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    Highlights—July 29, 2006

  • The Register (United Kingdom): Americans take the office with them on holiday. Sun screen? Passport? Laptop? Oh for God's sake... By John Oates. Excerpts: Pity the Yanks - they already get fewer days off than the rest of us and a new survey reveals they are still spending much of their meagre holidays working. A survey of 1,500 people for the Travel Industry Association found 24 per cent of respondents pack their laptops when they go on holiday.
    A sad nine per cent take laptops on holiday because they feel they have to be in touch with the office. Even more disturbing - 10 per cent do so because they like to stay in touch with the office. Some 18 per cent use the internet while away to stay in touch with family and friends.
    A separate survey carried out last month found 43 per cent of US office workers saying they work on vacation - double the number who said the same in 1995. One in four staff work for more than three hours a day while on holiday. The average US citizen gets 13 days off a year, compared to 42 for Italians.
  • Washington Post: SEC Requiring More Pay Disclosure. By Marcy Gordon. Excerpts: Companies will have to disclose their executives' pay and perks in greater detail under an overhaul of reporting rules approved Wednesday. Included are new rules on disclosure of the dating of stock option grants to executives, as a scandal spreads through corporate America over suspect timing of option awards.
    For the first time, public companies will be required to furnish tables in annual filings showing the total yearly compensation for their chief executive officers, chief financial officers and the next three highest-paid executives. Most of the disclosures, in annual reports and other regulatory filings, will have to be written in plain English. The plan is designed to enhance corporate accountability and address an issue that has angered company shareholders and the public.
  • Baseline, the Project Management Center: Study: Tech CEO Pay Doesn't Match Performance. By Todd Spangler. Excerpts: An analysis of the 100 largest technology companies finds that those with the highest-paid CEOs in 2005 had the worst returns. In the recent study, DolmatConnell & Partners, an executive compensation consulting firm based in Waltham, Mass., found there was an inverse correlation between tech CEO pay and shareholder returns over a one-year period. Companies analyzed in the study included Cisco Systems, Dell, EMC, Google, Hewlett-Packard, IBM, Microsoft and Oracle, as well as telecommunications providers, technology services companies and products distributors. [...]
    Dolmat-Connell declines to cite specific examples of highly paid CEOs whose companies underperformed. "We don't know exactly the reason why a company does things," says Dolmat-Connell. "A company may be in the midst of a major business transition--we don't know the intricacies of the situation to know whether [a compensation package] was right or wrong."
    But IBM, as an example, corroborates the study's findings. According to Baseline's analysis of the 100 tech companies in the DolmatConnell study, IBM is in the bottom third, as its stock price declined 15% in 2005. Meanwhile, CEO Sam Palmisano is one of the highest-paid executives in the industry, with direct compensation last year totaling $12.4 million--including a $5.2 million bonus--according to regulatory filings. In IBM's 2005 proxy statement, the company's compensation committee says it "believes that the total value of Mr. Palmisano's compensation is appropriate compared to chairmen/CEOs of the company's large, complex global competitors." It also notes that his 2005 compensation included a $4.2 million payout from IBM's 2003-2005 long-term incentive program, "based on the company's cumulative financial results over that three-year period."
  • Associated Press, courtesy of Forbes: Key IBM Growth Engine Appears to Sputter. By Brian Bergstein. Excerpts: A growth engine in IBM Corp. appears to be sputtering, illustrating the challenges with the company's broader strategy of enticing businesses to let Big Blue take over vital operations from designing products to handling payroll and customer service. The unit in question is a research-and-design team for hire known as Engineering and Technology Services, or E&TS. [...]
    Annex Research analyst Bob Djurdjevic said he suspects E&TS's problem is that it arose almost accidentally, when customers sought out IBM for help on design problems. Now it is shifting into a more traditional consulting business that finds it harder to sell itself rather than just fill orders. IBM's claim of "'organizational reasons' is a euphemism for 'we took our eyes off the ball,'" he said.
  • CFO.com: Lawmaker Raps Pension Proposals. A leading Democratic Congressman asserts that the private pension system would be better off if Congress did nothing. By Stephen Taub and David M. Katz. Excerpts: All three of the proposals now being considered by Republican lawmakers to change federal pension laws would actually worsen the pension crisis, according to an analysis provided by the Pension Benefit (PBGC) Guaranty Corp. and released by Rep. George Miller, a California Democrat. [...]
    But a simulation model produced by PBGC estimating the defined-benefit pension insurer's exposure over set time periods suggests that all the proposals currently being mulled would actually cut the contributions that companies must pay into their pension plans and increase the PBGC's deficit, according to a press release issued by Miller, the ranking Democrat on the House Committee on Education and the Workforce. [...]
    For his part, Miller contends that the current legislative proposals would encourage companies to dump their defined-benefit pension plans faster. By increasing pension levels of underfunding, the provisions under discussion would put more Americans' pension benefits at risk and encourage more companies to drop their traditional pension plans altogether. Miller asserted that the PBGC analysis shows that the private pension system would be better off if Congress did nothing than it would be if Congress adopted one of the pension proposals now under discussion.
  • Seattle Post-Intelligencer: Pension Reform: Just go home. Excerpts: Congress is nearing its summer recess. There are two ways of looking at this: The first is that we hired this bunch of yahoos to work for the people and there are still chores to do. On the other hand, it can also be argued that the sooner this bunch leaves Washington, D.C., the better. [...]
    But is nothing better than something? "If Congress simply made no changes to the law, then U.S. companies would be required to pay $1.24 trillion into their pension plans over the next 10 years, and the PBGC's deficit would increase by an estimated $12.8 billion over the same time period," Rep. George Miller, D-Calif., ranking minority member of the House committee, said this week. That compares with several evolving GOP plans that could decrease employer contributions when companies dump their plan on the pension agency.
  • WashTech: Why is Barclays Abusing the H-1B Program? Offshoring/Inshoring: That's Free-Trade, Folks! Commentary by Roberta L. Wilson. Excerpts: Feeling displaced and disposable? The IT sector, once the canary in the mineshaft in terms of outsourcing, offshoring, and inshoring, has been joined by other service sector jobs, including financial analysis positions at Barclays Global Investors and elsewhere. Meanwhile, the economic globalization of jobs, from entry-level manufacturing jobs to high-end research jobs, continues unabated by corporations and supported by free-trade policies, most recently efforts by the new Democrats, as well as Republicans.
    Congress is currently rewriting the Senate's immigration bill, which includes raising and, in effect, eliminating the caps on H1-B visa approvals, now set at 65,000. H1-B visas and L1 visas were purportedly created to allow corporations to bring in foreign workers for technical and professional jobs in which there is a shortage of domestic workers. Some Democrats are taking leadership roles to ensure that the proposed H1-B increases are maintained in whatever immigration bill Congress passes. [...]
    These are among a group of Democrats called New Democrats, who claim that workers of all political stripes like free trade, an important conclusion to come to if you are in the party that pushed through NAFTA (Clinton 1993). The only problem with it, according to the study linked below, is that we shouldn't leave American workers behind. Yes, well, you can't have both because the point of these free-trade agreements is to find the cheapest labor. The proposed economic benefit of getting cheaper goods made by workers who have been starved off their land and are now in slave-like labor conditions can confuse domestic workers who have not yet lost their jobs. Does it matter that you could buy cheap clothes if you have no job?
  • BusinessWeek: Big Blue Brainstorm. By By Jessi Hempel. Excerpts: The collective wisdom of crowds depends on your crowd, and IBM has one of the sharpest crowds around. CEO Samuel J. Palmisano knows this, and he wants to leverage it. He is pulling people together for the online equivalent of a town meeting. His hope: The opinions of some 100,000 minds will lead to catalytic innovations so powerful they will transform industries, alter human behavior, and lead to new businesses for IBM. He calls the project an Innovation Jam. [...]
    To prepare those invited to participate, the company built an interactive Web site that includes sound clips, virtual guided tours, and video snippets with background information. The jam went live just past 10 a.m. on Monday, July 24. Two moderators were assigned to four topics: transportation, health, the environment, and finance and commerce. The site initially slowed under the collective weight of thousands of simultaneous log-ins, but then IBM employees began throwing out conversation starters. In one riff, people debated using RFID-tagged bracelets to improve the traveler's experience at the airport. A strand focused on early warning systems for health pandemics. In another, folks weighed in on going to the movies, suggesting sensorial experiences such as seat movements and misting water to accompany their favorite films. This prompted someone to ask: "Will a cinema that sprays water do damage to my hearing aids?"
  • New York Times: House Passes Minimum Wage Increase. By Carl Hulse. Excerpts: The House approved an increase in the federal minimum wage on Saturday, but its future was clouded because Republicans tied the pay change to an estate tax cut that had been blocked in the Senate. [...]
    The maneuver to couple the minimum wage increase long sought by Democrats and moderate Republicans and the estate tax change backed by conservatives left some Republicans uneasy and Democrats fuming. Opponents of the bill said the estate tax change and other tax breaks included in the $310 billion bill could kill it. They accused Republicans of a cynical ploy to make it look as though they were pushing an increase in the minimum wage when their real intent was to block it. “It’s a political stunt designed to give vulnerable Republicans in tough elections the opportunity to say they voted to raise the minimum wage, even though they know this bill is going nowhere in the Senate,” said Representative Steny H. Hoyer of Maryland, the No. 2 Democrat in the House. [...]
    “The Senate has rejected fiscally irresponsible estate tax giveaways before and will reject them again,” said Senator Harry Reid of Nevada, the Democratic leader, who added that the Republican approach amounted to legislative blackmail. “If the Republicans were serious about raising the minimum wage for the first time in nearly 10 years and extending tax relief for working Americans,” Mr. Reid said, “they would not hold them hostage in their effort to give the wealthiest Americans hundreds of billions more in additional tax giveaways.”
  • Common Dreams: House Leadership Invokes "Martial Law," Forcing Members to Vote On Key Bills Without Full Knowledge of What They're Voting On. Move Represents Erosion of the Democratic Process. Excerpts: The House Republican Leadership has announced its intention to have the House vote, before adjourning on Friday or Saturday, on several major pieces of legislation that are not yet available to House members in final form because behind-closed-door negotiations on the proposals are still going on. The Leadership apparently intends to use a process known as “martial law” to allow these bills to be brought to the floor very shortly after negotiations are completed, with the result that Members of the House are likely to have virtually no time to examine and consider the details of the legislation before they will be required to vote on it.
    Among the matters the House may be asked to vote on under martial law are a major conference report on pension legislation, a costly bill that would permanently reduce the estate tax and extend certain expiring tax provisions, and a bill that would combine a controversial health insurance proposal with an increase in the minimum wage. The House Rules Committee on Thursday afternoon reported a resolution that would provide martial law authority in relation to all of these bills.
    Under the martial law procedure, longstanding House rules that require at least one day between the unveiling of significant legislation and the House floor vote on that legislation — so that Members can learn what they are being asked to vote on — are swept away. Instead, under “martial law,” the Leadership can file legislation with tens or hundreds of pages of fine print and move immediately to debate and votes on it, before Members of Congress, the media, or the public have an opportunity to understand fully what provisions have been altered or inserted into the legislation behind closed doors. This is the procedure that the Leadership intends to use to muscle through important bills in the next two days. [...]
    Legislation that has far-reaching implications for millions of Americans deserves to be considered under a more democratic process. Waiting until the last minute to reveal what is in these bills, and then “spinning” or potentially mischaracterized changes in the bills without Members of the House or the public having an opportunity to obtain a more objective review of what the legislation does, is unfair to Members of the House. It also is unfair to the millions of Americans whose lives could be affected by this legislation. It represents a further step in reducing the degree of transparency and democracy in how this country is governed and how decisions are made. At a time when our leaders preach the goal of promoting democracy abroad, they should not be reducing it at home.
  • Associated Press, courtesy of Tampa Bay Online: House Passes Pension Reform Bill. By Jim Abrams. Excerpts: The House approved an ambitious overhaul of the nation's pension laws late Friday, hoping to prolong the traditional employer-based pension plans relied upon by millions while also promoting new savings options and protecting the government from future taxpayer bailouts. The reforms in the bill "represent the most sweeping changes to America's pension laws in more than 30 years," said House Majority Leader John Boehner, R-Ohio. He said the bill "will ensure that workers and retirees can continue to count on their hard-earned pension benefits." [...]
    Opponents, mainly Democrats, said the bill did too little to prevent employers from eliminating their defined-benefit plans and favored some industries over others. "This tilts the table toward the decisions by companies to terminate or to freeze those plans," said Rep. George Miller, D-Calif. [...]
    It also would give legal certainty to future cash balance and other "hybrid" defined-benefit plans. Such plans have faced lawsuits over charges they discriminate against older workers.
  • Yahoo! message board post by "ibmoptioneer". Full excerpt: According to Businessweek, it was joyfully reported that Pension bill H.R. 4 was passed by the Republican majority in a quick surprise evening vote pushed by Boehner. The vote showed clearly that the party in power wanted it passed, no matter what. Everyone that voted the current party into power in the House should remember that your DB pension, if you lose it, is thanks to Boehner and the Republican party. The dems put up a good fight, but they just didn't have the votes. Now comes the senate vote.
  • Yahoo! message board post by "emmkaytee". Full excerpt: Not surprisingly, the press is falling in line with the liars of the House. I'm cruising through the early morning headlines, and seeing stuff like this (from CBS News): "House passes pension reform bill meant to give retirees greater financial security." Anybody else--other than the CBS execs and their golfing buddies-- feeling more secure now? I'm off to the bookstore to get "Hostile Takeover: How Big Money and Corruption Conquered Our Government--and How We Take It Back". Not that I have much hope...
  • Los Angeles Times: House Pushes Through Pension Reform Bill. The stabilization plan gives airlines leeway but requires other firms to pay their pledges. The vote follows a breach on strategy with the Senate. By Jonathan Peterson. Excerpts: But the House decision to push ahead with a vote came only after an angry breach with the Senate over legislative strategy that raised questions about the pension bill's short-term prospects. If the Senate were to completely accept the House bill, the matter could be resolved in days. Otherwise, the outlook is uncertain. The view from the Senate was hardly enthusiastic.
    "This plan throws months of work in the trash, throws Senate procedure out the door and puts us back at square one," said Sen. Max Baucus (D-Mont.), the senior Democrat on the Senate Finance Committee, who has helped broker bipartisan deals in the past. A Republican Senate staffer, speaking on condition of anonymity because of the political sensitivity of the issue, suggested that chamber would not be eager to rubber-stamp the House bill. Senate members had wanted to include a package of tax measures in the pension deal. "We could take up what they send, amend it and send it back to them," the staffer said. If the Senate follows such a course, lawmakers may have weeks or months of work ahead of them. [...]
    Under the legislation: [...] Companies would get some legal protection enabling them to shift traditional pension plans to an arrangement known as hybrid or cash balance plans, which grow with contributions but promise a specific benefit like the old-style plans. Older workers would get some legal protection of their benefits. IBM and others have been sued by long-tenured workers, whose benefits decreased after such shifts.
  • MarketWatch: Teamsters Oppose Flawed Pension Bill, Fight for Retirement Security. Official Statement Of Teamsters General President James P. Hoffa. Full excerpt: The so-called Pension Reform Act of 2006, H.R. 2830, passed by the House tonight will devastate important retirement security protections for millions of workers in this country and shatter the foundation of our nation's private pension system. The pension crisis in the United States is very real, and this flawed bill will only worsen it. Americans who have worked a lifetime to secure a stable and dignified retirement will have those promises ripped from their hands in the form of a "red zone" provision that allows for a reduction in vested benefits of multi-employer plans. No worker should be forced to live in fear of losing pension benefits they have already earned. [...]
    The 1.4 million hardworking Teamsters and their families will not stand by and allow Congress to give corporate America the green light to dump its retirement obligations to enrich the bottom line. The Teamsters have embarked on one of the largest grass-roots legislative programs in the history of our great union to defeat this bad legislation. We are mobilizing our 1.4 million members to take unprecedented action to stop the destruction of secure retirement in this country.
    This pension bill shows that politicians in Washington have lost sight of the people they represent. I call on every member of Congress to prove their commitment to working families by doing everything they can to defeat this bill. Should Congress pass this anti-worker legislation, the Teamsters Union will not forget those who choose corporations over workers in November's mid- term elections.
  • On Wall Street: Brewing a Tempest in a Teapot. By Stephen P. Utkus. Excerpts: Feeling gloomy about your retirement? Your clients' retirement? Have a sense of impending doom about the state of retirement savings in America and the upcoming retirement of the baby boomers? If so, it's only natural. Everywhere you look, Americans are feeling anxious about retirement. In May, PBS's Frontline reported on the "time bomb" in the impending flood of boomer retirees. One expert recently warned of a calamity on par with the Great Depression. Yikes! As with most national "crises," part of this public gloominess is manufactured. You grab people with provocative opinions, not with dull statistics. And black-and-white is more appealing than shades of grey. [...]
    No doubt, some of the doom and gloom in the media comes from viewing the past through rose-colored glasses. A casual reader might easily conclude that everyone in the "greatest generation" retired after 30 years with a generous Fortune 500 pension. But that's not the case. Private pensions have always covered a minority of retirees, and today, the median private pension payout is only $6,700 a year. That's helpful for low- and middle-income individuals, but it's hardly the generous retirement support that pensions are sometimes imagined to be.
  • The Heritage Foundation: President Bush Should Veto the Pension Bill If It Includes Special Treatment for Airlines. By David John. Excerpt: Pension promises made to workers should be kept and paid for by the companies that made those promises. The airline provisions of H.R. 2830 are bad policy and an even worse precedent. Signing such a provision into law would practically guarantee special treatment for any company or industry that runs into trouble funding its pension plan and has a decent lobbyist. Company after company will bring its workers to Washington, where they will point to the treatment the airlines received and claim that they should receive the same—or even better—treatment. It is hard to imagine Congress having the strength to resist such a plea. The result, in effect, would be to transfer the cost of paying for pensions from companies to the PBGC and, after the inevitable massive bailout of that agency, to the taxpayer.
  • Knowledge@Wharton: Longer Lives and the 'Lump-Sum Illusion' Are Just Two of the Challenges Retiring Baby-Boomers Face. Excerpt: In the United States alone, an unprecedented 77 million baby-boomers will be living the next 20 to 30 years in retirement. With long lives ahead of them -- and without adequate planning -- what are the risks they are facing? According to Olivia Mitchell, Wharton professor of insurance and risk management, and Christopher "Kip" Condron, president and CEO of AXA Financial, the world's largest financial services firm, the rising tide of boomers in the U.S. and around the world needs to meet challenges that previous generations never faced, including changes to key retirement institutions, as well as medical-care cost inflation and the "lump-sum illusion" -- the tendency to view retirement savings as a lump sum, as opposed to a prospective income stream. Knowledge@Wharton spoke with Mitchell and Condron about how the financial services industry is working to meet the needs of this next wave of retirees.
  • Boston College Center for Retirement Research: Will We Have to Work Forever? [PDF] By Alicia H. Munnell, Marric Buessing, Mauricio Soto, and Steven Sass. Excerpts: Today, the average retirement age is 63.1 If people continue to retire at 63, they are going to face a severe decline in living standards at retirement for a number of reasons. First, at any given retirement age, Social Security benefits will replace less of pre-retirement earnings as the Normal Retirement Age rises from 65 to 67. Second, Medicare premiums, which are deducted before the Social Security check goes in the mail, are slated to rise dramatically. Third, taxes on Social Security benefits will also rise. In addition, pension coverage in the private sector has shifted from defined benefit plans, where workers receive a life annuity based on years of service and final salary, to 401(k) plans, where individuals are responsible for their own saving and the median balance for individuals approaching retirement is only $60,000.
News and Opinion Concerning Health Savings Accounts, Medical Costs and Health Care Reform
  • San Francisco Chronicle: Stark offers universal health insurance plan. Employers, states and individuals would share costs. By Edward Epste. Excerpts: Rep. Pete Stark of Fremont, who would play a key role in the national health care debate if Democrats take control of the House in November, announced a plan Tuesday for universal medical insurance for all Americans. Stark, the ranking Democrat on the House Ways and Means health subcommittee, offered a plan that is based on Medicare's payment rates and low-cost administrative structure and a requirement that employers provide coverage for all their workers, even part-timers.
    By offering his far-reaching plan, Stark laid down a marker, letting it be known that he and other advocates of the long-debated idea of universal medical insurance will be key players if Democrats get back the House control they lost in 1994, just as then-President Bill Clinton's sweeping health care proposals went down in flames. [...]
    "The question is whether society will provide coverage for everyone or for just a wealthy few,'' Stark said in announcing his AmeriCare Health Care Act. "Everyone should benefit from this bill, with the exception of the bankruptcy bar and collection agencies,'' said Stark, referring to families who have been driven into financial despair by uninsured medical expenses.
  • New York Times: Drug Makers Pay for Lunch as They Pitch. By Stephanie Saul. Excerpts: Free lunches like those at the medical building in New Hyde Park, N.Y., occur regularly at doctors’ offices nationwide, where delivery people arrive with lunch for the whole office, ordered and paid for by drug makers to the tune of hundreds of millions of dollars a year. Like the “free” vacation that comes with a time-share pitch attached, the lunches go down along with a pitch from pharmaceutical representatives hoping to bolster prescription sales. The cost of the lunches is ultimately factored in to drug company marketing expenses, working its way into the price of prescription drugs. [...]
    A former pharmaceutical representative, Kathleen Slattery-Moschkau, called lunch “incredibly effective” in lifting pharmaceutical sales for the companies where she worked, Bristol-Myers Squibb and Johnson & Johnson. “We got the numbers of what the physicians were prescribing. If I brought in lunch one week, I could see the following week if that lunch had an impact,” Ms. Slattery-Moschkau said. [...]
    In Madras, Ore., meanwhile, a group of internists earlier this year banned not only lunch but also visits by drug representatives. Even in Madras, a rural town of about 5,000, the group got visits from more than 30 drug representatives a month, including two or three lunches. “The complaints that I would get from my patients were, ‘You’re 15 minutes late to see me.’ ” said Dr. David V. Evans, a member of the group. “ ‘O.K., I was back there talking to a drug rep.’ That wasn’t such a good thing.” Dr. Evans added, “It’s an issue of professionalism and integrity, really.”
  • BusinessWeek: A New Twist On Retiree Health Care. Instead of ending coverage, some companies are turning it into a 401(k)-like perk. Excerpt: The nation's pension crisis, it turns out, is only the second-largest long-term liability facing U.S. businesses. Far greater are underfunded health-insurance promises to current and future retirees. The companies that make up the Standard & Poor's 500-stock index are an astonishing $321 billion shy of what they need, according to senior analyst Howard Silverblatt at Standard & Poor's Corp. (which, like BusinessWeek, is owned by The McGraw-Hill Companies (MHP )). By yearend the Financial Accounting Standards Board is likely to require companies to put this liability on their balance sheets, a step that could shrink shareholder equity by as much as 9%.
    Many companies have been trimming those costs by dumping retiree health care entirely. In 1993, 40% of large employers offered such benefits to those over 65. By 2005 just 21% did, says Mercer Human Resources Consulting. But rather than drop benefits altogether, "a lot of clients are saying: 'Let's re-engineer our retiree (health) plans,"' says Edward Kaplan, national health practice leader at consultants Segal Co. A small but growing number of companies are trying one new approach: transforming retiree insurance into a 401(k)-type perk. Instead of promising to pay, say, half of a retiree's premiums, no matter how costly, these companies are setting aside a fixed amount for each pensioner's medical care. After that, retirees are on their own, even if costs top what's in their account.
  • AFL-CIO: Americans Pay a Lot for Health Care, Don’t Get Much in Return. The United States spends more on health care per capita than any other similar country, yet has the largest uninsured population, according to a report by the Economic Policy Institute (EPI). Some 16 percent of the U.S. population, or 45.8 million people, did not have any form of health insurance coverage in 2004. Ireland, Austria and Finland spend about half of what the United States spends, as a percentage of gross domestic product, but cover 99 percent to 100 percent of their populations, the report found. [...]
    Meanwhile, the Employment Benefits Research Institute (EBRI) released an issue brief projecting that a couple age 65 who reach average life expectancy will need $295,000 for retiree health expenses. And that figure, the study says, still may underestimate the amount of money needed to cover such costs.
    As employers increasingly shift the cost of health care to their employees, America’s workers are forced to pay higher premiums, deductibles and co-payments—if they can afford such coverage at all. To pay for soaring health costs and their children’s education, working families are going deeper into debt. A typical middle-income family earning about $45,000 a year saw its debt burden grow by 33.1 percent between 2001 and 2004, even after adjusting for inflation, according to a May report by the Center for American Progress. Debt has expanded by 30.3 percentage points to 108.4 percent of income—the first time that debt exceeded income since the Federal Reserve started conducting the survey.


New on the Alliance@IBM Site:
  • ThinkTwice for Summer 2006 [PDF]. Articles in this edition include:
    • Employees fight force-outs due to medical conditions
    • IBM to invest $6 billion in India. Where is your job going?
    • Study Reveals “Jobless Recovery” in Tech Labor Market, Despite Industry’s Contrary Claims
    • SSR’s Sold Out to Qualxserv
  • AFL-CIO: Bush Denies AFL-CIO China Trade Petition: A ‘Slap in the Face’ to Workers. Excerpts: The Bush administration’s decision today to reject the AFL-CIO petition demanding China’s government stop denying workers their rights is “a slap in the face to Chinese and American workers who expect our government to uphold the law,” AFL-CIO Secretary-Treasurer Richard Trumka says:
    In rejecting this petition, President Bush has shown once again that he is beholden to corporate interests at the expense of working families. It’s a travesty that after five years of failed trade policy that have contributed to the loss of almost three million U.S. manufacturing jobs and a record trade deficit of $726 billion, the Administration continues to take no meaningful action to support America’s workers or stop the abuse of workers in China.
    The AFL-CIO, along with Reps. Ben Cardin (D-Md.) and Chris Smith (R- N.J.), filed a petition June 8 with the U.S. Trade Representative (USTR) charging China’s government systematically denies workers’ basic rights and prevents them from exercising internationally recognized workers’ rights, such as the freedom to form unions. Further, the petition documents how China’s failure to protect workers’ rights is an unfair trade practice that costs U.S. jobs.
  • From the Job Cuts Status & Comments page
    • Comment 7/20/06: Some department members getting "out-take-a-hike'ed" in POK today; exact details still sketchy, firm indications that some LINUX, IMS, and DB2 support folks affected as well. All you can do is pray..... -Anonymous-
    • Comment 7/24/06: IGS AMS in RTP will be the next group to be outsourced to India. -Anonymous-
    • Comment 7/24/06: Something that made me laugh out loud. In a technical conference here in the UK (for the few techies left in the UK), an IBM Exec said: - and I quote: "We are not moving the jobs to India for cheap labour" - 10 mins later, talking about IBM's competitors, including Cap Gemini, they are having trouble reducing cost, some do and some don't have the opportunity to "follow us to the BRIC's to reduce costs"!!! Slight contradiction, and one which tipped me over the edge at which point I left. -Anonymous-
    • Comment 7/25/06: The thing is - I cant understand why we would want to admit to our competitors that we have no strategy beyond BRIC and that we are now inviting 'family and friends' in a WW Jam to layout just that. Its unbelievable to me! Happy to be corrected though. -Anonymous-
    • Comment 7/25/06: Rumor is this years offshoring job losses will be MUCH worse than previous years cuts. -Anonymous-
    • Comment 7/26/06: Rumors of IBM looking to sell RTP sw development facility and move folks back to main site space vacated by Lenova. There are increasing rumors concerns in RTP about potential large job cuts as well based upon moves of SW development to other labs across the world. So could be job cuts and sale of facility that was through a major renovation to thee wonderful work environment of small cubicles, white noise filters and waterfree toilets that aren't properly cleaned. -Anonymous-
    • Comment 7/26/06: IBM General Manager Val Rahmani said, “We're not taking jobs from the U.S. and shifting them to India.” So a US worker trains their replacement in India, then gets fired; if that’s not shifting jobs what is it? Clearly IBM management believes it can make contrary statements to the general public as well as to its employees. -Anonymous-
    • Comment 7/27/06: I work in an IBM office where a new hire orientation takes place. I was recently part of a class that held over 75 people and I watch new loads of employees come in every week. How can these job cuts be so severe if there are so many new people including myself? Perhaps people just aren't performing. -Anonymous- Alliance reply: And perhaps those people getting cut were making too much money in IBM management's view. You should read the rest of this forum and our other forums. We think you'll discover that long-term IBM'ers with talent and experience are being cut away like they were weeds in a garden,.... except that they are the roses.
    • Comment 7/27/06: We've received word that the cost challenge for the division will be 20% this year - about the same day we get a note from our director claiming we know we can't cut our way out of this....fun. odds are 99 to 1 there will be cuts, directly due to moving jobs off-shore, in middleware/websphere jobs by end of the year. -Anonymous-
    • Comment 7/28/06: STG (Austin) is cutting contractors, hardware projects, high-dollar equipment. Surplus engineers are being directed to a job in the field.... -Anonymous-
    • Comment 7/28/06: I heard 360 contractors were let go from STG in Poughkeepsie. Will let you know as I hear more. Likely too they'll spread over July and Aug. to avoid reporting excessive monthly numbers to Labor Dept. -Anonymous-
    • Comment 7/28/06: STG is reassigning 250 workers to lab services. These jobs require substantial travel which may be unacceptable to any worker who cannot travel due to family or personal life. -Anonymous-
    • Comment 7/28/06: Hey U.S. people! It's not going to give you any warm fuzzy's but you are not the only ones. It is happening in many countries and to managers as well as employees. My job (as a manager) got offshored a couple of years ago .. at the time they said there might be a position going I could have .. I tried to follow it up and got no response.. I tried to get other jobs but somehow they just didn’t want someone with my experience (or was it my pay level after 18 years) .. it dragged on for a while until my manager told me that I would be redundant if I didn’t find anything by the end of the week .. with 1 day left the other job miraculously came available.
      I then found that the initial job was to help them offshore some other jobs!! God I wish I'd said no. The manager of that area seems to source people that way, as they are desperate enough to do what he wants, including things that I personally consider unethical. When I didn’t want to do some of the more questionable things, it got nasty.
      Since that time I have had constant pressure to leave. It became quite blatant with my manager even telling me to! My health has been suffering with all sorts of little problems surfacing and then last year I ended up with chest pains .. it was diagnosed as a strained heart caused by hypertension and now I have to take pills every darn day.
      Then there was a redundancy program going on with several hundred people to be laid off and I had had enough so I told my manager I would volunteer to take it .. guess what: I was ignored .. didn’t even get a response until I escalated and then they just said no.
      The low level pressure to leave continues with small things like no communication of expectations, PBCs that go out of date (the PBC system wont allow an employee to update the PBC unless the manager sends it back to them). The thing I find very interesting is the number of people (employees, not managers) that don’t want to know you when you are being targeted like this. Its is a company that pits employee against employee. It's a scary, scared and scarred environment. I used to be an IBM manager, but now it’s a dirty word. -I'm on the pills now too-
    • Comment 7/28/06: POK is terminating hundreds of contractors. I heard that IBMers will go in August. -Anonymous-
  • From the General Visitor's Comment page:
    • Comment 7/24/06: Words of encouragement for IBM'ers still under the torture of IBM management. I went through all the head games, the daily tear down of self worth, the 3 rating, no raises, new manager torture everything you all have been going through. I just want to tell you that there is good life after IBM..There are jobs where people appreciate you, pay you fairly, treat you with respect and honesty. Don't be afraid to leave IBM, you will feel so much better after you do.
      IBM is an evil place and Sam is the dirtiest player in the game. I'm sure someday we will be reading about his upcoming court trial for illegal dealings of some sort. To my old friends in Lexington, MA Rational division. Your skills are needed outside of IBM, people pay premium prices for Rational knowledge. If you know Rational products you will have no problem using Mercury products, there almost identical. Start looking for jobs, get out there and see what's out there..Monster Jobs is a great place to post. Get familiar with Testmanager and Robot as they are still in high demand.
      You are worth a lot out there so don't be afraid. The way you are treated is not right , let the Indians have it..who cares there nothing but slaves if you look at it from this perspective. They think we are stupid, uneducated and are so cocky..they actually think they will be a world power..WRONG..they invent nothing, they cannot complete projects and are so full of crap it is unbelievable....What we have and they will never have is the ability to create, to think outside the box, to be able to do it and do it right. You are the most valuable assets in this country...go sell it to the highest bidder and let IBM fall to the ground..take the power, don't listen to them and know that there is a much better life after IBM..my thoughts and best wishes are with you all.. -Joey-
    • Comment 7/24/06: To the person who wrote on 7/20/6 - Yes, I hear and feel your pain. I was with IBM 7 years-I am now on anti-depressants and a high dose of blood pressure meds. My job went overseas and I left 6/30/6. Best move I made, I never had those problems before IBM, now, I am more relaxed and feel like with a little time, can wean off the meds. I worked with a handful who have the same issue(s), I'm just glad I am no longer there_life is very very much better now. With time and IBM out of my system, I feel like life is going to get better....biggest plus was walking away from IBM. -Anonymous-
    • Comment 7/24/06: IBM is WASTING MONEY in IGS AMS on GRs who can't do the work and processes that are supposed to guide them but FAIL. The business model of PMs in US and techies in India is FAILING. -Anonymous-
    • Comment 7/25/06: In response to Joey's comments below. It is IBM that is in the wrong, not the Indians you are taking it out on. To say that they are uneducated is doing them a disservice; given the number of call center workers with degrees. India has a huge number of skilled workers with plentiful qualifications. Due to India's considerably weaker economic situation and currency these people are cheaper to employ than you or I (I used to work at Rational too). India doesn't force IBM to outsource, just as India doesn't force Wal-Mart to open stores there and wreck the local markets. It's called globalisation, it works both ways, and it ruins peoples lives the world over - just to make the likes of Palmisano richer at our expense. As an ex-Rational employee you should also know that projects go wrong when requirements are poorly defined in the majority of cases, rather than the workers implementing the solution getting it wrong.
      If you think that India won't be an economic power then you are sadly mistaken, I'm afraid. India's economy is growing at breakneck speed. They have a huge youth population and a growing middle class (consumers galore). At their current economic stage they are concentrating on doing things cheaper than Western firms. When this gets saturated and they get richer they will begin to invent more. Then they will lead on cutting edge technology. This is not going to happen overnight but remember Japan post-war? Familiar story, only India has started from a poorer background. Don't take it out on the Indians, they are only taking advantage of the market opportunity - this is capitalism. We've been doing it to them for decades, don't forget.
      I would agree however that life is better outside IBM. I had the same crap with 3 ratings then 2+ ratings and still no pay raises. I was there for 6 years and didn't see any money - only cuts. I left this year and funnily enough I got a huge bump up, more respect from my boss and best of all - I actually get to see my family after work as I get home before 9pm! Get out or get in the union, it's the only way. -Anonymous-
    • Comment 7/25/06: I must agree with the previous post 'Don't blame the Indian's'. If it was us we would do the same. I believe the end is near for the US workforce at IBM. But I also believe that our people can compete with anyone in the world. In the end our young people will find others types of work that will fulfill them. Co's like IBN will be looking all over the world for the cheap resource. While we find other areas to focus on. They lose in the end. -Anonymous-
    • Comment 7/25/06: In Joey's defense, he was saying that the Indians think we are stupid and uneducated. Some of them impart a "cocky" attitude that gives off that vibe....others keep it in check. But ultimately, I agree that this is not the fault of the Indians but rather the fault of the global market, which is no longer loyal to a country, community, or way of life. There is no loyalty to the American worker. We will slip, and the divide between the top executives and the rest of us will increase. But, they best be careful since that's a recipe for a revolution.... -Anonymous-
    • Comment 7/26/06: To future dues paying members of the Alliance@IBM. I've collected hundreds of pages of IBM internal documents in the last few years, and believe me I fully understand the Fidelity process. FESCo is one of the largest and comprehensive HR/Benefits outsourcing companies in the world. And IBM has been using them for a number of years. FESCo manages NETBENEFITS, Employee Services Center, askHR, and a multitude of other services once held by IBM employees. In fact, many of the FESCo folks still work in RTP. While rumors pass around on this website, there are a few subject matter experts and please if I can help you understand the process, please contact the Alliance@IBM. Fidelity does not manage the HR partners,they are still IBM employees. Keep in mind that the employees services center provides non-binding advice to employees, refer to the Summary Plan Documents vs. listening to what you get from the VRU's (Voice Response Units). Steve Bergeron Alliance@IBM uvm2000@aol.com Governing Council Member - MA
    • Comment 7/27/06: When poison enters the system it takes a certain amount of time before the subject dies . Either they are saved or they die. I leave the rest of the story in your hands -i work for myself-
    • Comment 7/27/06: Interesting comment on unemployment insurance issue. IBM asked me to work one year in KY after 23 years in FL then let me go as I was older. FL and KY and IBM got together and found a way to deny me any unemployment payments. I forget the details, but it was obviously prearranged as they had a very fast answer. One more situation where older people are being chased out. Whatever. -Anonymous-
    • Comment 7/28/06: For the newbie of 75 new hires. You will have no pension. You will rarely meet your medical deductible each year. If you do invest in the Tax Deferred Savings Plan the match by your employer is considerably less than the match they make to long term employees. In other words...you're cheaper labor...but you will discover retirement and compensation won't come easy. Live Long and Prosper young pup. Given the current course American Businesses are on you will be working until your 80's. -New Hiree of Old-
  • From the Pension Comments page
    • Comments 07/26/06: I wonder if managers, especially those at the low end, have figured out that once they retire, they will be subject to the same pension abuses the rest of us have faced. Even if they have “dirt” on the company, the statute of limitations on most such things is 5 to 7 years. After that they are fair game. Lump sum payouts won’t insure benefits such as health, and poor health in retirement can wipe out savings in a hurry, and we’ve all seen health benefits attacked. Plus they won’t have a union to complain to. -Anonymous-
    • Comments 07/26/06: How do we start a class action law suit against the most recent pension plan changes? -Anonymous- Alliance reply: Feel free to contact a law firm willing to take this on. Be aware you have to prove what IBM did was illegal. So far those that have looked at a class action lawsuit have struck out. As we have said many times before if employees had joined the Alliance in mass numbers we could have negotiated this. It was stopped in Germany because they have strong unions and works councils inside IBM. Here in the US employees still refuse to undertake collective action and the price is being paid.
  • IBM employees on employee raises
    • Comment 7/24/06: I would like to say 29% is a fair increase for an industrial vampire, that is sucking the life out of its workers and this company. I have worked for ibm for eight years and its making me sick to my stomach when I see this leeching of the might of every ibm worker around the world. 1% to 2% etc, for most of the long term workers around the world. I think we should turn this percentage into unionised stakes and ram it into the heart of the greedy immoral soul sucking {corp-rat} that is Sam. i would just like to say every dog has his day and one day we will have ours! Regards, one of your workers. -gutted irish worker-
    • Comment 7/25/06: I was given an insulting 3% pay rise for a 1 pbc rating and told I should be grateful as most of my peers were given nothing. I have been with the company for 8 years and because I moved from MD to server and lost half of my shift premium and standard overtime I am now on the same salary I was 5 years ago. In that time my mortgage has increased and utilities have gone up by 40%. I watched the closure of MD with great sadness and saw my job being outsourced to AMKOR. Now I am starting to see alarming similarities in the atmosphere where I work now and the way it was before they shut down. Most of our low end products have been given to China so the writing is on the wall I just wish it was sooner rather than later so I can get my severance package and go on a long vacation and flush the bitterness and disillusion that IBM has instilled in me out of my system. Keep the faith and keep fighting. -Disgruntled Leprechaun-
    • Comment 7/27/06: 2003: PBC rating 1 - no increase. 2004: PBC rating 1 - no increase. 2005: PBC rating 1 - no increase. 2006: PBC rating 2+ equaled a 1.2% increase. After 2003, 2004 and 2005. I could only SHAME them into a 1.2% increase. Then I saw their assumption in their new friggin' Retirement Comparison Tool was 2.75% annually and told my manager that since they assumed this percentage, did that mean my 2006 increase would now be the 2.75%; his answer.. Is this an IQ test or something ? I told him "no" you dumb ass, was telling my "no increase" for the last several years at a 1 rating an IQ test ?.. Needless to say, I pissed him/them off. I don't care anymore. Going to quit soon. This place is a joke. New Employees - beware.. this will be happening to all of you too. JOIN the Union - NOW. It is your only shot at correcting these Executive Bastards. -Anonymous-

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:
  • "Technology vs Process explained again pt 1" by "Dose of reality". Full excerpt: First of all, this is a BCS message board - there's the trump answer to your constant attempts to treat this entire subject on a level that is so generic and broad as to render it absolutely meaningless. I don't give a rat's @$$ if Gates and Ellison want to farm out mindless, soulless, rote application development work to a bunch of resources that are to IT what an assembly line worker was to Henry Ford. It is no more testament to that unnamed country’s prowess in IT, than pirating DVD’s is testament to China’s prowess in the entertainment industry.
    You are about as naïve about this industry as anyone can be if all you can do is talk about a two tier model – MCK/BCG and everyone else. We are supposed to be delivering technology SOLUTIONS – application of tools that address objectives of reducing cost, increasing revenue, or otherwise improving operations. The gaps in understanding of context and process are not only handicaps when it comes to recommending business strategy – it is a major issue in an ERP implementation, CRM solution, web development – anyplace that the user experience meets technology, or anyplace where there are variations across businesses – in short virtually every APPLICATION of IT services. These require synthesis between process and technology, and the most effective model is where both skillsets are present to some extent in the same resource.
    Communication skills are also pretty important. We are simply cheapening the cost and hoping that resources that are overmatched can get lucky. It’s kind of like asking a recent graduate of SQL university to fill a role as an IT Architect. Does that make the analogy more real for you?!
    Who is the “we” in your “Secondly…” paragraph? It seems to me you are mixing indignations – legacy IBM indignation and foreign resource indignation. No wonder you are so irrational about this topic – you are a 2-fer. If IBM had a broad process capability, why did they need to acquire PwC? While there may be a few isolated staff that came up through the functional side, the vast majority of the legacy IBM’ers are technology retreads. Of course, given the attrition the past few years talking about pre-PwC legacy IBM’ers is more or less meaningless. If you were only referring to process capabilities in unnamed country resources, all I can say is “Give me a break”.
    So you are an architect? You are actually a lot closer to a SQL coder than you are to a consultant. I’ll bet you were really good at Jigsaw puzzles when you were a kid? Redundancy, capacity, compatibility, cost effectiveness, monitoring, integration, upgrades, etc.. Not exactly high value work in my book – high stress and high impact, maybe, but the people factor is as far away from what you build as it would be for SQL.
    Tivoli – a lot of back-end plumbing – it is necessary, but as far removed from business process as SQL. The only people factor you need to worry about are the architects and DBA’s – not the business. Your only contact with the latter is that you need to keep the system running. Sure – a tech-head can do it just fine.
    Websphere – a little closer to the real world, and has the same issues that the SQL world does. There is lots of dry development support that never touches a user, and for the components that touch end-user like portals, E-commerce, and wireless, the tech-heads constantly build within a process knowledge vacuum.
    Lotus – POS – enough said.
  • "Profits drift down" by "the arab". Full excerpt: When a company has bloated infrastructure, one can only wonder how profits can stay where they have been previously. It forces high quotes that are simply not acceptable unless we are buying market share. Let me explain.
    We quoted around $100,000 for a job in Pakistan, with the second bidder being over $1 million. We won and we lost money! With the Middle East having a substantial back office, then having to report to a hugely bloated structure in Vienna that reports to London and then on to Armonk, is it any wonder that we have trouble winning decent deals and bidding at realistic levels. We bid, we nickel and dime on staff and then spend much more time delivering and loose money, and the stock drifts down. Economics 101 maybe but with our management team that are hung up on their egos, there is little chance for the company until there is true empowerment in the sharp end of the business, the part that is client facing.
  • "No argument there" by "wonderaboutibm". Full excerpt: The only wisdom I have gained in all my years of consulting is this: good ideas are a dime a dozen, but good executions are rather rare.
    It takes less brainpower than one might think to whip up a "cool" technical solution with a little Tivoli here, a lot of WebSphere there, but so what? If it does not advance a business cause, it is for little more than nothing.
    Give IBM this much credit: I think they realized that at one point: maybe SP was more altruistic in those days. I think IBM had the (misguided) idea that PwCC would give them a bevy of great business executions. But IBM never had the smarts to pull that off, and now they have lost the will, or the interest. The best I can say for their move into (the unmentionable country) is that they somehow think nationals of that unmentionable country can do for them what the PwCC acquisition did not, in terms of invigorated business execution. The clock is ticking; even as a short term ploy, this one is a tightrope act.
  • "But your paranoia is justified" by "wonderaboutibm". Full excerpt: Remember, IBM is a "global" company. That means that the powers that be are looking for the cheapest way out. I don't know the exact timeframe for the cut of 130,000 or so, but you know it is coming. I also hear that IBM is attempting to suppress reports of the coming job cuts in the U.S. But we all know better, and IBM's official silence is telling. We have become just another big blob. Perhaps it was inevitable, but one could always have hoped for better.
  • "It is a matter of degree" by "Dose of reality". Full excerpt: There is nothing wrong with using commodity resources for commodity work. However, a proper mix has to be maintained for leverage. Where IBM went wrong was employing the philosophy if "X" is good, then 10 times X must be better. They substituted commodity resources for premium resources. That's the backdrop.
    Even without this backdrop, you will always have project level failures, and they are usually the result of asymmetry between executive compensation and executive delivery. I.E. partners that had to meet a set of targets that were not balanced, so they did whatever they could to sell the work regardless of the feasibility of delivery. We have the wrong kind of oversight here - bureaucratic and CYA, instead of pragmatic and business-focused.
  • "Practical Experience" by "banktoconsult". Full excerpt: Does anyone have any suggestions on how to get in front of someone from an interview? Here's the situation: 3 years practical experience in the field in which they are hiring; no consulting experience; plenty of project management experience on national level; MBA, but definitely not from a top-tier school. Anyone have any connections or any advice on how to ensure that my resume and cover letter has a fighting chance? Feel free to respond or email me at banktoconsult@yahoo.com
  • "You sound desperate" by "deep_eye". Full excerpt: bad impression for the pig to have of you and your candidacy. There is no magic formula for "getting in front" of someone. In fact, I've received so many contacts from them and their stooges to lure me back in, I'm surprised the entire consultant wannabe planet is not on their radar (two more emails from them this week alone). Do yourself a very large favor - seek employment elsewhere. Go back 6 months and read some of the posts on this board re IBM. I assure you, these are not fictional accounts
  • "there's also the Hydra's teeth effect" by "DM Bingham". Full excerpt: I'm also a believer in the eventual demise of the Blue Pig due to the same market forces and managerial miscues mentioned above and in recent threads/posts.
    I pose an additional burden that the will add to the Azure Porcine's demise: there are thousands of former p!ssed off employees who are literally cursing the Monster every day and doing what they can to bring it down. Some are in positions to influence buying decisions, some merely talk to their neighbors, but in total it is a huge grassroots feeling of total animus towards one Company. Think of WHELS only raised to the third power.
    I believe neither Sears, Roebuck nor K-Mart, Montgomery Ward nor any of the other department store chains that broke on Wal-Mart's rise had such human elements totally hoping to see their former employer fail.
  • "Coasting is the best policy" by "Toa". Full excerpt: I busted my gut scored a 2+, got nothing. Coasted and scored a 3, got nothing. Why bother to do any more than coast! The results in terms of an increase are the same and the added advantages in terms of lower stress more free time etc are so much better.

"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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