". Sam I understand how things have changed and that no one could foresee how much that promise would cost. Though I do not like it, I have accepted the idea of the Future Health Accounts. What I do not accept is that if some one leaves this company before they can retire they will all loose the money they have accumulated. If a person is lucky enough to retire there is no guarantee that the money will be available, IBM has reserved the right to stop the program anytime it wants to. To add insult to injury we have to buy our insurance from IBM at inflated prices. THIS IS AKIN TO WHAT THE COAL COMPANIES WERE DOING WHEN THEY PAID THEIR EMPLOYEES IN SCRIPT THAT COULD BE USED ONLY AT THE COMPANY STORE! Sam you have risen to the top of what was once a great and respectable company. You now have an opportunity and an obligation to do the right thing. Please protect and safeguard what few medical benefits we have left. Your financial future has been secured, ours has been promised and then rescinded! The integrity of this company is now your responsibly. You know how we have been treated, the promises made and the promises broken, what are you going to do about it? - Anonymous-
    • Comment 5/08/06: I am amazed how this cold calculating evil company can retain good employees. Why would anyone in their right mind want to put up with these PBC fear tactics so Sam can make another $19 million this year and look forward to his $10,000 per day retirement. It just doesn't make any sense at all. What an arrogant A$$ Sam is to continue to squeeze the life and blood out of his employees. What a greedy A$$ Sam is. - Anonymous-
    • Comment 5/10/06: Did you notice in your new link for the "PBC 2 managed out" the following comment on slide page 14 "The US pension change does not have an impact on ESI (Employee Satisfaction Index)." In other words, they can reduce our pension and it has no negative effect on us. How wacky is THAT!?! So keep taking away our benefits because, hey, no effect! -Anonymous-
    • Comment 5/10/06: Joining a union is NOT anti-IBM. If you care about IBM then you do not have a choice but to put the effort into trying to improve things. They are crushing many of us by taking jobs or by creating a climate where work is impossible. If you are fed up with the lies and bad treatment and have had enough, before you give up, stand your ground and join. If you still do not want to then it may be that you are afraid of what will happen. It is already happening and you are not joining. Realize that the NLRA offers protection but collectively we are stronger. -Anonymous-
    • Comment 5/10/06: The HR presentation is true in practice. All new hires in IBM get a PBC of 3, as we are told we need 6 months to "learn the ropes". However, I have a team member who is still "learning the ropes" today, as she is so incompetent, those that joined later than her are helping her out. To rub salt into the wound, she got a PBC of 3, while those new hires that were more competent than her also got a PBC of 3. Seems to me, IBM doesn't reward good performance, dedication or hard work anymore. The most insulting slap in the face? IBM Malaysia has announced that 2005 was one of its most successful years ever, with increased sales in every single brand and sector. I guess its about time I start looking elsewhere ASAP -Anonymous-
    • Comment 5/10/06: IBM is still playing the same violin on how to get rid of employees even with a 2 performer. VERY SAD. I would think there is a better way of treating a human being. -Anonymous-
    • Comment 5/11/06: FYI. I asked HR about the PBC "2" chart you sent out recently...here was their answer.-Anonymous- "I spoke to the PBC Program Owner. He stated that the policy has not changed. The reference is to declining performance from a 2. If you need additional assistance your HR Partner will be able to assist you further." Regards, Tom Lovenstein IBM Compensation Administration Employee Services Center
    • Comment 5/11/06: During my first few years with IBM in the late 90's, IBM would frequently send out emails offering severance packages to any employees who voluntarily left the company. I figured I had a real future at IBM, so I never took the company up on its offer. So here I am in 2006, making less money at IBM now than I did 5 years ago, at the dead bottom of my job family's pay range for several years running, and I'm wondering where did all those severance packages go? I predict that the next step in IBM's quest to rip off its employees will be the end of severance pay. If they can just willy-nilly decide that they're going to eliminate pensions, I doubt there is anything they can't get away with. -Anonymous-
    • Comment 5/14/06: Dear Future Dues Paying Members of the Alliance@IBM: First let me say I am totally supporting employees today with issues involving their employment status, guiding them through IBM's Internal Appeals Process, helping them articulate charges to the EEOC and DOL(FMLA). I am relentless in this effort and can help you if you willing to take charge of your career. Many of you who remain anonymous will soon realize that IBM doesn't fear you here, but may; once you proclaim your rights to employment, including your rights to organize, join a union and then speak out for the rights of others. Remember, IBM says it acts with "trust and responsibility". We use those expressions in our arguments and escalations to senior management. And I am talking about the management chain far ahead of your first and second level managers. There was a recent comment here which referred to a gentlemen named Tom Lovenstein, as the PBC Program Owner. Please folks; Tom is a contractor and whatever he says has absolutely no bearing on IBM HR programs. In fact, he is no more than a VRU (voice response unit). Tom's comments are not binding as a contract employee. He is not an HR Partner. Please take all of your HR questions to an HR manager like Robbin Suess; who is mentioned in this website. Robbin is a vice president of HR, get to know the VP who is in charge of HR for your business unit. I have also been reading about employees claims of sexual harassment. Please bring your concerns here, to the Alliance. All we ask in return is for you to join our cause. Help the Alliance represent you so these atrocities against workers will someday end. Steve Bergeron Alliance@IBM Member of the Governing Council uvm2000@aol.com
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