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Highlights—May 2, 2009

  • Human Resource Executive: Taking Aim at IBM. Layoffs combined with an offshoring initiative from the technology giant have created instant controversy. Enlightened companies approach the processes as major operational and cultural initiatives, but it remains a volatile emotional problem. By Paul Gallagher. Excerpts: Since the beginning of the year, IBM has laid off anywhere from 5,000 to 10,000 employees in its North American offices, some of whom have been told they can apply for open positions in foreign countries, such as India, Brazil, Romania, Slovenia and other exotic locales.

    And many of those layoffs were done without the 60 day's public notice required by the Worker Adjustment Retraining and Notification Act, because the number of affected employees didn't exceed the reporting thresholds. Known as the WARN Act, the federal notification law kicks in when there is a plant closing or a mass layoff of 50 or more employees -- if that number represents one-third of the workforce at a specific site -- or lays off 500 or more employees at a single worksite.

    IBM, based in Armonk, N.Y., has not divulged the number of terminated employees at its various sites, and a company spokesman refers to any specific numbers of job losses as mere "speculation by either the media or organizations with interests on this topic," an apparent reference to a workers' group called Alliance@IBM, which doesn't have official union status at IBM, but is connected to the Communications Workers of America. ...

    Critics -- especially Alliance@IBM, which is seeking to organize IBM's workers and claims the company has fired about 10,000 workers since January -- have hammered the company for the layoffs, even as Big Blue's earnings remain up. On April 20, IBM announced net income of $2.3 billion for the first quarter of 2009. ...

    In IBM's case, the outcry is sparked not so much by what some are calling stealth layoffs -- because the number of affected employees is apparently below the WARN Act's notification requirements -- but because the layoffs are in combination with the company's Project Match, in which American workers whose jobs are vanishing can apply for open positions in foreign countries. If the employee meets performance criteria, and is "willing to work on local terms and conditions," according to an internal company document about the program, there might be a spot open.

  • Poughkeepsie Journal: IBM cuts more jobs; 11 at East Fishkill. Supply Chain action nationally hits about 245. By Craig Wolfe. Excerpts: Lee Conrad, national organizer for the Alliance@IBM, said today that he has confirmed through a member of his organization whose position was cut in Research Triangle Park N.C., that the action is ongoing and that employees are getting the pink slip today. Details of where else cuts may be happening were not evident for sure, but Conrad said it appeared to be a nationwide action with 245 people affected and that other reports from news media had been received suggesting other sites were involved. ...

    According to an IBM document forwarded by the Alliance@IBM, the reasons for the cuts was stated as: "In an effort to rebalance skills, eliminate redundancies, and deliver greater economic efficiencies, IBM Integrated Supply Chain is announcing a resource action affecting its employees." The notice said the affected people would be terminated beginning June 1.

  • EE Times: IBM responds to union complaints. By Mark LaPedus. Excerpts: ''IBM employees are receiving pay cuts and job cuts while executives continue to enrich themselves. Executive greed and bloated compensation needs to be challenged,'' said Earl Mongeon, vice president of the union and an employee within IBM's chip operations in Burlington, Vt., in a statement. Mongeon plans to submit a proposal on executive compensation. It will urge the board ''to determine that pension income from any defined benefit plan will not be used as a factor in setting executive compensation.''

    In response, an IBM spokesman took issue with this article and the charges conveyed by the union. In a telephone message after the article appeared on Tuesday, the spokesman took offense at the term ''greed'' or ''greedy'' and insisted that shareholders are pleased with performance and direction of the company. ...

    ''IBM's model of profitable growth and strong cash flow enables the company to continue to deliver value to our shareholders. We demonstrated this commitment by returning $2.5 billion in the first quarter through dividends and share repurchase, and our continued solid performance allows us to increase shareholder return, as we are doing today,'' Samuel J. Palmisano, IBM chairman, president and chief executive officer, said in a statement.

  • The Street: IBM V.P. Sells $1.6 Million Worth of Stock.
  • Yahoo! IBM Pension and Retirement Issues message board: "Re: So how much does retiree medical coverage cost?" by "mel_zimowski". Full excerpt: I retired in March 2006 after nearly 32 years of service. While I agree that IBM's retirement plans changed over the years and the benefits that I have are fewer than what was initially promised, I still highly value the retiree medical coverage that I do have. In 2008, I selected an HMO (Kaiser Permanente Northern California) for medical, IBM Dental Plus for dental, and the vision plan. My individual coverage cost me $132.23 per month.

    Since I use an HMO, I have co-payments of $20 per doctor's visit and typically $10 per prescription. I have exercised regularly for the last 30 years and am lucky enough to be reasonably healthy. My total medical, dental, and vision costs for 2008 were about $2150.00, which for me is very manageable. My 2009 costs are even less because I only enroll in the vision plan every other year.

    Obviously this is not free medical coverage for life, but the cost is much less expensive than what I would need to pay when just purchasing similar coverage in the open market.

  • Yahoo! IBM Pension and Retirement Issues message board: "Re: So how much does retiree medical coverage cost?" by "hankharty". Full excerpt: If only we all were so lucky, the cost of healthcare would not be an issue.
  • Yahoo! IBM Pension and Retirement Issues message board: "Re: So how much does retiree medical coverage cost?" by "madinpok". Full excerpt: Mel - congratulations on your retirement and being lucky enough to have qualified for the "old" medical plan rather than the FHA plan. Most of the people who are retiring now were forced into the FHA plan back in 1999 because they were not within 5 years of being eligible to retire. As a result, their cost for even the least expensive plan is about 5 times more than what you pay. That makes it difficult for many people to afford.
  • Yahoo! IBM Pension and Retirement Issues message board: "Re: So how much does retiree medical coverage cost?" by "ignatz713". Full excerpt: Quite true, madinpok. Isn't it sad that there are still those who disregard the plight of those with the FHA?

    Isn't it sadder still that only NOW (it's been ten years, fhawontcutit), repeat only NOW, are people FINALLY waking up to the horror that is the FHA.

    And don't forget our brethren who have NOTHING at all in the way of medical.

    But by all means, Mel, enjoy your medical coverage (especially the worth-its-weight-in-gold prescription coverage). It is what we who were promised the same cannot do.

  • Yahoo! IBM Pension and Retirement Issues message board: "Re: So how much does retiree medical coverage cost?" by Linda Albury. Full excerpt: You must admit that IBM pulled a fast one on most IBMers. When the cash balance plan was introduced, most of us were concerned about not getting our pension instead of reading the fine print in our individualized benefits statement where the changes to the healthcare was presented. Think we were had!
  • Yahoo! IBM Pension and Retirement Issues message board: "Re: So how much does retiree medical coverage cost?" by "mel_zimowski". Full excerpt: Just for the record, I want to state that I do not "disregard the plight of those with the FHA". I misread the original append and did not realize that the initial question was "So how much does retiree medical coverage cost ***with the FHA***?".

    I do not really understand the FHA plan and cannot comment on it, but I do know that there is not a single one of us who, upon retiring form IBM, received the retiree benefits that we were promised over the years. In my opinion, this is one of the key reasons that IBM no longer makes the Fortune 500 list of "100 Best Companies to Work For".

  • Yahoo! IBM Pension and Retirement Issues message board: "High Risk at Losing Retiree Medical" by Kathi Cooper. Full excerpt: I think all retirees are at high risk of losing their retiree medical, literally a turning off of the faucet. Why?

    Because IBM is at its 'disbursement phase' of managing post-retirement benefits. (that means they dish out more money than they take in because of the baby-boomer-bubble-crest).

    Also, because of the accounting changes that require IBM to disclose more information about the future of retiree medical. (that means their balance sheet will be subject to volatility and they don't like that).

    With all their firings (er, I mean layoffs), I bet they micro-manage their disbursements quite well. I'm pretty certain they prefer exits choosing an annuity (smoothing) as opposed to lump sum payments (ouch!).

New on the Alliance@IBM Site
  • IBM Italy Union questions executive perks. Excerpts: We’d like to inform you that we have started in Italy a national campaign against IBM manager’s excessive bonuses. In the middle of the economical global crisis, and during 9600 job cuts in IBM US, the management of GTS department of IBM Italy reserved for themselves a large reward and in addition went on a free holiday to a famous and expensive resort. Our cost estimate for this holiday is between $40000 and $150000. This waste of money by IBM Italy management is not fair and is offensive in the opinion of IBM workers. ...

    Revenue and dividends are going only to the investors, and year after year more bonuses are going to IBM managers. This is having a negative affect on the morale of IBM employees. Bonuses to corporate management are under scrutiny by President Barack Obama’s administration. Management bonuses are also under the control of Sam Palmisano, our CEO and Corporate Social Responsibility offices. We will no longer accept these excessive benefits to IBM managers. We ask IBM to reinvest money in the direction of IBM workers (main stakeholders of this company), and especially to the employees that have not received salary increases for 7 or 10 years. On top of this many education course are cut due to low funds.

  • Job Cuts Status & Comments page
    • Comment 04/25/09: To Mac: Within 24 hours of your last day, your network access will be pulled. (dialer or whatever you use to connect to the ibm network). I know this to be true, because I knew someone who was RA-ed and they had everything set up on their home machine. They turned in their ibm laptop on the last day, but kept everything running at their house. When they woke up the next morning, access was pulled and they were no longer able to log in. Talk about hanging in until the bitter end. :-( -miss understanding-
    • Comment 04/25/09: Get a load of this.... I was RAed in earlier this year, and was lucky enough to find a new job outside of IBM. My IBM manager has been asking my friends what my salary is at my new job. Can't frickin believe it. -Gone and Happy-
    • Comment 04/25/09: At a outsourced application site (most in 50-60 age). Been training Indians to replace us last 2 yrs. Appears that more than half of the RA people at site will lose the Future Healthcare Account as just few years before 55. Site appeared to rush to put people on bench for 4/1 as probably suspected a RA and wanted a easy way to cut US and old and blame the economy. Most of the application resources that were reclassified last year to non-exempt got RA'd. not many application non-exempt left at site. Did others see this pattern at their site? I am assuming that if we sign the severance package we have no recourse -anon-
    • Comment 04/26/09: For those of you who have been RA'ed those of us left behind have been expected to pick up your workload. I wonder how much of STG's poor financial performance in the 1st qtr of 2009 can be attributed to the good people IBM fired who could have been closing business for them? Additionally, how much more STG business will be delayed because there aren't enough people left to work the opportunities. I do not think IBM's executives are stupid, just greedy, so how many STG people have to be fired before it materially affects STG's sales? -Anonymous-
    • Comment 04/27/09: Toronto, ON, Canada Fishkill, NY, US Boulder, CO, US. If you aren't in the above three locations, your job is forfeit. Coming from an IMAC/Helpdesk point of view at least....I can't speak for other sectors at IBM, though I have grounds to believe the Asset division will be affected shortly. IBM centers across North America are scheduled for closure once all appropriate transitions are complete. I work quite close with one of the leads for the transition project team...that person is shocked at how fast/clumsy IBM is making moves to ensure their deadlines are adhered to. Wish I could say more, but I really don't want to put my source at risk. Heed my words, this is the tip of the iceberg. I suspect IBM presence in NA to be almost non-existent by end of year, perhaps sooner. -Statistic#948726617849050038-
    • Comment 04/27/09: To all of those that had their final day as an IBMer this week: I am with you. Know that there are many others that have been placed into the same situation. We are not alone. There is a positive side to all of this. I have been told before by people that have left IBM that there is a better life to be found outside of this company, but I was in some ways too settled in the rut that I was in to make any changes. As a fellow RA'd employee, I can tell you this: I have already discovered more than one opportunity out there with a company that seems to value the skills of its people.

      They are offering salaries that are at least a 50% increase over what some were getting at IBM (following years of no pay raises, the reclassification and 15% reduction, etc.). Other companies are offering regular training, comparable or better health insurance, and an ear to the suggestions that you make for changes that could improve their business. It is a different world out there, and other employers are going to value the knowledge and skills that you have. Do not despair.

      To those that remain in IBM, I have to say that even a small amount of investigation into the workings of other companies has shown me that this is NOT the way that the industry is headed. Regardless of what the corporate shills may post, we do not need to accept this treatment. This is not the new world order. These are your choices: Accept the crap that the executives dump upon you; Organize and collectively have a voice as an organization of professionals; or leave IBM and find something in greener pastures.

      As workers in this industry, we have to accept that our skills are no longer valued, our knowledge is no longer considered to be something requiring education or experience. To those who make the decisions, you are easily replaced and only a burden on their bottom line. Your pension, your reimbursement for network access, your salary, and everything else is just a drain on the profits that they can present in their quarterly report. If you are not angry, then you are not paying attention. -1 2 X U-

    • Comment 04/29/09: My last day with IBM will be at the end of June. I was called yesterday by an Indian woman working for a tech recruiting company and couldn't understand 95% of what she was saying. She wanted references from me but I asked her to mail me the job description (since I couldn't understand her). She found my resume that I had posted on the web and wanted me to apply for an urgent 1 yr contract position with IBM in EF. It's not surprising that this urgent master level skilled job (as she called it) is no where in the Global Opp database. As we know, IBM is RAing people only to try to hire them back as contractors with no benefits! If anyone is interested in being an IBM contract slave, you can contact Artechinfo and see if they have a job for you. As for me, I'm looking forward to the end of June. -slammed-
    • Comment 04/29/09: "For those of you who have been RA'ed those of us left behind have been expected to pick up your workload." I have heard this many times - why are you all continuing to pick up the extra workload of RA'd employees if it consistently pushes your hours to more than 40 a week? I know many people who always for 60+ each week for the same pay. STOP IT! As a non-managerial employee, it is not your job to balance the workload for your department. It's your manager's job. And if there aren't enough employees to do the work, it's his butt that's on the line, not yours. IBM wants to overwork you - to get as many hours as possible for the same rate of pay. Don't let them keep walking over you. Do your 40 hours (an honest, hard-working 40 hours) and then go home. Your first priority is as a husband/wife or a parent. You can always find a job somewhere else but your child can't get another you. Quit giving IBM more for less. Create your own work/life balance. Push the workload management back up the chain. Get your coworkers on board with the Alliance. Don't answer work phone calls while at home. You have to be the one drawing the line because IBM sure won't. -Tulsa_slave-
    • Comment 04/29/09: Tulsa-Slave-- Couldn't agree more. Your only reward for working 60 hours a week is getting to do it the following week. This will continue till someone higher up the food chain thinks an off shore site can do your job.. For me, IBM is a distant 4th in line for my time. Time over 40 hours is better spent looking for another job.. -Gettin-Hosed-
    • Comment 04/29/09: The separation money has just arrived in the mail; but its calculation is based on my rehire-date which is not what I expect. I rejoined IBM several years ago, and the agreed negotiation was to bridge the dates between two IBM employments. Up until the layoff, all my benefits follow that rule, including the anniversary congratulation email each year. What are my rights in this case? Please advise or give a pointer if you know. Thanks! -NeedAdvice- Alliance reply: Do you have anything in writing? If so get a lawyer.
    • Comment 04/30/09: To slammed: When I was ra'd, (2 years ago) before my 30 days was up my team lead, (big time loser) called me and said he could get me in as a contractor, with no benefits, doing the same job. Luckily I had found another job outside ibm before my 30 days was up, collected 4 months severance, and went on to my new job. I told him to stick his job where the sun don't shine and hung up. I had been doing his job for a long time and he realized once I was gone he was screwed. I would not go back after being an employee to do the same job as a contractor. Never. -not_a_contractor-
    • Comment 04/30/09: More job cuts. In East Fishkill today. Typical IBM knee jerk reaction to lower revenue forecasts. For those that thought the last RA action was going to be the last for awhile this year well the USA/Canada stealth layoffs are back and possibly with a vengeance. -anonymous- Alliance reply: It's not a reaction. It's a deliberate plan that was set in motion some time ago. Alliance has been telling this grim reality series for some time now. Is anyone listening out there?
    • Comment 04/30/09: Working full-time in IT department @ ottawa for a company that was taken over by IBM a little over a year ago. 35 years old with PBC rating of 2. Bunch of us given notice that our end date is June 22nd. Manager says that the miscellaneous tasks and projects we are working on does not warrant a job in IBM's eyes. -Out in Ottawa-
    • Comment 04/30/09: For those of you who turned in your stuff April 27th, look at your last 'work' check for April. Any reimbursements you filed after April 13 will not be in that check. I was told all documents were printed and checks cut on April 14. I was shorted $153 and brought this up to my manger's attention. I stayed on my 1st line to get the money back. The check arrived today April 30. I, too, was asked by my first line where I’ve been applying, did I get any offers or any rejections. I was then asked for names of companies that I looked into. IBM is fishing for information. Managers are to report what they find. Don’t give give IBM more ammo. They have done enough damage already. -Demanded-every-Penny-
    • Comment 04/30/09: RAed in the March round, last day was 4/27. Told by mgr that I was "chosen" based on depth of skills, yet my work (software development) was given to a GR that has a completely different skill set. While I was not required to do in-depth training, I was asked to explain everything to the GR getting all my work (and it was a lot of work). The poor fellow later called me because he is struggling to understand the programs, i.e. most of my pgms are written in Java and he does not know Java. The truth is, my mgr--who is fairly new to our dept--does not understand what people actually do and the complexity of their jobs, even though I tried to explain it to him. Those chosen for job cuts are based on the manager's (mis)perceptions and where they have you pegholed in the office political structure. To those of you are are left, wake up. This is the company you are working for. Do not ever expected to be treated fairly without a union. Ps--I pity the people left behind with my work. There is no one who knows how to do my job or even vaguely understand how complex it is. I predict impending disaster within one month when everything stops and nobody knows how to fix it, and product doesn't ship. And if they call me to help them fix it, they will have to draw up a purchase order first. -Movin On-
    • Comment 05/01/09: To Reality: Your statement: Myth: "I won't be RA'ed because I am the only one who knows how to do my job so they need me." Fact: I was RA'ed and there is no one who knows anything about my programs and responsibilities. My job was given to someone who doesn't have a clue how to do it.

      Is absolutely 100% correct. I too had a job that was done by no one else, unique responsibilities, and I was let go. For those who are confused about how people are selected for cuts, it is simple. It is all about costs. IBM will maximize cost savings. Therefore, they select people for cuts based on salary. The higher your salary, the more likely you are to be cut. IBM does have a goal off offshoring employees, and have accelerated the transfer rate this year, but always remember, the final goal is to reduce employment costs. The average IBM'er in the US make about $70K per year. IBM will not stop taking action to reduce that number. My question is: at what point does "wage discrimination" become "age discrimination" ? Remember, the higher wages are typically earned by older employees. -RA'd in East Fishkill-

  • General Visitor's Comment page
    • Comment 04/2009: Count me among the many IBM'ers who want out. I won't ask to be RA'ed though as I'm sure they would try to get rid of me with a lousy severance package. If they are going to push me out the door I want everything I'm entitled to. The job is ok and the people (what little is left of our team) are great, but I can't stand working for this horrible organization anymore. Even our 1st line says 'you can't trust these bastards.' -Tired of Big Blew-
    • Comment 04/27/09: To -retired- If you can volunteer to be RA'ed, then why doesn't IBM make it easier for the employee and manager and offer a voluntary package now? My management says the recent RA'ed folks were not selected by their direct report first line manager. Other business considerations, management levels (likely from HR direction) make the RA decision. That is the reason IBM doesn't offer any voluntary packages anymore. You can't say "pick me" to your manager to make sure you can get RA'ed. -anonymous-
    • Comment 04/29/09: IBM as a company has Jumped the Shark! It has NO innovation, except for Outsourcing and cost cutting. Folks, face it - there is only a few things you can do, a) Unionize, b) Quit, c) Stay, bend down and take it. PS: Naming its Jeopardy computer 'Watson' is a slap in the face to us IBM old timers -Whatever-
  • Pension Comments page
    • Comment 4/28/09: How did the stockholder proposal on executive compensation (to exclude pension income from the calculations) at today's stockholder meeting? I heard IBM authorized another $3,000,000,000 for a stock buyback but no longer contributes to the IBM employee pension plans. Stock buy backs are a waste of shareholder $. -IBMpensioner-
    • Comment 4/29/09: -IBMpensioner- The proposal by Earl Mongeon Jr. did not pass but garnered a more than respectable 43.14% of shareholder support for it. Curious that IBM is different than some other big corporations that are part of CWA. For instance, Verizon. Verizon's board of directors actually listened to it's stockholders and took basically this same IBM stockholder proposal off their proxy (didn't allow a proxy vote) and agreed to leave pension vapor profits out of the Verizon executive compensation calculations back in 2003. -sby_willie- Alliance reply: You obviously understand very clearly, that CWA has a great deal of power and voice, within the company and the shareholders meeting as well. If IBMers would just realize that "This could be us!"; if they organized and worked together for voice in their workplace and a contract to work by. It always makes us wonder. Thanks for your comment.
  • Raise and Salary Comments
    • Comment 4/25/09: Salary = 72,000K; Band Level = 7; Job Title = IT Specialist; Years Service = 11; Hours/Week = 45; Div Name = IGS; Location = Endicott; Message = The writing was on the wall that I was next to get cut when I started working with PMs/SDMs/DPEs and Architects from India.. My last day is April 27, 2009. Good luck to all the co-workers still standing.... -anonymous-
    • Comment 5/01/09: Salary = 112,000; Band Level = 8; Job Title = Managing Consultant; Years Service = 4.5 with IBM; Hours/Week = 45+; Div Name = GBS; Location = DC; Message = 2+ Rating -Tuesday-
  • PBC Comments
  • International Comments
    • Comment 4/29/09: Country = Ireland; Union Affiliate = No; Job Title = Rather not say; IBM Division = GBS/AMS; Message = There was apparently a UKI management call about redundancies today. No-one outside management knows details. -Anonymous Coward-
News and Opinion Concerning Health Savings Accounts, Medical Costs and Health Care Reform
  • PBS Frontline: Sick Around the World. Can the U.S. learn anything from the rest of the world about how to run a health care system? Five capitalist democracies and how they do it. In Sick Around the World, Frontline teams up with veteran Washington Post foreign correspondent T.R. Reid to find out how five other capitalist democracies -- the United Kingdom, Japan, Germany, Taiwan and Switzerland -- deliver health care, and what the United States might learn from their successes and their failures.
  • Forbes: Microsoft: Dollars Won't Cure Health Care. The $19 billion for health IT isn't what's needed most. By Peter Neupert. Excerpts: The administration believes that the stimulus bill, with its $19 billion in funding for health IT, will be a down payment on health reform. The majority of the money is allocated to the adoption of electronic medical records--$17.2 billion for financial incentives for physicians and hospitals through Medicare and Medicaid and $2 billion for affiliated grants and loans--up to $65,000 per eligible physician and $11 million per hospital. Never before have we seen such a vast investment to drive the adoption of technology. But will it be the right technology investment? ...

    We have to look at health IT the way other successful institutions have--as a means to an end, not an end unto itself. Within industry today, there are many organizations--the Marshfield Clinic, Kaiser Permanente, the Department of Veterans Affairs and others--that have been successful in using technology to achieve specific goals. The real lesson of implementing health IT successfully is to focus on the goals first and foremost, and pick the right technology investments to accomplish them.

    As a result, the notion of feeding electronic medical records to thousands of doctors through the stimulus package does not seem like it will engender the change we all need--improving patient health.

    Given that 75% of health care costs stem from six chronic diseases, I'd argue that we should focus on preventing and managing these conditions, and then figure out the right technologies to support those goals. This type of focus on specific goals will enable us to deliver better care at lower costs to the whole system and get a real return on investment for health IT.

  • BusinessWeek: The Dubious Promise of Digital Medicine. GE, Google, and others, in a stimulus-fueled frenzy, are piling into the business. But electronic health records have a dubious history. By Chad Terhune, Keith Epstein and Catherine Arnst. Excerpts: The billions in taxpayer funds—part of the $787 billion economic stimulus—also have energized tech titans General Electric, Intel, and IBM, all of which are challenging Cerner and other traditional medical suppliers. Microsoft and Google aim to put medical records in the hands of patients via the Web. Wal-Mart is teaming with computer maker Dell and digital vendor eClinicalWorks to sell information technology to doctors through Sam's Club stores. ...

    That rare agreement, however, is obscuring the checkered history of computerized medical files and drowning out legitimate questions about their effectiveness. Cerner, based in Kansas City, Mo., and other industry leaders are pushing expensive systems with serious shortcomings, some doctors say. The high cost and questionable quality of products currently on the market are important reasons why barely 1 in 50 hospitals has a comprehensive electronic records system, according to a study published in March in the New England Journal of Medicine. Only 17% of physicians use any type of electronic records. Hospitals and medical practices that plugged in early have experienced pricey setbacks and serious computer errors.

    Suddenly dumping more money on hospitals, which will then funnel the cash to tech vendors, won't necessarily improve the situation, say many doctors and administrators. ...

    Part of the problem stems from a fundamental tension. Info tech companies want to sell mass-produced software. But officials at large hospitals say such systems, once installed, require time-consuming and costly customization. The alterations often make it difficult for different hospitals and medical offices to share data—a key goal. Meantime, the health IT industry has successfully lobbied against government oversight.

  • Medical News Today: Poll Examines How Much U.S. Residents Are Willing To Pay For Health Coverage. Excerpts: Nearly two out of three uninsured U.S. adults (64%) say they would be willing to pay no more than $100 per month for health insurance; however, the average monthly cost of an individual plan is about $400 and a family plan costs about $1,000 per month, according to a recent poll by NPR, the Kaiser Family Foundation and the Harvard School of Public Health, NPR.org reports (Knox, NPR.org, 4/24). The telephone survey of a nationally representative sample of 1,238 adults was conducted between March 12 and March 22 ("The Public and the Health Care Delivery System," NPR/Kaiser Family Foundation/Harvard School of Public Health, April 2009).

    According to NPR.org, the finding highlights the "difficult issue" of whether middle-class U.S. residents, whose employers do not pay a large percentage of their premiums, will need subsidies to pay for health coverage in order to achieve universal coverage. Kaiser Family Foundation President and CEO Drew Altman said that the Massachusetts health insurance law is the first real test of how U.S. residents respond to individual health coverage requirements.

News and Opinion Concerning the U.S. Financial Crisis
Minimize "It is a restatement of laissez-faire-let things take their natural course without government interference. If people manage to become prosperous, good. If they starve, or have no place to live, or no money to pay medical bills, they have only themselves to blame; it is not the responsibility of society. We mustn't make people dependent on government- it is bad for them, the argument goes. Better hunger than dependency, better sickness than dependency."

"But dependency on government has never been bad for the rich. The pretense of the laissez-faire people is that only the poor are dependent on government, while the rich take care of themselves. This argument manages to ignore all of modern history, which shows a consistent record of laissez-faire for the poor, but enormous government intervention for the rich." From Economic Justice: The American Class System, from the book Declarations of Independence by Howard Zinn.

  • New York Times: After Off Year, Wall Street Pay Is Bouncing Back. By Louise Story. Excerpts: The rest of the nation may be getting back to basics, but on Wall Street, paychecks still come with a golden promise. Workers at the largest financial institutions are on track to earn as much money this year as they did before the financial crisis began, because of the strong start of the year for bank profits.

    Even as the industry’s compensation has been put in the spotlight for being so high at a time when many banks have received taxpayer help, six of the biggest banks set aside over $36 billion in the first quarter to pay their employees, according to a review of financial statements. ...

    “I just haven’t seen huge changes in the way people are talking about compensation,” said Sandy Gross, managing partner of Pinetum Partners, a financial recruiting firm. “Wall Street is being realistic. You have to retain your human capital.” Brad Hintz, an analyst at Sanford C. Bernstein, was more critical. “Like everything on Wall Street, they’re starting to sin again,” he said. “As you see a recovery, you’ll see everybody’s compensation beginning to rise.” ...

    Of the large banks receiving federal help, Goldman Sachs stands out for setting aside the most per person for compensation. The bank, which nearly halved its compensation last year, set aside $4.7 billion for worker pay in the quarter. If that level continues all year, it would add up to average pay of $569,220 per worker — almost as much as the pay in 2007, a record year. “We need to be able to pay our people,” said Lucas van Praag, a spokesman for Goldman, adding that the rest of the year might not prove as profitable, and so the first-quarter reserves might simply be “sensible husbandry.”

  • Crooks and Liars: While Bankers Whine, Retired Auto Workers May Lose Pensions, Health Insurance. By Susie Madrak. Excerpt: I can't begin to tell you just how little sympathy I have for the Wall Street bankers who bitch and moan about how impossible it would be to live in NYC on "only" $250K. (My kid manages to live there on considerably less.) No, my sympathies lie with people like this who worked hard, played by the rules and are now caught in an economic disaster...
  • New York Times op-ed: Money for Nothing. By Paul Krugman. Excerpts: On July 15, 2007, The New York Times published an article with the headline “The Richest of the Rich, Proud of a New Gilded Age.” The most prominently featured of the “new titans” was Sanford Weill, the former chairman of Citigroup, who insisted that he and his peers in the financial sector had earned their immense wealth through their contributions to society.

    Soon after that article was printed, the financial edifice Mr. Weill took credit for helping to build collapsed, inflicting immense collateral damage in the process. Even if we manage to avoid a repeat of the Great Depression, the world economy will take years to recover from this crisis.

    All of which explains why we should be disturbed by an article in Sunday’s Times reporting that pay at investment banks, after dipping last year, is soaring again — right back up to 2007 levels. Why is this disturbing? Let me count the ways.

    First, there’s no longer any reason to believe that the wizards of Wall Street actually contribute anything positive to society, let alone enough to justify those humongous paychecks. Remember that the gilded Wall Street of 2007 was a fairly new phenomenon. From the 1930s until around 1980 banking was a staid, rather boring business that paid no better, on average, than other industries, yet kept the economy’s wheels turning.

    So why did some bankers suddenly begin making vast fortunes? It was, we were told, a reward for their creativity — for financial innovation. At this point, however, it’s hard to think of any major recent financial innovations that actually aided society, as opposed to being new, improved ways to blow bubbles, evade regulations and implement de facto Ponzi schemes.

    Consider a recent speech by Ben Bernanke, the Federal Reserve chairman, in which he tried to defend financial innovation. His examples of “good” financial innovations were (1) credit cards — not exactly a new idea; (2) overdraft protection; and (3) subprime mortgages. (I am not making this up.) These were the things for which bankers got paid the big bucks? ...

    One can argue that it’s necessary to rescue Wall Street to protect the economy as a whole — and in fact I agree. But given all that taxpayer money on the line, financial firms should be acting like public utilities, not returning to the practices and paychecks of 2007. Furthermore, paying vast sums to wheeler-dealers isn’t just outrageous; it’s dangerous. Why, after all, did bankers take such huge risks? Because success — or even the temporary appearance of success — offered such gigantic rewards: even executives who blew up their companies could and did walk away with hundreds of millions. Now we’re seeing similar rewards offered to people who can play their risky games with federal backing.

  • The Huffington Post: Why Are Bankers Still Being Treated As Beltway Royalty? By Arianna Huffington. Excerpts: During Wednesday night's press conference, President Obama said that he's been "sobered by the fact that change in Washington comes slow" and "humbled by the fact that the presidency is extraordinarily powerful, but we are just part of a much broader tapestry of American life and there are a lot of different power centers." Well, one of those different power centers -- the entrenched special interests that continue to call so many shots on Capitol Hill -- is the main reason change in DC comes so slow.

    This, of course, will not come as news to anyone who has paid even the briefest attention to Washington over the last 30 years. Indeed, I've been writing about it for over a decade. But despite all that I know about the reform-killing power unleashed by the nexus of lobbying, campaign cash, and legislation, I have been flabbergasted by the amount of behind-the-scenes influence recently being wielded by the banking lobby.

    Just this week, the bankers and their lobbyists -- who you might have reasonably thought would be the political equivalent of lepers in the halls of power these days -- have kneecapped substantive bankruptcy reform in the Senate, helped pull the plug on a government-brokered deal with Chrysler, and tried feverishly to throw up a roadblock in the way of credit card reform in the House. You heard me right. America's bankers -- those wonderful folks who brought us the economic meltdown -- are still being treated as Beltway royalty by those in Congress.

    According to Sen. Dick Durbin, the banks "are still the most powerful lobby on Capitol Hill. And they frankly own the place." When it comes to reforming our financial system, we are truly through the looking glass. I mean, since when did it become "to the vanquished go the spoils"? How do the same banks that have repeatedly come to Washington over the last eight months with their hats in their hands, asking for billions to rescue them from their catastrophic mistakes, somehow still "own the place"? But the banks continue to be rewarded for their many failures.

  • Investment News: Wealthiest feeling the pinch, survey says. High-net-worth clients struggle in era of 'negative wealth'. By Charles Paikert, Excerpt: The survey respondents had a net worth of $1 million or more, not including their primary residence. Nearly three-quarters of them said they felt less wealthy than last year.
  • New York Times: Before Tea, Thank Your Lucky Stars. By Robert H. Frank. Excerpts: The link between success and luck is stronger than many people think. Analysis of this connection provides a useful framework for weighing the issues raised around the country at recent “tea parties,” where orators in high dudgeon bemoaned their “crippling” tax burdens. Responding to President Obama’s plan to let the Bush tax cuts for top earners expire in 2010, one protester’s placard read, “Spread your own damn wealth around!”

    Other protesters contended that the tax system already strains the vital connection between individual effort and reward and warned that further tax increases might destroy it.

    But these accusations don’t withstand scrutiny. The current system is much fairer than many people believe, and the president’s proposal will make it both fairer and more efficient.

    Contrary to what many parents tell their children, talent and hard work are neither necessary nor sufficient for economic success. It helps to be talented and hard-working, of course, yet some people enjoy spectacular success despite having neither attribute. (Lip-synching members of boy bands? Money managers who bet clients’ retirement savings on subprime-mortgage-backed securities?)

    Far more numerous are talented people who work very hard, only to achieve modest earnings. There are hundreds of them for every skilled, perseverant person who strikes it rich — disparities that often stem from random events. ...

    Although people are often quick to ascribe their own success to skill and hard work, even those qualities entail heavy elements of luck. Debate continues about the degree to which personal traits are attributable to environmental and genetic factors. But whatever the true weights of each, these factors in combination explain nearly everything. People born with good genes and raised in nurturing families can claim little moral credit for their talent and industriousness. They were just lucky. And they are vastly more likely to succeed than people born without talent and raised in unsupportive environments. ...

    Financially successful tax protesters seem blissfully unaware of how incredibly fortunate they are. To borrow from the late Ann Richards and her description of the first President Bush, they were born on third base and thought they’d hit a triple.

  • Time Magazine: Bernie Madoff. By Michael Moore. Excerpts: Bernie Madoff, for at least 20 years, ran a Ponzi scheme on thousands of clients, among them the people you and I would consider the best and brightest. Business leaders, celebrities, charities, even some of his own relatives and his defense attorney were taken for a ride (this has to be the first time a lawyer was hosed by the client). We're clearly in one of those historic, game changing years: up is down, red is blue and black is President. Aside from Obama himself, no person will provide a more iconic face of this end-of-capitalism-as-we-know-it year than Bernard Lawrence Madoff.

    Which is too bad. Yes, he stole $65 billion from some already quite wealthy people. I know that's upsetting to them because rich guys like Bernie are not supposed to be stealing from their own kind. Crime, thievery, looting — that's what happens on the other side of town. The rules of the money game on Park Avenue and Wall Street are comprised of things like charging the public 29% credit card interest, tricking people into taking out a second mortgage they can't afford, and concocting a student loan system that has graduates in hock for the next 20 years. Now that's smart business! And it's legal. That's where Bernie went wrong — his scheming, his trickery was an outrage both because it was illegal and because he preyed on his side of the tracks.

    Had Mr. Madoff just followed the example of his fellow top one-percenters, there were many ways he could have legally multiplied his wealth many times over. Here's how it's done. First, threaten your workers that you'll move their jobs offshore if they don't agree to reduce their pay and benefits. Then move those jobs offshore. Then place that income on the shores of the Cayman Islands and pay no taxes. Don't put the money back into your company. Put it into your pocket and the pockets of your shareholders. There! Done! Legal! ...

    It would be too easy — and the wrong lesson learned — to put Bernie on TIME's list all by himself. If Ponzi schemes are such a bad thing, then why have we allowed all of our top banks to deal in credit default swaps and other make-believe rackets? Why did we allow those same banks to create the scam of a sub-prime mortgage? And instead of putting the people responsible in the cell block in Lower Manhattan, where Bernie now resides, why did we give them huge sums of our hard-earned tax dollars to bail them out of their self-inflicted troubles? Bernard Madoff is nothing more than the scab on the wound. He's also a most-needed and convenient distraction. Where's the photo on this list of the ex-chairmen of AIG, Merrill Lynch and Citigroup? Where's the mug shot of Phil Gramm, the senator who wrote the bill to strip the system of its regulations, or of the President who signed that bill? And how 'bout those who ran the fake numbers at the ratings agencies, the lobbyists who succeeded in making sleazy accounting a lawful practice, or the stock market itself — an institution that's treated like the Holy Sepulchre instead of the casino that it is (and, like all other casinos, the house eventually wins).

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:

  • "But not yet to IBM" by "wonderaboutibm". Full excerpt: There is indeed a time for everything under the sun, and someday India will not be a labor arbitrager's dream. That time has not yet come for IBM, and the pendulum has not yet reached the edge of its arc (and if it has, IBM wants to nudge it past the extreme, just to ensure they extract maximum "benefit.") Besides, let's get real. Even if to IBM, India outsourcing has lost some sex appeal, there's still those patent-worthy algorithms to prove that India is still the best bet anyway. You must give proper deference to the brilliant minds at work. And to the very contented shareholders. Will the upcoming annual meeting rival the meetings conducted by the pigs in "Animal Farm?"
  • "Lest they call us Chickens Little" by "wonderaboutibm". Full excerpt: The casual reader may dismiss your warning of problems in 2015 to be little more than the squawking of Chicken Little. Hell .. we gotta be careful. I was convinced that IBM's stock price would wither, but I was wrong. Maybe I just had the timescale incorrect. So let me elaborate on your arguments. IBM once blathered on about its "value proposition" - the subtle attempt to convince customers that its high prices vis a vis the competition were offset by all the additional advantages that IBM had. Although a lot of our extra cost was just overhead and bloat, there was some logical weight to the argument that a higher cost structure is sometimes justified.

    You are spot on to note that IBM management is either ignorant of, or does not care about, any cost analysis beyond "cheap is best." They seem to have forgotten the readings from their own hymnal.

    So we have two hypotheses to consider for IBM management: the ignorance and the arrogance. The first one is easy to argue -- with IBM Finance running the show, there is no operational perspective at all on how IBM should run. IBM is a money machine to be stoked by whatever bean-counting methods produce the short-term results, rather than mid- to longer-term corporate viability. The evidence of this managerial mindset is everywhere around us.

    But then there is the arrogance. We all are merely slaves to the plantation owners in Armonk. I really doubt Sam would know how to relate to most IBMers -- he once tried, but has long since given up. And besides, Sam is only 2 years from retirement, and as long as there is enough of a financial shell to provide his 4 million/year pension after that ((I would think with annual cost-of-feasting increases) -- he's covered. Charity does begin at home. I'm all right, Jack. This goes for the whole motley crew.

    But forget ignorance, forget arrogance, forget even greed. The worst part of this sad story is that IBM has give up on the developed markets. They have given up on Americans and Europeans. It's one thing to globalize and add new friends and new markets -- we're all for that. It's quite another to renounce your home and run elsewhere for the tinsel.

If you hire good people and treat them well, they will try to do a good job. They will stimulate one another by their vigor and example. They will set a fast pace for themselves. Then if they are well led and occasionally inspired, if they understand what the company is trying to do and know they will share in its sucess, they will contribute in a major way. The customer will get the superior service he is looking for. The result is profit to customers, employees, and to stcckholders. —Thomas J. Watson, Jr., from A Business and Its Beliefs: The Ideas That Helped Build IBM.

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