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Highlights—March 27, 2010

  • Associated Press, courtesy of Forbes: Plea anticipated by former IBM executive. By Larry Neumeister. Excerpt: Papers filed in a massive insider trading case indicate that a former high level executive at IBM is likely to enter a plea to end the case against him. Federal prosecutors alerted the court Tuesday that they plan to file a document containing charges once Robert Moffat (MAHF'-iht) waives indictment. ...

    Moffat, of Ridgefield, Conn., is a former senior vice president and group executive at International Business Machines Corp.'s Systems and Technology Group. He was once considered a possible candidate for IBM chief executive officer. ,,,

    Mr. Moffat was originally arrested in October, along with Mr. Rajaratnam; Danielle Chiesi, a former consultant to New Castle; and three others. At the time, Mr. Moffat was charged with conspiracy to commit securities fraud. Prosecutors from the U.S. Attorney's office in Manhattan have alleged Mr. Rajaratnam was at the center of an insider-trading ring that generated millions of dollars in improper trades. Prosecutors have claimed the scheme topped $49 million. ...

    Prosecutors have alleged that Mr. Moffat, between August 2008 and January 2009, provided insider information to Ms. Chiesi about Advanced Micro Devices Inc. and other companies. Ms. Chiesi then allegedly shared the AMD tip with Mr. Rajaratnam, prosecutors said.

    In a separate civil complaint, the Securities and Exchange Commission has alleged Mr. Moffat also tipped Ms. Chiesi about Sun Microsystems's second-quarter earnings before they were released in January 2009. IBM was conducting due diligence of Sun Microsystems in anticipation of a possible acquisition at the time, the SEC said. Oracle Corp. completed a $7.4 billion acquisition of Sun Microsystems in January.

    Mr. Moffat also allegedly provided inside information to Ms. Chiesi about IBM's fourth-quarter 2008 earnings before their release in January 2009, according to the SEC.

  • Wall Street Journal: Moffat to Waive Indictment in Galleon Case. By Chad Bray. Excerpts: Robert Moffat, a former senior vice president at International Business Machines Corp., is poised to waive his right to proceed under a criminal indictment in a high-profile insider-trading probe that has ensnared several hedge-fund executives, including Galleon Group founder Raj Rajaratnam. In a court filing Tuesday, prosecutors from the U.S. Attorney's office in Manhattan said they intend to file a new charging document, known as a criminal information, against Mr. Moffat if he waives indictment. The filing by prosecutors could be an indication that Mr. Moffat plans to plead guilty to criminal charges.
  • Financial Times: IBM faces fresh EU antitrust complaint. By Nikki Tait. Excerpts: Antitrust problems for IBM mounted on Tuesday when a fresh complaint about its business practices was filed with Europe’s top competition regulator. The new complaint comes from TurboHercules, a French company, which is accusing the US group of refusing to allow customers to run IBM’s mainframe operating systems on anything other than IBM mainframe hardware, an illegal practice known as “tying”. This is the latest in a spate of complaints against the US technology company on both sides of the Atlantic. In Europe, competition officials at the European Commission started to look at IBM’s mainframe activities several years ago, following objections from a small technology company called PSI. ...

    Meanwhile, in the US, the Department of Justice started a preliminary investigation into IBM’s dominance of the mainframe computer market last autumn, sending out requests for information. This appeared to be triggered, at least in part, by a complaint from the Computer and Communications Industry Association, an industry group that includes some large IT companies such as Google and Microsoft, as well as much smaller groups.

  • People's Daily (China): IBM to set world's largest development center in western China. Excerpt: IBM will officially announce today the establishment of its fourth major business area at western China-IBM Software Group in the Greater China region. The business area will include Shannxi, Gansu, Ningxia and other provinces and autonomous regions. And the company will set up IBM China Development Center, IBM Global Analysis Software Lab and IBM Regional Software Development Center. The IBM China Development Center will become world's largest development center, said Steve Mills, senior vice president and group executive, IBM Software.
  • Trading Markets: IBM announces new predictive analytics lab in China. Excerpt: Information technology company IBM unveiled a new predictive analytics software lab in Xi'an, China. Making this announcement on Tuesday, IBM said that the new lab will help its clients see patterns in vast amounts of data and forecast trends before they occur for improved decision making and competitive advantage. The new lab will reportedly serve as a global hub for analytics development helping clients adopt predictive analytics capabilities tailored for their industry-specific requirements including banking, telecommunications, power grid, railroads, health care and urban management.
  • Yahoo! IBM Retiree Information Exchange: Trying to understand healthcare benefits at retirement. By "alphadog0227". Full excerpt: I have a couple more years to work (if I make it) and have been trying to understand what healthcare benefits I will get from IBM. I have called the ESC and have been told I would receive about $1500 per year to defray the cost of the health insurance (essentially I pay for all of it - thank you IBM). I have seen estimates of between $10-15k per year from reading the different posts on this site and from my financial adviser. I am on the 'new plan' - lump sum cash balance plan.

    I have not been able to get any approximate costs from the ESC on what I can expect to pay with different options. Are we eligible to purchase our insurance at IBM group rates? Does anyone know how I can get an idea of the costs of different options? Should I call/write the ESC and hope I get a more knowledgeable person to answer the phone? Thank you for sharing your knowledge on this topic.

  • Yahoo! IBM Retiree Information Exchange: "Re: Trying to understand healthcare benefits at retirement" by "madinpok". Full excerpt: You didn't say specifically, but I assume you are covered by the FHA (Future Health Account) plan for retiree medical. Your FHA account should have a balance of IBM-use-only dollars that you can use to buy health insurance coverage at IBM group rates. If you are a long term IBM employee (say 30 years), your account balance could be as much as $40,000 to $50,000. That sounds like a lot, but it won't go very far.

    As a retiree with the FHA plan, your health insurance coverage will cost about twice what it costs as an employee. But as an employee, you pay only about 20% of the real cost and IBM pays the rest. So expect to pay about 10 times what you have withheld from your paycheck right now for a similar level of coverage.

    If you would like to know the current rates for the various FHA plans, you can see them here: http://finance.groups.yahoo.com/group/ibmpension/files/IBM Retirement Benefits Info/. You will have to be a member of the ibmpension group to get to the files section. Scroll down through the list of files and open the file titled "IBM 2010 Retiree Medical Plan Costs." Note that these costs are for non-medicare retirees.

    (Editor's note: For the convenience of our readers, "IBM 2010 Retiree Medical Plan Costs." may be downloaded from our site. It is in PDF format.)

    With $40,000 in your FHA account, you can expect to be able to pay for your medical coverage for about 2 years for you and your spouse, or 3-4 years for just yourself.

    Another strategy is to withdraw less money from the FHA account each year and pay the rest out of your own pocket. That makes the money last longer, but you should be aware that IBM could take it away at any time. So many people feel it is better to spend the FHA money as fast as you can and not risk losing it. The money you leave in the FHA account earns only trivial interest these days. You might be able to invest your own money in something better and come out ahead in the long run.

  • Yahoo! IBM Employee Issues message board: "Re: Why?" by "zimowsk". Full excerpt: There have been many good responses to the "Why?" message, including this message from finitewisdom. Let me add my perspective. Sam Palmisano and the executives he surrounds himself with are numbers guys. Meeting your numbers is critical to the success of a services business and we all know that Sam has always been good at meeting the numbers - probably the single key reason that he rose up through the ranks to become CEO.

    Many have commented on why layoffs and outsourcing contribute to Sam's ability to meet his number goals and I agree with the points made. But, I think another important point needs to be made. In a services business, employees are considered to be commodity. The belief is that if an employee is not willing to do whatever it takes to achieve the goals and meet the numbers, then the employee can be replaced with someone else who can and will. Some say that one skilled employee cannot just be replaced by another - that they are not interchangeable. In a general sense I think this is true, especially when it comes to positions that require a high degree of creativity and ingenuity. However, I spent some time in a services organization and learned that most of the job assignments simply don't require skills that can't be replaced. They just don't. This is what makes replacing expensive U.S. employees with cheaper foreign workers viable.

    Why pay more when you can achieve the same goals by paying less? From a numbers perspective, just a business decision. Compete successfully or run the risk of loosing your job.

    But, better yet, why not just develop some skills that cannot be easily replaced? This, by the way, is how most other high tech companies work. There are some exceptions, of course.

    Finally, the primary responsibility of a CEO of a publicly traded company is to keep the shareholders happy. Shareholders, in fact, own the business. Most of IBM's CEOs prior to Gerstner did not focus on this goal, partly because the IBM culture, which may of us still remember fondly, was much different then. For at least a decade, maybe more, times were good and IBM was fat, dumb and happy. It was all about the employees, keeping them happy. Keeping stockholders happy was primarily an afterthought, but when times were good, it was even possible to achieve this secondary goal.

    One could argue that some of these CEOs did not even try to serve their stockholders - John Akers was a good example and he took IBM to the brink of failure. Sam, clearly, has every intention of keeping the shareholders happy. Doing so is one of the key metrics on which he is being measured, and he likes achieving his goals... because he's a numbers guy. I don't his business decisions have much to do with greed or personal financial benefit. Sam, after all, already has more money than he will ever be able to spend.

  • Yahoo! IBM Employee Issues message board: "Re: Why?" by "teamb562". Full excerpt: zimowski, appreciate your comments to your original "Why" post. However, I must make comment on one thing you stated:
    "Compete successfully or run the risk of loosing your job. But, better yet, why not just develop some skills that cannot be easily replaced?"

    Developing skills means LITTLE. I have seen highly rated person after person get RA'ed. These persons had current skills and were thought critical and indispensable. I doubt there is one reader of this board who would dispute this. If it were as simple as "developing skills" everyone would be doing it. The reality is, if you're in the wrong place at the wrong time, if you are politically incorrect, if you have an odor, etc, etc, do you are toast. Employees know this and in large part, NO LONGER CARE.

  • Yahoo! IBM Employee Issues message board: "Re: Why?" by "orsonbear". Full excerpt: That is my observation also. Had nothing to do with skills. The people who were RA'd were doing a good job. The organization got the "number" from HQ and did away with the required amount.
  • Yahoo! IBM Employee Issues message board: "Re: Why?" by Bob Rodriguez. Full excerpt: The problem is that some of these resource cut decisions are made at a higher level (2nd and 3rd line, perhaps based on current PBCs). Unless you're in a position with a lot of customer visibility, like sales or other revenue-generating areas, higher-level managers often may not know enough about your skills or contribution to make an informed decision, And if you've been hit once before and find a new job, chances are good that you'll get selected again as the less experienced member of the team, even if your overall skills could benefit IBM in other areas. In the most recent layoff we had, the first line found out at the last minute, and the team lead didn't have any say in the decisions.

    Another problem is that even when skills can be readily replaced, and there are some good India/Brazil people out there, the short training period and adverse conditions tend to discourage any real collaboration or information sharing, since whatever info you give away may be used to take your job, rather than to help the overall team work more effectively. I can remember in the 1980s and early 1990s, we had a great culture of sharing tools and ideas via the forums, but now with steady layoffs and off-shoring, you see a lot less of that at least in public areas.

  • Yahoo! IBM Employee Issues message board: "Re: Why?" by "big.bertha92". Full excerpt: These two posts sum it up very nicely and so true. I'll add any active IBMer that is in operations or non-customer facing is screwed and it's truly just a matter of time before your job is cut. I've been hearing 2Q (June) more lay offs (through the rumor mill) Also, this last lay off (in GBS) cut way too deep. A lot of PMs were cut and now the projects are left scrambling to find PMs to cover. The question is asked "How long before we can hire them back as subcontractors" Boy, this company really is making some bad decisions. (BTW, I'm currently training my replacement and will be gone soon enough)
  • Yahoo! IBM Employee Issues message board: "Re: Why?" by "bits_bytes_and_bugs". Full excerpt: I'm hearing the same thing everywhere I go. Development labs, supply chain, ITD, STG and multiple locations in multiple geos. Not enough resources left to do even basic functions. These organizations, including mine, are barely surviving on what resource is left working large amounts of regular overtime. Yet we keep being challenged to do more with less, while more people are taken out of the business.

    I see an awakening occurring - borne out of the frustration of working large amounts of overtime as a way of life to cover resource shortages and delivering the product or services only to face yet another round of layoffs and yet another round of increased job demands and more overtime. Meanwhile, the execs reap their huge bonuses and the employee gets to keep his job - if he's lucky.

    The awakening is the sudden realization that this staffing model is insane, doesn't serve the employee, and the only way to fight back is to not put in the 40-50% overtime, but to cut back to 10, maybe 15% maximum overtime and let the executives deal with reduced content or service delivery failures or stuff not getting done.

    I believe we need more US employees to put tight limits on their overtime, more US employees to allow work to not get done, employees that move the work-life balance pendulum back towards life, more US employees that let the natural consequences happen because IBM has chosen to egregiously understaff.

    What are they going to do - fire all of us? And like that will help the understaffing situation? Ha! Why not a start a corporate movement named "Only 10", referring to working only a maximum of 10% overtime.

  • Yahoo! IBM Employee Issues message board: "Re: Why?" by "big.bertha92". Full excerpt: I agree with you, unfortunately, what I've seen is that the IBMers left in the United States that are holding together the work done by the Off Shore workers (whether in India or wherever) actually have contempt for the U.S. folks that were displaced - saying that the fired workers weren't cooperating, etc. Of course, this isn't always the case, but I've seen this type of behavior and it's scary to say the least. It's not just the executives that are doing us in.

    IBM is no longer interested in investing in the U.S. worker. They bring over the Off Shore replacement to be trained (airfare, hotel, meals, etc.). What about training for the US workers? It's done rarely, if ever anymore. There's no outrage anywhere - just the silent despair of the folks fired and a few wild ducks trying to make sense out of a senseless situation.

  • Yahoo! IBM Employee Issues message board: "Re: Why?" by "madinpok". Full excerpt: In my development organization a few years ago, our 3rd line manager told us that 50 hours per week was the minimum time we were expected to work year round. That would get you a 3 on your appraisal. If you wanted something better than a 3, you had to work more than 50 hours. There have also been extended periods of up to 6 months at a time where we were ordered to work 6 days a week with requirements of 10 hours a day Monday through Friday and at least 8 hours on Saturday or Sunday.
  • Yahoo! IBM Employee Issues message board: "Re: Why?" by "this_dog_dont_hunt66". Full excerpt: I certainly agree with you and have expressed those same sentiments. The problem is that unless you can get everyone to go along with you, your "protest" will never work. AND I can guarantee you that you will not get more than a handful of people to join you. People need their jobs and they will do whatever is necessary to keep them. IBM management is fully aware of that fact and they will continue to abuse the workers for as long as they possibly can. Why? Because they know they can.
  • Glassdoor IBM reviews. Selected reviews follow:
    • IBM Systems Administrator: (Current Employee) “Great Place to work?” Pros: Great short term opportunities for everyone willing to work hard, wealth of knowledge for those willing to take the time to learn. The knowledge learned from collaboration with coworkers can be invaluable. Cons: No long term opportunities unless you stand out as top 5% of your group. Must play politics well to survive crossfire. Easy to wake up in a dead end position and not realize it until it's almost too late. Advice to Senior Management: Crisis management is not good management. Being good at quickly putting water on fires is not as effective as preventing fires from starting.
    • IBM Sales Representative: (Past Employee - 2009) “Slow and cumbersome.” Pros: Sold, respectable company. Treats customers with respect and good ethics. Genuinely concerned to help customers with resolving their business problems. Cons: Compensation is average at best. Company doesn't want you to be very successful, just marginally successful. If your success gets ahead of you, you will be cut down to size, and be forced to regress to the mean. Advice to Senior Management: Incredibly political organization. It's very clear who's connected and who's not. Management must face that it's a major demotivator for sales employees to know their compensation is deliberately being withheld.
    • IBM Anonymous in Boca Raton, FL: (Current Employee) “Not as good as it used to be.” Pros: Flexibility to work at home for many people. Great benefits. Company name recognition. Cons: Push by IBM to move many jobs from the US to other countries. IBM has made it clear that as a global company, they want a global workforce. While this makes sense in some ways, IBM is letting really good people, with experience and knowledge go, simply because they are based in the US. This move of resources to other countries means there are many people new to the company and job. Excessive workload leads to excessive work hours. It is expected that you will work nights/weekends to complete all the work that needs to be done. Focus on negatives instead of positives. Advice to Senior Management: While moving to a more global workforce, make sure you don't lose valuable experience and knowledge just because that knowledge and experience resides in the US.
    • IBM IT Architect: (Current Employee) “As good as any Indian IT service company.” Pros - Excellent opportunities for learning. All IBM products and technologies are at our disposal, for free to learn. - Work life balance is generally better compared to other Indian IT biggies. Cons - Appraisal system is very bad. People run it like fiefdoms. - Loyalty is given zero importance - Salaries are below industry standard. Advice to Senior Management Pay more and you'll see quality go up.
    • IBM Legal: (Current Employee) “Good and Bad.” Pros: Fantastic benefits. You will work with some of the best people around, and the company has good telework options. Great technology, the company gets respect from its partners due to its size and history. Pay is better than average. Cons: Offshoring is rampant. Company has stopped pushing work-life balance as one of its principles and it shows. Excellent vacation provisions but nearly impossible to take it all. Persistent layoffs have now started to reach excellent people as the pool of weaker employees has already been largely removed. Management's refusal to be forthright with grunt-level employees or the press is highly disturbing. Advice to Senior Management: Think about who benefits from your communications policies and then think about whether that's consistent with how it should be.
    • IBM Consultant in Stockholm, Stockholm (Sweden): (Current Employee) “The IT company that only sets its owner first.” Pros: Great global opportunities but only if you are senior within an area (then you probably won't go because of family.) Cons: Too much focus on short targets The business processes does not fit the consulting arm. Advice to Senior Management: Market based payment and compensation.
    • IBM Technical Intern in Beijing, Beijing (China): (Past Employee - 2009) “Very good experience.” Pros: Good mentoring system. Fine working environment. Opportunity to get hands-on experience with many advanced tasks. Cons: Maybe it could be better to let interns to work on a small part of the whole system, rather than let them work on a self-contained part. Advice to Senior Management: Just fine.
    • BM Senior I/T Specialist in Portland, OR: (Past Employee - 2009) “Proud to have worked at IBM, but glad to be out.” Pros: Great technical resources available - Opportunity to learn new skills (assuming you get the time) - Ability to work from home - Some great people/colleagues. Cons: Upper management does not care about anything but profits. Constant restructuring putting you in places you don't want to be. If you like your current role, don't get used to it, because you'll eventually be forced in to another role you don't really want. After almost 4 years of employment, I received no raises even though I was a top performer each year. In constant fear of layoffs. I lost many good friends over the span of numerous resource actions. Some of these people were excellent and highly technically skilled, however they didn't play the politics game as well as the people who were kept. IBM cares more about the process than the people. Advice to Senior Management: Focus a little less on profits and a lot more on the people who make you those profits. My last year at IBM was awful. Between fear of layoffs and getting pushed in to a role I didn't want to be in, I decided to quit. It's really unfortunate because I was proud to say I worked at IBM and there was so much potential there. I think management needs to realize that they are alienating the people who keep their customers happy.
    • IBM Anonymous in Hawthorne, NY: (Current Employee) “IBM Research is a fast paced place to work.” Pros: IBM Research is working on a range of projects that are going to change the shape of IBM and the industry. Cons: The projects we are working on a research are highly visible and there can be a lot of pressure to completely them quickly. Working extra hours is common, particularly when working with international teams is disparate time zones. Advice to Senior Management: N/A
    • IBM Staff Software Engineer in San Jose, CA: (Current Employee) “Review Software Engineer IBM.” Pros: flexible work hours - frequent remote work - work/life balance - health benefits - fairly easy to move around within the company Cons: relatively slow development process and many procedures - the tools you work with can be really annoying and I have heard better from other companies - IBM is on a big saving trip; don't expect fancy hardware to work with such as your personal laptops, monitor, etc. Advice to Senior Management: make process easier/leaner and tools better
    • IBM Associate Project Manager: (Current Employee) “IBM will off shore your position.” Pros: work from home, make your own hours, no one looking over shoulder, decent salary, IBM is a household name and industry leader. Cons: eventually your position will be off shored, nothing you can do about this, ibm does not care about any individuals. Advice to Senior Management: eventually your position will be off shored also, nothing you can do about this, ibm does not care about any individuals.
    • IBM FTSS: (Current Employee) “The beginning of the end of IBM...going to set just like the Sun.” Pros: Good benefits. Great hardware. Great technical skills. Cons: IBM has lost focus on their core values. Over the past eight years, IBM has been cutting back on the technical skills forcing those of us that remain to continue to take up the slack. With record profits and Earnings per Share Through The Roof, why do they continue to cut? I for one do not understand why they cut the best and keep the weakly skilled. From what I see, it is all political. We need more help and they are running us all in the ground. I have never seen so many disgruntled people in my life. I know this is all being created by the bean counters that have no idea what they are doing. IBM was suppose to be the final company I was going to work for until retirement but there is no way I can stay. I am not enjoying my work anymore. I will be firing IBM in the very near future so I can get my life back. Life is too short to have to put up with this. Advice to Senior Management: My management is great and is just as disgruntled and frustrated as the rest of us. To upper management, what does it take to make up a company? Lou Gerstner knew. It is not the buildings or products, it is the people. You have lost focus on your people and without people, you cannot produce the products or offer the results the customers expect and want. If things keep spiraling like they are, there will be no more customers and no IBM. This is sad to say, IBM was once a great company.
    • IBM Anonymous in San Jose, CA: (Current Employee) “An okay company to work for.” Pros: Provides a very good environment for work life balance - the support is just awesome. You also get to work with people of various calibers coming from diverse backgrounds. Cons: It is a set of independent companies competing with each other. The pay is substantially below the local market, but is presented to you as if you are earning a few percentage points above the market value. Its a mystery where HR gets these figures. Advice to Senior Management: Employees are savvy enough to see beyond the facade that management raises. It would help resolve some of the issues plaguing the company by treating them as partners instead.
    • IBM Managing Consultant in London, England (United Kingdom): (Current Employee) “Lost my work/life balance at IBM UK.” Pros: The only reason to stay with IBM UK is because we get to play with the big guys, which is good to build a resume if you want to look for growth somewhere else. Cons: I lost my work/life balance; there is load of stress work related, and my weight has gone up. When booked for training, have been asked to cancel it in order to continue billing, then I'm asked why I didn't take training. Advice to Senior Management: Please do not let people lose their work/life balance. Try to get more resources into projects; if possible, submit that as part of the RFPs when required.
    • BM Advisory IT Specialist: (Past Employee - 2008) “Advisory IT Specialist.” Pros: Prestige of working for world's largest software development firm Diverse career path tracks: IT Specialist, IT Architect, Project manager. Good opportunities for senior level developers who don't mind leading off-shore teams. Cons: Views people as assets and attempts to maximize profit through use of cheaper off-shore labor so don't expect to make a career at IBM in writing code. People with low networking skills can find it hard to get off their current project. Advice to Senior Management: I don't begrudge IBM for taking the position of off-shoring IT skills. I would suggest though that they identify senior-level developers and work with them to transition over to architect roles. While I was at IBM I felt threatened by off-shore resources. If IBM had done a better job of expressing interest in my career though compensation and professional development opportunities then I may have stayed.
    • IBM Anonymous: (Current Employee) “Pretty good...until your job moves to India.” Pros: Excellent Benefits, competitive salary plan. Cons: Highly Territorial Work Environment. Constant anxiety about layoffs. You never know if you will be the next person whose job will be off-shored. Advice to Senior Management: Be more open and honest about what jobs about being off-shored.
    • IBM Account Executive in Columbus, OH: (Past Employee - 2009.) “IBM has forgotten its legacy and is dead set on re-inventing itself...at the expense of the people that built it up.” Pros: If you are focused on moving up the corporate ladder and playing politics you can go far in IBM, regardless of your talent level, but you will have to re-locate. Cons: You never know when your time is up, regardless of how well you do from a numbers standpoint. There is never any feeling of comfort, always worry that you will be the next to go. IBM has drastically changed as a company and it is all about EPS, period. Advice to Senior Management: Provide regular feedback and updates to your team. If someone is struggling and they don't reach out to you, do the right thing and reach out to them and offer assistance and guidance versus letting them spiral until it's too late.
    • IBM Advisory Software Engineer: (Past Employee - 2009.) “Enjoyed my IBM experience, but the company culture is not the same...” Pros: Many diverse, interesting technologies and products to work on and contribute to their success. Intelligent, motivated colleagues who were very professional and ethical. Flexibility to work from home. Great education opportunities. A good company to gain industry experience, just do not plan to make it a career. Cons: Management decisions to dramatically change compensation packages over the past 15 years and significantly reduce the North American work force has damaged the morale of most IBMers who remain with the company. Not a surprise that IBM dropped out of the Fortune's "100 Best Companies to work for" about 7 years ago based on their growth strategy impact on morale. Top executives reap the rewards of severe cost cutting to meet Wall Street expectations, but this is not a strategy that can last forever. The old culture of being an IBMer used to mean the company expected the employee to do anything for the company 24/7/365, and the employee responded and was motivated to do so because of the culture of trust since IBM took care of ALL of their employees, not just the ones at the top. Sadly, those days are history. Still a lot of good people there hanging on trying to make a difference. Advice to Senior Management Be a true innovative leader in these difficult times and look to return to the policies of Thomas Watson Sr.
    • IBM Anonymous in Dallas, TX: (Current Employee) “A great company (once).” Pros: Great variety in the company. There are really many opportunities to engage at IBM. Cons: A bureaucratic nightmare. Management at IBM is a lost art. You need to come to the job with all the skill and education required. Don't look to IBM to grow an employee. Executive decisions are opaque and seemingly random from an employee's perspective. (In fact, there is probably a lot of randomness at play). IBM has gone from three basic beliefs, with people being the top priority - to a company that doesn't really seem to know what to do with people anymore. The old IBM of Tom Watson knew that without strong people little could be accomplished. That does not appear to be the case now. Advice to Senior Management: Return to basics. You are just another software company, just another hardware company. Get behind your people. If you need to cut your size by 50%, then do it. But once the cutting is done, provide the remaining workforce with runway to rebuild the company. This "death by a thousand cuts" is really hurting IBM.
    • IBM Computer Operator in Raleigh, NC: (Past Employee - 2010) “Computer Operator.” Pros: They have a relaxed culture. There is not a lot of micro management. You are given the opportunity to do your job. Cons: There is no room for advancement. So called layoffs happen at the drop of a hat with no notice. Training is poor at best for new work assignments Advice to Senior Management: Hire the people who do the work. Stop outsourcing everything trying to save a penny while treating US employees like they don't matter.
    • IBM Anonymous: (Past Employee - 2008) “Engineer in Supply Chain.” Pros: I was given opportunities to work on projects outside of my job responsibilities. IBM followed through on commitments within Resource Package (ex. education reimbursement, training with a job placement group and lump sum for years of service). Other companies in the area didn't give their employees anything or did not follow through on what they committed. Cons: Stay out of debt as much as possible because there is a very good chance your job will get moved overseas....definitely out of the country. Be prepared to have a lot of late night and early morning conference calls with other workers in other countries possibly 12-13 hours away. You never really get the feeling that you are on a team...everyone is out for themselves. The motto should be...I only help others that can help me. Advice to Senior Management: Good luck...I never met anyone in my 20 years with your company that said they love what they do. Whenever I did meet someone at other companies that said that they love their job...I would look at them like they had "3-eyes".
    • IBM Consultant- Business Risk Management in Washington, DC: (Current Employee) “This Place is the pits!” Pros - Name recognition - Ability to command more far money at another firm - Plenty of Learning and knowledge opportunities - Cons - NO work/life balance (we are expected to be the last ones in the office, despite the fact that the client staff leaves at least 3 hours before us) - Management is the worst, no communication and lots of sugar coating bs - salary below industry average; bonuses are the WORST and pay raises are non-existent unless you're already making $250K - morale low - resource actions are arbitrary - promotion process is a major joke, not at all merit based; based on how much @ss you kissed - WAY TOO MANY POLITICS. Advice to Senior Management: At least 60% of management needs to be fired.
  • LinkedIn: The Greater IBM Connection. You have an Hour One on One with Sam Palmisano. What Would You Tell Him? (Selected comments follow).
    • Just as we as individuals need to re-invent ourselves every 5 to 8 years, a successful corporation must do the same thing - especially one as technology based as IBM. Back when I was working on my Masters degree, we did a case study on a company in the late 1800's that made buggy whips. They had the opportunity to get into the electric horn business as part of an effort to diversify. The case study looked into the rationale they used to not make the investment. The company was out of business 5 years later. Its important that IBM not suffer from this "buggy whip" syndrome.

      I think we would all agree that it was the work of Thomas Watson Sr and Jr that made IBM the company to work for in the 50's and 60's - both in how it treated it’s employee's and how the company engaged with customers. The anti-trust lawsuit in 1969 shaped IBM into a very silo’ed company with vertical pillars that shared little in common except the brand. It’s my understanding that IBM actually had a plan at one point to break up much like what Bell did - a plan that did not need to be implemented. One of IBM's darkest times came in the late 80's early 90's with John Akers as CEO, Microsoft's brilliant marketing campaign that "the mainframe is dead", and a notable economic downturn. Akers thought that it was the end for IBM and looked to implement the anti-trust break-up plan as a way of going forward. Back in those days, there were lay-offs and site closings, just like there are now. The Services group was almost sold off if I remember correctly.

      At that point, Lou Gerstner became CEO. I can still remember the water fountain jokes about how could the "tobacco" guy know anything about high tech company - boy were we wrong! Lou knew the value of the brand and how badly we all had lost sight of that. I think that what Lou did in re-inventing IBM makes him one of the best CEO's of the 20th century. Lou had integrity and I think that is easily visible in the way IBM ran under his leadership. When Lou left and Sam replaced him, I for one was disappointed.

      Sam, for me, embodies the "talking head". All the right words come out but there's nothing underneath it. You don’t see anything that inspires confidence. Look at the employee recognition programs under Sam’s tutelage. Many of the things that made IBM a great company to work for and now gone. Gone are all formal and informal award programs. Gone is the focus on education and training. The last recognition program, the “Thanks” program, will be terminated shortly if it hasn’t been already. (Editor's note: It's gone.)

      Sam is clearly in it for the short haul and for his own personal gain. A case in point. Last spring he met with Obama as part of a CEO summit to discuss job creation. The video was posted on the IBM web site in which Sam stated that even as the economy was slowing down, IBM would continue to invest and drive to take a leadership position that would make it even stronger once the recovery started. It was less than a week later that the SWG RA of Feb 09 was rolled out - the one that hit me. So much for honestly and integrity.

      So Sam's re-invention of IBM involves massive divestment of its US employee base and moving jobs off shore, guised in a rationale of "investing in emerging markets". IBM has now honed the art of the Layoff to a fine art. It breaks the size of the group down to make it small enough to avoid the State and Federal regulations requiring public disclosure and in doing so keeps off the 'bad press" radar.

      To reiterate what I posted earlier, my concern is the long term viability of the IBM company. With Lou, it was very clear that his long term goal was the success of IBM as an American Fortune 100 company. With Sam, it’s just not clear to me. My hope is, once Sam leaves, IBM finds another CEO that values the hearatige that is IBM.

    • Reminds me of the anecdote in Readers Digest, 'When my boss returned to the office, he was told that everyone had been looking for him. That set him off on a speech about how indispensable he was to the company. "Actually," interrupted his assistant, "you left with the key to the stationery closet." '

      Sure, you try to find another position, but then you just have to move on. The thing that the MBAs running companies by spreadsheet forget is that treating people like numbers make them less loyal and more apt to be mobile. Why should they care about your bottom line when they know that, even if you make it, their jobs are always at risk? Situational loyalty is the best such companies can hope for.

    • IBM is just doing what a lot of other large multi-nationals are, but it is much better /quieter than most of them. I would not fight IBM over this because I think it’s the wrong opponent. IBM is only doing what it needs to do to remain/become more profitable, which they’d better dam well do every quarter or suffer the market consequences!

      This fight belongs in the US sociopolitical arena. And it’s basically a question of whether or not our country can sustain a middle class any longer. If it can’t, then I am at a loss at what to do with all those folks who cannot “re-tool” to be part of the knowledge economy.

      And for those you Aces who think YOU are immune to involuntary vocational dislocation, e.g. getting caught up in an RA, just look at the band kinds of IBM employees let go over the past 18 months. No it’s not just the non-exempts who need to worry, IBM (and others) have shown that it is every bit as feasible to ship Band 9, 10 and higher type jobs to Mumbai or Shanghai or wherever else the rates/salaries are cheaper.

      What are we left with? My take is that it’s the old Lower/Middle/Upper level wage-earner pyramid in which significant portions of the top and the mid-level workforce are being exported to our ever-more viable competitors. Welcome to the "new normal"…

    • Hmm... Fighting to keep my job? Odd concept. What kind of "job" (in the widest sense) is it if you need to go to battle to keep it? Sounds like a battle won't fix it anyway - you're probably in for a war.

      Let's see... In 1996 I joined IBM in the wake of an outsourcing decision by my previous employer (Insurance Company). I wasn't in scope to go, but I elected to jump because IBM represented my core business. I felt good because I had some say in my future - no fighting required.

      Since then I've survived 2 redundancy programmes, one of which saw my partner thrown out after she was kindly allowed to spend the last 8 weeks of her employment training someone else to do her job in South Africa (and they still can't do it properly some 6 years later!). Fighting not really an option - it was a "done deal" redundancy for cost cutting reasons, plain and simple.

      The "C" plan pensions change (Editor's note: in Great Britain) in 2006 came with an opportunity to influence my future, so I felt involved (if not exactly valued by IBM). No point fighting - I chose the, at worst neutral, solution.

      Then came "Pensions 2009" and punitive Early Retirement Terms. Why change the terms if early retirement wasn't to be offered any more anyway? Answer: This is a redundancy programme by stealth for those over 50. All this at a time when IBM enjoyed a record cash bank balance and record quarter after record quarter. Despite this, the stock price hasn't changed, except in line with the market, so the execs are doing nothing to impress Wall Street. I could have spent several grand joining the legal actions against IBM regarding constructive dismissal, etc, but without a reasonable chance of decent compensation, I'd be financing the lawyers' bonuses instead of those of the IBM board. My pockets are not deep enough to fight for a principle.

      The value proposition working for IBM had changed to the point of absurdity. It wasn't fun any more to be part of the machine. So I looked for the opportunity within the change and took positive action to look after No 1. Nobody else will - certainly nobody in IBM!

      I miss the IBM family, but not IBM. I'm in control of my future again and have a pension as income and operating capital to execute the plans. So far, so good.

      Years ago an IBM mentor told me "You need to know which battles to pick and when to roll with the flow." He was absolutely right.

    • Everyone judges whether their job (or chosen employer for that matter) is a "good one" (and hence worth fighting for) by their own experience. This year's graduate intake will be delighted to have landed a job and think of me as a dinosaur. I doubt many even know how IBM has changed before they joined (sorry Dennis). From my perspective, the value proposition in 1996 was fair but by that standard, in 2010 it is not. The saying about "the good ol' days" doesn't bode well for any future, but it is relative to what each of us considers as "old days".

      Incidentally, there is no such thing as "one" IBM. Working in GTS in the UK I do not recognise the IBM of which Sam & co speak in their quarterly announcements. I bet our colleagues' perspective in China, India and Eastern Europe, etc is quite different to mine.

    • Fighting for your job is useless at the company level. Once you're tagged, you're out no matter how good a job you've done. Management doesn't care and don't want to hear anything other than "it will save you money that you can then sock away in your own pocket!!" The best thing you can do to fight is to keep your skills and education updated, your reputation good and your network strong. We need to fight at a government level and demand that the US government support and protect the US worker who pays US taxes. Take every election opportunity to do that, and every media opportunity to highlight what is going on in our industry because it will happen in others as well and soon there will be no opportunity outside of healthcare and service industries. Other countries protect their own, this one needs to as well.
  • eWeek: 11 Tech Companies 'Willfully' Violating H-1B Laws. Excerpt: There are currently 21 companies that have been debarred by the U.S. Department of Labor’s Wage and Hour Division as being willful violators of laws that regulate the use of H-1B visas for foreign workers. Here, eWEEK looks at 11 different technology or IT-related companies that are on the Labor Department’s list, including a look at the companies’ locations and periods of debarment. During the debarment period, these companies are not allowed to apply for or obtain H-1B visas for foreign workers. These IT companies have "committed either a willful failure or a misrepresentation of a material fact," according to Labor Department statistics. One company that faces additional sanctions is Peri Software Solutions, which currently owes $1.4 million in back wages. Right now, Peri Software’s petition is under review by the Labor Department.
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  • To Alliance@IBM supporters: The Alliance is the only organization that advocates and supports IBM employees and ex-employees. In fact, there are few like it in the Information Technology field. It is always difficult to keep an organization like this alive, but as a supporter you know how important it is that we exist. We are calling on you today to help keep us alive another year by joining as a member or associate member. See our online forms below. As our membership has dropped, it is imperative that we gain new members or this organization and web site will cease to exist. Help us keep our organizing and advocacy work alive!
  • General Visitor Comments: Due to a lack of membership growth the comment sections will be closed until we see sufficient growth in full membership, associate membership or donations. Many of you that visit our site have not yet joined, but seem to value its existence. The only comment section that will remain open will be Job Cuts Reports. If you have information that you want the Alliance to know about please send to ibmunionalliance@gmail.com. Information of importance will be put on the front page of this web site. To join go here: Join The Alliance! or here: Join The Alliance!
  • Tell-A-Friend! Take action! IBM must employ US workers on ALL Government contracts! Pass your message on to your friends and colleagues, and invite them to sign up for Alliance@IBM.
  • Job Cut Reports
    • Comment 3/20/10: If you have been recently cut by IBM and believe it is based on age discrimination and you are interested in a class action lawsuit then contact Jeff Young at McTeague, Higbee, Case, Cohen, Whitney & Toker, since when I spoke to him he indicated if there were approx. 50 People involved then he could pursue it. I know he has settled cases in the past but can't discuss the outcome. Here is additional info: Address: PO Box 5000 4 Union Park Topsham, ME 04086-5000 Map & Directions Phone: (207) 725-5581 Fax: (207) 725-1090 E-mail: Contact Us Web site: http://www.me-law.com -Screwed-
    • Comment 3/20/10: I was in IBM for 13 years. I was trying to work hard to keep my job. Due to I am an asian, I have done most work in my team. I got the bad manager. She has not education at all; but she works up to be a sr. test manager. She always let the team member lie to her and most my team members are good talker without only limited technical knowledge. I am a asian and I am having a accent with the English. But I am the one get all the work done. And my manager always giving overload work and then giving all the credit to team member. She's highly discrimination. I am the only one in my team get laid off (Resource Action). My manager name Linda. I will provide most information after I am officially by eom. I do not want to their provide me the laid off package -Anonymous-
    • Comment 3/20/10: If you are an Alliance member, and wish to post comments in a members only forum, we can accommodate you. First, you must verify your membership by simply including your email address that you used when you signed up as a member. We do not and will not post that information, publicly.

      Second, We have set up a private forum for members only. Once we verify your membership and email from your post, we can send you the link to the private forum. You can then register for the forum, using your verified email. I will personally make sure registration is swift, and then you can begin posting comments in several of the sections of the private forum.

      Just to be clear: If you use the Job Cuts Reports board to post Job cuts related information, and you are a member, we will still protect your identity and will post your comments with a pseudonym of your choice or as Anonymous. Again, The private forum is for dues members only. It is protected by the same Federal laws that protect us from anti-union trouble makers and union busters. Be sure to include your email that you used to sign up as an Alliance member. Contact us if you have more questions. -Rick White Treasurer, Organizer, IT Administrator and Health & Safety Representative. CWA Local 1701, Alliance@IBM.

    • Comment 3/22/10: When one gets an RA, do they have to apply for other IBM jobs (either successfully or unsuccessfully) in order to get the severance? I wouldn't think so, but just in case... -Anonymous-
    • Comment 3/22/10: No, one does not have to apply, nor even look on the GOM for another IBM job to get the severance. Only things that can cause the severance to be withheld is a) Turning down another comparable (as defined in the packet) job in IBM (if you're not looking, than someone would have had to come find you and make a formal offer through your manager or b) Something you do in violation of the BCGs or other terms of employment, where they can terminate you for cause before your exit date. BTW, I say these official-sounding terms not because I am a manager or anything, but a) I was RAed and b) I *was* a manager, so I know the official stuff ;-) -RAed last Jan-
    • Comment 3/22/10: I've been reading comments about getting the so called one month notice to find another comparable job at IBM. You don't have to look for another position at IBM during your month long notice, to get your severance package. You can look for another position, but IBM will not hire you. I know of someone in Toronto that found and applied for an available and comparable IBM position after being RA'ed. He was then told he would not be considered because he was not qualified. If IBM wants you gone, you are gone, any job search within IBM during this so called "month notice" is just a waste of time.

      You're better off using your time looking outside IBM. Let IBM cut it's own throat by getting rid of it's experienced front line staff.

      I also heard a story about an IBM Toronto sales person RA'ed in March. Her manager wanted her to sign a letter saying she was retiring and wanted her to tell all her customers the same. She refused to sign and told her customers that she was being let go. Good for her. This is another typical IBM attempt to cover the truth.

      I was a front line service tech with 22 years experience at IBM. After I was RA'ed, IBM sub-contracted most of the equipment I worked on, to a cheaper service company. IBM is acting as a middle man on these service contracts. My message to the IBM customers is "if IBM does not want to provide IBM staff to service your IBM equipment, and want to act as a middle man, then I say cut out the middle man and deal directly with the cheaper sub-contract company. The result would be the same and you would actually get what you pay for." -RA'ed in Canada Mar 2009-

    • Comment 3/23/10: On March 1 I was notified that I was impacted due to " a resource action". My employment ends March 31. Division 07, Dept. L46A -Anonymous-
    • Comment 3/23/10: I was in the GDS division -public sector. We lost 15 team members to this 3.1.2010 Labor Action -Anonymous-
    • Comment 3/23/10: I'm not sure about all the people cut here in Tucson, but I am aware of at least 3 others beside myself, in different areas. As for the organization, ISC, there were 63, including myself -Anonymous-
    • Comment 3/23/10: Got RA'd on March 1 - last year 8 got RA'd in my dept. Today I was offered and accepted a better job w/better pay. My condolences to those left behind. Thanks Sam!!! -Happy!!-
    • Comment 3/24/10: I'm wondering if anyone else who was converted to non-exempt is being screwed out of stand-by time for 24/7 on call or hotpager support. I was on an account that allowed us to claim stand-by time while we were primary on-call (hotpager) My new account doesn't allow this but we are still required to be on-call for primary callout. We only get to claim OT if we get paged but we are required to be available. -No-More-OT-
    • Comment 3/24/10: Got RA'd. I am in ISSW in the US. We already don't have enough people to fulfill the contracts we have but they are still letting people go. IBM management are morons. -Anonymous-
    • Comment 3/24/10: I don't know what its like in the states but in Canada they have to pay you severance pay. They just don't have to pay the 2 weeks. By by law they have to pay one week/year. -Whatever- Alliance reply: There is no law in the US that says a company must pay severance.
    • Comment 3/25/10: Work out of the Toronto Lab and the last few days have been the last day for many employees. Our group which is part of AIM lost 15% of it's staff. Other groups in the lab have experienced the same number. Across the lab this would equal 300+ jobs. Hearing the numbers from our teams in Raleigh and Burlingame, I'd imagine the total cuts with this round are well above what your reporting -Joe-
    • Comment 3/25/10: I was told by my manager today that the Resource Action in Canada earlier this month was significant, he did not mentioned the actual number of folks got RA’d, however, I personally know of 10 people that was let go in TS / ITS in the Toronto are …..so just as he finish speaking of the RA, he mentioned to me I should be happy to have a job and and goes on to say that all customer / education travels is no longer allowed.. I’m now on the hook for paying my mileage / parking to and from customers… For those who got RA’d, I hope you find a job soon and be happy you are out of this cesspit. I really hate working for IBM, hope to be out of IBM soon, had enough of these uneducated / unskilled managers speaking down to us highly skilled employees… Sucks to be an IBMer…. -zion-
    • Comment 3/26/10: I reported my RA from IBM RSS back on Mar 1. Found an awesome job in STG, the manager was prepared to make me an offer. Then STG froze all jobs, at least to those who are being let go. So, I wasted three weeks trying to keep a spot in ibm after 26 years. Class act, IBM, post jobs but don't actually let us have them. -FTSS-
    • Comment 3/26/10: just wanted to follow on my request for people to talk to Jeff Young at McTeague, Higbee, Case, Cohen, Whitney & Toker about age discrimination, like everyone else I understand that IBM has an army full of lawyers and dotted ever I and crossed every T but consider this...If the media could be brought into the discussion with a very public trial then the playing field might be more level. Here are some facts to consider from a company that doesn't want even talk about US headcount -IBM CEO received 21M last year while continuing to move jobs overseas at a time when the US economy hasn't seen worse times since great depression:
      • Top IBM exec has just pleaded guilty to insider trading
      • IBM has accepted state and federal $$$ for stimulus to add jobs in US
      • IBM profits last year were highest ever though they didn't grow the business with Revenue.

      This is a company that I joined 24 years ago that I don't even recognize since at one time they seemed to be a company with a sense of fairness/honestly and integrity. But now when you mention that to the executives they just indicate that what got US in trouble...now they have become this evil empire that will do whatever it takes to make quarterly numbers. Wouldn't it be nice to see a follow on to Michael Moore's Roger and Me called Sam I AM. IBMer are probably more conservative that GM employees which is why we may seem to go away quietly but the facts speak for themselves and should be aired more publicly -screwed-

    • Comment 3/26/10: to screwed - I absolutely will contact Jeff Young, just waiting to receive my separation payment. I urge everyone else in this round to do the same. My theory is not so much "age", but "years" - so they can avoid paying retirement benefits. -screwed2-
    • Comment 3/26/10: -screwed- IBM never does anything wrong or immoral. All claims to the contrary are without merit. The news media and all our government (state and federal) believe this. That is why any investigations on any IBM wrongdoings will never see even a bit of light. -anonymous-
    • Comment 3/26/10: I can confirm a couple (2) RA's out of our building (GBS) in the vancouver area (all hush, hush), plus I heard a few more across the street (sales/support, not GBS). We also lost our O/T and GBS finally came out with targets that still include 10% O/T 44 to 45 hour work weeks. Of course we've never rec'd actually communication (email) about these O/T targets. It is always verbal, never written. My wife is in the medical industry (which has strong unions). After a decade of both of us working (medical vs. IT), she will finally be the primary breadwinner in our household. I'd hate to be a single income family working at IBM. As for severance, I've heard Band 6 and above in Canada can get up to 3 weeks/year (as part of the hush, hush campaign) and Band 5 or below can get up to 2 weeks/year. -west coast canada-
    • Comment 3/26/10: Cut. Atlanta, GA ITD, Complex Engagement Services -Anonymous-
    • Comment 3/26/10: FTSS - That should not surprise you at all with 26 years in this company. Same thing happened to one of my coworkers with STG. In the past few years I have only known one person who was ever successful in finding a position and that was a fluke. -long time beemer-
    • Comment 3/27/10: -west coast canada- USA RAed only get max. of 2 weeks pay for max. of 26 weeks. Is it Canadian labor law for getting 3 weeks pay for salaried employees? Of course if we had a North American IBM union we could get more or have a fight to save jobs. -RA'ed2009-
    • Comment 3/27/10: I can also confirm (3) RA's out of our building (GBS) in the Montreal area including myself as of March31st . Many others also RA'd at least six that I know personally. 2 Oracle DBAs I was working with had to train their India replacements over a period of 6 weeks. Initially they were told that they would be working on another account that was a lie. As for myself PBC of 2 and 2+ during my 12 years at IBM suddenly a fabricated 3 last January -Montreal Canada-
    • Comment 3/27/10: NO -Drgunzet- IT IS YOU WHO DO NOT GET IT. Without a union and without a contract there is NOTHING that can be done from the employee side. Any action an employee may take like work slowdowns or strikes without being organized first and being represented by a union will more likely result in the employees being terminated then anything constructive.

      How as employees do we stop offshoring?? Beg the board of directors to pweese stop? Or by having it defined in a labor contract. The government will not stop offshoring for us. Corporate America will not stop it. Corporate Canada or the Canadian Government will not stop it either. Writing your Representatives will do no good. Calling the Newspapers does no good. Getting it on TV does no good.

      Please enlighten us how you expect a group trying to organize workers into a union who do not represent anyone yet to show results?? Getting membership in high enough numbers to vote in a union is the only result that can be produced by any of us members at this point. THEN, when we are legally represented by a union we can vote on what we want OUR negotiators to get in writing during collective bargaining with IBM Management. Be it stopping offshoring, Forcing Onshoring when possible. Defining layoffs by seniority and right to recall before hiring new employees and so on. You want to stop this abuse by IBM? Join the union effort.

      Sheer raw numbers is the only thing that counts at this point. The only result we can achieve is enough members to successfully organize IBM. After that its up to us what we want our union to work on. Hope this has cleared up your misunderstanding . Hope you decide to join us and make a difference. -Exodus2007-

    • Comment 3/28/10: RA'd March 1. Working to find a new position outside IBM. I am a Project Manager (51. I work out of a home office in SCM -Anonymous-

    Editor's note: Many more job cut comments are available in the highlights from these weeks:

News and Opinion Concerning Health Savings Accounts, Medical Costs and Health Care Reform
Minimize
  • New York Times: Is Any Illness Covered? By Nicholas D. Kristoff. Excerpts: Opponents of the reform proposals argue: If you like the Department of Motor Vehicles, you’ll love Obamacare. But as the drama of Zack and Jan shows, the only bureaucrats more obdurate than those at the D.M.V. are the ones working for insurance companies. The existing system is preposterous: we rely on insurance companies whose business model is based on accepting premiums from healthy people and devising ways to exclude from coverage those who most desperately need medical care.

    Jan’s stomach was removed, and she underwent extensive chemotherapy. Then in October, her doctors discovered that the cancer had spread to her intestines. She has been hospitalized ever since.

    The insurance company is InterGlobal, based in London, and the policy ostensibly covered up to $1.7 million in costs. But, according to Zack, the company said the policy allowed it to cut Jan off because she suffered from a “chronic condition.” It stopped paying her bills in January, Zack says.

    I reached Sophie Walker, the group head of claims for InterGlobal. She said she couldn’t talk about an individual case. But she explained in an e-mail message that with a “chronic condition” the policies can have a much lower limit, $85,000, on lifetime claims. That’s the limit that Jan ran into in January, Zack says. Then Ms. Walker gave me the company’s definition of “chronic” (you couldn’t make this up):

    “Chronic means a medical condition which has at least one of the following characteristics: has no known cure; is likely to recur; requires palliative treatment; needs prolonged monitoring/ treatment; is permanent; requires specialist training/rehabilitation; is caused by changes to the body that cannot be reversed.”

    That sounds like a spoof from “The Daily Show.” To translate: We’ll pay for care unless you get sick with just about anything that might be expensive. Then we’ll cut you off at the knees. ...

    Those opposing reform argue that emergency rooms are always available as a backstop for those without insurance. That rings hollow for a woman with, say, stomach cancer. More broadly, E.R.’s simply cannot solve the larger health needs of the roughly 75 million Americans who are either uninsured or underinsured.

    The conundrum is this: It’s in the interest of insurance companies to exclude people who are sick, while it’s in our national interest to see them covered. Plus, it’s the right thing to do.

  • Bloomberg News, courtesy of the Washington Post: When drug makers' profits outweigh penalties. By David Evans. Excerpts: Prosecutor Michael Loucks remembers clearly when attorneys for Pfizer, the world's largest drug company, looked across the table and promised it wouldn't break the law again. It was January 2004, and the lawyers were negotiating in a conference room on the ninth floor of the federal courthouse in Boston, where Loucks was head of the health-care fraud unit of the U.S. Attorney's Office. One of Pfizer's units had been pushing doctors to prescribe an epilepsy drug called Neurontin for uses the Food and Drug Administration had never approved. In the agreement the lawyers eventually hammered out, the Pfizer unit, Warner-Lambert, pleaded guilty to two felony counts of marketing a drug for unapproved uses. New York-based Pfizer agreed to pay $430 million in criminal fines and civil penalties, and the company's lawyers assured Loucks and three other prosecutors that Pfizer and its units would stop promoting drugs for unauthorized purposes. What Loucks, who was acting U.S. attorney in Boston until November, didn't know until years later was that Pfizer managers were breaking that pledge not to practice off-label marketing even before the ink was dry on their plea.

    On the morning of Sept. 2, 2009, another Pfizer unit, Pharmacia & Upjohn, agreed to plead guilty to the same crime. This time, Pfizer executives had been instructing more than 100 salespeople to promote Bextra -- a drug approved only for the relief of arthritis and menstrual discomfort -- for treatment of acute pain of all kinds.

    For this new felony, Pfizer paid the largest criminal fine in U.S. history: $1.19 billion. On the same day, it paid $1 billion to settle civil cases involving the off-label promotion of Bextra and three other drugs with the United States and 49 states.

    "At the very same time Pfizer was in our office negotiating and resolving the allegations of criminal conduct in 2004, Pfizer was itself in its other operations violating those very same laws," Loucks, 54, says. "They've repeatedly marketed drugs for things they knew they couldn't demonstrate efficacy for. That's clearly criminal." The penalties Pfizer paid for promoting Bextra off-label were the latest chapter in the drug's benighted history. The FDA found Bextra to be so dangerous that Pfizer took it off the market for all uses in 2005. ...

    If the law is clear, why do drug companies keep breaking it? The answer lies in economics. Pharmaceutical companies spend about $1 billion to develop and test a new drug. To recoup their investment, the companies want doctors to prescribe their drugs as widely as possible. Since May 2004, Pfizer, Eli Lilly, Bristol-Myers Squibb and four other drug companies have paid a total of $7 billion in fines and penalties. Six of the companies admitted in court that they marketed medicines for unapproved uses. In September 2007, New York-based Bristol-Myers paid $515 million -- without admitting or denying wrongdoing -- to federal and state governments in a civil lawsuit brought by the Justice Department. The six other companies pleaded guilty in criminal cases. ...

    As large as the penalties are for drug companies caught breaking the off-label law, the fines are tiny compared with the firms' annual revenue. The $2.3 billion in fines and penalties Pfizer paid for marketing Bextra and three other drugs cited in the Sept. 2 plea agreement for off-label uses amount to just 14 percent of its $16.8 billion in revenue from selling those medicines from 2001 to 2008. The total of $2.75 billion Pfizer has paid in off-label penalties since 2004 is a little more than 1 percent of the company's revenue of $245 billion from 2004 to 2008. Lilly already had a criminal conviction for misbranding a drug when it broke the law again in promoting schizophrenia drug Zyprexa for off-label uses beginning in 1999. The medication provided Lilly with $36 billion in revenue from 2000 to 2008. That's more than 25 times as much as the total penalties Lilly paid in January.

    Companies regard the risk of multimillion-dollar penalties as just another cost of doing business, says Lon Schneider, a professor at the University of Southern California's Keck School of Medicine in Los Angeles. In 2006, he led a study for the National Institute of Mental Health of off-label use of drugs, including Zyprexa. "There's an unwritten business plan," he says. "They're drivers that knowingly speed. If stopped, they pay the fine, and then they do it again."

  • New York Times: For Consumers, Clarity on Health Care Changes. By Tara Siegel Bernard.
  • New York Times: In Health Bill, Obama Attacks Wealth Inequality. By David Leonhardt. Excerpts: For all the political and economic uncertainties about health reform, at least one thing seems clear: The bill that President Obama signed on Tuesday is the federal government’s biggest attack on economic inequality since inequality began rising more than three decades ago. Over most of that period, government policy and market forces have been moving in the same direction, both increasing inequality. The pretax incomes of the wealthy have soared since the late 1970s, while their tax rates have fallen more than rates for the middle class and poor.

    Nearly every major aspect of the health bill pushes in the other direction. This fact helps explain why Mr. Obama was willing to spend so much political capital on the issue, even though it did not appear to be his top priority as a presidential candidate. Beyond the health reform’s effect on the medical system, it is the centerpiece of his deliberate effort to end what historians have called the age of Reagan. ...

    The bill is the most sweeping piece of federal legislation since Medicare was passed in 1965. It aims to smooth out one of the roughest edges in American society — the inability of many people to afford medical care after they lose a job or get sick. And it would do so in large measure by taxing the rich. A big chunk of the money to pay for the bill comes from lifting payroll taxes on households making more than $250,000. On average, the annual tax bill for households making more than $1 million a year will rise by $46,000 in 2013, according to the Tax Policy Center, a Washington research group. Another major piece of financing would cut Medicare subsidies for private insurers, ultimately affecting their executives and shareholders.

    The benefits, meanwhile, flow mostly to households making less than four times the poverty level — $88,200 for a family of four people. Those without insurance in this group will become eligible to receive subsidies or to join Medicaid. (Many of the poor are already covered by Medicaid.) Insurance costs are also likely to drop for higher-income workers at small companies. ...

    Since 1980, median real household income has risen less than 15 percent. The only period of strong middle-class income growth during this time came in the mid- and late 1990s, which by coincidence was also the one time when taxes on the affluent were rising. For most of the last three decades, tax rates for the wealthy have been falling, while their pretax pay has been rising rapidly. Real incomes at the 99.99th percentile have jumped more than 300 percent since 1980. At the 99th percentile — about $300,000 today — real pay has roughly doubled.

    The laissez-faire revolution that Mr. Reagan started did not cause these trends. But its policies — tax cuts, light regulation, a patchwork safety net — have contributed to them. Health reform hardly solves all of the American economy’s problems. Economic growth over the last decade was slower than in any decade since World War II. The tax cuts of the last 30 years, the two current wars, the Great Recession, the stimulus program and the looming retirement of the baby boomers have created huge deficits. Educational gains have slowed, and the planet is getting hotter. ...

    Before he became Mr. Obama’s top economic adviser, Lawrence Summers told me a story about helping his daughter study for her Advanced Placement exam in American history. While doing so, Mr. Summers realized that the federal government had not passed major social legislation in decades. There was the frenzy of the New Deal, followed by the G.I. Bill, the Interstate Highway System, civil rights and Medicare — and then nothing worth its own section in the history books. Now there is.

  • New York Times: A Grand Achievement, or a Lost Opportunity? By David M. Herszenhorn. Excerpts: When the last swords in the great health care clash finally clatter to the ground, and Congressional Democrats head home to savor their victory, a question that may still nag at them — and the party’s liberal base — is whether they missed a last, best chance to create the government-run insurance plan known as the public option. For many Democrats, the public option was the be-all and end-all of the health care debate for much of the past year. Even after President Obama, in a speech to a joint session of Congress in September, said he could live without it, Speaker Nancy Pelosi and other Democrats battled to keep it in the legislation. ...

    Senator Bernard Sanders, independent of Vermont, who supports not just a public plan but also a government-run Medicare-for-all system, said he had secured a commitment from the majority leader, Harry Reid of Nevada, for a future vote on a public plan, when it could well be harder to pass. But Mr. Sanders also said Democrats were smart to quit while they were ahead. “Is it possible that if I or somebody else introduced the public option today, that it conceivably would go back to the House and be passed?” he asked. “Is it possible? Yes. Is it possible that it would fail? Yes. Is it possible then you would not have the reconciliation bill? Absolutely. Is that a risk work taking at this moment? I think not.”

  • New York Times op-ed: The Fight Is Over, the Myths Remain. By Brendan Nyhan. Excerpts: AT the White House signing ceremony for health care legislation on Tuesday, President Obama declared, “In a few moments, when I sign this bill, all of the overheated rhetoric over reform will finally confront the reality of reform.” For Democrats nervous about political fallout from the bill in the November midterm elections, it’s reassuring to imagine that the myths about the legislation — that it provides free coverage to illegal immigrants, uses taxpayer money to subsidize abortions and mandates end-of-life counseling for the elderly — will be dispelled by its passage.

    But public knowledge of the plan’s contents may not improve as quickly as Democrats hope. While some of the more outlandish rumors may dissipate, it is likely that misperceptions will linger for years, hindering substantive debate over the merits of the country’s new health care system. The reasons are rooted in human psychology.

    Studies have shown that people tend to seek out information that is consistent with their views; think of liberal fans of MSNBC and conservative devotees of Fox News. Liberals and conservatives also tend to process the information that they receive with a bias toward their pre-existing opinions, accepting claims that are consistent with their point of view and rejecting those that are not. As a result, information that contradicts their prior attitudes or beliefs is often disregarded, especially if those beliefs are strongly held.

  • AARP Bulletin Today: What Health Care Reform Will Mean to You. A quick guide for people age 50 and older. By Elizabeth Agnvall . Excerpts: It may be, like many Americans, that you’ve been bewildered—or bored—by the raft of details on health care legislation. But now that the overhaul is the law of the land, you’re probably wondering what the reforms will mean to you and your family. Here is a simple guide to the new law for those age 50-plus. Look for your own situation below.
  • Investopedia, courtesy of Yahoo! Finance: 10 Ways the New Healthcare Bill May Affect You. By Katie Adams. Excerpt: The Patient Protection and Affordable Healthcare Act, more commonly referred to as the "healthcare bill", has taken over a year to craft and has been a lightning rod for political debate because it effectively reshapes major facets of the country's healthcare industry. Here are 10 things you need to know about how the new law may affect you:
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.

  • Forbes: The Misinformed Tea Party Movement. For an antitax group, they don't know much about taxes. By Bruce Bartlett. Excerpts: On March 16 the Tea Party crowd showed up for yet another demonstration on Capitol Hill in Washington. Curious about the factual knowledge these people have regarding the issues they are protesting, my friend David Frum enlisted some interns to interview as many Tea Partyers as possible on a couple of basic questions. They got 57 responses--a pretty good-sized sample from a crowd that numbered between 300 and 500 people. ...

    Tuesday's Tea Party crowd, however, thought that federal taxes were almost three times as high as they actually are. The average response was 42% of GDP and the median 40%. The highest figure recorded in all of American history was half those figures: 20.9% at the peak of World War II in 1944. ...

    According to calculations by the Joint Committee on Taxation, a congressional committee, tax filers with adjusted gross incomes between $40,000 and $50,000 have an average federal income tax burden of just 1.7%. Those with adjusted gross incomes between $50,000 and $75,000 have an average burden of 4.2%. ...

    Tea Partyers also seem to have a very distorted view of the direction of federal taxes. They were asked whether they are higher, lower or the same as when Barack Obama was inaugurated last year. More than two-thirds thought that taxes are higher today, and only 4% thought they were lower; the rest said they are the same.

    As noted earlier, federal taxes are very considerably lower by every measure since Obama became president. And given the economic circumstances, it's hard to imagine that a tax increase would have been enacted last year. In fact, 40% of Obama's stimulus package involved tax cuts. These include the Making Work Pay Credit, which reduces federal taxes for all taxpayers with incomes below $75,000 by between $400 and $800.

    According to the JCT, last year's $787 billion stimulus bill, enacted with no Republican support, reduced federal taxes by almost $100 billion in 2009 and another $222 billion this year. The Tax Policy Center, a private research group, estimates that close to 90% of all taxpayers got a tax cut last year and almost 100% of those in the $50,000 income range. For those making between $40,000 and $50,000, the average tax cut was $472; for those making between $50,000 and $75,000, the tax cut averaged $522. No taxpayer anywhere in the country had his or her taxes increased as a consequence of Obama's policies.

    It's hard to explain this divergence between perception and reality. Perhaps these people haven't calculated their tax returns for 2009 yet and simply don't know what they owe. Or perhaps they just assume that because a Democrat is president that taxes must have gone up, because that's what Republicans say that Democrats always do. In fact, there hasn't been a federal tax increase of any significance in this country since 1993.

  • New York Times: Behind Consumer Agency Idea, a Tireless Advocate. By Jodi Kantor. Excerpts: Ask Elizabeth Warren, scourge of Wall Street bankers, how they treat consumers, and she will shake her head with indignation. She will talk about morality, about fairness, about what she calls their “let them eat cake” attitude toward taxpayers. If she is riled enough, she might even spit out the Warren version of an expletive. “Dang gummit, somebody has got to stand up on behalf of middle-class families!” she exclaimed in a recent interview in her office here. ...

    She is an Oklahoma native, a janitor’s daughter, a bankruptcy expert at Harvard Law School and a former Sunday School teacher who cites John Wesley — the co-founder of Methodism and a public health crusader — as an inspiration. She brims with cheer, yet she is such a fearsome interrogator that Bruce Mann, her husband, describes her as a grandmother who can make grown men cry. Back at Harvard, Ms. Warren’s teaching style is “Socratic with a machine gun,” as one former student put it. In Washington, she grills bankers and Treasury officials just as relentlessly. ...

    In a blitz of television appearances, she offers a story of how 30 years of deregulation has rewarded the financial industry but led to abusive practices and collapses that have hurt ordinary Americans — the same taxpayers who are paying for bank bailouts. ...

    Ms. Warren does say that if she and the administration lose on the agency’s passage, she’d like them to lose big — to force lawmakers, as she puts it, to leave “lots of blood and teeth” on the floor. If that happens, Ms. Warren will still have her own platform, starting with her nearly constant stream of television appearances. Hosts and cameramen love her: she has the friendly face of a teacher, the pedigree of a top law professor, the moral force of a preacher and the plain-spoken twang of an Oklahoman. “This is America’s middle class,” she recently said on “The Daily Show With Jon Stewart.” “We’ve hacked at it and pulled at it and chipped at it for 30 years now, and now there’s no more to do. We fix this problem going forward, or the game really is over.” “When you say it like that and you look at me like that, I know your husband is backstage, I still want to make out with you,” Mr. Stewart responded.

  • Jim Hightower: Drowning Democracy in an Ocean of Corporate Money. Full excerpt: Can five votes make a difference in America's democratic elections? You betcha, as Sarah Palin might say. Especially when those five voters are Supreme Court justices hell bent on allowing the unlimited money power of corporate giants to drown out the people's democratic voice.

    But wait, say apologists for the five Supreme voters who hung this plutocratic albatross around the neck of our democracy – it's not just corporations who were freed by the Court to spend billions to elect or defeat candidates. They smugly point out that labor unions, too, can now take their members' dues money and dump as much of it as they want into their campaigns. So, see, the ruling justices took care to be "fair and balanced."

    Where've we heard that phrase before?

    Balanced? Even if every union were to liquidate all of their assets and set aside every dime they have for elections, their total war chest would be $6 billion. Just one Wall Street firm, Goldman Sachs, doled out three times more than that in bonus payments to its bankers this year alone. Indeed, the combined union assets of $6 billion adds up to a mere one-tenth of one percent of the assets held by only the four largest banks in our country.

    Yet, the Court's corporate supremists have now equated the freedom to spend money on elections with our people's freedom of speech. This means that those with the most money get the most speech. What's fair about that?

    As an indicator of how imbalanced our brave new world of money-based elections will be, check this out: the 100 largest American corporations have annual incomes totaling $13 trillion. Henceforth, they can tap this ocean of political clout to elect policymakers who will do their bidding – not ours.

    To help undo the Court's coup against us, connect with www.freespeechforpeople.org.

  • Jim Hightower: Who's Watching Our Wall Street Watchdog? Full excerpt: Wall Street executives are howling that there's no need for big bad government to tighten regulations over their financial dealings. We're not thieves, they huff, we're high-class professionals with auditors, boards of directors and shareholders guiding us. We can regulate ourselves – trust us!

    Uh... no. Let's look to Lehman Brothers for an object lesson in trusting Wall Street elites. When it collapsed into bankruptcy in 2008, the official word was that it was a victim of bad mortgages. Nothing amiss, just... unfortunate. Now, however, a newly-released bankruptcy report reveals that top executives at the investment house were desperately "Enroning" its books. Using an accounting flim-flam, they spent nearly a year before Lehman's denouement manipulating its books to hide the rapidly deteriorating state of its financial condition.

    This "creative accounting" was done to deceive shareholders and Lehman's own board of directors. The CEO himself certified the misleading figures, and the report cites him for being "at least grossly negligent." The bank's accounting firm, Ernst & Young, also knew of the manipulation – but raised no protest.

    So this is why well-tailored, high-class professionals must be regulated: in a pinch, they cheat.

    But regulation must be truly independent, for guess who else knew about Lehman's financial shell game even as it was happening? The Federal Reserve Bank of New York, headed at the time by our present treasury secretary, Tim Geithner. He had dispatched officials to assess the bank's health, but they raised no alarm about the accounting gimmickry.

    Wall Street and the Fed have long been two peas in a cozy pod, with the so-called regulators treating the bankers as trusted colleagues. These giant banks deserve no public trust, but neither does the Fed.

  • New York Times op-ed: Derailing Help for Consumers. By Bob Herbert. Excerpts: Why should there be any significant opposition to the creation of an independent agency with strong powers of enforcement to protect consumers from exploitation by banks, mortgage companies, auto dealers and other purveyors of credit?

    The dragons lurking in the fine print of some credit agreements are enough to give you heart failure. Payday loans, for example, typically carry annual interest rates in the vicinity of 400 percent. Or look at the lineup of fees, penalties and interest rates on your credit cards and overdraft privileges. Don’t even start on mortgage abuses. That would take too long, and it’s too depressing. We’re talking here about exploitation run wild. The Mob, which used to have a stranglehold on loan-sharking, can only look on with envy.

    So I guess it’s understandable that the financial industry and other big-money interests are all but hysterical in their opposition to the Consumer Financial Protection Agency that has been proposed by the Obama administration as part of its overall reform of financial regulations. You’d hardly expect the people rifling the pockets of middle-class Americans and the poor to be happy about an agency with oversight and enforcement authority homing in on their nefarious and wildly profitable activities. The U.S. Chamber of Commerce is spending millions trying to prevent the agency from ever seeing the light of day. ...

    Ordinary Americans need someone on their side in the wild world of consumer credit. The big companies have their accountants and economists and lawyers and lobbyists and trade associations, and their good buddies on Capitol Hill — all of them figuring out new and better ways to separate consumers from their money. But as Elizabeth Warren has asked again and again: Who is looking out for the consumer? The answer is no one. Consumers have to navigate the treacherous credit terrain on their own, often with the equity in their homes or their life’s savings at stake. ...

    An interesting concept at work here is the notion that consumer protections that work too well would end up hurting the “safety and soundness” of the nation’s financial sector. (That’s the reason the Senate bill provides for bank regulators to have a veto over the proposed agency’s rules under some limited circumstances.) “Safety and soundness” is a euphemism for profitability. What’s really being said is that when the profitability of the big banks and other financial agencies and institutions are in conflict with the fair treatment of consumers, it’s the fair treatment of consumers that has to give way. Now would be a good time to start putting that notion to rest.

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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