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Highlights—April 14, 2012

  • eWeek: IBM Union Calls for Pickets to Protest Job Cuts. By: Darryl K. Taft. Excerpts: A group representing IBM employee interests has called for pickets at IBM locations on April 24 to protest recent job cuts. The Alliance@IBM, which touts itself as an IBM employees’ union, said its members and supporters will be holding informational pickets at various IBM locations around the country to call attention to the IBM job cuts and off-shoring. So far, the alliance plans to hold pickets in Austin, Texas; Poughkeepsie and Endicott, N.Y.; Boca Raton, Fla.; Burlington, Vt.; Boulder, Colo.; Rochester, Minn.; and Research Triangle Park, N.C.

    “IBM employees and their communities continue to see IBM cut employee jobs while shifting the work offshore,” Tom Midgley, president of the Alliance@IBM, said in a statement. "This destruction of IBM jobs is unacceptable, and we will be sending a message to IBM—'Stop off-shoring our jobs.'"

    “The recent termination of 2,500 IBM U.S. employees shows that IBM clearly does not value the experience and expertise of U.S. workers,” Lee Conrad, national coordinator of the Alliance, said in a statement. “To have IBM U.S. employees help transfer work out of the country and then get terminated is outrageous and a threat to all jobs and our economy.”

  • Poughkeepsie Journal: IBM revenues fall flat; more downsizing ahead. By Craig Wolf. Excerpts: IBM Corp.’s earnings rose 13 percent in the first quarter, though not as much as expected, and some of that gain will continue at the expense of employees who will lose their jobs in further downsizing. The company’s chief financial officer, Mark Loughridge, confirmed the future downsizing in a conference call Tuesday with brokerage analysts. ...

    IBM shares fell in electronic trading after the close of regular markets, losing about $5 a share after having gained about that much during the day. “Lack of growth,” explained Robert Djurdjevic, president of Annex Research in Hawaii. “Sure, IBM profit is up. But its first quarter revenues were flat overall, with software being the only major growth segment.”

  • Lewisboro (NY) Ledger: IBM layoffs are deeply troubling. By Greg Ball, 40th District State Senator. Excerpts: A few months back I stood alone, warning of my fears of relying upon promises from IBM, a global outsourcing giant, without getting those guarantees in writing. I simply asked that we get a confirmation in writing. Nothing more. Nothing less.

    Alone, I warned our leaders that we should not reward these global giants with an even larger giveaway of corporate welfare, without getting confirmation that such funds would not be used to outsource American jobs. Not even a few years prior, we found IBM cashing checks from taxpayers while simultaneously patenting a new technology specifically designed to outsource New York jobs. Sadly, instead of learning from the past, IBM was handed another $400 million in incentives, direct and indirect. As small businesses everywhere are shutting their doors, I spoke out about the fact that this was an unacceptable risk without written confirmation to protect American jobs.

    Now, once again, we are seeing IBM layoff hardworking New Yorkers. These new layoffs are deeply troubling and once again show why my demands that NY state demand specifics from IBM were legitimate. Let it be clear, a private corporation does and should have free reign to operate freely, but when they accept taxpayer benefits we must make sure that those dollars and our jobs are truly protected. We must hold IBM accountable for any direct or indirect benefits they receive from NY taxpayers. They have already received hundreds of millions of dollars from New York State taxpayers. We have a right to know what concessions were secured as New York decided to give $400 million to a group of companies that are known for off shoring jobs. ...

    The incentives handed to IBM should have in return delivered a commitment to keep jobs in New York. They also could have been divided into 1,600 or more small business loans, spreading opportunity to new businesses and entrepreneurs statewide. In fact, a portion could have immediately went to fix bridges, roads and crumbling infrastructure, putting thousands of New Yorkers back to work. Instead, we have once again made a deal, evidently without written guarantees, with a global outsourcing giant and the taxpayers are now left holding the bag as employees get pink slips. I don't care if I have to continue to be the sole voice on this, this is unacceptable.

  • I, Cringely: Not your father’s IBM. By Bob Cringely. Excerpts: The direct impetus for this column is IBM’s internal plan to grow earnings-per-share (EPS) to $20 by 2015. The primary method for accomplishing this feat, according to the plan, will be by reducing US employee head count by 78 percent in that time frame.

    Reducing employees by more than three quarters in three years is a bold and difficult task. What will it leave behind? Who, under this plan, will still be a US IBM employee in 2015? Top management will remain, the sales organization will endure, as will employees working on US government contracts that require workers to be US citizens. Everyone else will be gone. Everyone.

    Now industries and businesses change all the time because they have to or want to. Big companies and small have to adjust to the realities and changing reward structures of their markets and cultures. Or they change to better adapt to new opportunities. But what’s happening at IBM is different than that. It’s different because this incredible American success story, if it continues to follow its current course, will utterly fail. It’s different, too, because neither IBM management nor Wall Street seem to have the slightest notion of the peril facing the company. My deepest fear is they simply don’t care. ...

    This is the first thing to understand about the IBM of today: the company is being run by executives who for the most part don’t understand the products and services they sell. The IBM of today is a sales organization. There is nothing wrong with sales if you can also deliver, but increasingly IBM can’t deliver.

    The reason IBM can’t deliver is also explained well by Steve Jobs. It’s IBM’s maniacal fixation on process, once a strength but now a cancer.

    “Companies get confused,” Jobs told me. “When they start getting bigger they want to replicate their initial success. And a lot of them think well somehow there is some magic in the process of how that success was created so they start to try to institutionalize process across the company. And before very long people get very confused that the process is the content. And that’s ultimately the downfall of IBM. IBM has the best process people in the world. They just forgot about the content.”

    In this instance content means the deliverable, whether a product or service. IBM smugly thinks it knows so well how to do things that they can export their entire business model to cheaper labor forces in less expensive places to do business. While this is correct to a very limited extent it has been embraced as religion in Armonk.

    IBM seems to believe it is cheaper to replace a skilled worker with two or three unskilled workers to do the same job. That is like hiring nine women to make a baby in one month. While it looks good on paper it is not practical and is not working. The language barrier for IBM’s Indian staff is huge, for example. Troubleshooting, which was once performed on conference calls, is now done with instant messaging because the teams speak so poorly. Problems that an experienced person could fix in a few minutes are taking an army of folks an hour to fix. This is infuriating and alarming to IBM’s customers.

    Selected reader comments follow:

    • Absolutely true and the insane thing is that as an IBMer from a Business Partner in 1990-91, those old “processes” are once again destroying IBM from within just as it was during the Akers time frame. As an IT consultant, outsourced OUT of a major insurance firm in 2005, I have nothing but contempt for India and the supposed technical excellence of support there. It is awful. But at $2 an hour, management cannot beat those reduction costs, plus not health care benefits too. Beyond Disney, the loss of the Texas data center project was a knife into the HEART of IBM. They could not build and control a damn Data Center!!! If anything else, that is what IBM should do great and do it well. They did not and now Texas is with ACS and that will be a disaster too. IBM management is blind and deaf to everything else except profit and shareholder value.
    • That’s not the only disasters. I’ve been on the customer side for two separate IBM engagements where they took over all of operations (SO). Both were utter disasters. I’ve never seen such incompetence. All these relationships have ups and downs – but this was APPALLING. Cost was, in one instance, nearly 3 TIMES what was budgeted (with the help of IBM). IBM was then surprised when the customer resisted any kind of extension.
    • IBM is another example of what is wrong with American business today. Outsource until you are only a company of managers in the US producing nothing.
    • Bob, you are spot on. Having been at IBM for many years, the rank and file in the company like myself simply cannot believe the poor executive leadership exemplified every day at every level. They have systematically killed any and all morale that existed within the company. Everyone fears for their job and the mentality has become “why bother, I’m eventually going to be resource-actioned (fired) anyway.” No matter the outcome, the execs still get their big compensation every year and the workers lose their jobs, or worse, remain only to get yelled at in endless meetings. Many in the company watch the big February executive stock giveaway each year only to become extremely nauseated watching these jokers get handed small fortunes while the workers get the shaft. You are correct, it is not your Dad’s IBM anymore. And Wall St. hasn’t a clue.
    • IBM’s problems have been long-standing, and certainly not a surprise to those in the industry. The biggest problem that IBM has is that there is little, if any, organic growth of the company. IBM has entered lines of business by buying successful startups, but it has exited just as many, if not more. You name the IT technology…PCs, storage devices, networking, printers, semiconductors. IBM has either downsized those divisions, or sold them off to other companies. There are hot and heavy rumors as to which line of business will be next…strategic outsourcing, or perhaps the hardware business (STG).

      As you can imagine, this does not make for a optimal business environment, much less one that is pleasant for the employees. The resource actions, LEAN, cost-cutting atmosphere, etc. are all symptoms of the bigger problem, in that IBM cannot maintain high value for the business. To put it bluntly, management has run the company into the ground.

      For its part, the top executives have focused on financial engineering — preserving stock value while they themselves cash out at opportune moments. IBM’s 2015 plan is just another example in a long line of financial tricks.

      The real “crime” in this whole scenario is that people are confused about what IBM actually is. At its heart, IBM has become a financial engineering operation masquerading as a technology firm. The corporate emphasis is not on product or services (“content” per Steve Jobs), but on EARNINGS PER SHARE. Once you understand and accept that fact, everything starts to make sense.

      You don’t have to like it…but that’s the way it is.

    • The current level of EPS was reached by a combination of two things: (1) offshoring jobs and (2) killing the pension fund (IBM stopped contributing to its pension fund in 2007 – all subsequent benefit dollars have gone into 401k plans). Lots of other shenanigans too of course, documented well in the book “Retirement Heist: How Companies Plunder and Profit from the Nest Eggs of American Workers” by Ellen Schultz.

      Since (2) has already been done, to redouble EPS again to $20 per share will require an even greater rate of US job elimination than we have seen in the past.

      They have also done other little things. Yes, retirees can purchase health insurance through IBM, but retirees are placed into their own insurance pool rather than being co-insured with all employees. Result: (much) higher rates. Result of higher rates: retirees cannot afford health insurance ==> retirees die sooner ==> lower pension costs for IBM ==> higher EPS!

    • I was RA’d with the the March 28th group after 17 years of 1 or 2+ PBCs. I am 18 months away from retirement age. You should be very worried if you get the boot before you reach your official retirement point. Even with the bridge they gave me I am 2 months short and the result isn’t nice.
    • Congratulations at nailing exactly what is wrong with IBM and the doomed path it is following. It is very sad to see IBM’s greatest resource — a talented, hard-working, and once extremely loyal pool of employees be demoralized, torn apart and kicked to the curb. By the time IBM realizes it has destroyed it’s business model, it will be too late. It is a modern-day example of killing the goose that laid the golden egg. I plan to print a copy of your article each day and mail it to Armonk. Time to go find the address. P.S. Is there any ability for other publications to republish this if they give you credit?
    • Add CapitalOne, and ING to your list
    • I think you are naive about the employees being cut. Within IBM we are now having situations where we want to ask someone for assistance because they know a product or a procedure and we find out that person whose expertise we valued and sought was part of the last Resource Action.
    • I work for IBM in training. There is a learning curve for employees in developing countries, and once they start up it they leave IBM and get better jobs with other countries. We are constantly training new people in the developing markets. Average tenure for employees in Asia and Central America is probably less than 5 years now. But that works to Ginni Rometty’s advantage — and the advantage of other executives and share holders — because they can continue to pay entry level wages. Another strategy is to hire “consultants” rather than employees because you don’t need to give them benefits, and when you let them go it doesn’t show up as a “reduction in force.”

      I have joined Alliance@IBM, and I am appalled by the number of people who haven’t. The union is only as strong as its membership. And working in a dispersed organization makes it harder to band together. Like most of my colleagues, I work from home (thereby saving IBM a bundle on infrastructure), and I wouldn’t even know where to go to picket on April 24th.

    • Ah, Francis. Let me tell you about that myth of “they are on a learning curve and will get there. and they’ll be both cheaper and better.”

      As they learn, they get better, and walk out the door and get hired at a higher salary. Even call centre workers who have mastered the American mid-western accent go for a premium. As the workers get better, they can get hired for more money elsewhere until they reach equilibrium with us in the developed world. The ones who are paid crap will _deserve_ to be paid crap. They are the ones who couldn’t climb the learning curve.

      Offshoring for cheap labour a short term fix with no long-term sustainability.

    • It’s fascinating what happened with jobs outsourced to IBM Brazil. Some went up the learning curve quite quickly. They now work elsewhere because even academia pays more than IBM in Brazil. Those that don’t move at all on the learning curve stay at IBM.
    • Can’t wait for the next installment. The Jobs quote about “IBM’s maniacal fixation on process, once a strength but now a cancer” rings more true than ever in my head. I was part of the March 28 resource action from IBM and am looking forward to vigorously competing against them, because if there’s one thing I can do, it’s beat them at their own game.
    • Roadmap 2015 is being called Roadkill 2015 by employees.
    • $2 an hour will not get you a good engineer or even an average engineer in India. You could make that much just working at a call center. The good salaries in India are about $30000-$40000 a year. The problem is there are so many workers who just provide fake resumes, even having someone else do their phone interview.
    • Very good article, and accurate comments about fixation on process and offshoring. If you’re not doing research and are not in upper management, your goose is cooked. If your company is acquired by IBM, after a few years your product will be stagnant and the jobs will be in Brazil and India.
    • The problem is that IBM is the people who work for it. The numbers of IBMers who join the Union, the only organization or method that can help them is pathetic. It is one thing to gripe about it.. but IBM employees are complicit by keeping their heads under the sand and pretending that it all just isnt true. Like my ancestors in Germany, they refused to see the disaster looming on the Horizon, and just like them, they will go likes sheep to slaughter. If IBM employees would stand up, strike- have sick outs and fight back. .Ms. Genny could not get away with the path to destroy IBM and turn it into India Business Machines.
    • Loved this article and cannot wait for the next installment. Spot on !!! The comments are also interesting. I work in the Global Services organization – we just lost US jobs in Atlanta to Brazil, who is our ‘outsourcing’ arm for customer service and operations. English is a second language there to Portuguese and it took me 3 tries today to explain a simple billing problem we need to fix. Oh yes, they fired thousands of IBMers in the USA to offshore to Brazil years ago and the dirty little secret that the company does not want to get out is that we actually did not realize the expected gains overall since thousands of customers have bolted and won’t do business with us any longer due to poor customer services. Further due to the robust Brazilian economy TURNOVER is a huge problem.

      When you used to talk to your local Customer Account Manager in Oshkosh Wisconsin and may have actually met them versus a nameless faceless email or 1-800 “help #” to help with a problem – how would you react?

    • Further due to the robust Brazilian economy TURNOVER is a huge problem.” Thank you for saying what needs to be said! Hiring workers overseas is not a problem. Google hires talented people in China to make a good Chinese Google. Microsoft hires people in Ireland to make good software and QA. It’s the DISRESPECTFUL attitude of off-shoring that’s the problem: viewing the foreign worker as “lesser” and not deserving of the full value of their labour.

      And if that economy is booming, the worker becomes experienced, and if they are smart, they shop for a higher paying job. This turnover problem is big in India to the point that a top engineer or computer programmer can make almost as much as a North American programmer. In relative purchasing power terms, they are actually paid better than us. But IBM is not hiring these top-flight people; they are hiring what the can find for $2-$5/hour. And those are NOT the best & brightest.

      Don’t go overseas for cheap labour — go overseas for _quality_ labour. And if you do that, you’ll still find North Americans competitively priced.

    • I work in one of the outsourced arms of IBM in Eastern Europe.

      It’s crap.

      Management is feeding naive little “first workers” with dreams of careers and grandeur. Meanwhile, most employees are simply too dumb to contribute anything beyond their daily work, and management is a clusterfuck. Literally.

      I’m leaving ASAP. I just pity our customers and Business Partners who get shafted with our piss-poor work (due to processes and the need to engage 50 different IBM organizations to get anything done).

      The IBM rot is visible globally across IBM and at every level. Get out while you still can.

    • You hit the nail on the head. What you describe is what I saw when I first started with IBM in 1979. I also had 9 levels of management between me and the CEO.

      While he is rightly disparaged for what he did to the employee retirement plan and benefits, Lou Gerstner did recognize that IBM needed to change the way it did business. He took care of the hemorrhaging and allowed the product technical folks do what they did best. That was create products instead of spending all their time managing and creating processes. When he left I had 5 levels of management between he and myself (I was always a worker bee). When I retired there were 11 levels of management between myself and Sam Palmisano. Unfortunately Sam Palmisano and the current executives do not understand that a company needs creative, dedicated employees to excel and be able to service it’s customers.

      I lay part of the blame on the changes many business schools went through in the late 60′s and 70′s. Around this time they started teaching that the only duty of a company was to the shareholders. Prior to this the common thought was a company needed to balance the needs of the stockholders with those of society and employees. So how best to align executive needs with those of the stockholder? Provide executives with income plans that included large number of stock options. This has also resulted in the executives becoming more powerful than the lay stockholders as their shares increased.

      Another philosophy that popped up around this time was the idea that management was the company and a company was nothing more than a brand. As long as management could sell the brand the underlying products were unimportant. Much to my chagrin IBM has embraced both of these business philosophies. The end result is while IBM saw it’s 100 year anniversary it will not see its 200th.

    • Bob, amazing article, and sadly not even surprising. I’ve been through so many of these “resource actions,” the last one just this past month. You could sorta see how the deadwood was getting cut years ago, but by now the only people left are the survivors who’ve somehow found a way to do the work of two people, then three, then four… Some days it almost feels like The Hunger Games, I swear. (Some of my mission did go to China, but the results were kind of a disaster, so it had to come back. So now it’s just a few of us doing the work of dozens.)

      We all know about these earnings-per-share targets, believe me. We’re reminded every time we hear from upper management. What I have to ask you, though, is did you actually see a written-down internal plan that lays out this specific 78% reduction in US headcount? I realize that you probably need to protect a source here, and like I said, it’s not even remotely surprising, but please humor me and tell me that you had a real piece of paper in your hands. (Okay, a PDF on your screen. Or a Lotus Notes presentation. Or whatever.) Frankly, that would be almost as eye-opening to me, that they’d actually write this stuff down and then proceed full steam ahead like there’s any chance in hell most of us will even be here in 2015.

      (But nothing should shock me anymore. I know this.)

    • Bang on and accurate. IBM also has difficulty competing for net new customers that fall outside it’s core base so revenue will remain flat and profit will continue to be ‘engineered’. The layers of process you describe are repetitive, inconsistent, very time consuming, and often conflict with other existing processes. Sellers spend 20-30% of their week selling, the rest is taken up with layers of meaningless nonsensical management reporting. The processes don’t scale well to affect or manage change, or impact the outcome of sales activities. The one thing I would say is that I have met many passionate and capable managers and employees who are tenured and deeply experienced but politics ensures the cream never rises to the top. If you want to understand the culture go watch http://www.youtube.com/watch?v=6MWpxH-RlFQ
    • I come from an IBM family, my dad, my in laws. I myself did 25 years. For the first 20 years of my career I was proud to say I worked at IBM…It meant something special. The last 5 years when I would tell people I worked at IBM they would ask me…’aren’t you scared of getting let go? The company has changed…it is no longer the prime example of what a company should be. If everyone would remember what ‘At Will’ means then it levels the playing field. It means they don’t owe you…and you don’t owe them! nuff said!
    • I left IBM in 2010 of my own volition after eleven years working as corporate staff based in NYC. The final five years of that tenure…roughly corresponding to the last time Cringley wrote on the topic…were a train wreck of U.S employee firings for no cause (lay offs), abysmally low morale in the rank and file, the strangling of any creative or inspirational spark (aside from the unfettered success of the Smarter Planet Marketing campaign) and a complete and irreversible disconnect between the messages that management communicates to its employees and the reality of how it actually views and values them. Against this backdrop the IBM stock price has reached an all time high.

      I don’t have a lot to add to Mr. Cringley’s comments other than to say he makes some very good points and, If I were an investor (sold my position when I left) holding the stock for long term value…I’d be VERY concerned about an approach to managing for shareholder value that is predicated of divesting the corporation of American workers. If I were a client I’d worry about the very same things…

      What I will comment on is the appalling lack of balanced press coverage on this topic. The majority of IBM-focused press coverage in leading business publications (Forbes, Fortune, WSJ, NYT, Economist) and trade magazines alike uniformly reflects the whitewashed view of management, fails to appropriately question the company’s strategy and NEVER EVER tackles the central issue of why a corporation with such a proud American heritage…a company that literally would not exist were it not for the effort and toil of generations of U.S. workers…is permitted to receive an outrageous host of U.S. tax breaks, cheats and dodges while it pursues a business strategy of firing most of its existing American employees.

      In part the answer to the question on the lack of balanced press coverage is that Armonk is a bully…and more than willing to use a big stick on any journalist who dares challenge the status quo. But it’s also a general comment on the spineless nature of big media. Kudos to Cringley for giving the Armonk flacks the middle finger. I wish more so-called journalists and editors had his balls…

    • You have hit the nail DEAD ON! I am a 25+ year veteran of IBM working in the technical field within GTS. There is too much process in this company – It can take approx 2 hours of administrative (process) work in order to perform a 10 minute technical change. The process to get any sort of change done on the servers involves multiple groups and management teams approving every step of the process. If any one of those groups doesn’t like what you’re doing, they REJECT your change and you have to start all over again going through the motions to get everyone onboard once again.

      I’m not talking about massive environment altering changes. I’m talking about making a small minute change that isn’t even service affecting and would not have been noticed by the customer unless you specifically told them what you did.

      On top of that, due to the number of people involved, you also need an extra group specifically assigned to “coordinate all that coordination”. Add another group of 10 people on a team. It’s just ridiculous!!

    • IBM is built on a house of cards, and run by a bunch of penny-pinchers, who have artificially inflated the stock, at the expense of the US worker. Sammy, Ginny, and Warren will undoubtedly have inside information and cash out long before the stock crashes. The remaining US workers, if there are any left in 2015 will get to enjoy their 5 whole shares of vested IBM Stock that were issued in 2011. Can’t wait. It’s going to be a helluva pizza party!”
    • IBM philosophy: “Install a major customer system system from offshore” – 10 minutes. “reboot a server” – 2 days.
    • Bravo, bravo, bravo! I haven’t seen such an accurate depiction of historical context from you since the Three Mile Island reports. You have successfully and dramatically once again crossed the legendary Rubicon from industry raconteur to business reporter, maybe even become a serious historian of the failings of morality in US business.

      The big question for me, since IBM now has no employees, just owners and resources, why anyone not at the executive levels is not sitting down, taking it easy and waiting for the inevitable ax that will come? I know the Indians on the whole, don’t work that hard and have no allegiance.

      I guess the executives are counting on the continuance of IBMers hard work and professionalism until they realize in the next 32 months that they’ve been had.

    • Bob is back! First he nails Best Buy, now scoops IBM. Great to see the old Cringe back in action.

      One other angle to the IBM story Bob. We purchased Cognos for BI five years ago. They were superb with support, maintenance, training, etc. Then IBM wrote a big check and bought Cognos.

      Once Cognos was assimilated into the IBM machine, they tried to double my annual support saying the product was now priced by “value”, eliminated most of the convenient training, and support dipped.

      Want to talk to IBM about support costs? You get to talk to their global support sales staff that knows nothing about Cognos.

      Their business model is close to the mafia.

    • I can speak a bit on the HR side. The crappy things I see done to employees on a daily basis is disgusting. Age discrimination in RAs, completely false performance reviews, laying off/firing people right before they can retire and/or get their FHA benefits and it goes on and on.

      I hope someday a really good lawyer gets his claws into a good lawsuit and can bring some justice to ex-employees. They deserve it.

      Oh, the off shoring of payroll, etc to the Philippines is major fail. The icing on the cake? HR Partners in the US are beyond useless and have to call the Employee Services Center to get answers (which are usually wrong / varies on what rep you get.

      Randy MacDonald is disliked throughout the entire HR community. And dislike is a kind word.

    • The problem Haywood is that a US employee gets fired in a heartbeat – the India employee just get shuffled around. I’ve seen it happen often.
    • Jobs’s comments were mostly, but not not entirely valid. IBM was almost always led by sales, not engineering. The only engineer on top was Jack Kuehler. http://en.wikipedia.org/wiki/Jack_Kuehler

      IBM used to have the customer’s best interests at heart. Two of the three commandments of IBM’s Old Testament were “Best Possible Customer Service” and “Excellence in All Things.” They were taken very seriously as guiding principles. But then again, so was the third commandment, “Respect for the Individual.”

      These three commandments were replaced in 2003 with new ones, including, “Trust and personal responsibility in all relationships.” Sadly, both of these seem to be missing to the degree that I would not trust any commitment made by IBM unless it is signed by a VP or higher who has the authority to make it happen.

    • IBM likes to talk out of both sides of their mouths. They need to grow the workforce in BRIC companies to better serve their customers where they are. True enough, but then why is our internal help desk answered by Indians? Regardless of what your problem is, they offer to reset your password, since that’s what they know how to do.

      Some IBMers have been targeted for layoffs because they work remotely. Supposedly, they aren’t as effective when they aren’t face-to-face. At the same time, we are asked to stay up late for conference calls with China, India, Russia, and Australia, and for some reason, that’s supposed to work just fine.

      My favorite is how they gut internal support organizations (workstation support, build groups, help desk, development tools) to “save money”, then make highly paid engineers do it individually, while not slipping any dates, with fewer people to produce the products. Then they can point out how unproductive American workers are, further bolstering their case for offshoring.

      Some executives are going to make a bundle of money meeting their 2015 targets. I’m not sure how there will be a business beyond that date, however.

    • Very prescient article. As an employee of 14 years I can only say that I am appalled every day at what I see taking place in the company, and everyone around me is in a daze. The rot is accelerating. I work in IBM Research, once an organization that has been admired worldwide, but this will soon not be the case. All research is being scrutinized as to short term profitability. Anything that doesn’t come up with green dollars this year will be cut next year.

      An array of overseas ‘research centers’ has been established. All IBM intellectual property is being transferred to China, India, Brazil, and anyplace that’s cheap to staff. I don’t believe anything anyone in IBM says anymore. Nobody should.

    • I’m an IBM employee of over 15 years, as part of an acquisition, is about the only way IBM knows to “make” software products. Everything Cringely and everyone else has said is true. Our product is going to be offshored within the next few years, which will basically kill it. What will our installed customer base think then? What would potential customers think? Even more interesting, what would the American public think of IBM moving 78% of the workforce to foreign countries. I gotta find a job somewhere else.
    • Right on the money and sad to watch. I also noticed that 45+ posts of insight, concern, and truth have disappeared. That’s one thing IBM has a lot of, lawyers and accountants.
    • Bravo for saying this. I grew up in an IBM home. I am third generation IT; my grandfather was one of IBM’s early techies (nobody famous, just a guy on the team) and you can find his patents in Google. Back then it was an American company. Since then it has ceased to be. No wonder they are bungling and losing contracts left and right. Did you see on the union Alliance’s job cuts board, how IBM gets around customers’ insistence on work being done in America by Americans by adding foreign workers to their business directory in a way that makes it look like they are located here? I feel there’s little to do now but stand back and watch them sink like Titanic. Their bow is already inundated.
    • This article obviously explains why top executives including the CEO continue to sell the shares they are issued year after year. Even when they get millions of dollars of stock for free they dump it rather quickly, they don’t even seem to wait for the 1 year mark to reduce taxes from 50% down to 15% (or whatever current long term taxes are). The company probably pays the tax for them anyway. Sam has sold the vast majority of his holdings and the most obvious reason is that he can’t even wait of the final three year countdown to company implosion or it would be too obvious. Shortly after Ginny (or shortly before) was announced she did a big unload, keeping with tradition. http://finance.yahoo.com/q/it?s=IBM+Insider+Transactions

      The bottom line, don’t listen to big blew executives, watch what they do, and the main thing they do while singing blue skies, is sell like the place is on fire…

    • Damn right it’s not your father’s IBM. Customers and Employees come last these days. It’s all about the stockholders now. Below are responses to employee questions pertaining to the 2015 road map which supports my statement above. The word ‘Customer’ is nowhere to be found.

      2015 Strategy Roadmap Rollout: Questions and Answers


      1. Why is important for IBM to have the 2015 Roadmap?

      Answer: The 2015 Roadmap articulates IBM’s overall financial objectives to investors. Internally, the roadmap provides a framework within which we can execute our strategy, with specific parameters by which we can measure progress along the way. Enabling STG & ISC line managers with this information, information that managers can then expand on and help their teams interpret, is empowering. The goal, ultimately, is for all of our managers to help all of our employees better understand their role and related contributions to the company’s achievement of the 2015 Roadmap.

      2. What are the biggest risks or inhibitors to the success of the 2015 Roadmap?

      Answer: The biggest risks to success are in areas such as a) new business areas, where we must develop new product capabilities and skills, b) areas of aggressive growth which require significant share gains, including acquisitions which must be integrated, c) economic risks which impact our clients, and d) competitive risks such as unforeseen strategies or breakthroughs.

      3. Are we achieving our transformation goals, what are the key measurements you are paying attention to, and what should we be focused on?

      Answer: Key measurements include revenue and PTI, share vs. competition; specific focus on growth initiatives, and shifts in our revenue mix (such as the ratio of SW/HW, increase in proportion of Growth Markets/Major Markets, as well as platform mix). For example, storage is a growth area for us, and we expect storage revenue to lead our platform growth at 12% CGR.

      4. How can we use this 2015 Roadmap information to empower line managers and employees to do their jobs with less bureaucracy?

      Answer: The 2015 Roadmap is a framework to describe how we will achieve the financial targets we have set for ourselves by 2015. Knowing the details of the strategy will help employees to better understand the business opportunities we are pursuing and the challenges we face. This in turn will help employees to recognize the importance of the investment decisions we make and subsequent trade-offs. With this insight, managers and employees will become more empowered to align their work and deliverables to achieve our strategic goals.

      5. Many employees are confused because they believe there is a disconnect between strong business results and record earnings being reported by IBM and the constant cost-cutting and lack of investment in employees and capital for STG and ISC. Why does there seem to be such a disparity?

      Answer: Our 2015 roadmap calls for PTI growth as well as revenue (or top-line) growth. To achieve PTI objectives we must be efficient, and that means controlling costs. This allows the funding of future investments. While investments will be stable or reduced in some areas, increased investments are targeted toward growth areas (such as the IBM growth priorities of BAO, Cloud, Smarter Planet, and Growth Markets).


      6. How will ISC be integrated in the 2015 Roadmap? How will it impact ISC employees?

      Answer: ISC will be integrated into IBM’s 2015 Roadmap by helping provide solutions that delight clients and IBM shareholders. This will be achieved by Creating Smarter Value Chains, Driving Effectiveness and Enabling Growth with a series of big plays to enable these strategic areas. This strategy will support IBM’s Operating Leverage by continuing to drive $6B in Product and Services cost take-out (in support of margin) annually; contributing $1.6B of Value Services Productivity through radical transformation, workload prioritization, smarter Supply Chain analytics, and increased productivity. Lastly, ISC will contribute to balance sheet improvement through cash optimization initiatives, driving inventory turns improvement of 7% (2011-15); improve days sales outstanding by maximizing collections thru O2C / Blue Harmony and optimizing accounts payable terms. ISC will be a showcase for implementing transformation and supporting key IBM growth initiatives. ISC employees are foundational to this framework. Through leadership development programs, like talent accelerators, the enhancement of global experiences and learning, we are building broad and deep (T-shaped) skills. ISC is ensuring employee development is part of the everyday thought process, and not just a once a year skills assessment.

      7. Blue Harmony has caused many problems with paying sales commissions in 2011. How can we prevent it from happening when we implement it in fulfillment systems?

      Answer: The commissions’ related defects seen with the initial release of Blue Harmony, can, for the most part, be attributed to late testing with data that differed from production. The interfaces were delivered late in the cycle and the test environment for R0.5 did not contain the range of data that would have allowed the team to first test each component in isolation, and then test the complete solution. Specifically, the limited time available for test meant that each component had to be tested individually in parallel. We tested that the interfaces selected all the data elements from the total test universe, as designed. We also tested that the data was sent to and received by the FMS system. What caused the defects was the inability to include end-to-end test scenarios where the data sent and the data received and interpreted were examined to ensure the business rules and conclusions drawn from the interface results were accurate. Had that been done, the majority of defects related to converted invoice and customer data, as well as middleware mappings for marketing code indicators, would have been exposed in test, rather than in production. There simply was not sufficient time. These issues have now been identified, corrected, and implemented in production. As we move to subsequent releases, we are using these valuable lessons learned. Our process integration team is ensuring true end to end testing with better data, and where possible, real data, to ensure this doesn’t happen in future implementations for Sales Commissions or other areas.

      Employment Outlook

      8. Will the STG employee population grow as a result of continued business success and revenue growth? If yes, where will that growth take place?

      Answer: IBM and STG will continue to invest in resources in areas that are driving revenue and profit growth as well as investing to attract and maintain critical skills that support our technical and growth initiatives. Due to the future revenue and share growth coming from the emerging global markets, we anticipate that we will have the majority of the hiring and population growth occurring in the growth markets.

      9. IBM’s global resources strategy is to grow the employee populations in the Growth Markets. This is causing a lot of fear and uncertainty about layoffs or, at a minimum, no career opportunities for employees in the Major Markets (in other words globalization is putting our jobs and careers at risk). Does the 2015 Roadmap provide any clarity or sense of direction for long-term career growth in the Major Markets?

      Answer: As you see in the Roadmap, the STG Major Market revenue plans to grow by 2% while the Growth Markets revenue plans to grow by 11%. The Major Markets continue to be a substantial revenue source for STG so although the greatest growth is seen in the geographic area of the Growth Market countries, employees in the Major Markets should plan to develop their skills to be competitive to support the 2015 Roadmap plans.

      10. There has been very little vitality hiring in the Major Markets and the signal this sends is that in the future IBM will no longer locate jobs in the Major Market countries. Is this a fair interpretation and how does this affect the long-term career planning for the current employees?

      Answer: IBM will continue to locate jobs in the Major Market countries. Through 2015, 70% or more of IBM’s revenue will continue to come from the major markets. This will require us to maintain a level of strength in the major markets to successfully deliver on our business commitments.

      11. In the Growth Market countries the labor markets are tight and attrition rates are high, many IBM employees feel their best opportunities to get ahead (promotions and salary increases) are to leave IBM and go to work for another company. How can we stem this trend? Do you think sharing the 2015 Roadmap will help employees better understand their long-term career opportunities?

      Answer: Sharing the 2015 roadmap will highlight both the expansion in the growth markets and the strength and contribution of the major markets, hopefully helping employees to understand the business strategy and realize how their role fits in. We will continue to focus on retaining our best performers through all vehicles at our disposal; including superior management practices, skills and career development opportunities, and differentiated compensation.


      12. Tight expense controls have helped bring our costs down, but have built up a lot of bureaucracy and red tape. Is there any concern about the frustration and wasted time this has created? Is anyone doing anything about it?

      Answer: There is a team, being lead by Elizabeth Baker, currently looking at our expense controls and processes across all brands. The purpose of the team is to propose a consistent, better defined and streamlined process for expense controls and approvals.

      13. Travel expenses have been tightly controlled for a long time, with little to no discretion allowed for line managers, is there any let up in sight?

      Answer: Travel in IBM will continue to be focused on Customer facing, Revenue generating events. Non-Customer travel will not return to levels that employees were accustomed to a couple of years ago. We will continue to have an exception process to review requests for Non-Customer / Revenue generating travel that makes business sense and supports our initiatives.

      Product Strategy

      14. It appears that we’re decreasing our investments in the System z Brand, does that mean it has a lower priority in our technology portfolio?

      Answer: System z is still very important to the STG portfolio. The point of having a portfolio is that each element plays its own role; System z makes an important contribution in terms of PTI (including the rest of the IBM stack). The investments made over 40+ years have made this possible; we are leveraging those investments and making the incremental investments needed to deliver continued customer value.

      15. What is the future strategy for the Power platform?

      Answer: The Power strategy is to drive revenue growth through aggressive share gains vs. competitors (HP, Oracle/Sun), expansion of the target market with Power Linux, and alignment with key IBM initiatives (Smarter Planet, BAO, Cloud). Workload

      16. Many employees have high workload levels with no let up in sight and no recognition of how hard they are working. With more aggressive deadlines and a push to do more work with fewer people, employees are feeling like they’re pushed to the brink. Do the executives recognize this and are there any plans to address the workload issues?

      Answer: IBM’s senior leaders recognize that today’s business environment is more competitive, globally integrated, and faster paced than ever before. The incredible effort and hard work of our teams around the world is recognized, as are the workload and engagement concerns. We hope, and expect, that all employees continue to look for new ways of doing their work to streamline processes, improve efficiencies and increase productivity. There are teams of managers and employees throughout STG & ISC who are working on transformation initiatives with these very objectives in mind; such as the STG/ISC Climate Council. Over the past century, IBM’s greatest achievements have arisen from the contributions of committed and energized IBMers. If you see a way to evolve the way things are done or have ideas how to improve the way we work or lessen a burden, speak up and share your ideas.

      17. Major market employees feel pressured to pick up the slack for the major market employees who have been let go while the growth market employees are not up to speed to fully trained or ready to take on the workload. Are these issues being addressed with the 2015 Roadmap?

      Answer: Yes, a key element of the strategy now through 2015 consists of training and mentoring of employees in the growth markets, as well as establishing centers of competency and support systems to get them up to speed and productive.

      Skills/Professional Development

      18. Employees seem concerned that there’s minimal investment for their skills development and career growth, does the 2015 Roadmap help us clarify where we should be investing in skills development and career vitality?

      Answer: Yes, this is one of the benefits of having such a framework for execution of our strategy. It identifies the growth areas (e.g. IBM growth priorities, as well as STG growth such as software, storage, networking…) so that we know where to focus our efforts.

      19. How much are we investing in the skills development for our employees?

      Answer: The WW STG / ISC combined budget for education for 2011 is approximately $25M. Our current expense guidelines specifically identify key education initiatives that are supported.

      20. What are the plans to address a potential skills, experience and leadership gap that is likely to occur when employees in the Mature Market geographies start to retire in large numbers?

      Answer: In STG, as we work on our skill development plans, we will include actions to be sure to transfer knowledge and skills where necessary. We will also plan to utilize the workforce flexibility programs available in IBM.

      21. What steps are we taking to improve the productivity of our sales and technical sales management teams?

      Answer: Improving sales and technical sales productivity is a critical enabler to free up capacity that can be deployed to competitive and growth selling. We are optimizing our sales coverage across STG and IBM, and also leveraging our extended sales team (BPs and ibm.com) through continued destacking. As we increase the ratio of technical sales to sales, we will also shift the focus of technical sales more in the direction of pre-sales. The Sales Transaction Hub is a major productivity aid, as it frees up seller time by allowing them to offload several back office functions (e.g. pricing, proposals, contracts). And finally, skills continue to be of major importance in improving effectiveness and productivity, with a continuing emphasis on solutions which is consistent with our strategy.


      22. With continued business success, will we be able to invest more in employee recognition and rewards programs?

      Answer: Our 2011 Budget for employee recognition and awards is $4M, which is at the appropriate level given our financial model. Our financial performance will continue to be the deciding factor for what is affordable.

      Questions and Answers

      23. What are we doing to recognize top performers so we don’t lose them to competitors?

      Answer: We continue to strategically invest in retention to ensure we can retain key employees. This year we funded additional investments worldwide in the STG employee salary program with particular focus on key countries. Managers had flexibility in the delivery of TCR to put more focus on lower paid contributors. We made significant investments in 2011 in our sales plans, particularly the PSP plan, to help retain sellers, and announced new recognition programs which should help to retain our top performers. Additionally, we continue to invest in skills development and career growth opportunities. The IBM Career Framework allows all IBMers to identify the competencies and skills required to succeed in their current role, as well as what expected for future career growth, and to locate learning opportunities to develop those skills and competencies.

      24. There is no recognition (monetary or non-monetary) for employees who get a “2” PBC rating, but they are still being told they’re valuable contributors. Most employees who get a “2” rating feel there are too many mixed messages and feel dejected about the rating. Is the line management or HR team doing anything about this?

      Answer: Our business is only capable of succeeding to the extent that ALL of our employees continue to contribute and drive it forward. As a company, we have to make difficult decisions related to the optimal spend of limited funding. There are programs specifically designed to apply to all of our solid performing employees – GDP, the MBA program (when we’re able to fund, like in 2010 for most job families), Eminence and Excellence recognition, career development, etc. There are other programs (TCR, sales recognition, etc.) where we have chosen to more strongly differentiate and recognize the contribution of our top contributors. All in all, there is a blended approach that, as a company, we feel is appropriate and what we’re able to effectively manage.

      • WOW. This roadmap is very telling. Do they really think that the US employees reading these responses will be satisfied with their job situation? They basically say that they have no use for “2″ rated employees which is the majority of the population. They have a whole $4 million set aside for employee recognition. The company earns $15 billion per year and they set aside $4 million for employee recognition?!? Look at the stock options that management is given. One senior level manager cashes in more then $4 million per quarter. What a joke! There is $25 million set aside for training WORLDWIDE. Guess where most of those dollars are going! They dance around the question of dealing with the incompetence of the global hires. Luckily I am retired and no longer need to deal with these working conditions. Good luck to all who remain.
    • Some of the issues at IBM are:

      CLAIMS: Project managers can cap hours at 40/week even when the worker is putting in 50-60 hours in a week, even on a green-dollar project. Subsequent projects size based on CLAIMS reports and therefore are under-sized. GIGO.

      Priorities: “The fours goals of IBM are first quarter, second quarter, third quarter and fourth quarter” — an IBM VP announced this back around 2000 at a big group meeting. I should have looked for an eject handle at that point. IBM’s once standard setting for customer service has decayed because, to a bean counter, “Customer service does not add to share-holder value this quarter”.

      Off-shoring only works when the skill/experience levels are even but the labor costs vary greatly. Where I work now we’ve got a competent team in Bangalore, but, 5 years ago, it didn’t look like IBM chose as well from what I was seeing. Granted, in the last 5 years the labor costs have narrowed given the revolving door on the HR departments in India.

      I was caught in the RIFtide of 2007 at IBM and, as near as I can tell, the bean-counters only considered the lowest-value hat I was wearing… out of the 5 hats. “You don’t have to kill millions of people to turn them into statistics, all you need is a spreadsheet” – me.

      Somehow the intangible values of each employee never seem to be considered– inventiveness, enthusiasm and teamwork… and a lot can be seen in how the PBC (Personal Business Commitment) categories changed when Palmisano took over: “Win, Execute, Team” became “Win, Execute”. The “High Performance Workplace” tended to reward those good at writing memos and flushed out the team-players since everyone was in competition to hold a job. Those of us who felt that we *all* needed to succeed together as a team were amongst the first to go.

      When your employer tells the rank-and-file to “think of share-holder value” there is a problem; I’ve always believed that, when you take care of your customers, they will continue to buy from you… which automatically takes care of the share-holders. Of course, with the “fiduciary responsibility” rules for institutional investors, share-holder loyalty is an obsolete term.

      Perhaps the best thing IBM can do for their share-holders is to liquidate the company, providing one big pay-out, and then no more worries when it comes to servicing current– or pre-existing– customers.

    • You are right on the mark. As a former Big Blue refugee from an outsourcing initiative, I saw the process and ‘metrics’ became the real product and not the creation of useful information. Troubleshooting did indeed become a nightmare, as the ‘dedicated’ (i.e. on site legacy) staff was left to handle everything due to language and skill set issues. And the disdain with which the new managers treated the existing workers was astounding – Like colonial nations treating their new subjects as heathens that were finally going to be civilized (they dismissed our expertise as ‘tribal knowledge’) I think IBM is banking that the US will continue to diminish in importance, so closing up shop and shifting to overseas makes perfect sense to them – the language won’t be a problem.
    • Yes – you are right on – having watched the crumbling of IBM from the inside during the last 10 years! The drive to satisfy shareholders and not customers is felt internally every day and most front line employees are miserable and only stay because they need a job and fear venturing out on their own as they often have never worked anywhere else in their careers. The management people have no clue how to run the business – all of the credit goes to the sales people who are selling solutions that are often marketing dreams but not implementable solutions. It reminds of rats on a sinking ship that have no idea that the bowels are filling with water while they enjoy their cheese on deck! I’m no longer employed there and enjoy my life better each day!
    • I beg to differ with those of you that say that the skills are not here in the USA. I am the one that was in your high school and college class that busted my butt to make sure I learned the material not only well enough to get the A in the class and screw up the curve, but I also made sure I fully understood how to apply what I learned. I’ve been with IBM for some time now and even if you young ‘uns consider me an “old timer”, I still have the same work ethic that I’ve had all my life, and I take pride in knowing that whatever I do is the right thing and benefits the company. I’ve also adapted to the changing times. I have made sure that I continue keep my skills up, on my own time and dollar since IBM refuses to invest in employee development here. (And, by the way, I am a consistent 1 performer.)

      Does that mean I feel I’m safe from the resource actions? No way. Even though my colleagues and my first and maybe second line management recognize that I contribute greatly to IBM in my own small way, as far as Ginny and Sam and Randy are concerned, I’m just another disposable cup that can be replaced with a cheaper piece of cardboard that was manufactured overseas. It’s a guarantee that I’ll be one of the 78% because I’m just a couple years away from being eligible for retirement. It’s age discrimination, it’s illegal, but IBM will spin it so I got fired for performance reasons, not because they want to save a few bucks by not allowing me to retire.

      You may ask why I don’t leave… I’ve considered it very seriously. Fact is, the current project I’m working on is THE BEST JOB that I’ve had my entire career and I really am having fun with it in spite of all the uncertainty. Do I feel entitled to my job? Well, maybe I can explain it to you this way. I am a citizen of the United States of America, which was founded on the premise of its people having the rights of “life, liberty and the pursuit of happiness”. I’ve busted my butt all my life in the pursuit of happiness and in this country, you really do need to have some type of gainful employment in order to avoid having the constant worry (and its resultant unhappiness) of how you’re going to feed your family.

      I also have a social responsibility as a citizen of this country. I pay my taxes, I volunteer, I try to make sure that my kids have the same ethics and personal responsibility that I was raised with. Our government has ensured that corporations now have the same rights as individuals. Therefore, any corporation that operates in this country and benefits from tax incentives should share the responsibility of contributing its fair share back to the country for the good of ALL (not just its executives and shareholders). Otherwise, those tax incentives are just another form of welfare being paid out to someone that doesn’t qualify.

  • ABC News: Golden Parachutes: 21 CEOs Landed $100M Plus. By Dan Kloeffler. Excerpts: While TV viewers love to hear the words, “You’re Fired,” from Donald Trump, few would ever want to have that conversation with their own boss. That is, unless they are the boss and managed to negotiate a hefty separation package. So-called golden parachutes are contractual provisions that compensate executives, if they are terminated without cause. And according to a first-of-its-kind report, the payout practice has guaranteed several outgoing chiefs with nine-figure landings to help soften the fall from their corner offices. ...

    ‘These numbers don’t include the perks – the use of the corporate jet, the corner offices – a lot of the compensation that doesn’t get listed on the public files.’ ...

    IBM Louis V. Gerstner Jr.; 1993-2002; $189,005,929.

  • Business Insider: IBM Not Augusta is Wrong About the Masters. By Laura Goldman. Excerpts: With IBM as a major sponsor of the Masters played at Augusta National Golf Club, many thought that the exclusive club would break with tradition and admit its first female member, IBM's new CEO Virginia Rometty. This is America. Augusta is a private club and should be able to do what it wants.

    IBM, on the other hand, is a public corporation that bids on government contracts and major investors include public pension plans. It should insist that they will not tolerate discrimination of any kind in their dealings. Shame on Rometty for not speaking up and setting an example for millions of young girls in the United States. While I am sure that she rose to the top of IBM by not rocking the boat, she is the CEO now. She can afford to do the right thing and speak out against discrimination. ...

    IBM’s biggest money maker is its Global Services business, which also employs the most people. Ten years ago Global Services was an even larger part of IBM but the company is now making a lot less on its contracts, and the turnover of business is brisk. It is in Global Services where you see the most jobs being shipped offshore But the problem is the offshore teams often lack the skill and experience to do the work, problems mount, customers like (most recently) The Walt Disney Company get upset and leave. ...

    Today at IBM the US workers who try to save the business are the first in line to lose their jobs. Management accountability is gone. The people who mess up get to keep their jobs; and those trying to retain the business lose their jobs.

  • Glassdoor IBM reviews. Selected reviews follow:
    • IBM GPS Procurement Consultant in Melbourne (Australia): (Past Employee - 2012) “IBM is a revenue orientated organisation interested in growing its business any cost and does not values it's employees.” Pros: - Large organisation who tolerates low achievers by shifting then from one business unit to another i.e. managers do not have the ability to effectively manage their staff. - Company leverages off the brand and are not best in class.


      • Does not practice what it preaches e.g. work life balance
      • Management does not like to be challenged
      • Weak HR department who is afraid to stand up to employees
      • Poor performance review system; high achieves are not equally remunerated compared to the market
      • Great imitators in the art of being original
      • Organisational standard driven out of U.S. who has little understanding of the local market
      • Organisation is the leader in making excuses to the client as to why they did not deliver to expectation.

      Advice to Senior Management:

      • Foster young talent and do not be afraid of being challenged; existing management team have been around far too long
      • Start living the corporate values - "respect for the individual"
      • Compensate employees according to effort
      • Demonstrate empathy
      • Walk the talk!
    • IBM Anonymous: (Past Employee - 2012) “IBM Global Consulting Services seems to have lost its way.” Pros: Opportunity to travel if you like/want that. The name gets you in the door. Salary and benefits are good. Cons: (For GBS division) Work life balance is very poor. Expectations of hours to be worked are very high. Promotions are virtually non-existent once you get to a certain level. Bureaucracy is overbearing. Such a large organization that your management can help you with very little - they are small fry themselves in the greater scheme of things. Appears that all admin is being outsourced/automated, so that when there is a problem it is way more difficult to sort out than it should be. Feels like focus is on earnings per share rather than investment in employees. I don't know anyone in the company who has said a good thing about training and personal development. Advice to Senior Management: Remember - your employees are your assets.
    • IBM Consultant in Rapid City, SD: (Past Employee - 2011) “Worst work experience in my entire life.” Pros: Work at home. 401 K was good. Cons: Computers were pieces of crap, too much red tape, every single thing had to go through India/China, too much outsourcing, wastefulness...very environmentally UNFRIENDLY contrary to how the project themselves and the so called smarter planet....more like dumber planet! Advice to Senior Management: Stop being bean counters, start being bean planters.
    • IBM Anonymous: (Current Employee) “Know what you want.” Pros: Vast array of project experiences, high performers are pushed to more responsible positions, depending on your project you can have the ability to work flex time as part of work life balance. Cons: Utilization (billable hours) is considered a key input into measuring employee performance. Often are sold as more of a contractor than a consultant. Advice to Senior Management: Though individual projects value their people, with periodic layoffs people tend to not fully trust the company. With record yearly profits additional consideration should be show to employees and not solely the shareholders.
    • IBM Associate Systems Engineer in Pune (India): (Past Employee - 2010) “Comfortable, Insightful and a great learning experience - especially how things are managed professionally in IBM” Pros: Employer friendly policies such as flexible hours, work from home, unlimited sick leaves, and a good workplace environment. Managers show faith and trust in employees. Communication channel is fairly good. Cons: Promotion and career growth within the company can be too slow. Many free-riders can go unnoticed owing to the large size of the company. In spite of automation in basic HR processes, there is a need for a HR POC. People manager concept puts too much load on managers for them to help their employees well enough. Advice to Senior Management: Conduct stricter performance reviews and increase its frequency to bring better results. Have good training facilities and bring in some modifications in HR system, like appointing a HR person of contact, because not all queries can be solved by the automatic online HR center.
    • IBM Software Engineer: (Current Employee) “Unfortunately getting worse with each year.” Pros: - Challenging environment. - Smart people. - Good work-life balance. - Flexible hours - Considerable vacation time. Cons: - Compensation is not good (salary is not being increased fast enough). - Promotions and career advancement are difficult. - Long hours with not much recognition. - Top talent is leaving and people that stay have to work much harder. Advice to Senior Management: Focus on innovation and try to retain top talent (and to attract new top talent)
    • IBM Systems Engineer in Bangalore (India): (Current Employee) “System Engineer” Pros: Good place to work. Learning environment. Cons: Designation won't make justice to the qualification. There are examples of professional bullying taking place. Advice to Senior Management: Assign work by showing some respect to qualification. Try to keep a check on how the junior level employees are treated
    • IBM Market Development and Insights Organization: (Past Employee - 2012) “Extremely stressful - political and bureaucratic.” Pros: Great brand name to associate with, smart individuals, flexibility. Fast pace learning. Cons: Too many bureaucratic systems, highly political and stressful environment. Advice to Senior Management: Have a long view - management and systems are all short sighted based on quick numbers.
    • IBM Anonymous in Dallas, TX: (Current Employee) “Subjectivity” Pros: You have the expectation that you will get rewarded when exceeding your goals by 200% or more. Cons: Performance goals are great except your evaluation is completely subjective. So what you did in exceeding your goals is of little importance. Advice to Senior Management: Recognize the individuals who are making a difference
    • IBM Senior Financial Analyst in Rochester, MN: (Current Employee) “Great resume builder, flexible, extremely poor pay” Pros Extremely flexible company, as long as you get your work done. Opportunity to work in wide variety of areas to build professional experience. Cons Pay is OK for entry level position, however as you progress in your career and take on additional responsibilities you might be lucky to get one promotion (8% raise). To put it another way you could work 20 hrs / week doing the bare minimum and get paid the same as a top performer who is working 60+ / week. There's no motivation to perform. Advice to Senior Management Good place to start your career but don't plan on staying for the long haul, unless you're in love with the Rochester area.
    • IBM Advisory IT Specialist in New York, NY: (Past Employee - 2012) “Company too focused on the short term.” Pros: - Great benefits (health, dental, vision, life insurance, long term disability, etc); - Great 401k benefits (100% match up to 6% of salary and an additional 2% of salary regardless); - Great work life balance.


      • Noncompetitive pay.
      • Raises either pitifully small or non existent.
      • Low employee morale.
      • Every year something is taken away to cut costs (no longer pay for internet service, no longer pay for mobile phone usage, no longer have a pension, bonus is 4% less than it used to be, employee stock discount decreased from 15% to 5%, mandated compact car rentals, all flights must be economy even when super long overseas flights, no longer pay for schooling, no longer offer training, no longer pay for company holiday party, replace computers every 4 years now, etc).
      • Low chance for advancement.
      • Performance reviews do not correlate with actual performance.

      Advice to Senior Management: Stop focusing on the short term, and do things that will help the long term health of the company. Realize that employee morale is key to increased productivity and quality. Stop replacing your US workforce with global resources. Global resources should do the work in their own countries, and US resources should do the work in the US.

    • IBM Senior Project Manager: (Past Employee - 2010) “Used to be a good company to work for.” Pros: work at home opportunities are available. Cons: The company makes their profits from offshoring resources.
    • IBM Credit Analyst: (Past Employee - 2012) “Awful place to work with no raises and under staffed.” Pros: Good benefits. Flexibility with work schedule. Cons: No pay raises. Minimal bonuses when the company is making huge profits. No basic stationary is provided!!! You have to get your own. Bad management, very hierarchical, unapproachable. No team camaraderie. Absolutely no growth opportunities. Occasional lateral moves to another team. Advice to Senior Management: Most importantly, boost morale of employees. It is common sense that IBM is making profits by cutting costs and not through organic growth. Get rid of rude, nasty and bad English speaking managers.
    • IBM Anonymous in Dubuque, IA: (Current Employee) “Exhausting, low paid, no room for advancement.” Pros: Healthcare, 401K, good location, it's a job and a good name for your resume. Good education to take with you to your next job. Cons: Low paid, limited if any raises, no room for growth, too much work, too few people due to constant turn over. I have seen at least 100 people on my floor leave in the past year then you have to pick up their work even though you have no time. Then if you can't fit it in you get a poor rating. Managers are like robots, running around like crazy, always in a frenzy, no time for their people. Two or 3 years without a raise or bonus. Advice to Senior Management: Management at the Dubuque site cannot fix these issues, it's the model. It does not work. The customers don't like it, the employees don't like it. Management needs to listen if this center is to survive.
    • IBM Senior Project Manager in Toronto, ON (Canada): (Past Employee - 2010) “Tightly knit company but not for creatives.” Pros: IBM absolutely looks after its own. On large, multi-vendor projects particularly, the pressure can get pretty intense. IBMers who work in the same environment provide a tremendous bit of support for one another when things get tough. There's also some outstanding management who excel at looking out for their people.

      Cons: I found working at IBM I was constantly under pressure to change who I was. On one project where I achieved recognized results, I still routinely heard, "you don't belong here". On another, I got mixed messages from management every day - first they'd tell me to change my behaviour to become less creative and more corporate, but then in reviews tell me I should "just be myself". It was a very frustrating experience overall. I would absolutely not recommend IBM as a workplace for anyone who wants to develop creative solutions to problems.

      Advice to Senior Management: You often focus so much on your revenues that you lose sight of what's good or right for your clients. I know how important the numbers are for a publicly traded company; however, clients choose IBM because they trust the brand. Be careful you don't become so fixated on making budget that you put that brand in jeopardy.

  • Alliance for Retired Americans: Friday Alert (PDF). This week's articles include:
    • Wall Street Journal Gives Lay of the Land on Senior Vote in 2012
    • Wisconsin Alliance Welcomes Secretary Sebelius to Milwaukee Senior Center
    • White House Derides Health Care Study
    • Rep. Allen West Says That Dozens of his Democratic Colleagues are Communists
    • Alliance Members Work to Save America’s Postal Service
    • Norm Wernet Honored at Ohio Convention
    • Easterling Addresses Communications Workers in Maryland
  • Yahoo! IBM Retiree Information Exchange message board: "Future Health Account" by "luv_my_catz". Full excerpt: Does anybody know where the money in the FHA actually came from? Was it deducted from our paychecks? I have been searching for hours to find an answer. Input appreciated!!
  • Yahoo! IBM Retiree Information Exchange message board: "Re: Future Health Account" by "madinpok". Full excerpt: The money in your FHA "account" isn't real - it is just a notional account (i.e. an accounting record). You did not have anything deducted from your paycheck to fund the FHA and IBM simply made entries in a ledger to make it appear that you have money there.

    IBM pays for retiree medical costs out of general operating funds. When you "spend" your FHA money for health insurance premium, IBM deducts the amount from your notional account. Then IBM pays any actual costs for your health care from its general funds.

    Be aware that you have no rights to the FHA funds, and retirees in general have no rights to IBM provided health care. IBM can change the rules and take it all away at any time.

  • New York Times: In Target-Date Funds, a Hodgepodge of Styles. By Carla Fried. Excerpts: Choosing among the often-confusing lineup of mutual funds offered in 401(k) retirement accounts can be an unwelcome chore. Increasingly, employees have been embracing a simpler choice: all-in-one mutual funds known as target-date retirement funds, or T.D.F.’s. Assets in these funds have more than quadrupled since 2007. For employees, the funds appear very straightforward, requiring only the choice of an expected retirement date. Once a fund with an appropriate target date is chosen, investment professionals take charge. They decide on a mix of assets that gradually becomes more conservative as the employee nears retirement. ...

    There is a very wide range of T.D.F.’s, and that may be a problem because they have a whiff of the old Wild West about them: just about anything goes. For example, Morningstar found that among three dozen funds with a target retirement date of 2025, the percentage of fund assets invested in stocks ranged from 38 to 86 percent, with an average of 70 percent. The retirement investment industry and Washington regulators have basically left it to investors to figure out what their T.D.F.’s contain, and to decide if their plan dovetails with their risk and return expectations. ...

    But automated simplicity isn’t a magic bullet. “The potential problem is that the T.D.F. you are given isn’t really that good,” Professor Statman says. For example, a recent survey by Callan Associates, an investment consulting firm, found that 63 percent of such funds used actively managed funds and that an additional 17 percent used a mix of active and index-based funds. Historically, active management has been less effective than passive index-based investing. “The fact is, after investment fees are subtracted, active management is a loser’s game,” says Tom Idzorek, global chief investment officer at Morningstar Investment Management. ...

    On an asset-weighed basis, the average annual expense ratio charged on target-date funds is 0.61 percent, according to Morningstar. Vanguard, which has an average charge of 0.18 percent for its T.D.F.’s, is the only major manager that emphasizes index-based funds for them. Target-date funds that are actively managed tend to have annual expense charges above 0.70 percent — though many exchange-traded funds charge less than 0.30 percent.

  • New York Times: It’s Probably Not Going to Be You Who Beats the Market. By Carl Richards. Excerpts: Growing up, we learned that two plus two equals four. We take comfort in numbers having a set value. So it’s totally logical that when we look at the ticker tape of numbers scrolling across the television screen, we think that there must be some perfect formula for revealing the secret of investing.

    Numbers don’t lie, right?

    But as this article about pension funds trying to improve their performance using alternative investments reminded me, we need to understand what we’re up against when we start searching for an amazing, index-beating manager, fund or investment.

    Turns out that finding the next Warren Buffett is not impossible. But it is highly improbable. Think I’m too pessimistic? Consider these three points carefully...

  • New York Times: ‘Pipeline’ to Programming Jobs Has Leaks. By Katie Hafner. Excerpts: When educators speak of women in computer science, they often refer to the “pipeline,” which tends to start in high school and wind its way through graduate studies. Along the way, the pipeline becomes increasingly porous, losing women at a discouraging rate.

    By the time it reaches the workplace, the pipeline has become a veritable sieve.

    Even a degree in computer science isn’t enough to propel some women into programming jobs. On average, about 18 percent of computer science degrees go to women, and the Bureau of Labor Statistics reports that 19 percent of software developers are women. But experts say that at many prominent tech firms, where coding is king, the percentage of female programmers is in the single digits.

    Part of the problem, say those familiar with the hiring process, is with the recruiting itself. Some women are put off when they go for interviews and are interviewed only by men. And some companies hold 24-hour “hackathons” for recruits, reinforcing the profession’s geeky, high-testosterone stereotype. “There’s a bias in the system,” said Madeline Heilman, a psychologist at New York University who studies gender stereotypes. “It affects women’s willingness to go into these situations because they know what they’re in for.”

  • TechRepublic: Is the tech skills crisis just a myth? By Nick Heath. Excerpts: It’s often claimed we are suffering an IT skills crisis of epic proportions: just recently the European Commission announced that by 2015 there will be an estimated shortfall of 700,000 IT professionals across Europe. And yet, academics have told TechRepublic there is little hard evidence of a shortage of IT workers, as neither pay levels nor employment rates for IT professionals have reached the levels that might be seen in a skills crisis.

    Pay levels for IT workers in the UK over the past eight years or so have not undergone the large shifts you would expect to see in an industry suffering from a skills crisis, says Dr Jonathan Liebenau, reader in Technology Management at the London School of Economics. “In looking at historic wages we don’t see the sort of fluctuations that would support the argument that employers are finding it consistently difficult to find people,” he said. ...

    And despite the warnings of skills shortages in the coming years, each year industry finds enough IT workers to satisfy its demand, Liebenau added. “If you look at historical surveys of industry they’ll always say they haven’t got enough people for the future and yet they’ll always demonstrate that the year before they found enough people,” he said.

    In the US, Hira said, unemployment among IT workers is about double that of other college graduates. IT workers also generally take positions that they’re offered, he said - not what would be expected in employees’ market.

New on the Alliance@IBM Site
  • SOS! Stop Off-Shoring our jobs! Informational pickets April 24. Locations:
    • Austin: 11501 Burnet Road intersection of Burnet and Palm Way
    • Poughkeepsie: Sidewalk in front of Spackenkill Plaza, Rt 9 4pm-5pm
    • Endicott: Corner of North and McKinley, Endicott. 4pm-5pm
    • Boca Raton: Congress Ave. 4pm to 5pm.
    • Burlington, VT: Corner of Park St and IBM exit, Essex Junction 4pm to 5pm
    • Boulder: Diagonal Highway (Rt 119) and Mineral Road (shoulder) 4pm to 5pm.
    • Rochester, MN: Peace Plaza 4pm to 5pm
    • RTP: IBM Main site front gate (intersection of Davis Drive and E Cornwallis Road) 4pm to 5pm

    If you want to participate or have an information picket line at your site please contact: ibmunionalliance@gmail.com

  • Job Cut Reports
    • Comment 04/09/12: At least 3 good friends were part of the 2/28 layoffs... and now I find out that I am going to be reporting directly to a manager in India - although they have assigned a new bluepages/HR manager in the US, it was made very clear that I will take all direction from the person in India. I guess this type of ethics was not part of the latest BCG course? -work4deman-
    • Comment 04/09/12: To work4deman: IBM jobs in the US have been on the decline in the last decade while IBM jobs in India have been on the rise. The bottom line is employee cost. IBM CEOs found that they can replace a US employee with an employee in India at a fraction of the cost. Once your new manager in India figures out what you do and how to do your job will probably be gone too. Sorry to give you such sad news but welcome to an IBM without a Union to protect their employees. -BearerOfSadNews-
    • Comment 04/10/12: Does anyone know how many L1B visa workers IBM employs in the US? Do they use us.ibm.com email addresses instead of their home country? -anon-
    • Comment 04/10/12: To work4deman: There is a rule in ibm where US employees cannot be directly assigned to a manager outside the US. So, to get around their own rules, they assign you a bluepages manager. Undercover, you actually report directly to the manager outside the US. IBM is so messed up, they even break their own rules!!! -dun-4-
    • Comment 04/11/12: To -dun-4- IBM in recent years has circumvented US based personnel requirements on contracts by giving foreign nationals userID's in the us.ibm.com Notes domain and not in their home country. Customer's and even IBMers are misled thinking that by communication with userxxx@us.ibm.com that person is actually in the U.S. Sometimes you can catch this in Bluepages for example where a 'first last name' has both a cn.ibm.com and us.ibm.com entry, with the same picture. -Anonymous-
    • Comment 04/11/12: Did you know the most recent RA was called "Phoenix"? It was actually treated like a project and had a code name. I was on a call with several people when a Director and a Manager made reference to Randy's Phoenix Project, but I didn't know what they were talking about. Little did I know they were talking about everyone on the call except themselves. We were all RAd. -Anonymous-
    • Comment 04/11/12: IBM loses the big Disney contract but does not try and help its employees find alternate jobs at all. Instead they might freeze internal re-hiring. I hear that top management as well as managers are telling employees that they have a better chance of finding employment with Disney or with the new company that has got the contract!! One IBM honcho even sent out the Disney jobs URL to the IBMers!! Amazing! -Another_worried_IBMer-
    • Comment 04/14/12: Where are the West Coast locations on April 24? -What about Tucson and San Jose?- Alliance reply: We didn't get any volunteers to say they wanted to hold one in Tucson or San Jose. If someone does want to by all means contact us asap at ibmunionalliance@gmail.com. That includes other locations as well.
News and Opinion Concerning Health Savings Accounts, Medical Costs and Health Care Reform
  • Physicians for a National Health Program: How to Replace Obamacare. By James C. Capretta and Robert E. Moffit, National Affairs, Spring 2012. Excerpt: What Needs Fixing. But for all its considerable strengths, the system suffers from pervasive weaknesses as well. The most serious of these is rapidly rising costs.

    Of course, government health-care programs and policies are largely responsible for these rising costs in the first place. To begin, the design of Medicare is terribly flawed: Because the program pays providers of care based on the volume of their services, it creates a massive incentive for inefficiency and overuse. And because Medicare is the biggest payer in most health-care markets in America, that incentive badly distorts the economics of the entire sector. Furthermore, the Medicaid program inflates costs by (among other policies) having states control how the program is run while the federal government pays most of the bills. The result is that neither party has both the incentive and ability to keep costs in check.

  • Health Care Blog: Much Ado About Broccolli. By Michael Turpin. Excerpt: As the Supreme Court debates the boundaries of government’s role in mandating the purchase of insurance, the discussion continues on whether the public or private sector is best positioned to drive market reforms necessary to meet our goals of lower costs and higher quality. As the son of a Phi Beta Kappa neo con who believes government should be the size of a sand gnat and as the husband to a British citizen who loves national healthcare and was born through a midwife, I often find myself lost in a political no man’s land with volleys being exchanged from the right and left. To complicate Thanksgiving dinner further, thirty years of healthcare consulting, including a three-year stint in Europe, hospitalization for pneumonia in the NHS and a tour of duty as a senior executive for a national insurer has left me with my own conflicted convictions about how we might fix our broken system.
  • Washington Post: Health-care law will add $340 billion to deficit, new study finds. By Lori Montgomery. Excerpts: President Obama’s landmark health-care initiative, long touted as a means to control costs, will actually add more than $340 billion to the nation’s budget woes over the next decade, according to a new study by a Republican member of the board that oversees Medicare financing. The study is set to be released Tuesday by Charles Blahous, a conservative policy analyst whom Obama approved in 2010 as the GOP trustee for Medicare and Social Security. His analysis challenges the conventional wisdom that the health-care law, which calls for an expensive expansion of coverage for the uninsured beginning in 2014, will nonetheless reduce deficits by raising taxes and cutting payments to Medicare providers.
  • Reuters, courtesy of the New York Times: Obama Healthcare Could Worsen U.S. Debt: Republican Study. Excerpts: Instead of curbing government spending, President Barack Obama's healthcare law could add up to $530 billion to the federal debt over ten years, a Republican expert on U.S. government benefit programs said on Tuesday. A study by Charles Blahous, a George Mason University research fellow and the Republican trustee for the Medicare and Social Security entitlement programs for the elderly, challenged the administration's contention that the 2010 law would reduce healthcare costs. ...

    White House health adviser Jeanne Lambrew said Blahous' analysis wrongly charges that some savings are "double counted." She said government estimates from the Office of Management and Budget and from the non-partisan Congressional Budget Office show the 2010 law would lower federal deficits over a 10 year period.

    "This new math fits the old pattern of mischaracterizations about the Affordable Care Act when official estimates show the health care law reduces the deficit," Lambrew, deputy assistant to the president for health policy, wrote in a blog post on the White House website.

  • New York Times opinion: Another Bogus Attack on Health Reform. By Paul Krugman. Oh, boy. It turns out that the WaPo featured on its front page a report by Charles Blahous of the (yes, Koch-funded) Mercatus Center — although the Post describes him as a Medicare trustee, giving the impression that this is somehow an official document — claiming that the Affordable Care Act will actually increase the deficit. Jonathan Chait does the honors:
    You may wonder what methods Blahous used to obtain a more accurate measure of the bill’s cost. The answer is that he relies on a simple conceptual trick. Medicare Part A has a trust fund. By law, the trust fund can’t spend more than it takes in. So Blahous assumes that, when the trust fund reaches its expiration, it would automatically cut benefits.

    The assumption is important because it forms the baseline against which he measures Obama’s health-care law. He’s assuming that Medicare’s deficits will automatically go away. Therefore, the roughly $500 billion in Medicare savings that Obama used to help cover the uninsured is money that Blahous assumes the government wouldn’t have spent anyway. Without the health-care law, in other words, we would have had Medicare cuts but no new spending on the uninsured. Now we have the Medicare cuts and new spending on the uninsured. Therefore, the new spending in the law counts toward increasing the deficit, but the spending cuts don’t count toward reducing it.

    So saving Medicare money isn’t a deficit reduction, because Medicare is going to run out of money and cut benefits anyway. Right?

    OK, this is crazy. Nobody, and I mean nobody, tries to assess legislation against a baseline that assumes that Medicare will just cut off millions of seniors when the current trust fund is exhausted. And in general, you almost always want to assess legislation against “current policy”, not “current law”; there are lots of things that legally are supposed to happen, but that everyone knows won’t, because new legislation will be passed to maintain popular tax cuts, sustain popular programs, and so on.

  • Huffington Post: Insurance Company Ordered to Pay $34 Million For Kicking 90-Year-Old Arlene Hull Off Plan. By Jeffrey Young. Excerpts: Arlene Hull, a 90-year-old Montana woman, has won a lawsuit against an insurance company that refused to pay her nursing home bills and now must pony up millions. Ability Insurance was ordered by a unanimous jury last week to pay Hull $34.3 million, the Billings Gazette reports [h/t The Consumerist]. ...

    Hull and her late husband purchased a long-term-care insurance plan in 1997 that was supposed to cover their medical and living expenses during the final years of their lives. After paying premiums for a decade, Hull's health declined and she was diagnosed with Alzheimer's disease five years ago. She moved into an assisted-living facility in 2008.

    Ability Insurance, which changed names several times during the years Hull paid premiums, cut her off two years later, the Billings Gazette reported. Although the company agreed to resume her benefits last year, it refused to pay the bills from the time during which it wouldn't cover her. The Montana jury decided the insurance company had breached its contract with Hull.

News and Opinion Concerning the "War on the Middle Class"
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.

  • AlterNet: When corporations abandoned the 99%. Over the last 30 years, companies have shifted their loyalties from employees to shareholders. By William Lazonick. Excerpts: In 2010, the top 500 U.S. corporations – the Fortune 500 – generated $10.7 trillion in sales, reaped a whopping $702 billion in profits, and employed 24.9 million people around the globe. Historically, when these corporations have invested in the productive capabilities of their American employees, we’ve had lots of well-paid and stable jobs.

    That was the case a half century ago.

    Unfortunately, it’s not the case today. For the past three decades, top executives have been rewarding themselves with mega-million dollar compensation packages while American workers have suffered an unrelenting disappearance of middle-class jobs. Since the 1990s, this hollowing out of the middle-class has even affected people with lots of education and work experience. As the Occupy Wall Street movement has recognized, concentration of income and wealth of the top “1 percent” leaves the rest of us high and dry. ...

    What a difference three decades makes! Now mass layoffs to boost profits are the norm, while the expectation of a career with one company is long gone. This transformation happened because the U.S. business corporation has become in a (rather ugly) word “financialized.” It means that executives began to base all their decisions on increasing corporate earnings for the sake of jacking up corporate stock prices. Other concerns — economic, social and political — took a backseat. From the 1980s, the talk in boardrooms and business schools changed. Instead of running corporations to create wealth for all, leaders should think only of “maximizing shareholder value.”

    When the shareholder-value mantra becomes the main focus, executives concentrate on avoiding taxes for the sake of higher profits, and they don’t think twice about permanently axing workers. They increase distributions of corporate cash to shareholders in the forms of dividends and, even more prominently, stock buybacks. When a corporation becomes financialized, the top executives no longer concern themselves with investing in the productive capabilities of employees, the foundation for rising living standards for all. They become focused instead on generating financial profits that can justify higher stock prices – in large part because, through their stock-based compensation, high stock prices translate into megabucks for these corporate executives themselves. The ideology becomes: Corporations for the 0.1 percent — and the 99 percent be damned.

  • New York Times op-ed: The Gullible Center. By Paul Krugman. Excerpts: The Ryan cult was very much on display last week, after President Obama said the obvious: the latest Republican budget proposal, a proposal that Mitt Romney has avidly embraced, is a “Trojan horse” — that is, it is essentially a fraud. “Disguised as deficit reduction plans, it is really an attempt to impose a radical vision on our country.” ...

    The reaction from many commentators was a howl of outrage. The president was being rude; he was being partisan; he was being a big meanie. Yet what he said about the Ryan proposal was completely accurate.

    Actually, there are many problems with that proposal. But you can get the gist if you understand two numbers: $4.6 trillion and 14 million.

    Of these, $4.6 trillion is the revenue cost over the next decade of the tax cuts embodied in the plan, as estimated by the nonpartisan Tax Policy Center. These cuts — which are, by the way, cuts over and above those involved in making the Bush tax cuts permanent — would disproportionately benefit the wealthy, with the average member of the top 1 percent receiving a tax break of $238,000 a year.

    Mr. Ryan insists that despite these tax cuts his proposal is “revenue neutral,” that he would make up for the lost revenue by closing loopholes. But he has refused to specify a single loophole he would close. And if we assess the proposal without his secret (and probably nonexistent) plan to raise revenue, it turns out to involve running bigger deficits than we would run under the Obama administration’s proposals.

    Meanwhile, 14 million is a minimum estimate of the number of Americans who would lose health insurance under Mr. Ryan’s proposed cuts in Medicaid; estimates by the Urban Institute actually put the number at between 14 million and 27 million.

    So the proposal is exactly as President Obama described it: a proposal to deny health care (and many other essentials) to millions of Americans, while lavishing tax cuts on corporations and the wealthy — all while failing to reduce the budget deficit, unless you believe in Mr. Ryan’s secret revenue sauce.

  • New York Times: In Executive Pay, a Rich Game of Thrones. By Natasha Singer. Excerpts: Is any C.E.O. worth $1 million a day?

    That’s roughly $42,000 an hour. Or $700 a minute. Or $12 a second.

    Think of it this way: In the time it took to read those words, you could’ve pocketed $100. Finish this article and — well, you do the math. ...

    Of course, most of us can’t begin to wrap our heads around pay figures like these. An American with a bachelor’s degree, after all, typically makes $2.3 million, not in a year, but over a lifetime, according to a recent study from Georgetown University.

    Data on C.E.O. compensation in 2011, albeit preliminary, confirm what many of us already know: the top brass generally do much, much better than the rest of us, whether times are good or bad. After the ups and downs of the recent boom-bust years, pay among the 100 best-paid chief executives at big American corporations held fairly steady in 2011, according to Equilar, which reviewed C.E.O. compensation for The New York Times. Here are some numbers worth knowing...

  • Huffington Post: Tax Loophole Romney Made Famous Now In Crosshairs Of Democrats, White House. By Dan Froomkin and Michael McAuliff. Excerpts: A tax dodge that millionaire hedge fund managers use to slash their income taxes could soon become a major election issue, as congressional Democrats and the White House gear up for a fight to close the loophole.

    What makes it a real hot-button issue is that presumptive Republican presidential nominee Mitt Romney is this particular loophole's poster child.

    Under current tax law, certain kinds of financiers, including private equity investors and some managers of hedge funds, are allowed to treat bonuses like long-term investment income, called carried interest, taxable at the maximum 15 percent capital gains rate. Others have to pay up to 35 percent taxes on their labor income. The cost to the U.S. Treasury is more than $1 billion a year.

    One of the main reasons Romney paid 13.9 percent in taxes on his $21.7 million income in 2010 is that a big chunk of that income came from performance bonuses still trickling in from private-equity investments he managed during his career at his former firm, Bain Capital. ...

    Several other Democratic candidates are prepared to weigh in, including Ohio Sen. Sherrod Brown. "Wealthy hedge fund managers can make more than $2 billion each year, yet pay a lower tax rate than most middle class Ohioans because of a special tax break," Brown told HuffPost. "If hedge fund managers paid the regular income tax rate, we could reduce the deficit by $23 billion over the next decade."

  • Huffington Post: Barack Obama Campaign Attacks Mitt Romney Over Swiss Bank Account. By Sam Stein. Excerpts: A conference call organized by President Barack Obama's presidential campaign on Monday to push for higher tax rates for millionaires quickly descended into an attack on Republican frontrunner Mitt Romney for his secretive Swiss bank account, with Sen. Dick Durbin (D-Ill.) declaring that no presidential aspirant has ever had such an exotic financial portfolio.

    "I asked Warren Buffet in a meeting we had recently, 'Have you ever had a Swiss bank account?' He said, 'No, there are plenty of good banks in the United States,'" Durbin said.

    "So I started asking people: 'Why do you have Swiss bank account?' One, you believe the Swiss Franc is a stronger currency than the United States dollar. And that is apparently the decision the Romney family made during the Bush presidency. And secondly, you want to conceal something. You want to hide something. Why would you have a Swiss bank account instead of one in the United States? I would like to ... ask the press to really press some of these questions, the obvious questions. When is the last time a presidential candidate for the United States had a Swiss bank account? I think the answer is never."

  • InvestmentNews: Buffett rule will clobber Mitt Romney — but won't jolt Albert Pujols. Proposal likely to smack those with lots of capital income; ordinary income not so much. Excerpts: President Barack Obama is promoting a “Buffett rule” setting a minimum tax rate for top earners to ensure they pay a higher percentage of their income than middle- class families. For the most part, they already do.

    The average tax rate, including payroll taxes, for the middle 20 percent of U.S. families will be 15.9 percent in 2015, according to an estimate by the Tax Policy Center, a nonpartisan research group in Washington. Of the 217,000 households that would be affected by the Buffett rule, only 4,000 will have incomes exceeding $1 million and tax rates below 15 percent, under slightly different measures of income and taxes by the center. ...

    Under current law, capital gains and dividends are taxed at a top rate of 15 percent while wages and other ordinary income are taxed at as much as 35 percent. A new 3.8 percent tax on unearned income takes effect in 2013. ...

    High earners including Buffett and Republican presidential candidate Mitt Romney would be “clobbered” by the Buffett rule, Williams said. Measured as a share of adjusted gross income, Romney, the co-founder of Bain Capital LLC, paid a 13.9 percent rate for tax year 2010, according to tax returns released by his campaign.

    Corporate chief executives and professional athletes like Albert Pujols with multimillion-dollar salaries would see less of a change in their tax rate because their pay is taxed as ordinary income. High-income households with a mix of ordinary and capital income have rates between 15 and 30 percent. Their taxes would go up under the Buffett rule although they already pay more than middle-class households do. ...

    “If you make more than a million dollars annually, then you should pay at least the same percentage of your income in taxes as middle-class families do,” the president said in an April 3 speech in Washington. A 30 percent tax rate “shouldn't be too much to ask,” said Seth Larson, a spokesman for Whitehouse. “Those who can afford it should pay a little more in taxes,” Larson said. “This has been a guiding principle of our tax code for generations, and the Paying a Fair Share Act would simply restore that balance.”

  • Huffington Post: Why the Buffett Rule Sets the Bar Too Low. By Robert Reich. Excerpts: Next Monday most Americans will be filing their income taxes for tax year 2011. This year, though, tax day has special significance. If there's one clear policy contrast between Democrats and Republicans in the 2012 election, it's whether America's richest citizens should be paying more. ...

    No one in Washington believes the Buffett Rule has any hope of passage this year. It's largely symbolic. The vote will mark a sharp contrast with Republican Paul Ryan's plan (enthusiastically endorsed by Mitt Romney) to cut the tax rate on the super rich from 35 percent to 25 percent -- rewarding millionaires with a tax cut of at least $150,000 a year. The vote will also serve to highlight that Romney himself paid less than 14 percent on a 2010 income of $21.7 million because so much of his income was in capital gains, taxed at 15 percent.

    Hopefully in the weeks and months ahead the White House and the Democrats will emphasize three key realities:

    1. The richest 1 percent of Americans are now taking in over 20 percent of total national income, and so far have raked in almost all the gains from this recovery. Thirty years ago, the richest 1 percent got 9 percent of total income. Income and wealth are now more concentrated at the top than they've been since the 1920s.
    2. The richest 1 percent are paying a lower tax rate than they've paid since 1980. For three decades after World War II, their tax rate never dropped below 70 percent. Even considering all deductions and tax credits, they paid close to 55 percent. Under Eisenhower, the top rate was 91 percent and the effective rate was 58 percent.
    3. Right now the nation faces two yawning deficits -- an investment deficit and a federal budget deficit. The investment deficit includes deferred maintenance on America's infrastructure -- roads, bridges, public transit, water and sewer systems that are all crumbling -- and an educational system that's being starved for resources (the federal government pays for 8 percent of K-12 education and about 5 percent of public higher education, but could do much more). The federal budget deficit is projected to mushroom to $6.4 trillion over the next ten years, mostly because of aging boomers and soaring health care costs.

    Any serious person looking at these three realities would conclude that the rich should be paying far more. It's not just a matter of fairness; it's also a matter of patriotism.

  • Wall Street Journal: Wealth Gap Hurts Economy: Obama. By Jared A. Favole. Excerpts: As he urges support for a minimum tax on millionaires, President Barack Obama on Tuesday said the gap between the "ultra-rich" and everyone else is a drag on the U.S. economy. "I want folks to get rich in this country ... But understand, the share of our national income going to the top one percent has climbed to levels we haven't seen since the 1920s," Mr. Obama said while speaking at Florida Atlantic University. "The folks who are benefiting from this are paying taxes at one of the lowest rates in 50 years." ...

    The president has said it is unfair for millionaires to pay a lower tax rate than the middle class, and will defend his tax policy against accusations that it is a form of wealth distribution.

    "When we guarantee basic security for the elderly or the sick or those who are actively looking for work, that doesn't make us weak," he said Tuesday. "What drags our entire economy down is when...the gap between those at the very very top and everybody else keeps growing wider and wider and wider and wider."

  • Washington Post opinion: An economic recovery that leaves workers further behind. By Harold E. Meyerson. Excerpts: Why is this recovery different from all other recoveries?

    Many of the reasons are widely known: Rebounding from a financial crisis takes an excruciatingly long time; the huge decline in housing values has reduced Americans’ purchasing power; large corporations are making do with fewer employees — at least, in this country.

    But what really sets the current recovery apart from all its predecessors is this: Almost three years after economic growth resumed, the real value of Americans’ paychecks is stubbornly still shrinking. According to Friday’s Bloomberg Economics Brief, “the pace of income gains is well below that of the past two jobless recoveries and real average hourly earnings continue to decline.”

    The Bloomberg report cites one reason for this anomaly: Most of the jobs being created are in low-wage sectors. According to Bloomberg, fully 70 percent of all job gains in the past six months were concentrated in restaurants and hotels, health care and home health care, retail trade, and temporary employment agencies. These four sectors employ just 29 percent of the country’s workforce but account for the vast majority of the jobs being created.

    Among the economy’s better-paying sectors, construction still has an unemployment rate of 17 percent. Given the persistence of mass foreclosures, the continuing decline of housing values and Republicans officeholders’ reluctance to allot public funds even for paving roads, construction isn’t coming back anytime soon. ...

    Profits and dividends are up and wages are down — which is why, as University of California economist Emmanuel Saez has documented, all income growth in the United States in 2010 went to the wealthiest 10 percent of households, and 93 percent to the wealthiest 1 percent. Profits and dividends are up largely because wages are down, as JPMorgan Chase chief investment officer Michael Cembalest has documented. “U.S. labor compensation,” Cembalest wrote in a newsletter to the bank’s major investors last year, “is now at a 50-year low relative to both company sales and U.S. GDP.”

    Why is this recovery different from all other recoveries? Because American workers have lost all their bargaining power. That’s a function of ongoing high unemployment levels, but not only that. The 1981-82 recession had even higher rates of joblessness, but wages didn’t continue to decline during the ensuing recovery. There have been two fundamental alterations in the U.S. economy since Ronald Reagan was president, however. First, American multinational corporations now locate much of their production abroad. Second, with the rate of private-sector unionization down to a microscopic 6.9 percent, workers have no power to bargain for higher pay. Employers can serenely blow them off — and judging by the data, that’s exactly what employers are doing.

  • New York Times opinion: The High Cost of Gambling on Oil. By Joseph P. Kennedy II. Excerpts: The drastic rise in the price of oil and gasoline is in part the result of forces beyond our control: as high-growth countries like China and India increase the demand for petroleum, the price will go up.

    But there are factors contributing to the high price of oil that we can do something about. Chief among them is the effect of “pure” speculators — investors who buy and sell oil futures but never take physical possession of actual barrels of oil. These middlemen add little value and lots of cost as they bid up the price of oil in pursuit of financial gain. They should be banned from the world’s commodity exchanges, which could drive down the price of oil by as much as 40 percent and the price of gasoline by as much as $1 a gallon.

    Today, speculators dominate the trading of oil futures. According to Congressional testimony by the commodities specialist Michael W. Masters in 2009, the oil futures markets routinely trade more than one billion barrels of oil per day. Given that the entire world produces only around 85 million actual “wet” barrels a day, this means that more than 90 percent of trading involves speculators’ exchanging “paper” barrels with one another.

    Because of speculation, today’s oil prices of about $100 a barrel have become disconnected from the costs of extraction, which average $11 a barrel worldwide. Pure speculators account for as much as 40 percent of that high price, according to testimony that Rex Tillerson, the chief executive of ExxonMobil, gave to Congress last year. That estimate is bolstered by a recent report from the Federal Reserve Bank of St. Louis.

  • The Smirking Chimp: The Rich Are Different from You and Me – They Pay Less Taxes. By Bill Moyers and Michael Winship. Excerpts: Benjamin Franklin, who used his many talents to become a wealthy man, famously said that the only things certain in life are death and taxes. But if you’re a corporate CEO in America today, even they can be put on the back burner – death held at bay by the best medical care money can buy and the latest in surgical and life extension techniques, taxes conveniently shunted aside courtesy of loopholes, overseas investment and governments that conveniently look the other way.

    In a story headlined, “For Big Companies, Life Is Good,” The Wall Street Journal reports that big American companies have emerged from the deepest recession since World War II more profitable than ever: flush with cash, less burdened by debt, and with a greater share of the country’s income. But, the paper notes, “Many of the 1.1 million jobs the big companies added since 2007 were outside the U.S. So, too, was much of the $1.2 trillion added to corporate treasuries.” ...

    Corporate taxes today are at a 40-year-low -- even as the executive suites at big corporations have become throne rooms where the crown jewels wind up in the personal vault of the CEO.

    Then look at this report in The New York Times: Last year, among the 100 best-paid CEOs, the median income was more than 14 million, compared with the average annual American salary of $45,230. Combined, this happy hundred executives pulled down more than two billion dollars.

    What’s more, according to the Times “… these CEO’s might seem like pikers. Top hedge fund managers collectively earned $14.4 billion last year.” No wonder some of them are fighting to kill a provision in the recent Dodd-Frank reform law that would require disclosing the ratio of CEO pay to the median pay of their employees. One never wishes to upset the help, you know. It can lead to unrest. ...

    So what do these big moneyed nabobs have to complain about? Why are they whining about reform? And why are they funneling cash to super PACs aimed at bringing down Barack Obama, who many of them supported four years ago?

    Because, writes Alec MacGillis in The New Republic -- the President wants to raise their taxes. That’s right -- while ordinary Americans are taxed at a top rate of 35% on their income, Congress allows hedge fund and private equity tycoons to pay only pay 15% of their compensation. The President wants them to pay more; still at a rate below what you might pay, and for that he’s being accused of – hold onto your combat helmets -- “class warfare.” One Wall Street Midas, once an Obama fan, now his foe, told MacGillis that by making the rich a primary target, Obama is “[expletive deleted] on people who are successful.”

    And can you believe this? Two years ago, when President Obama first tried to close that gaping loophole in our tax code, Stephen Schwarzman, who runs the Blackstone Group, the world’s largest private equity fund, compared the President’s action to Hitler’s invasion of Poland.

    That’s the same Stephen Schwarzman whose agents in 2006 launched a predatory raid on a travel company in Colorado. His fund bought it, laid off 841 employees, and recouped its entire investment in just seven months – one of the quickest returns on capital ever for such a deal.

  • New York Times opinion: Tax Face-Off: Romney vs. Me. By Timothy Egan. Excerpts: This year, I did my 1040 and its attendant nightmare forms while comparing my family’s financial documents with those of Willard M. Romney’s. He paid 13.9 percent in taxes on income of $21.7 million for 2010 and about the same rate for the not fully completed 2011 returns.

    I’m going to pay double Romney’s rate on a mere fraction of his income. But you won’t get any class-war envy from me about a man worth upward of $250 million paying the same rate as someone earning, say, $55,000 a year. Nope. There’s a larger point here than the inequality one, compelling though it is.

    Remember: The tax return is a blueprint for how to earn and spend money. It encourages us to do some things and discourages us from doing others.

    One disincentive, comparing Romney’s taxes to mine: don’t work. The tax code discourages work, certainly for the rich. And Romney’s plan for the future would further discourage work for poor households with children or those paying for their kids to go to college.

    Take a look at Line 7 of the 1040, the one where you report wages, salaries and tips — work. It’s from your W2. Romney, of course, had no wages, salaries or tips, which can be taxed at up to 35 percent. His biggest disclosure is Line 13, capital gain — paper profits — where he weighs in with $12,573,249 from 2010. On that, he pays a mere 15 percent. ...

    Better to do no work and pay taxes at a far lower rate on capital gains or a category Romney shares with certain hedge fund managers: compensation from his Bain Capital days also taxed at 15 percent called carried interest. ...

    Another disincentive, as mentioned: don’t send your kids to college. Currently, I can apply for the American Opportunity Tax Credit, which gives families paying tuition a cut of up to $2,500 on taxes owed — a meaningful break.

    Romney knows something about college. He has two degrees from Harvard. Three of his five sons — Tagg, Matt and Josh — have M.B.A.’s from Harvard, giving the family a coxed scull of Crimson-red advanced degrees. It’ll cost you about $84,000 a year to attend Harvard Business School, with tuition, housing and related expenses.

    But don’t try getting a tax credit for that under a President Romney: his plan calls for eliminating this college incentive, along with doing away with an expanded credit for working families with children at home. ...

    I’m not fluent enough in Internal Revenue Service argot to understand why I probably should have stashed some money overseas. But with a Swiss bank account and holdings in Bermuda and the Cayman Islands, Romney by example demonstrated another kind of incentive — invest in foreign countries while paying the absolute minimum in taxes to your own nation.

    “I pay all the taxes that are legally required and not a dollar more,” Romney said earlier this year. ...

    So, taking my cue from the social engineers who’ve manipulated the code, I’m looking to follow Romney’s example next year: work less, stash money overseas, certainly don’t pay for junior year in college. And, of course, complain about my burden.

  • National Journal: Obama Releases Taxes, Does Not Qualify for Buffett Rule. Making under $1 million, the president doesn't make enough for rule. By Matt Vasilogambros and George E. Condon Jr. Excerpts: President Obama earned $789,674 in 2011, the White House announced on Friday. However, with this income, he does not even qualify for the so-called Buffett Rule that he has promoted relentlessly and the Senate will take up on Monday. ...

    The president paid $162,074 in taxes with an effective federal income tax rate of 20.5 percent, according to the returns. ...

    The Obama return showed that the president and his wife Michelle contributed $172,130 – about 22 percent of their income -- to 39 different charities. By far their biggest contribution -- $117,130 – went to the Fisher House Foundation, a Maryland-based foundation that provides free housing and help to wounded members of the military with at least one Fisher House at every major military medical center. The Obamas also reported $5,000 contributions to the Boys and Girls Club of Greater Washington, Habitat for Humanity and Sidwell Friends School.

  • Washington Post: Obama, Romney tax plans for ultra-rich offer window on disparate economic views. By Jia Lynn Yang. Excerpts: Perhaps no one has more at stake in this year’s presidential election than the ultra-wealthy.

    If Republican front-runner Mitt Romney reaches the White House, he will push for the top 1 percent of American earners to save an average of $150,000 in taxes, according to an analysis of his tax plan by the Tax Policy Center. In a second Obama administration, these Americans would pay about $83,000 more than they do now.

    For the top 0.1 percent, the difference is even more stark. Romney’s plan would save them an average of $725,000. President Obama would raise their taxes by $450,000. ...

    In Massachusetts, Romney did little to reverse the trend of income inequality that was happening in his state. And his work at Bain Capital embodied a pure distillation of American capitalism in which higher returns for investors, not worker pay, were the highest priority. If elected, Romney has pledged to curb deductions and other tax benefits for high-income households, but he has not been specific. ...

    “I think it’s fine to talk about those things in quiet rooms and discussions about tax policy and the like,” Romney said in January on “The Today Show.” “But the president has made it part of his campaign rally. It’s a very envy-oriented, attack-oriented approach, and I think it will fail.” ...

    Average weekly wages for workers rose slightly more than they did nationally while Romney was in charge. In Massachusetts, wages went up 4.1 percent from 2002 to 2006, adjusting for inflation. Nationally, they rose 3.2 percent.

    But those gains were not spread evenly. Those who worked in investment banking and securities trading saw their average weekly wages rise 60 percent, from $2,707 in 2002 to $4,852 in 2006, according to census data adjusted for inflation.

    Meanwhile, weekly wages for employees in retail dropped 3 percent. Manufacturing workers saw a rise of 5.5 percent.

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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