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    Highlights—May 20, 2006

  • PBS FrontLine: Can You Afford to Retire? Baby boomers are heading for a shock as they hit retirement: vanishing pensions and inadequate 401(k) savings. What can be done? (Editor's note: We highly recommend watching this program. The full video is available on-line.)
  • Media General News Service: Pension agony. By John Hall. Excerpts: Hedrick Smith, The New York Times reporter who has carved out a unique place for himself in documentary television, paints a chilling picture of the future of the American private pension system. Smith talked to experts who concluded that the corporate retirement system is so shaky that baby boomers should have a nest egg as much as 15 to 18 times their annual earnings before contemplating retirement. [...]
    While there have been good results in the use of 401ks to supplement basic pension plans, Smith finds evidence that many big corporations are now beginning to turn their entire pension programs into 401ks, effectively leaving their employees' retirement to the mercy of the stock and bond markets. For now, there is so much fear, mistrust and confusion about the markets _ particularly among lower educated workers _ that they are not investing at all in their own futures even when corporations encourage it through pension contributions. Smith made the startling discover that the average size of a 401k retirement account is $29,000. That won't buy many groceries or pay much rent in retirement. [...]
    Don't blame just Bush, Congress, or Washington, D.C. Blame an increasingly casual attitude towards social responsibilities by a new breed of corporate citizen.
  • MarketWatch: IBM grants 151,758 stock options to CEO Palmisano. Excerpts: The Armonk, N.Y., company on Monday granted Palmisano 88,130 options with a $91.04 exercise price, which is substantially higher than Monday's closing price of $82.89 a share, according to a filing with the Securities and Exchange Commission. IBM said it granted Palmisano an additional 63,628 options with an $82.76 exercise price, the average between Monday's low and high share prices.
  • Los Angeles Times: Exec Pay Is Focus of Public Attention. By Jonathan Peterson. Excerpts: Sparked by an outcry over lucrative pay for corporate chiefs, Democrats on Capitol Hill wanted a hearing. Republican Michael G. Oxley of Ohio, chairman of the House Financial Services Committee, said no. But Rep. Barney Frank (D-Mass.), sponsor of a bill to give shareholders power to veto big pay deals, pushed back. [...]
    In a time of $3 gas, frozen pensions and rising healthcare costs, executive pay is in the spotlight. Politicians point to the nearly $400-million package for former Exxon Mobil Corp. Chairman Lee Raymond and other deals as signs of broader unfairness in the American economy and a growing gulf between corporate chieftains and rank-and-file workers. "It's a symbol of what's going on in the economy, of great wealth being hoarded by a handful of people," Frank said. "The economy is out of whack." [...]
    Indeed, executive pay may be taking its place alongside outsourcing, corporate downsizings and trade accords as a source of public frustration with the state of the economy, according to some political consultants. "It's a symbol of corporate excess at the expense of workers," said Mark Mellman, a Democratic pollster. "It's a symbol of companies that are only self-interested and no longer have loyalty to workers, to communities, even to the country. [...]
    According to a Los Angeles Times/Bloomberg poll this year, the view that top executives are overpaid extends across party and ideological lines. Among both Democrats and Republicans, 80% thought CEOs of larger corporations were paid too much. Even among those who described themselves as conservative — a group that might be expected to accept the workings of the marketplace — 74% said corporate heads were overpaid. Among liberals, 84% felt that way.
  • Beneplace: Discount for IBMers. Excerpt: "Discounts for IBMers" is an independent gateway for IBM employees and retirees to voluntary benefits, discounts and special services offered by IBM's clients, vendors and other companies.
  • Business Day (South Africa): Leaked IBM memo reveals plan to poach rival’s staff. Excerpts: IBM has landed in hot water after an internal memo encouraging its staff to poach employees from the Business Connexion group was leaked. The memo reached the hands of Business Connexion CEO Peter Watt, who promptly complained to Mark Harris, GM of IBM SA. Staff at Business Connexion are jittery as Telkom is trying to take over the company. That is a galling prospect for technicians who have long been frustrated by Telkom’s efforts to protect its dominance of the telecoms sector by thwarting the use of innovative technologies by its rivals.
  • MS-NBC: Companies buck the outsourcing trend. The costs are often far higher, but ‘made in the USA’ brings other benefits. Excerpts: Workers at the New Balance factory in this suburb of Boston create the sound of "made in the USA." The company, striving in a world dominated by Nike, Adidas and Reebok, keeps 25 percent of its manufacturing in America — the only company to make any athletic shoes here.
    "Our labor costs are 10 to 12 times higher," says President and Chief Operating Officer Jim Tompkins. "But productivity at New Balance's five U.S. plants is much greater, lowering other costs. We're able to deliver into the market in a matter of days, where our competitors are looking at a matter of weeks and sometimes months." [...]
    Unlike other carriers, Denver-based Frontier Airlines keeps all its work in-house, refusing to outsource its maintenance or its call centers to other companies in America or overseas. "Our employees here take ownership," says Frontier CEO Jeff Potter. "They are so committed to our customers, and I'm not sure that's something you could find offshore." New Balance, Frontier and North Fork Bank have all discovered that while it is more expensive to keep work in this country, it ultimately delivers a bigger payoff.
  • Los Angeles Times, courtesy of the Hartford Courant: Workers Retiring Sooner Than Planned. By Jonathan Peterson. Excerpts: American workers, who face growing financial pressure to stay in the workforce, are far more likely to be forced into an early retirement than many expect, according to a study out today. Four out of 10 retired workers left their jobs sooner than they had planned, usually because of health problems or the loss of employment, according to the report by McKinsey & Co., which was based on a national survey of 3,086 people. [...]
    The findings raise fresh concerns about Americans' ability to afford a comfortable retirement. With more companies abandoning or freezing pensions, many people say they plan to work longer to build up nest eggs.
    The reality "is quite sobering," said David Hunt, a senior partner at McKinsey. "Our research clearly shows that many people - and more than a few public policymakers - who are betting on simply working longer to compensate for a lack of current savings are setting themselves up for a rude awakening and a significantly poorer standard of living in retirement than they had expected."
    Ask Rolf Marsh. The computer programmer was 60 when he got a surprise tap on the shoulder from IBM Corp. Marsh had planned to work five more years to qualify for higher pension payments, then retire to enjoy a new phase of life, including visits to friends in Britain and other travels with his wife. "I guess I was blind to the handwriting on the wall," said Marsh, who lives near Spokane, Wash. "I didn't think it was going to happen."
    Marsh, 63, has been frustrated in his attempts to prolong his career. "I looked for work when I first got out - basically, there's very little up here in Spokane - and the jobs I applied for I didn't get. My feeling was it was because of age."
  • Monthly Review: The End of Retirement. By Teresa Ghilarducci. Excerpts: An esteemed colleague read three paragraphs of news clip on employer pensions before he realized it was from the satirical newspaper The Onion. The tip off was the interview with an eighty-seven-year-old machine shop worker struggling with widowhood, high stress, and early stage Alzheimer’s at General Electric. Early stage Alzheimer’s was the first clue, not the eighty-seven-years of age. Satire writers must have a holy grail of seconds before the earnest reader starts chuckling; my colleague’s delay might be a record. It takes three seconds to know “Cindy Sheehan loses second son in Katrina” is a lampoon. The reason it took so long to laugh at a news story that GE was adopting a new policy of “lifetime” jobs and a new forty-five-year vesting period for their pensions is that it is credible; the signs of the end of retirement are all around. [...]
    The current federal policy of promoting an “ownership society” means shifting risks that were once spread out among many workers and employers to individuals, who are now expected to manage individual accounts: their 401(k) plans, their health savings accounts, and, if powerful forces get their way, Social Security individual accounts. None of this bodes well for working people. Twenty years of experience with 401(k) plans reveal that workers will never be able to accumulate enough assets in individual accounts and choose payout options that will provide a steady stream of income for life after retirement. This means that Americans will turn to the option that American adults have always relied on—contingent, low-paying jobs—and will lose one of the few remaining accomplishments of the American working class, retirement. [...]
    Despite corporate and political arguments to the contrary, pensions are as affordable as they were thirty years ago. The nation can still afford retirement, or more precisely, the ability of older people to choose not to work. Everything really depends on the distribution of power in the labor market. The loss of pensions and the ability to choose to work on one’s own terms coincided with the loss of union bargaining power, which began in the 1980s. We must be clear that workers losing the bargaining power to secure pensions is not the same thing as the economy losing the ability to pay for them. Those who argue that the elderly should work more imply that we cannot afford the same levels of retirement time because a growing number of retirees must be supported by fewer workers. But demography is not destiny: economic bargaining power is. [...]
    Under what conditions can society provide jobs that older people want, not jobs that older people have to take? Currently it seems employers are offering jobs to older people that employers have previously reserved for other marginal workers. Instead of sixty being the new thirty, it would be the new seventeen as older people fill the area with the predicted largest growth in new jobs—retail clerks. This seems to be the direction in which we are going.
  • PBS: Google Doesn't Have to Try Nearly as Hard as Microsoft, Yet to Maximize Its Success Google Ought to Try Even Less. By Robert X. Cringely. Excerpts: If Apple is just a pimped-out Microsoft, then what is IBM? IBM is a disaster-in-the-making. Big Blue as a total enterprise is running primarily on customer inertia and clever advertising, which definitely isn't enough. Of course they have their Power5 and Cell processors, AIX and DB2, but IBM's customers are now all in big business, which doesn't touch my readers or the PC market very much. And IBM is in trouble. I have lots of friends at IBM and none of them are happy. The company is not going anywhere, but it is also going nowhere, if you know what I mean.
    One aspect of IBM's malaise is the disconnect between the traditional public image of the company (basic research, advanced R&D, patents, patents, patents) and the fact that most of their revenue-generating businesses aren't about hardware or software products at all, but services. Why continue to spend all that money if you're mainly just a business/IT consulting company made up of IGS and Price Waterhouse? Why, indeed.
    Here's what's happening with IBM. The heart of a company culture can be discovered if you look at the compensation system. IBM's major incentives right now are for signing business and cutting costs. In many IT firms, IBM included, billable hours are important. This results in a system where little is done to improve service efficiency, because doing so would lead to fewer hours and less revenue. Efficiency kills, so at today's IBM it is generally avoided.
    Of course laws of both science and business continue to apply, something has to give, costs have to be driven down, so at today's IBM what gives is generally quality.
    The result is that an increasing number of customers are unhappy with IBM, signings are harder, so there is less return business. To get that signing incentive, IBM's sales folks are now under-pricing deals. The people who do the actual work are still expected to show a profit though, even if one wasn't designed into the contract in the first place. So to still be profitable, they under-deliver on the contract, and this leads to an even lower quality of service. What I am describing is a death spiral that top IBM management either doesn't see or simply doesn't want to admit.
    If IBM had invested in improving services, rather than cutting them to the bone, by now they could own their market. But they didn't. IBM's primary innovation has been to move as many jobs offshore as possible, cutting costs for now, but at a horrible long-term cost to the company.
    IBM CEO Sam Palmisano, should he choose to reply to this column, might point to the IBM development center in Austin, Texas, which specifically targets the services business, as an example of what IBM is doing right. It's called the Global Technology Center. Alas, the GTC has spent millions of the company's money, are masters at promoting themselves, but have delivered very little of real value back to the services organization.
  • InformationWeek: Outsourced IBM Workers To Get Unemployment Benefits. The Department of Labor has ruled that former IBM staffers can seek benefits under the Trade Adjustment Act. In the past, IT workers were shut out from claiming TAA benefits. Excerpts: The federal government says a former IBM programmer whose job in New Jersey was outsourced to Canada is eligible to apply for the same employment benefits typically extended to manufacturing workers who lose their jobs to lower-cost offshore competition. Under a ruling handed down by the Department of Labor, the former IBM staffer—who helped develop billing software for businesses—can seek benefits under the Trade Adjustment Act. The Act provides for extended unemployment payments, federally funded retraining, and relocation allowances for workers hit by foreign competition. In the past, IT workers have been shut out from claiming TAA benefits.
    In a written ruling dated May 11, DOL official Elliot Kushner noted that "a shift in production of software like, or directly competitive to, that produced at the subject facilities to Canada contributed to the total or partial separation of a significant number or proportion of workers at the subject [IBM] facilities" in New Jersey. The former IBM worker, James Fusco, took the DOL to trade court after he was initially denied TAA benefits. The DOL's May 11 ruling in favor of Fusco applies to all workers at IBM centers in Piscataway, New Jersey and Middletown, New Jersey whose jobs were outsourced after November 13, 2001. It was not immediately clear how many IBM workers that would affect.
  • Los Angeles Times: Bush's Tax Cuts Far Outweigh Congressional Pork. Excerpts: Maybe the most valuable earmark reform Congress could consider would be to offer more pork-barrel projects to legislators who vote against unaffordable tax cuts. OK, that's slightly facetious. Excessive earmarks are a real problem. But they don't pose nearly as great a threat to the federal government's finances as the massive tax cuts President Bush and Congress continue to enact. [...]
    As a strategy for reducing Washington's huge budget deficit, fighting earmarks while promoting tax cuts is incoherent. It ignores the biggest near-term threat to the budget to concentrate on a second-tier problem. It's like a bank security guard arresting a pickpocket in the lobby while a gang of thieves loots the vault below. [...]
    Last month, the Tax Policy Center — a joint project of two center-left think tanks, the Brookings Institution and the Urban Institute — produced a comprehensive projection of the federal budget over the next decade. It calculated that extending all of Bush's first-term tax cuts and adjusting the alternative minimum tax to blunt its impact on the middle class would cost about $300 billion a year over the next decade. That means the cost of Bush's tax agenda exceeds the cost of all earmarks, even under the most expansive definition, by about 10 to 1. The cost of Bush's tax agenda in one year alone will exceed the total spent on earmarks, by any definition, in the past decade.
  • New York Times: IRA Swaps Could Cost U.S. Billions in Tax Revenue. By David Cay Johnston. Excerpts: President Bush is scheduled to sign into law tomorrow an extraordinary deal for high-income people with retirement savings accounts. By paying $1 in income taxes before the taxes are due, these investors may be able to avoid future taxes equivalent to $3.50. [...]
    Under the 10-year period covered by the Congressional Joint Committee on Taxation's official estimate, the Roth conversions would raise $6.4 billion in taxes in the short run. But because the government will not collect taxes on the future investment gains, the Tax Policy Center estimates that through 2049, the conversions will cost the government $53.3 billion.
  • Yahoo! message board post by Skip Bogard. Full excerpt: I believe Janet, as well as many others on the board have been advocates of getting personally involved in educating & lobbying for a Single Payer health system...either at a Federal level, or a state level like Massachusetts. If you want more info, a good place to start is with the Massachusetts Campaign for Single Payer Health Care ... This is run by the Massachusetts Nurses Association who has a single payer information site: http://www.masscare.org/
    • Single Payer = government pays. We already have a single payer system NOW for 40% of Americans when you add up Medicare, Medicaid, CHIP, Federal Workers & their families, Military & their families, State employees and their families, and City/County governments and their families.
    • 30-35 cents out of every health care dollar has "no added value" in terms of medical treatment. 5 cents of that could be eliminated with more Healthcare IT. 25-30 cents of that dollar is given to the insurance industry for processing forms, processing & auditing codes, and profit. If you could cut 60% of that waste..With an extra 15-20 cents allocated to actually treatment instead of paper pushing...a large increase over hat 40% already having Single Payer status could be increased way past the 50% mark.
    • Note that Single Payer DOES NOT EQUAL Single Provider. In fact, you could go to any provider that you want...provided they don't try to overbill or cheat the Federal Government. If they do that, they pay fines or go to jail. Who needs insurance company auditors when you have the GAO? Our GAO does a very fine job when the Bush administration doesn't ignore their reports.
    • Note that Single Payer DOES NOT EQUAL Single Provider. In fact, you could go to any provider that you want...provided they don't try to overbill or cheat the Federal Government. If they do that, they pay fines or go to jail. Who needs insurance company auditors when you have the GAO? Our GAO does a very fine job when the Bush administration doesn't ignore their reports.
    Single Payer just means: the government writes the check...don't screw with them...(don't overcharge, don't over code, don't scheme) or you'll go to jail. I can't speak for Janet, but she might have said something like this...for the health care component. It's plain silly that payment for healthcare be tied to employment. - Skip
  • Yahoo! message board post by Janet Krueger. Full excerpt: I recommend looking at http://www.uhcan.org/ for a lot of factual information on universal health care and myths versus realities...
    A good book to read is The World Is Flat by Thomas L. Friedman... He provides a lot of theories on why American workers are finding it more and more difficult to compete with workers in the rest of the world; one of them is that employers have to pay for health care when they hire American workers, but can completely avoid health care costs when they outsource. Many of his other theories are also worth THINKing about.
  • Jim Hightower: Scratching the Backs of Corporate Backers. Excerpts: When corporations give money to the lawmakers who do legislative favors for them, some hotheads are quick to label such transactions as "bribery." But that's such an ugly term. Members of congress prefer to use a kinder and gentler phrase: "constituent services."
    Take Democratic Senator Hillary Clinton, for example. She has recently been of tremendous service to the Corning corporation, which is a bit odd, since Corning has always been a solidly Republican bastion. In recent years, however, the upstate New York manufacturing giant has put $137,000 into Hillary's campaign coffers, becoming her second largest donor.
    This political switch is not casual or coincidental – it's business. Clinton, you see, has gone out of her way to become Corning's leading champion in Washington, using her substantial influence to do favors that give a big boost to the corporation's bottom line. In 2004, for example, the Chinese government imposed a tariff on Corning's fiber optic products, charging the company with illegally undercutting the prices of Chinese firms. Corning ran to Hillary for protection, and she promptly launched a personal push. She upbraided China's top trade official, summoned the Chinese Ambassador to her office, and even collared George W to get him personally involved – finally compelling the Chinese to drop the tariff.
    One month after she began providing this service, Corning's chairman held a fund-raiser for Hillary in his home, quietly sacking up $46,000 for her re-election campaign. "When you are down and somebody gives you a hand," explained Corning's top lobbyist, "you have to remember that."
  • Jim Hightower: Save the Billionaires! Excerpts: If you were in charge and you wanted to give a helping hand to some deserving people in our society, you might single out school teachers... or poverty workers... or columnists like me! Okay, not me – but even I would be more deserving than the people being singled out by the Bushites and congress to receive a trillion dollars in new tax relief over a ten year span. Who? The very richest people in America.
    By "rich," I don't mean affluent or comfortable. I mean wallowing-in-wealth multibillionaires – the richest one-fourth of one percent of American families! These are the heirs to the founders of such giants as Wal-Mart, Gallo wines, Campbell soup, and M & M candies. In a new report, two watchdog groups have documented a decade-long, stealth campaign by 18 of these superrich families to eliminate the federal estate tax. These 18 families – averaging more than $10 billion each in personal wealth – would net a windfall of $71.7 billion if this deal passes!
    Since it's hard to generate much public enthusiasm for a "Save the Billionaires" campaign, the families have kept their selfish effort anonymous, by funding front groups to do their dirty work. They've also spent about $500 million on lobbying firms and some $27 million in campaign funds for key politicians, including George W.
    The worst part of their effort is its fraud. With their money, these unimaginably-rich heirs have convinced politicians and the media to portray the estate tax as a crushing burden on the middle class, small business, and family farmers – when, in fact, 99.75 percent of Americans pay zero estate taxes. Indeed, when asked to find even one family forced to sell its farm because of this tax, the rich man's front group could not produce a single example.
  • Jim Hightower: Thanks to Grover Norquist, the Republican lobbyist and right-wing anti-government guru, the world has just gotten weirder. Along with Newt Gingrich and Tom DeLay, Grover developed the "K-Street Project" in the 1990s. It was an effort to require corporate lobbying firms (which are mostly headquartered along Washington's K-Street) to hire partisan Republicans as their lobbyists and to give the preponderance of their campaign donations to the GOP. The unwritten quid pro quo of the project was that corporations that played this game of footsie could expect a friendly reception for their legislative agenda.
    As you might expect, this quickly devolved into a system of thinly-veiled bribery, with lawmakers trading legislative favors for lobbyists' cash. Thus, the term "K-Street Project" has now become a political pejorative, an iconic brand-name for big-money corruption in Washington. This negative PR for his pet project has mightily upset Norquist, so he is trying to trademark the phrase, "K-Street Project" – and he says he'll sue the pants off of anyone who uses it as a symbol of unethical behavior.
    And you thought that Republicans were opposed to frivolous lawsuits! No, they only oppose your lawsuits – as a group, corporate Republicans are the most litigious bunch in America.
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:
  • "Ready Made Solutions" by "ancientblueconsultant". Excerpts: Right on! The OD has really become an overdose of confidence which will kill IGS. The other crucial flaw in ready made solutions is that if a solution is in a can, a client will automatically try to commoditize it. It can also be replicated by a cheaper services firm with less overhead and perhaps better quality. If it's critical, the client will not outtask/outsource it, if they have to, uniqueness is a requirement for market differentiation. [...]
    The answer: You cannot charge a premium for ready made solutions. The market for services is high margin for custom, one of a kind solutions and commodity for anything ready-made, replicatable. The focus on patents is a good protective measure, but services is so easy to change that end runs on the portfolio will invalidate using patents as a defence. The one stop shopping has turned into a "deep pockets" play so every services engagement in that arena becomes a problem engagement, driven by clients seeking the deep pockets.
  • "The Three Bears" by "Dose of reality". Full excerpt: That doesn't leave IGS much room to navigate. If the business process requirements are too simple, the client chooses a low cost provider. If the business process requirements are too complex or too dynamic, we can't meet them with an On Demand solution, or we have to charge too much for the contract, or one of our gross revenue-obsessed salesmen will over-sell the deal and we end up with a PO'd client. Wrong strategy, wrong time, wrong company structure.
  • "Advice please" by "alderman72". Full excerpt: I have recently been approached for a role with the IBM UK consulting arm. I am an experienced Finance Reengineering project leader in the City, working mainly as in house project manager for various large investment banks and Reinsurance companies. The company I am working for currently is being taken over, and whilst I have a role in the new organisation I am considering whether now is a good time to change career and move into consulting.
    Having scanned the message board here I can see that there is a deal of disaffection with IBM BCS organisation, but is this a US phenomenon or does it apply to the UK/Europe arm also? I would be grateful for advice as to whether this is an opportunity worth pursuing. I certainly have my doubts based on what I have read to date.
  • "No difference" by "whitespider". Full excerpt: Dear 72nd Town Council Member, Apart from some pension-related differences and the H1 visa mess in the US, all of the problems you read about that make IBM a bad place to be are identical in the UK. The problems in Belgium, Sweden, Germany and Switzerland are also, with minor local flavour, the same. So anything you have read on this board about how IBM handles fixed and variable comp, the mindless mediocrity of "managers", the lack of investment in training and career development, the outrageous utilisation rates ... it is the same in the UK.
    It sounds as if you are an industry specialist focused on improving businesses by fundamentally changing the way the business operates. IBM will put technology first in every approach to any client, and so the "consulting" you will do will be heavily encumbered by what IBM wants to sell, rather than what is right for the clients' business. Strongly suggest you stay put and ride it out or look elsewhere.
  • "Everyone is leaving BCS FCM..." by "nollag". Excerpts: You might benefit from asking your question on top-consultant.com, which is a UK consulting discussion board. As a London based ex-PwC Consulting / IBMer myself, I’d counsel you to think long and hard about why you want to join IBM. The atmosphere in Southbank is absolutely terrible – ask for a walk around the floors at your interview to see for yourself.
    IBM has treated their UK staff terribly, with limited pay rises, few promotions, and little training. This explains the recent exodus of Finance consultants, in particular, to the competition. Even the partner who led BCS FCM in the UK, Richard Sandwell, has just thrown in the towel and gone to EY. You would be better off in looking at one of the advisory arms of the accounting bodies, or someone like Cap Gemini or PA Consulting, who are all recruiting people with your skill set. Good luck in your decision
  • "Here's why" by "Dose of reality". Full excerpt: IBM is the ultimate in central command and control philosophy. No one should expect that a particular geography will be immune from the management policies, culture, and environment depicted here. We are truly a global company in the worst sense of that word. That consistency was the glue that held the company together in the good old days, and it is the muck that is dragging the rest of the non-US operations down with it.
    There is no use hoping or rationalizing that you will find an IBM oasis somewhere in the world - it doesn't exist. There are too many good companies out there to waste any time on IBM.
  • "Thanks for the advice" by "alderman72". Excerpts: Thanks to those who took the trouble to reply. I will certainly check out 'top-consultant' also as nollag advised. Obviously it looks as though IBM need people to replace those haemorrhaged to competitors, explaining why I'm being canvassed.
    On the one hand it beggars belief that there isn't some introspection at IBM BCS to understand why people are leaving and correct their approach accordingly. However my experience of other large organisations is that such introspection rarely results in change, as the evidence tends to be ignored to save embarrassing the leadership.
  • "Motivation isn't there" by "Dose of reality". Full excerpt: At IBM, turnover is built into the system. The philosophy is that the cost of turnover is less than the cost necessary to reduce it. Of course anyone with any organizational management skills knows that's untrue, but IBM is run by history majors, political techno-nerd hacks, and business-ignorant number crunchers.
  • "Recruiting Accelerating" by "Tweetie_Bird". Full excerpt: The departures are increasing dramatically now. I heard that in GTS Public Sector, there's a $5K bonus per head because of so many slots open. This means that the quality required of candidates will drop even further.
  • "Well IBM has only itself to blame" by "civilliberty". Full excerpt: On the one hand they're getting rid of people regularly, and on the other they're hiring - not investing in their people in the least - downhill spiral.
  • "The sins of the past" by "Dose of reality". Full excerpt: It's the sins of the past coming home to roost. The unfavorable impact of organizational issues like inequitable compensation practices, lack of staff development, and excessive targets take time to work their way to the financials. Once they do, it's too late to turn around.
    The "benefits" of those practices were realized in prior years through cost reductions. However, you are faced with the decision of having to INCREASE costs to stem the tide, while the profit impact of last years unfavorable policies are also hitting the bottom line. It is a double whammy that no one is willing to accept. All we can do is pedal faster downhill. We've been "cashing out" the organization at least since the PwC acquisition.
  • "Techie view" by "ibmtechie". Excerpts: Training. At Deloitte you will have access to better training on IBM products. BCS does not believe in training. Have been on engagements where the clients went on training and BCS would not spring for the training for us consultants who were going to teach them. Most of us train using material on developerworks. The internal training is not really training, someone (either streaming no web, of as flash) reading PowerPoint slides.
    You better have an exit plan if you decide to take a position with BCS. Every day when I look at the 5-10 yr people I get motivated to execute on my exit plan. Many who have been here 5-10 yrs really have let themselves go intellectually. They are not stupid but, it is apparent they have just not been exposed to opportunities. Quite sad.
    Be ready to be underwhelmed by the caliber of projects.
    Soln. Architect, client contact?... hmm. Make sure your number is unlisted, google yourself and make sure you can not be found. Don't be surprised if clients hunt you down.
    Right now at Deloitte you will have more access to WPC dev team than if you are here, no inside track.
    Either your skills have really improved and this is a wake up call that you need to negotiate a better package with Deloitte, or G**d forbid GBS is paying for your reputation. The old bait and switch, parade you in front of clients, and bring in unprepared consultants to implement.

News and Opinion Concerning Health Savings Accounts, Medical Costs and Health Care Reform
  • New York Times: D for Debacle. By Paul Krugman. Excerpts: Today is the last day to sign up for Medicare Part D, the prescription drug benefit. It appears that millions of Americans, confused by the array of competing plans or simply unaware of the cutoff date, will miss the deadline. This will leave them without drug coverage for the rest of the year, and subject to financial penalties for the rest of their lives.
    President Bush refuses to extend the sign-up period. "Deadlines," he said last week, "help people understand there's finality, and people need to get after it, you know?" His real objection to extending the deadline is probably that this would be an implicit admission that his administration botched the program's start-up. And Mr. Bush never, ever admits mistakes.
    But Part D's bad start isn't just another illustration of the administration's trademark incompetence. It's also an object lesson in what happens when the government is run by people who aren't interested in the business of governing. [...]
    After all, prescription drug coverage didn't have to be bafflingly complex. Drug coverage could simply have been added to traditional Medicare. If the government had done that, everyone currently covered by Medicare would automatically have been enrolled in the drug benefit. Adding drug coverage as part of ordinary Medicare would also have saved a lot of money, both by eliminating the cost of employing private insurance companies as middlemen and by allowing the government to negotiate lower drug prices. This would have made it possible to offer a better benefit at much less cost to taxpayers. [...]
    But while a straightforward addition of drug coverage to Medicare would have been good policy, it would have been bad politics from the point of view of conservatives, who want to privatize traditional social insurance programs, not make them better. Moreover, administration officials and their allies in Congress had both political and personal incentives not to do anything that might reduce the profits of insurance and drug companies. Both the insurance industry and, especially, the pharmaceutical industry are major campaign contributors. And soon after the drug bill was passed, the congressman and the administration official most responsible for drafting the legislation both left public service to become lobbyists.
    So what we got was a drug program set up to serve the administration's friends and its political agenda, not the alleged beneficiaries. Instead of providing drug coverage directly, Part D is a complex system of subsidies to private insurance companies. The administration's insistence on running the program through these companies, which provide little if any additional value beyond what Medicare could easily have provided directly, is what makes the whole thing so complicated. And that complication, combined with an obvious lack of interest in making the system work, is what led to the disastrous start-up.
  • The Century Foundation: Universal Health Insurance: Reaching The Tipping Point? By Leif Wellington Haase. Excerpts: Employers are the wild card. Universal coverage, potentially, could lower costs for business and get them out of the hassle of administering health benefits. On paper, employers ought to be leading the charge. But they aren’t—yet. Why not? Some answers emerged from the recent World Health Congress in Washington, which I attended. This conference, which is co-sponsored among others by the Wall Street Journal, Accenture, and PriceWaterhouseCoopers, is a great barometer of industry trends. [...]
    Many employers feel that “consumer-directed care” will save money for their companies and forestall the need for systemic reform. They have cast, or will cast, their lot with health savings accounts and high deductible insurance products. Some CEOs, such as Bill McGuire of the health insurance giant UnitedHealth, made a thoughtful case that individual choice and responsibility can lower health costs. For others, offering HSAs clearly has more to do with offloading the risk of rising costs onto employees. Ideology and convenience drive the appeal of savings accounts. Ivan Seidenberg, the CEO of Verizon, predicted that “the real magic will come from the market.” He offered few details. One health benefits manager told me that because HSAs are a product that can be marketed and sold to employers they get their attention regardless of their merits.

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)
  • InformationWeek: Tech Workers Of The World Unite! Or Not. By Paul McDougall. Excerpts: Efforts to unionize IT workers have, to date, pretty much fallen flat. Despite the growth in perceived job threats like offshore outsourcing, automation, and H-1B visa workers, tech pros aren't rushing out to get union cards. Some fear that unionizing IT will result in even more jobs going offshore as companies look for ways to circumvent collective bargaining. One trade union thinks it has an answer for that. [...]
    This no doubt sounds appealing if you're a techie worried about your job going to India, China, or some other far-flung, low-cost destination. But realistically, IT workers in the West have never shown much interest in unions. One advocacy group, Alliance@IBM, recently had to post a desperate appeal for members on its Web site. And this is a group that represents workers at a company that's hiring in India by the tens of thousands. That's worth noting because an international IT union isn't going to carry much clout if it doesn't have strong support in the U.S. After all, it's U.S. companies that are doing the bulk of offshoring.
  • From the Job Cuts Status & Comments page:
    • To all IBM employees in EMEA: IBM would be shifting a lot of support jobs to places such as Eastern Europe (if possible) or to Asia. Most of these jobs that are affected would be in support and administration depts (such as tech support, accounting, procurement etc). Start looking elsewhere if your job falls in this type of category. -Anonymous-
    • Major offshoring is hitting network services in North America. Recently network support across the Americas was merged into a single team (One Team, No Border) and support folks were forced to transfer their knowledge and diagrams to a global database and indirectly train their replacements. The network infrastructure has been largely standardized. Now work is transferred to the cheaper locations. Networks at all North American IBM sites (minus software labs) will be remotely managed from Brazil. Heavy job losses are coming to "less efficient" sites (in US and Canada). Also, all IGS (ITSA) teams are under pressure to offshore as much miscellaneous support work as possible to India. -Anonymous-
  • From the General Visitor's Comment page:
    • Comment 5/16/06: By the end of this year IBM India will be nearly half the size of IBM US. Give it a few more years and IBM will truly become Indian Business Machines Corporation. -Anonymous-
    • Comment 5/16/06: I don't give a damn about the stock going up to $100... I want what was promised to me and the retirees. Piss on Sam and all his executive cronies that are getting richer and richer each day by screwing the IBM workforce. Join the Alliance..!! Let's have a STRIKE... This company is for shit anymore... Anyone left hates working for these lying, cheating, stealing executives that IBM presently has. -Anonymous-
    • Comment 5/17/06: Challenge to IBM methods in Denmark Danish finance union FSU has protested at working arrangements in several IBM controlled companies. Many jobs are vacant, many employees are not covered by the collective agreement and consultants have been hired. The FSU congress is pressing IBM to begin negotiations to provide decent working arrangements for their 1000 members there - and preserve the Danish social model. (finansforbundet.dk) -Anonymous-
    • Comment 5/18/06: To the person that wants IBMers to push the stock past $135: You were conned by a greedy management. This pattern was repeated many times in tech, Enron and for Lou in AMEX and RJR. He used your greed, hope and money to fund the buying of his options. There is still a glimmer of hope for IBM, in as much as it is bleeding profusely by self-inflicted management wounds. The answer is to focus on customers and employees, not month to month financial results. Once IBM has regained the trust of its customers and employees, then the stock will again rise to higher levels. -Anonymous-
    • Comment 5/19/06: The new pay plan is a nightmare for young employees not located in high cost areas. Instead of paying for performance and having balanced salaries across the country, the rocket scientists in Armonk trying to save money by obfuscating the salary plan have decided that employees in high cost areas will get over 10% more than those in low cost areas. That means that for example, many employees in RTP, Austin and Boulder will get no raises or even have reductions in pay whereas employees in downtown NY city will get the high pay increases. The new plan is having the effect of immediate and dramatic losses of young employees leaving for other companies. Older employees and those stupid enough to stay will have to deal with the increased workloads. Pay in areas like RTP will be eventually 15-20% less than places like Chicago and NY City, Florida and Washington DC. Employees in sites located in Texas, NC and FL will take it on the chin, despite the propaganda otherwise. You'll know you're being lied to when management refuses to show you the relative cost index of your area versus the "North American average". -Anonymous-
  • Pension Comments page
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