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    Highlights—July 15, 2006

  • CBS News Video: Pay Cuts And Pensions (July 07, 2006). Many workers are complaining that while they are taking pay cuts, top executives are retiring with huge pensions. Anthony Mason reports.
  • Investment & Pensions Europe - IPE.com: IBM Germany puts DC plans on ice. Excerpts: Opposition from employee representatives has forced IBM in Germany to temporarily halt plans to transfer half of its employees from a defined benefit pension scheme to a defined contribution one, IPE has learned. [...]
    Since mid-2000, the other half of the employees has been in a DC scheme where IBM contributes to a fund and where the employee has the option to do so. The accrued savings are not, however, paid out as a monthly pension but can be withdrawn as the employee wishes.
    Last January, IBM Deutschland announced that it wanted to place all of its employees on the DC scheme, adding that it expected to save “several hundred million euros” from the move. The announcement was part of a campaign by the US-based computer giant to slash worldwide pension costs.
    But worker representatives at IBM Deutschland, which must agree to pension plan changes, rejected them. They said the changes meant significant benefit cuts, particularly for 4,000 employees who were newer members of the DB scheme. [...]
    Meanwhile, Berlin-based Verdi confirmed that IBM Deutschland had mounted a legal action against Rudolf Quetting, a member of the workers’ council at the firm, to get him dismissed. A Frankfurt court has yet to set a date for a hearing on the action. According to Verdi, the action was initiated after Quetting sent a letter to the computer firm’s management that criticised the pension plan changes and the scrapping of holiday pay. “Mr Quetting probably went a bit too far by personally attacking chief executive Johann Weihen,” Schmidt said.
    In any event, Verdi sharply criticised the legal action against Quetting, likening it to a frontal attack on the principle of co-determination at companies in Germany.
  • Yahoo! pension board post by "igibmrga". Full excerpt: Just for the sake of completeness - This halt of pension plan transfer was based on the strong support of German IBM Employees organized in the Association for Safeguarding of IBM Pension, Salaries, Employment (IG-IBM-RGA)- Member of Employment Rights Organization http://www.er-org.net who have strengthened the position of the IBM Germany Enterprise Works Council. This demonstrates how important a large scale support of works council through a broadly organized employees base is.
  • Seeking Alpha: G&K Services Freezes Pension - Questioning The Company's Financial Integrity (GKSR). By David Phillips. Excerpts: G&K Services Inc. (GKSR), one of the nation’s biggest uniform-rental companies, announced last Friday that it would freeze the defined benefit pension plan for its 6,300 employees, effective December 31, 2006. The Company joins a growing list—IBM, Verizon, and Circuit City Stores —of financially healthy firms that have moved to freeze pension obligations as they seek to shift the burden of retirement savings to employees.
    According to the Employee Benefit Research Institute, the number of active, private-sector workers covered by defined-benefit plans has been on the decline for some time. The number of PBGC-insured plans peaked at more than 114,000 in 1985, declining to 31,238 in 2004. [...]
    In the last two years, Congressional subcommittees have held hearings on how to better protect employee benefits in corporate America. Areas of reform under discussion include making permanent changes to the interest rate companies use to calculate their pension liabilities, improving transparency by enhancing disclosure for participants, and reforming pension funding rules (e.g. raising funding limits).
    In "The Critique of the Gotha Program” Karl Marx elucidated his much repeated bromide: “to each according to his labor contribution.” Just as in communist countries, however, history has shown that the burden of change always seems to more adversely affect those not making the decisions.
    The changes at G&K will not affect the $13.9 million in projected benefit obligations owed to past and present senior management members under the Supplemental Executive Retirement Plan [SERP]. Nor will the burden of funding this ancillary executive retirement plan go away. As of FY ending July 2, 2005, the Company’s SERP was under-funded by approximately $14.0 million.
    Marx would assert that only when society moves beyond “the sphere of bourgeois right altogether”—and ascends to a higher phase of communist society—only then will society operate according to the moral norm, “from each according to his ability, to each according to his needs.”
    Has anyone ever seen a member of the Politburo of the People’s Republic of China riding a bicycle to a Committee meeting? The day that happens is the day that society moves beyond the sphere of bourgeois—and will be the day that management at G&K (and all companies) actually makes a fiduciary decision that adversely impacts their own perquisites and retirement benefits, too.
    Pension fund freezes are a transparent ploy to cut costs and strengthen balance sheets (by limiting accrual of payment obligations). G&K did not disclose the expected savings that will result because of their maneuver; nonetheless, a review of G&K’s financial statements might provide a useful guide in assaying whether or not there is a value proposition to flash freezing future pension obligations?
  • Forbes: Services, Hardware Trends To Hurt IBM: Analyst. By Mary Crane. Excerpts: Weak services bookings and hardware trends will likely pressure earnings at IBM in the second quarter and through the rest of the year, according to a new report from UBS Investment Research. Analyst Benjamin A. Reitzes said that IBM will likely report lower-than-expected services bookings in the second quarter, totaling $10 billion versus previous estimates of $12 billion to $13 billion, due to a weaker outsourcing market.
  • Plan Sponsor: Workers File Pension Suit against Boeing. Excerpts: Four former McDonnell Douglas employees who moved over to Boeing after a corporate merger between the two firms have filed suit against a Boeing pension plan.
    According to the suit, the plaintiffs' employment was transferred to Boeing on August 1, 1997, after the merger. They claim their retirement benefits are less than the accrued benefit to which they are legally entitled because the plan didn't properly apply accrual and vesting rules imposed by ERISA. The plaintiffs charge that the plan violates ERISA’s anti-back loading provisions because it makes benefits accrue very slowly over time until the participants near the normal retirement age so that a participant's vested pension rights have very little value until they complete a very long period of service, according to the news report.
  • Wall Street Journal: Getting a Raise From the Boss. By Jaclyne Badal. Web Sites Post Salary Databases To Compare Pay Levels of Peers; Target the Bonus if You Hit a Wall. Excerpts: Corporate profits are rising, and unemployment is falling -- so why isn't everyone getting big, fat raises? Despite classic conditions for salaries to start climbing, it appears this year's average pay increase once again won't keep pace with inflation. It has been a recurring problem in recent years, and something that previously hadn't happened since the early 1990s. This year, salaries for nonexecutive white-collar workers are expected to rise only about 3.6%, according to consulting firm Watson Wyatt Worldwide, but consumer prices are up 4.2% from last May, according to the government.
  • USA Today: Many Americans retire years before they want to. By Sandra Block and Stephanie Armour. Excerpts: The stark reality is that most of today's middle-age workers who want to continue working after 60 or even 65 will need to find a new source of income. While nearly half of baby boomers expect to work past 65, only 13% of current retirees surveyed this year by consulting firm McKinsey & Co. actually worked past that age. Forty percent of current retirees were forced to stop working earlier than they had planned, the survey found. The average age when current retirees left the workforce: 59. [...]
    As of 2005, just 60% of 60-year-olds, 32% of 65-year-olds and 19% of 70-year-olds were employed, according to the Bureau of Labor Statistics. Current retirees cited two primary reasons for quitting sooner than planned:
    • Illness. About 47% of current retirees who retired earlier than planned were forced to stop working because of health problems, according to McKinsey & Co. Less-affluent retirees were far more likely to cite health problems as the reason for forced retirement than higher-income workers were, the study found. "At lower-income levels, many of these people have jobs that require physical labor," says David Hunt, a senior partner at McKinsey. As they age, some are no longer able to handle the demands of their jobs, he says.
    • Unemployment. Forty-four percent of current retirees who retired earlier than planned blamed job loss or downsizing. Unemployment was the most frequently cited reason for early retirement among retirees with more than $250,000 in investments, the McKinsey study found. "Even at reasonably high levels of pay, if you're laid off when you're 53 or 54, it's much harder to get retrained and back in the workforce," Hunt says.
  • University of California Hastings College of the Law: Litigating the Maternal Wall: U.S. Lawsuits Charging Discrimination Against Workers with Family Responsibilities [PDF]. By Mary C. Still. Excerpts: This report examines the growing trend in lawsuits filed by workers alleging they were discriminated against because of their family caregiving responsibilities. The number of such cases has grown from a total of eight in the 1970s, when the first case was heard in U.S. courts, to 358 in the first half of the 2000s. In the last decade (1996-2005), the number of family responsibilities discrimination (FRD) cases filed grew nearly 400% from the previous decade, from 97 cases to 481. [...]
    Amongst companies sued for discriminating against workers with family responsibilities are nearly 30 that have been designated as “Best Companies to Work For” by Working Mother magazine or have been touted by Fortune’s “Most Admired” list as amongst the best in the nation for treating employees well. Companies such as IBM, Wal-Mart and UPS have been sued multiple times.
  • Truthdig: The Politics of Greed, by Molly Ivins. Excerpts: I don’t get it. What’s the percentage in keeping the minimum wage at $5.15 an hour? After nine years? This is such an unnecessary and nasty Republican move. Congress has voted seven times to raise its own wages since last the minimum wage budged. Of course, Congress always raises its own salary in the dark of night, hoping no one will notice. But now it does the same with the minimum wage hike, quietly killing it.
    Anyone who doesn’t think this is a country where the rich are getting richer and the poor are getting poorer needs to check the numbers—this is Bush country, where a rising tide lifts all yachts. According to the current issue of Mother Jones:
    • One in four U.S. jobs pays less than a poverty-level income.
    • Since 2000, the number of Americans living below the poverty line at any one time has risen steadily. Now, 13%—37 million Americans—are officially poor.
    • Bush’s tax cuts (extended until 2010) save those earning between $20,000 and $30,000 an average of $10 a year, while those making $1 million are saved $42,700.
    • In 2002, Sen. Charles Grassley (R-Iowa) compared those who point out such statistics as the one above to Adolph Hitler (surely he meant Stalin?).
    • Bush has diverted $750 million to “healthy marriages” by shifting funds from social services, mostly child care.
    • Bush has proposed cutting housing programs for low-income people with disabilities by 50%.
    Meanwhile, for those who have been following the collapse of the pension system, please note a series in The Wall Street Journal by Ellen Schultz taking a hard look at executive pension obligations:
    • “Benefits for executives now account for a significant share of pension obligations in the United States, an average of 8 percent (of large companies). Sometimes a company’s obligation for a single executive’s pension approaches $100 million.”
    • “These liabilities are largely hidden, because corporations don’t distinguish them from overall pension obligations in their federal financial filings.”
    • “As a result, the savings that companies make by curtailing pensions of regular retirees—which have totaled billions of dollars in recent years—can mask a rising cost of benefits for executives.”
    • “Executive pensions, even when they won’t be paid until years from now, drag down the earnings today. And they do so in a way that’s disproportionate to their size, because they aren’t funded with dedicated assets.” [...]
    It is so discouraging to watch this country become less and less fair—“justice for all” seems like an embarrassingly archaic tag. Republicans have rigged the “lottery of life” in this country in ways we don’t even know about yet. The new bankruptcy law is unfair, and the new college loan rules are worse. The system has been stacked so that large corporations have an inside track over small businesses in getting government contracts. We won’t see the full consequences of this mean and careless legislation for years, but it starting to affect us already.
  • eWeek: Mumbai Bombings Shake Outsourcing Community. By Stan Gibson. Excerpt: The big fear of offshore outsourcing customers has become a reality: a major bombing attack in an outsourcing hub. On July 11, at least 200 commuters were killed by terrorist bombings in Mumbai, India, a key outsourcing locale. In the wake of the attacks, outsourcing providers in Mumbai scrambled to make sure employees and customer data were safe and secure. Meanwhile, outsourcing customers sought reassurances that their Indian partners could handle future unforeseen events. The terrorist attack in Mumbai—and conflict between Israel and Lebanon for that matter—raise a series of questions for companies sourcing technology globally.
  • Forbes: IBM: Staying Invested In India. By Ruth David. Excerpts: India's stock markets have shrugged off one of the worst terrorist attacks in the country's history. And from all indications, it's business as usual for the many foreign investors that have poured billions of dollars into India and its markets in the past few years. IBM (nyse: IBM - news - people )--the largest multinational corporation in India, which is now Big Blue's second largest base after the U.S.--is no exception. Despite Tuesday's terrorist attacks in Mumbai that killed about 200 people and injured hundreds more, the company is committed to its India investments.
    In the months leading up to Big Blue's latest $6 billion investment in India, Val Rahmani, one of the company's top executives, spent days on end there trying to understand the market and implement strategies to shore up operations. Based in New York City, Rahmani is general manager for infrastructure management services at IBM Global Technology Services. She is responsible for IBM's infrastructure services worldwide and oversaw the company's recent investments in India. [...]
    Forbes: IBM CEO Sam Palmisano recently said the average age of IBM's India employees is 24. What are the implications for IBM about having a workforce that's so young? Are Indian workers eligible for the same benefits as their American colleagues?
    Rahmani: The young employees have seen growth, and they are eager to be a part of it. They think that anything is possible, and they are ready to make things happen. IBM seeks to be competitive in its employee benefits in all countries in which it operates.
  • CNN: Unending nincompoopery. By Molly Ivins. Excerpts: Thomas Frank's "One Market, Under God" is a populist romp over the most delicious idiocies of the past decade. The obligatory subtitle is "Extreme Capitalism, Market Populism and the End of Economic Democracy," which doesn't sound promising, but this is a ring-tailed tooter. The book is a delicious chronicle of the hubris of capitalism in our time, and it contains some of the most savagely funny cultural criticism I have ever come across. [...]
    "Very little of the 'New Economy' is new. What the term describes is not some novel state of human affairs but the final accomplishment of the longstanding agenda of the nation's richest class. ... Once Americans imagined that economic democracy meant a reasonable standard of living for all -- that freedom was only meaningful once poverty and powerlessness had been overcome.
    "Today, American opinion leaders seem generally convinced that democracy and the free market are simply identical. ... What's 'new' is this idea's triumph over all its rivals: the determination of American leaders to extend it to all the world; the general belief among opinion-makers that there is something natural, something divine, something inherently democratic about markets."
    One of his most useful observations concerns why politics in the '90s was so often surreal -- populism got stood on its head. Anyone who questioned the Great God Market was held to be an "elitist." Pointing out that the majority of American workers either lost ground or barely kept up with inflation during the '90s was considered bad form, like belching in church.
    While the likes of Rush Limbaugh and George Gilder raged against "elitists," CEO compensation during the decade went from 85 times more than what average blue-collar employees received in 1990 to 475 times what blue-collar workers received in 1999. Any old populist can rage against the gross maldistribution of wealth; Frank's special contribution is his mordant examination of the cultural snow job that accompanied the redistribution of wealth to the rich. [...]
    We all know why such decisions are made: The political process no longer represents the people -- it represents money. It's been bought. While we were being sold a bill of goods about how the market "empowers" us because we get to choose between the mint-flavored and the cinnamon-flavored toothpaste, thus expressing our individuality, we lost something important in our vision of a just society.
  • New York Times: Left Behind Economics. By Paul Krugman. Excerpts: I’d like to say that there’s a real dialogue taking place about the state of the U.S. economy, but the discussion leaves a lot to be desired. In general, the conversation sounds like this:
    • Bush supporter: “Why doesn’t President Bush get credit for a great economy? I blame liberal media bias.”
    • Informed economist: “But it’s not a great economy for most Americans. Many families are actually losing ground, and only a very few affluent people are doing really well.”
    • Bush supporter: “Why doesn’t President Bush get credit for a great economy? I blame liberal media bias.”
    To a large extent, this dialogue of the deaf reflects Upton Sinclair’s principle: it’s difficult to get a man to understand something when his salary depends on his not understanding it. But there’s also an element of genuine incredulity. Many observers, even if they acknowledge the growing concentration of income in the hands of the few, find it hard to believe that this concentration could be proceeding so rapidly as to deny most Americans any gains from economic growth. [...]
    The answer comes from the economists Thomas Piketty and Emmanuel Saez, whose long-term estimates of income equality have become the gold standard for research on this topic, and who have recently updated their estimates to include 2004. They show that even if you exclude capital gains from a rising stock market, in 2004 the real income of the richest 1 percent of Americans surged by almost 12.5 percent. Meanwhile, the average real income of the bottom 99 percent of the population rose only 1.5 percent. In other words, a relative handful of people received most of the benefits of growth.
    There are a couple of additional revelations in the 2004 data. One is that growth didn’t just bypass the poor and the lower middle class, it bypassed the upper middle class too. Even people at the 95th percentile of the income distribution — that is, people richer than 19 out of 20 Americans — gained only modestly. The big increases went only to people who were already in the economic stratosphere. [...]
    In short, it’s a great economy if you’re a high-level corporate executive or someone who owns a lot of stock. For most other Americans, economic growth is a spectator sport. [...]
    But don’t expect this administration or this Congress to do anything to limit the growing concentration of income. Sometimes I even feel sorry for these people and their apologists, who are prevented from acknowledging that inequality is a problem by both their political philosophy and their dependence on financial support from the wealthy. That leaves them no choice but to keep insisting that ordinary Americans — who have, in fact, been bypassed by economic growth — just don’t understand how well they’re doing.
  • Wall Street Journal: Are You Saving Enough for Retirement? A Guide to Figuring It Out and Funding It. By Jonathan Clements. Excerpt: Corporations are looking to shed their pension liabilities. Guess who's getting stuck with the tab? As companies replace traditional defined-benefit pensions with 401(k) plans, the burden of saving and investing for retirement gets shifted to employees -- and suddenly we're the ones who don't have enough money set aside to see us through our retirement years. So what's your personal liability and how can you trim it? Brace yourself: We're in for some scary math.
  • New York Times: New House Majority Leader Keeps Old Ties to Lobbyists. By Mike McIntyre. Excerpts: Representative John A. Boehner won the job of House majority leader amid a post-Abramoff clamor for an overhaul of lobbying and ethics rules. But nearly six months later, the changes are still tied up in Congress. And far from trying to put the brakes on lobbyists and the money they channel into Republican coffers, Mr. Boehner, who has portrayed his ties to Washington lobbyists as something to be proud of, has stepped on the gas. He has been holding fund-raisers at lobbyists’ offices, flying to political events on corporate planes and staying at a golf resort with a business group that has a direct stake in issues before Congress. [...]
    In addition, his campaign committees recently hired two people from lobbying groups for the financial and insurance industries, reflecting a continued revolving-door relationship between leadership offices on Capitol Hill and interest groups with stakes in legislation. One of the two recently hired, Amy Hobart, worked for Mr. Boehner before becoming political affairs manager at the Bond Market Association. The group has contributed $50,000 to Mr. Boehner and lobbied for legislation he sponsored that would loosen investment restrictions on pension fund managers. [...]
    A review of Mr. Boehner’s recent contributors finds a “who’s who” of Washington special interests, many with issues before Congress. The Indian tribes have fought to keep gambling legislation from affecting their casinos. Investment companies that have contributed tens of thousands of dollars have a stake in legislation to update the pension system.

News and Opinion Concerning Health Savings Accounts, Medical Costs and Health Care Reform
  • BusinessWeek: The Best Medical Care In The U.S. How Veterans Affairs transformed itself -- and what it means for the rest of us. Excerpts: Every day some 1,400 patients pass through the Buffalo VA's unprepossessing entrance, into what many might assume is a hellish health-care world, understaffed, underfunded, and uncaring. They couldn't be more wrong. According to the nation's hospital-accreditation panel, the VA outpaces every other hospital in the Buffalo region. "The care here is excellent," says Roemer. "I couldn't be happier, and my friends in the POW group I belong to all feel the same."
    LOWER COSTS, HIGHER QUALITY. Roemer seems to have stepped through the looking glass into an alternative universe, one where a nationwide health system that is run and financed by the federal government provides the best medical care in America. But it's true -- if you want to be sure of top-notch care, join the military. The 154 hospitals and 875 clinics run by the Veterans Affairs Dept. have been ranked best-in-class by a number of independent groups on a broad range of measures, from chronic care to heart disease treatment to percentage of members who receive flu shots. It offers all the same services, and sometimes more, than private sector providers.
    According to a Rand Corp. study, the VA system provides two-thirds of the care recommended by such standards bodies as the Agency for Healthcare Research & Quality. Far from perfect, granted -- but the nation's private-sector hospitals provide only 50%. And while studies show that 3% to 8% of the nation's prescriptions are filled erroneously, the VA's prescription accuracy rate is greater than 99.997%, a level most hospitals only dream about. That's largely because the VA has by far the most advanced computerized medical-records system in the U.S. And for the past six years the VA has outranked private-sector hospitals on patient satisfaction in an annual consumer survey conducted by the National Quality Research Center at the University of Michigan. This keeps happening despite the fact that the VA spends an average of $5,000 per patient, vs. the national average of $6,300. [...]
    MIGHTY FORCE FOR CHANGE The VA's radical overhaul has caught the attention of health-care policy wonks, who have in turn sung the system's praises in prestigious medical journals. Last year the Canadian journal HealthcarePapers devoted an entire issue to the lessons other systems can take from the VA's transformation.
    The biggest lesson? A nationwide health-care network that gets its funding from a single payer can institute mighty changes. Proponents of national health-care reform extrapolate even further. "The VA proves that you can get better results with an integrated, organized, national health-care system," says Dr. Lucian Leape, a professor at the Harvard School of Public Health and a leading expert on hospital safety. "We will not achieve even close to the level of quality and safety we need [in the U.S.] as long as we have individual practitioners and hospitals doing individual things."
    The VA is, in many ways, the exact opposite of America's fragmented private-sector system, where doctors work for hospitals as independent contractors, and third-party insurers pay the bills as they see fit. By far the largest health-care network in the U.S., the VA serves 5.4 million patients -- double the number it treated 10 years ago. Most veterans are eligible for free or low-cost care, paid for out of the federal budget. The 2006 allocation comes to $35 billion.
  • U.S. Department of Labor: In Brief. Can the Retiree Health Benefits Provided By Your Employer Be Cut? Excerpt: Providing for health care is an important part of retirement. Some employees are fortunate: they belong to employer-provided health care plans that carry over to retirement. However, an important question arises for employees and retirees: How secure are my health care benefits after retirement? Under what circumstances can the company reduce or terminate my health benefits?
    Employees and retirees should know that private-sector employers are not required to promise retiree health benefits. Furthermore, when employers do offer retiree health benefits, nothing in federal law prevents them from cutting or eliminating those benefits--unless they have made a specific promise to maintain the benefits.
  • The National Law Journal: Are Companies Bound by Promises of Lifetime Benefits? Federal courts divided over cuts for retirees. By Pamela A. MacLean. Excerpts: Since 1991, the number of retirees offered health benefits by the nation's largest companies plummeted from 80 percent in 1991 to 56 percent by 2003, and some union retirees promised lifetime medical benefits have learned that lifetime only means "until revoked."
    Across the country in contract disputes and bankruptcy filings, federal courts have been pulled into the wrangling over how promises of lifetime benefits can be broken, or whether they existed at all. And the courts have not been uniform in their answers. Some predict that the U.S. Supreme Court will eventually have to step in to smooth out the wrinkles. [...]
    Current industry conditions are a far cry from the attitude prevalent in 1971, when then-President Richard Nixon said, "even one worker whose retirement security is destroyed by the termination of a plan is one too many." [...]
    In 1974 Congress created the Employee Retirement Income Security Act to establish fiduciary standards to protect retiree pensions and other benefits. Although pensions were vested under the law and difficult to alter, health benefits were not and could be changed more readily. The 7th Circuit has one of the toughest standards for retirees attempting to block loss of benefits. The court has said that a company had to have misled plan participants about the terms in order to have breached its fiduciary obligation.
  • Physicians for a National Health Program: A Telephone Worker Responds to Andy Stern on Single Payer Health Care. By John Horgan. Excerpts: It was obvious that President Stern is as troubled about the out of control costs of health insurance as any American. It was also obvious President Stern has no constructive solution. He spoke of the health care crisis in America without offering a single constructive idea as to how this crisis can be addressed. Instead he blames politicians and business for their lack of leadership on this issue. He also belittles the concept of a single-payer system while complaining that American business can’t compete with countries that have single-payer systems.
    First to address the question of why business leaders are not out in the street demanding health insurance reform after the tax breaks, the cost shifting, and the gutting of the health-care plans, the business of American business is simply business. The American workers are out on the streets, but American business is out of the country. In President Sterns’ labor pool you can’t janitor, doctor, or nurse etc…from out of the country. He represents a service based membership that works inside the U.S. in jobs that don’t compete in the global market. The car industry, as well as many other industries, competes globally. What is the major difference between a G.M. worker in Canada and one in the U.S.? The benefit cost of health insurance.
    Now to answer the question why is health insurance so expensive? Let’s start with the big ticket item of administrative costs… 39% of every dollar in this private employer-based model of health insurance goes to administrative costs. This model leaves 45 million uninsured, millions more underinsured and is also a cost driver of the insurance premium.

New on the Alliance@IBM Site:
  • AFL-CIO: 1,500 Workers Take Fight for Union Rights to NLRB’s Front Door. that resonated from civil rights marches in the 1960s, nine union and religious leaders, backed by some 1,500 chanting workers, locked arms and blocked streets at the National Labor Relations Board (NLRB) headquarters in downtown Washington, D.C., for nearly half an hour today at the height of the lunch hour. Chanting, “We’re Union, Get Used to It!” and “Labor Board, You Ain’t Right, You Ain’t Gonna Take Our Rights,” workers from a gamut of unions protested the Bush-appointed NLRB’s failure to do its job and protect workers’ rights. In recent months, the labor board has systematically taken away workers’ rights and is poised to bar millions more workers from belonging to a union.
  • From the Job Cuts Status & Comments page
    • Comment 7/13/06: AP Story: "Intel to slash 1,000 management jobs". IBM used to like to benchmark itself (or collude, I'm not sure which) with other technology companies and tell us that our benefits are getting cut because it will bring them down to the level of benefits in other companies. I wonder how enthusiastic IBM managers will be about benchmarking against other technology companies when the issue is managerial jobs. I'm guessing they'll have a double standard and conclude that benchmarking only applies to non-managers. -Anonymous-
    • Comment 7/13/06: I was told July 11th that my services at IBM were no longer needed. I have the choice of taking a limited something-or-other package, or if I refuse the package, it won't be offered again and it was implied I would be terminated within six months.
      I'm over 50 and have 23 years of service with IBM. Last year I got my first 3 rating from a "new" manager with no previous management experience. My new manager has been "riding my butt" since he started this year. I'm really sad. I thought if I worked hard at IBM I'd have a career and a retirement. My previous manager, the one who gave me the 3 rating, also forced out an older lady in my department with the same tactics. Too much work and micro-management of deliveries. I've interviewed for a couple jobs but as soon as they hear I have a 3 rating the room turns cold. Best wishes for IBM employees still working at IBM. When you get "the talk" try not to take it personal. I think IBM just wants to eliminate the older, higher paid workers. -Anonymous-
    • Comment 7/14/06: I was laid off after 22 years and hired back on several months later as a long term supplemental (LTS). I'm also collecting an annual pension, although it's about 1/3 what I would have gotten if I could have made it to 30 yrs. My boss(es) keep telling me they're pushing to get me hired (one even promised I would be rehired in writing, but he later he went to Lenovo, so that note is worthless)...but there never seems to be any success. Something always seems to come up, it stalls, "timing's not right," etc. Does anyone out there know of a LTS who was collecting a pension who actually made it back in? Or is there a big red "S" on our personnel jacket and the unwritten policy is to "keep 'em out?" -Anonymous-
  • From the General Visitor's Comment page:
    • Comment 7/12/06: I was part of the Qualxserv transition. I had 22years in IBM and was actively looking within IBM for another position since Dec 05. I was rated a 2 for almost my entire career. However, my manager rated me a 3 this time and said that if I didn't improve I could possibly be fired. This rating change took place shortly after I told my boss that I could not work a 3 month project working 3rd shift due to my family obligations. They ended up finding someone else to do their 3rd shift project but I had to backfill in the other persons schedule.
      They (the job could have been backfilled by the normal back up for that area but they decided to pick on me)!!I called HR and put in a complaint. It was on the books. Then, come rating time, I'm all of a sudden rated a 3 without any notification. I was told that I wasn't a contributor to my team and so on and so forth.
      I Opened Doored my boss and was able to have the rating changed back to a 2. I tried to pursue the other opened position within IBM because of fear that the manager involved would retaliate against me. I was told that there was a hiring freeze as of 2-15-06. I was then told that I was a part of the group going to Qualxserv a month before it was to take place. Also, they said that if I didn't take the job, that I would be considered as quitting and no severance pay would be given.
      I was at Qualxserv for 12 days before I had another offer from another company. By they way, making more then IBM would ever pay. I can't believe that I dedicated myself to IBM for 22years and they treat you like that!!! BIG BAD BLUE stinks!! -Anonymous-
    • Comment 7/14/06: I talked to a friend yesterday who finished facilitating the outsourcing of his job to Brazil. He was commenting on the treatment of the Brazilian employees who traveled to the US to train. His comment was to the effect that the Brazilians were working 70 hours a week on the project but when they tried to claim it IBM wouldn't permit it. I guess they didn't want the number of hours the Brazilians were spending to reflect badly on the outsourcing effort. I was involved in a previous outsourcing effort where a manager (brave of him) tried to get American wages for the Brazilians when they were here and was promptly smacked down for his efforts. The lesson here is "you can't trust a company that lies". The funny part (depends on how you look at it) is that IBM is tranferring sensitive data and jobs to countries that are notorious for theft of data and political instablity. The chickens will come home to roost eventually. -Anonymous-
    • Comment 7/14/06: Intel is laying off 1000 managers to improve efficiency. IBM should do the same...except IBM should lay off 5000 managers. When is IBM going to wake up and realize that it's BLOATED with middle managers who are doing nothing but creating meaningless work? This is particularly true in IGS AMS where process and bureacracy has taken on a life of its own and has become more significant than the product or application being developed. IGS AMS is full of non-producing management types. -Anonymous-
    • Comment 7/14/06: Does anyone keep track of the IBM stock price? If not, you should. $73.57 today and on its way down to $50. I am just wondering when the Shareholders will ask for Palmisano's head. Way to go Palmisano!! -IBMer-
  • From the Pension Comments page
    • Comments 07/08/06: Regarding all of the comments about benefits management being farmed out, they are true. As a former employee whose job went to China, I can tell you that every time I contact them via telephone I receive incorrect information. Of course I don't find out until much later that this is the case. My advice, ask for everything in writing or insist on speaking with a manager or supervisor. Simply accepting the response from whomever you reach on the telephone is risky! -Anonymous-
    • Comments 07/10/06: To get the true impact of the IBM pension cuts you need to take the net loss modeled in the new tool on realistic numbers (the performance pay numbers in the model are too high, but the others are OK), multiply that by the annuity multiplier (10.n) and then divide by the number of years until the retirement age you selected. This gives you the amount of money you must put into your 401K and then convert to an annuity at retirement to come out even. For most of the cases I've seen the number is about $5,000 per year which means that IBM is saving about $5K per year per senior employee and the senior employees just got a $5K per year salary reduction. Add to that the shifting of the burden of risk and you could make a good case that IBM has reduced the salaries of its senior employees by close to $10,000 per year. -Anonymous-
  • From the IBM employees on employee raises page:
    • Comment 7/09/06: We sell multi-million dollar premium products and services and back them up with sub-minimum wage employees. How many of our customers find that acceptable long run? Does Sam go to a high dollar restaurant and accept a minimum wage chef? Or buy a new car and approve of the-lowest-wage-mechanics-available to keep it in tune? Does he go to low cost doctors here in the US on H-1B visas? -Anonymous-
    • Comment 7/11/06: The problem with the 80% work done by 20% of the people "rule" is that most managers are too stupid to recognize what constitutes a TRUE "top performer". For example, the programmer whose code runs flawlessly 24/7 never shows up on anyone's radar. However, the one whose code keeps breaking and always has to be called in off-shift to fix it is perceived as a "hero" because he makes a point of telling everyone how "hard" he works. The old sayings still apply and are probably the basis for many underserved raises and promotions" 1) If you can't dazzle them with brillance, baffle them with BS. 2) Screw up, move up. Sounds like our executive management, right? -Anonymous-
    • Comment 7/11/06: No pay increase in 2006. Reduced variable pay. Reason given -- did not contribute as much as my peers. The reason for the reduced contribution -- spent 10 months in 2005 recovering from an on the job accident in an IBM office. My boss tells me my settlement from the injury will make up for the lack of a raise. Isn't that lovely? -Crippled for life-
    • Comment 7/12/06: In Australia I just got 2% for an excellent PBC rating, but that was my first 'raise' in 4 years. This year I experienced less erosion in my packages than previous years. IBM is just not keeping up with inflation. Time to start looking elsewhere! -Anonymous-
    • Comment 7/13/06: Well, I haven't had a raise since I took the 1993 retirement package. I was sickened by all the BS that was passed around about the great job Gerstner was doing/did. Now Sammy got a 29% raise - I am about to puke. It's too bad that one group of people get all the rewards that so many of the real workers have been forced to earn. I was once proud to be an IBMer but I am now ashamed to acknowledge it. One day I hope all these fat-asses have to wonder where the mortgage payment is going to come from since there isn't any money in the larder. Most chances I get, IBM gets a bad rap from me. -B A-
    • Comment 7/13/06: After reading all the post. I thought 5% was bad. Guess I am lucky enough to get a 5% raise. Its about time to start my own business. -Worker Bee-

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:
  • "Couple of reasons" by "CandorSense". Full excerpt: I stay because: 1. There are "people" here I have a great deal of respect for and to whom I have loyalty. 2. I believe IBM can get its act together, I still have hope for that. 3. I am think most firms will be pretty much the same, the grass is not always greener elsewhere. 4. I enjoy most aspects of my work and I am in group with some very sharp people who are more than co-workers, they are friends and family.
    Now, understand that I think IBM has serious issues, not the least of which is a lack of intelligent strategy. I also think we have grown morbidly fat in the middle and a shake-out is unavoidabe. I will also offer that every year that goes by as things get worse and not better, I lose a little more hope and contemplate leaving. When those I look-up to and have loyalty to begin to leave, there will be little to keep me here.
    Lastly, remember that criticism and dissent is not akin to disloyalty (the common rank of Bush Junior) but often a genuine effort to advocate change. It's healthy for any ogranization to hear both the good, and the bad.
  • "Where to start?" by "wonderaboutibm". Full excerpt: We involved posters on this board are really incurable optimists, who are being continually dismayed by the plodding, unimaginative, self-serving (and some would even say kleptomaniacal) management of this corporation. This place has a rich history, fabulous assets, and many great people -- but we see it all being frittered away, slowly but surely, and almost underneath the radar. IBM has truly lost its way.
    A few years ago, I rebuffed all job feelers from outside IBM, but no longer. In Reagan's words, we could be the shining house on the hill, but instead we are turning into the shack at the bottom of the gully.
    This is not a detail post -- but look at many, many other entries on this board and you will be overwhelmed by the detail. I stay at IBM because I basically like my work and I have not yet found a suitable alternative, but I know there is great stuff out there and the grass is greener on the other side.
  • "Why I stay" by "Frank_Reality". Full excerpt: I enjoy my job, my coworkers and my customers. I do my job well. At my age, the odds of getting a better job are slim and none due to rampant age discrimination in the industry. I would have to move where the jobs are available. Living in a major metro is not appealing. Any such job would likely require much travel. I like my current situation.
    I make enough money (although nowhere what Dose of Reality makes), but more would be helpful but not critical. I'm not quite financially able to retire yet. Soon, though. I think that people coming into IBM ought to hear what it's really like - stuff they'd never hear from the IBM HR spin-masters. Every complaint here lets off a great deal of frustration - it is better to release it here than to let it blow up at work.
  • "About IBM Sales" by "wonderaboutibm". Full excerpt:
    1. They promise the sun, the moon, and the stars.
    2. There is no penalty for promising the sun, the moon, and the stars, since post-sale, the salesmen are usually long gone and cannot even be located (a notorious problem in SO, for example.) Or they are somehow otherwise protected.
    3. Therefore, our salesmen are incented to sing and dance the unprofessional "sun, moon, and stars" vaudville routine.
    4. Delivery organizations are left holding the bag, and as Cringley has written, these delivery organizations thus underdeliver to squeeze out a mythical "profit."
    This all feeds in to the downward spiral we have been discussing on this toxic board. By the way, toxicity often is a function of the environment.
  • "I've been staying out of this one" by "Dose of reality". Excerpts: As far as salesmen go, you can't live with them and you can't live without them. They are not inherently bad, just like tech-heads are not inherently bad. Like any other component of a business enterprise, they have to be used properly and incented to do the things that move the corporation in the right direction.
    I would have to put salesforce management in the top 5 issues that we have here. They are given free reign to close deals and walk away with a bundle of money with no respnsiblity for delivery, no recourse, and woefully insufficient checks and balances from the "operations" side of the business on feasibility.
    It's just another part of the fiefdom set up to enrich the anointed few, fully supported by SP and company, since top line growth is such an important metric. But, like they do with cost compression, they analyze it and optimize it in short term isolation with little regard for the broader long term implications. It is all about living to fight another day – not for the company, but for it’s stooge insiders.
  • "Hit the nail on the head" by "mogrits". Full excerpt: Before I left IBM, I was a Client Exec. for many years. Your point is exactly one of the reasons I left as I was spending the majority of my time either protecting the customer FROM IBM or trying to fix IBM screwups. The sad thing is that IBM did have the capability to really get it right 98% of the time but there was no incentive anymore to do this. Nor are there the personnel in-house any longer to make it happen. Too many of us simply got tired of making excuses for IBM and yes, I had to leave after I felt that I could no longer wear the IBM logo proudly. I never thought the company would fall so far, so fast. I can't list the number of my good customers who told me they just couldn't jusify business with us any longer due to the quality of our overall solutions and delivery thereof.
  • "Meager at best" by "Dose of reality". Full excerpt: Average raise less than 3% - many average performers get nothing. Bonus is about the same. Forget about the 12 - 15% targets they mentioned during the recruiting process - no one ever gets them, because they are contingent on divisional profitability, and the targets are set at unreachable levels.
    I hope you know what you are getting yourself into here. This is not your father's IBM. Spend some time reading this forum if you want to get an appreciation for the culture, environment and career opportunities here.
  • "It is not too late!" by "no_longer_blue_or_bitter". Full excerpt: RUN AWAY! Take that offer letter and spread it out on a table in front of you. Sprinkle on top of it all of your hopes, aspirations, career goals, ambitions and expected challenges. Then, take a good look at it. You now have two choices:
    1. You can lift up the offer letter and watch all your dreams fall to the floor as you accept being an IBM employee. Good luck, and as Dose said, you'll be back in less than a year to this board as a wiser, disgruntled IBM'er; or,
    2. Roll that offer letter with everything inside into a long tube. Light a match and inhale everything back into your body. Watch that offer letter burn. Feel the overwhelming pleasure of freedom and accomplishment. Regain your attitude and competence. Run away from IBM and enjoy your career.
    You are standing at the crossroads. Make the right choice!
  • "Appreciating technical competence" by "phooey69". Full excerpt: To be fair, there are parts of IBM where technical competence is definitely a priority. Even in much-maligned IGS, there are various departments where technical skill is highly valued. Unfortunately, over the past few years, the recognition and appreciation of technical skill has drifted. It's one of those things that is very difficult to stop once it has started, because it's dependent on culture.
    In SO where I come from, technical skill is indeed looked upon as a commodity. Over the years, there has been tremendous focus on process and management-related issues. There is seemingly an infinite amount of funding for process studies, project management initiatives, courses studying PM issues, etc.
    However, maintenance and improvement of technical expertise is difficult at best. Management doesn't fund it, either explicitly (via formal training), or implicitly (on-site labs and stuff). In fact, in the part of SO I'm in, management wants to get rid of on-site labs completely...they want nothing to do with any hardware or software outside of laptop PCs and standard office applications.
    The end result? There are a lot of people who can talk the talk, but cannot walk the walk, so to speak. "Software Engineers" who have never written a line of code in their lives, but can certainly critique code designs on conference calls. "IT Architects" who have never implemented an application, a server, or a network, but who can definitely tell you how to manage the requirements for such things. How does one recognize technical skill or competence in such an environment?
  • "ditto on this side" by "long2begone". Full excerpt: The only funding for education that appears available is for internal classes. Even short-term I am confused by what this buys other than getting all of the consultants to sound uncertain in an identical manner. I haven't been in a real classroom learning deep technology since my first year with the company (and the customer payed for it then).
    Deep skills are misdefined as narrow skills and shunned for staffing purposes. Shallow skills are misdefined as broad and then staffed full lifecycle on projects where they have the potential to handicap a project long-term.
    IT Architects who were never involved in implementations are a great example of this issue. They're long gone if the project goes critical and, if it doesn't go critical, nobody questions why we couldn't make the NFRs with the spec'ed hardware/software. I think that the adage "what you can't do, teach" is twisted for IBM where it is instead "what you can't implement, architect".
  • "post of the day" by "Old_Paradigm". Full excerpt: "The only funding for education that appears available is for internal classes. Even short-term I am confused by what this buys other than getting all of the consultants to sound uncertain in an identical manner." Scrumptous.
  • "Advice" by "Dose of reality". Full excerpt: Counter offers can be handled one of two ways, depending on your particular situation and our need. In general we will take a hard line, since it is more important to the recruiting organization that we minimize cost than get better resources. You are seen as a commodity - if we have a need for 10 people that fit your profile, and get more than 10 acceptances that meet the basic requirements, we won't negotiate with anyone. We don't differentiate salary based on perceived value - we calibrate an offer up front based on your current base (or our asigned value at entry level), and that's the end of the story.
    If, on the other hand we need 10 people and have fewer viable candidates, we may increase the offer a bit. It all depends on the acute project needs that we have. We only higher for imminent project needs, and not to “stock the shelves”. Obviously, the problem is that you will never know which category you are in – surplus or deficit.
    Don’t expect a response any time soon in either case. Recruiters here are not rewarded based on timeliness, and they are notoriously lazy and inefficient. Getting an exception processed has a lot of red tape.
    Unless you are desperate for a job, my recommendation is to decide on what your minimum required salary is (in light of all the cultural and HR issues here), and give them an ultimatum. Unfortunately, if you are worried about sounding desperate, you probably are, and will certainly come across that way. Frankly, you have very little to lose. However, don’t stop your job search.

Modern-Day Robber Baron Corner
Today's highly compensated executives face many difficulties, including figuring out how they can possibly spend all of the rich rewards they've earned on the backs of ordinary workers. Take a look at the insider trading of many of our IBM executives—spending the cash from all that stock "acquired at $0 per share" must be a real challenge! Or, imagine the difficulty IBM CEO Sam Palmisano will face spending his $10,000 a day pension when he retires!
As a way of helping out our beleaguered, modern-day robber barons we will periodically feature "spending opportunities" that the "upper crust" of our society may want to take advantage of!
  • USA Today: CEOs shell out nearly 6 figures to secure the perfect nanny. By Del Jones. Excerpts: A single employee's resignation disrupted the life of Boston Beer Chairman Jim Koch. It wasn't the CEO. It wasn't the chief financial officer. Rather, it was the nanny of his daughters, ages 8 and 10. Tom First understands. He's the founder of Nantucket Nectars, a company he sold in 2001 that is now a $100 million division of British food giant Cadbury Schweppes. Jessica Glenn, 25, is nanny to his children, 2 and 6. [...]
    Millions of families face upheaval caused by child care issues. Rich, poor and the middle-class dream of Mary Poppins or Mrs. Doubtfire. Few find the dream nanny, but just about everyone experiences a child care nightmare at one time or another. CEOs are no exception. They are not insulated from a nanny gone sour, and their combination of anxiety and wealth is driving annual salaries of the best-paid nannies toward $100,000. [...]
    Salaries of top nannies aren't the only thing being driven by the CEO search. Those at the high end also get benefits such as health insurance, meals at fine restaurants, country club passes, cars with free gasoline, education stipends, cellphones, working trips aboard corporate jets to places like Hawaii and personal trips compliments of the CEO's frequent-flier miles. All that, plus room and board in a mansion, can make leaving the profession a lifestyle decision.
"The test of our progress is not whether we add more to the abundance of those who have too much; it is whether we provide enough for those who have too little." — Franklin D. Roosevelt
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