"We're going to rebalance resources, align them to opportunities," he said.
Why would workers be laid off when total net income was $5.8 billion, better than what most analysts expected?
"Transformation is a permanent feature of our business model," IBM spokesman Doug Shelton explained via email. "Technology evolves -- requiring new skills. Client needs shift -- requiring new capability. Consequently, some level of workforce remix is an ongoing part of our business model." ...
Restructuring of IBM included layoffs in March of last year. In that round, some 1,100 workers were laid off in both the U.S. and Canada. ...
Founded in 1911 as the Computing Tabulating Recording Company, IBM ushered in its first round of layoffs in 1993.
Selected reader comments follow:
American corporations like IBM need to encouraged by our tax system that in order to qualify for tax breaks you must retain your long-term employee and provide retraining whenever the technology changes and the "needs of the business" requires a new set of skills.
It's hard to understand that smart, market driven and flexible employees at IBM cannot be taught new skills to build on skills that they have already acquired through knowledge, experience and wisdom.
Shame on you IBM, Thomas Watson Senior would never have approved of this management business practice: he would have probably reminded all of you to "THINK".
Repent and Rescind the upcoming layoff decision, your loyal employees have earned the right to determine when they want to leave. I am an IBMers and proud of it!
To make the profit they make and they really needed to take away their employee's pensions? IBM is a disgrace. Still can't understand how people can go on these forums and blame the worlds woes on Obama and Unions. Our friend Bush is the one who wrote most of these laws that actually gave companies tax breaks for sending jobs overseas and give these corporations tax breaks that serve nothing more than to line the pockets of the CEO's and other executives.
Current IBMers, by and large, get no internal education from IBM. Nothing. None. IBM education budget is a joke. Just ask any conscientious IBMer who has been with IBM just a few years when they last went for internal training for the job they do or for the future "hot" skills they really want to learn to make a "smarter planet"?
IBM doesn't want to teach grown ups new tricks. They just like to wean newbies on their customers whether they have the right skill mix or not.
This rebalancing and remixing is more IBM wordspeak for systematically getting rid of the older, experienced workforce skill sets.
Since IBM revenue growth has been dismal, the only way to raise the stock EPS is to cost cut, cut, cut... until their is nothing left but total inexperienced workforce, old bloated management ,and line of businesses to sell. Then IBM will be as extinct as a dinosaur.
"I go to a party, and I almost immediately get insulted," says Eugen Tarnow, a director of the consultancy Avalon Business Systems, which sells the aging email software to businesses. "They say, 'Lotus Notes, that's still around?' It's no fun." ...
IBM has spent billions of dollars on dozens of software acquisitions in recent years, which have helped the company deliver a flow of steady earnings. Still, much of its software revenue flows from technologies like Lotus that it acquired or developed at least a decade ago. The company needs to modernize its portfolio for a new technology era by selling more software aimed at fast growing areas like social media, cloud computing and mobile. ...
For IBM, Lotus is too lucrative to ignore but very hard to grow. While the company doesn't break out how much revenue the Lotus franchise generates, tech-research firm IDC estimates the software accounted for about $1.2 billion of revenue in 2011, the most recently available number.
Meanwhile, that franchise is being eroded. The Federal Aviation Administration, which began using Lotus Notes as its main email program in 2001, announced in June a $91 million contract to switch its 60,000 FAA employees and contractors to a new Microsoft email and communications system that it says would allow it to work more efficiently. ...
For now, the technology giant continues to milk its Lotus client base to win customers for its social-media software. For instance, the annual IBM Lotus conference to be held later this month was renamed Connect2013.
IBM also continues to update and sell the aging program. IBM General Manager Alistair Rennie says the company is absolutely committed to Lotus Notes and related programs and is preparing to release new versions of them in this year's first quarter.
Does IBM Artificially Inflate Earning Per Share? Yes. The two main techniques used by management to artificially inflate earnings per share (EPS) are well-timed stock repurchases and inorganic earnings growth through high-risk acquisitions. These two techniques are common for large, cash-rich, companies struggling to grow and determined to meet internal EPS targets. The consensus, Wall Street, five-year, EPS growth target for IBM is 9.73% per annum (Yahoo! Finance IBM Analyst Estimates). For a company as large as IBM (over $200 billion in market cap), 9.73% growth is no easy task. Additionally, IBM has an internal goal of $20 operating EPS in 2015 (IBM Annual Report, p11), which is a 10.5% annual increase over the company's 2011 number of $13.44. It's no secret that IBM will use massive share repurchases and high-risk acquisitions to artificially inflate EPS (they discuss it throughout their annual report, for example p11). However, management spins these techniques as positives when in reality they are not.
Share buybacks are a common way for companies to artificially increase earnings per share (if there are less shares outstanding, then earnings per share increases). IBM has done this in dramatic fashion in recent years. IBM has spent $111 billion to buy back shares of its own stock since 2000 (annual report, p11) which is not insignificant considering the total market capitalization is currently only around $220 billion. The company has internal EPS goals (discussed previously), and buying back shares helps the "big wigs" achieve those goals and earn their "fat cat" bonuses. The share buybacks are not concerning in the short term because they create value for shareholders (if you own stock, the price of your stock generally increases when EPS increases), and because I know IBM is a profitable business because free cash flow is strong. However, share repurchases cannot continue forever (eventually there will be no shares left to repurchase). And share repurchases are a signal that management doesn't have organic growth prospects because if they did they'd spend the cash on growing the business instead of returning it to shareholders through buybacks. In the near time, IBM doesn't have the growth prospects to meet Wall Street expectations or internal EPS goals, therefore they're using share repurchases to artificially inflate EPS. ...
The management of huge cash-rich companies (such as IBM) frequently go on acquiring sprees because they can't grow fast enough organically to meet internal goals, so they start spending cash to buy other companies which makes earnings grow, albeit at a less than optimal rate of efficiency. IBM spent $1.8 billion on five acquisitions in 2011, $6.5 billion on 17 acquisitions in 2010, and $1.5 billion on six acquisitions in 2009. If questioned, management will explain these were "strategic" acquisitions that provide unique "synergies" enabling IBM to efficaciously increase profitability. I don't believe it. These acquisitions are the desperate work of a cash-rich management team that cannot generate enough internal growth, so they grow the business inorganically, and empirical evidence (for example, see previously cited research) shows acquisitions are a sign of weakness. IBM will point to the high profit margins of the software companies they acquire, and management will also proclaim these acquisitions allow them to grow tangentially-related services business. I know better. While I believe IBM will continue to be profitable for a very long time, I believe the acquisitions and the product (hardware and software) business in general are real weaknesses of the company.
I've been at IBM long enough to know that layoffs happen this time of year.
My question is this: Should I worry that I might be laid off before the 30 days I have for consideration of the separation agreement? I'm inclined to accept the agreement but for various reasons I want to work through some of the 30 days. My fear is that a resource action would occur before 30 days are up, and that I would be let go with a less attractive termination package.
Or perhaps the layoff package would be better? Not really sure if there is a way to know. Thanks.
You are being singled out when you are offered the minimized separation. You are essentially being separated due to performance by IBM.
With the minimized separation package you get for consecutive 3's means you get only one week pay for each year worked and no more than 13 weeks pay, compared to the standard separation package normally given in any RA of two weeks pay per year of IBM service to max of 26 weeks pay severance.
Not to be trite, but holding out for an RA for you to be included in the next 30 days will not give you a better severance payout. The consecutive 3's and the notification you were given means that you will not be rolled into a RA where PBC 1's, 2+'s, 2's, and IBMers with one PBC 3 in last two years are "selected to participate" in. IBM is not going to give you favored treatment or any more payout than what they offer. The only way to negotiate with IBM is to have a union in place to represent you and file a grievance with IBM management for you. This is what the Alliance has been trying to get across to IBM employees.
You could try filing a formal performance review appeal to try to get your latest PBC 3 overturned and changed to a PBC 2, that might delay any departure date if they grant you the appeal. If you win the appeal, then you can probably could get the standard package if you are caught in a future RA. If you lose the appeal then you have to hope IBM still offers you the minimized separation package if it is at or after 30 days.
I have worked for IBM for 30+ years. My manager spent at most 5 minutes on my latest PBC and based it on an issue that was on my of 2011 not 2012.
I am happy to leave IBM and start a new career and adventure. Life is a...
I have developed and implemented these formal reviews and they are discussed and adjusted by upper management and HR. They are designed to be difficult to achieve. Since 1993 I have seen many of these review appeals and have not seen one overturned. As an interesting history prior to 93 I had seen very few appeals and when they were challenged almost all were won by the employee. This ain't your fathers IBM.
The most matured talent was from China and Belarus. India, Hungary, and Slovakia were on the next tier. The rest were either completely raw or weak (The folks from Mexico, Brazil, and Argentina were the mostly likely to be ineffective).
Over all the distribution of talent was weaker than in the US...an average US employee was significantly better than an average GR employee (we have better university systems that deliver better professional engineers, programmers, and IT folks and that head start matters). With respect to the company claims its all about the money.
I was given a 3, appealed through the arbitration process and won. I posted about it earlier. As a consequence, I was removed from reporting to the bad manager. She was reprimanded. I have a new first line who is everything that is good and in with the world. I have since received a 2 and a 2+ and been given a very special project.
It is your right to arbitration. It is stated in IBM's procedures.
You will have to appeal to your 2nd line first. Be prepared that your manager will say your performance is relative to other workers. Ask for details. Make them make the case. You have the right to do this. It sounds like your first line was just being lazy. So give them some work to do. They'll have to do hours and hours of work to prepare. So will you, but it could be worth a lot to you.
If they take action against you after the arbitration process then you have a legal case against them.
You don't have anything to lose.
I post to inform and I see some do not like to see the dark side of the business (management).
The old school managers changed in 93 and as the years go by the new breed are more cut throat. In the old days you could trust your 1st line but today you can't even trust your co-workers.
You can take my posts as a grain of salt but all I offer is some of my 20 years of different management assignments. By the way a bad manager is someone who doesn't execute the "needs of the business".
In the 80's I worked with IBM'ers that were in the bottom of the rankings, and even in the 'good old days' I saw some 'let go'. What is different now is that they are using the PBC system to both control payroll expenses and provide fodder for the next layoff. That means a mandate to 1st line managers that there MUST be a 3 on their team each appraisal period (that was absolutely not the case in those days) and no more than a single 1 performer.
While there were always controls on a managers ability to give out high ratings, I have experienced a number of departments where everyone was rated high (not necessarily 1's of course), and managers had discretion about it with justification.
Today there is no way to justify an entire team making 2 or above, even if they deserve it. In that fashion, bonus dollars are reduced, only a tiny number of people qualify for raises, and they do not have to promote people. All in the hidden agenda of reducing the expense of us 'resources'.
As far as the few young people hired in the USA, the evidence is abundant that they were the 3.8 GPA average and above folks that IBM hired. The growth geography trainees are bright too, naturally they only send the best to us to learn from us. But with the abundance of 3rd world labor, in general, IBM is not getting the best people because since jobs are abundant, they ditch their $14K a year job at IBM for a better position elsewhere. Hence the best and brightest in the 3rd world do not stay for long at IBM.
Any prospective USA graduate who reads the Glassdoor reviews of IBM as an employer may also decide to go elsewhere.
I submit that my boots on the ground version of I/T Engineer reality is closer to the truth than statements from IBM Executives. And the company line is not synonymous with "what's good for IBM" either. We're in catch up mode on many fronts in the industry.
Or, do what many of us have done and just resign from IBM since it is no longer a decent company. Take my word for it, other companies pay more and treat employees better, plus they do not request one to make phone calls to the other ends of the earth on one's own personal time. The simple word 'no' does work. Good luck, and yes the Sam Cay character is clearly a shill to my ears, it brings nothing to the table.
Managers hold out 1's and 2+'s for their "special" people and the same is done with any salary increases.
Usually the 2nd lines will tell the 1st line how much he wants held back. So the process today is more of a firing tool then a salary or evaluation tool.
I venture to say there will always be some type of tool to measure people. Every company has one type or another to accomplish the same thing.
By the way middle managers don't have to fight; they make the 1st lines justify their peoples ratings. The 3rd lines don't care as long as the numbers are made. Unless there is a small group, the 3rd lines don't know more then a handful of employees.
This works until an RA comes then it's a crap shoot. Remember the 2nd line has a larger number of people to play with the numbers. If they know the employees they can shield who they want. Two 3's in a row is a killer though.
A business group of top executives on Wednesday proposed reforms to Social Security and Medicare that would raise the enrollment age for both programs to 70 but not raise Social Security taxes paid by upper-income Americans.
It's being pushed by the Business Roundtable. You know who is a member of the Business Roundtable, don't you?
I think problem is in the mindset of our own society. We want consistent and unreasonable success at any cost. We have not defined the real threshold of satisfaction and happiness. We just keep running after some unknown goals but some how our life end first way before we realize the fact.
Last November was a classic example. So, until we have-nots start getting treated fairly, the 5% can spout off all they want but it's doubtful anything meaningful (like age 70 retirement) will come to pass. Those 5'vers are just so out of touch, it's unimaginable.
People need to speak out and contact their Congress critters.
(Don't think you are "safe" if you are over 55.)
The issue is of particular concern because:
She interviewed with the employer, liked what she heard, a job was offered, and she took it even though she had some trepidation about working for a large corporate entity. (She understood all too well how some large corporations operate due to the fact we've been married over 30 years, and she went thru both the good and bad times with me while I was at IBM.)
My wife has never looked back, she doesn't regret a thing. I'm absolutely shocked at how well her employer takes care of their employee's. For instance, she's going on a company cruise next August in Denmark. It's not a "fun" cruise, it's a working cruise, and spouses can not go. There simply aren't enough bedrooms on the boat to handle both employees and their spouses. Employees will be doubled up in staterooms. I can go and meet her after the cruise or we can go before it starts, which we're thinking about doing.
Last week she flew to Las Vegas for training. Once again, no spouses could go. She was bumped from a flight she was initially booked on, so the airline upgraded her to a first class ticket for the flight she eventually did get on. Sitting immediately in front of her in first class, was her boss's boss's boss, a "Senior Vice President" of the company. My wife recognized the woman, and introduced herself to her, but she did not want to bother the woman. The SVP gives my wife a big smile, and a hug, and says "Are you going to Vegas for the training?" My wife simply said yes, and then moved to sit down in her seat in the row behind The SVP's seat. The SVP followed my wife back to my wife's row, and sat down next to my wife. My wife said she was "mortified" because she didn't want to bother The SVP. The exec was great, she talked to my wife for 15 to 20 minutes,and then moved back her own seat.
Upon landing, my wife went to the first class baggage claim, where she saw The SVP had also arrived. The SVP got her own bags, and says to my wife, "Come with me." They find a driver who was standing by the baggage claim with a sign that had the SVP's name on it, and into the limo they go. They were staying at the same hotel, and all week, any time the SVP saw my wife, she came right over to her, said hello, and asked my wife how she thought the training was going. The best night in Vegas was the last night. The SVP took my wife with her down to the front row of the theatre they were in to watch "The Beatles" Cirque De Solay show.
Think many IBM exec's would do that? I don't either.
The point I wanted to get across is that there definitely are company's out there that do value their employees and treat them with respect. I said in my original post that I was "absolutely shocked" at how well the company treats their employees. I think that's a direct result of how conditioned I became due to the kind of mistreatment I received from IBM.
"They want to measure twice and cut once," said Bryce Williams, managing director for exchange solutions at consulting firm Towers Watson & Co. One first step may be trimming or eliminating coverage for retired workers, particularly those who aren't old enough for Medicare and will have many more insurance options in 2014 than today.
It's hard to know if IBM will make cuts to those of you in the "old" retiree health plan. It hardly seems necessary because a) the company's annual contributions are fixed; b) you all are dying off.
The fact is that the 401(k) has not worked out well for millions of average Americans and one big reason is that Congress gave birth to the 401 (k), it was never intended to become a nationwide retirement system.
The main political push for the 401 (k) came from Kodak and Xerox, which wanted a tax shelter for profit-sharing bonuses for their executives and managers. But the Internal Revenue Service had previously ruled that profit-sharing plans must include rank and file employees. Irving Trust of New York and a dozen other companies had such plans. So when the 401 (k) was written into law in 1978, it followed the Irving Trust model. It covered only a small circle of companies. Not until several years later was it opened up to nationwide use by the Reagan Treasury Department. Then it took off. The mutual fund industry, spotting a financial bonanza, sold do-it-yourself 401 (k) retirement as “power to the people,” and millions of Americans took the bait, thinking they could beat the market. ...
The hard truth is that building a proper nest-egg takes much more ambitious savings than virtually any 401(k) plan envisions. The best plans typically let rank-and-file employees sock away 6% of their pay and provide a 3% company match, for a total of 9%. But EBRI’s experts suggest the combined target should be about 15% and Dallas retirement consultant Brooks Hamilton said 18%. Most plans, says Hamilton “are half what they need to be.”
One reason for bigger contributions is that you don’t actually reap the full benefits of your long-term gains. Mutual funds or financial managers take a big bite – much bigger than you think. Their fees for handling stock transactions, setting up funds, doing the paperwork and managing your account are listed in the fine print in investment brochures that most people don’t bother to read. ...
“Where did the nearly $4 difference go?” Bogle asks. “It went to the fund or to Wall Street in fees. So you the investor put up 100% of the capital. You take 100% of the risk. And you capture about 37% of the return. The fund or Wall Street puts up none of the capital, takes none of the risk and takes out 63% of the return.”
Do you all fully grasp the nefarious planning going on here? The take-away here -- aside from IBM having NO loyalty whatsoever, is that when you see a lot of ads for "recent college grad" on their hiring board, you can be 100% sure that they are planning a RIF in short order, probably about 6 months. Not too hard to see the self-serving evil logic here. -OlderAndWiser-
I joined the subsidiary in March of 1997 and joined IBM in August of '97. I appealed and showed a fellow employee who got a bridge and therefore is able to receive the FHA money. She is younger than me. I was not entitled to a bridge because I am over 55 with 14 years of service, depending on which department you talk to. So I am discriminated against because of my age.
I have been through 6 levels of appeals all the way to Randy who passed it off to Barbara Brickmeyer (sp?). She said she couldn't overturn the decision of the Plan Administrator even though there is a different administrator now.
There are no leaders in IBM anymore, no decision makers unless they want to layoff. Whomever monitors this site from Health Care will write that the FHA money is "notional" which isn't even a word, so please don't bother. Your excuses are lame and insulting. It was bad enough to lose a job I loved, then to be cheated out of money that was given to a younger person was just too much. There will be another RA and you need to be aware of the all pitfalls IBM will put in your way. Join the union. -Maesey1-
Their white "captors," er, employers expect loyalty and feign the same, yet look down on them as if they're second-class, dirty, substandard, undeserving, lowly, etc. etc. (You're not qualified, you cannot speak above your rank or address those in authority, and you HAVE no authority....) Unionizing is one way to have a voice as maids. Are we to the point like "the maids" yet? -LoyalEmployee-
Here’s why the eight factors matter: U.S. health care spending was estimated at $2.8 trillion last year, or 18 percent of gross domestic product. It is expected to climb to $4.8 trillion, or 20 percent of GDP, by 2021. In an increasingly global economy, in which most countries spend much less, this is unsustainable.
A summary of the report’s seven other factors:
"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.
There are four major reasons inequality is squelching our recovery. The most immediate is that our middle class is too weak to support the consumer spending that has historically driven our economic growth. While the top 1 percent of income earners took home 93 percent of the growth in incomes in 2010, the households in the middle — who are most likely to spend their incomes rather than save them and who are, in a sense, the true job creators — have lower household incomes, adjusted for inflation, than they did in 1996. The growth in the decade before the crisis was unsustainable — it was reliant on the bottom 80 percent consuming about 110 percent of their income.
Second, the hollowing out of the middle class since the 1970s, a phenomenon interrupted only briefly in the 1990s, means that they are unable to invest in their future, by educating themselves and their children and by starting or improving businesses.
Third, the weakness of the middle class is holding back tax receipts, especially because those at the top are so adroit in avoiding taxes and in getting Washington to give them tax breaks. The recent modest agreement to restore Clinton-level marginal income-tax rates for individuals making more than $400,000 and households making more than $450,000 did nothing to change this. Returns from Wall Street speculation are taxed at a far lower rate than other forms of income. Low tax receipts mean that the government cannot make the vital investments in infrastructure, education, research and health that are crucial for restoring long-term economic strength. ...
Our skyrocketing inequality — so contrary to our meritocratic ideal of America as a place where anyone with hard work and talent can “make it” — means that those who are born to parents of limited means are likely never to live up to their potential. Children in other rich countries like Canada, France, Germany and Sweden have a better chance of doing better than their parents did than American kids have. More than a fifth of our children live in poverty — the second worst of all the advanced economies, putting us behind countries like Bulgaria, Latvia and Greece. ...
Market forces don’t exist in a vacuum — we shape them. Other countries, like fast-growing Brazil, have shaped them in ways that have lowered inequality while creating more opportunity and higher growth. Countries far poorer than ours have decided that all young people should have access to food, education and health care so they can fulfill their aspirations.
Our legal framework and the way we enforce it has provided more scope here for abuses by the financial sector; for perverse compensation for chief executives; for monopolies’ ability to take unjust advantage of their concentrated power.
On the other hand, when the Billionaire Class extracts benefits from the government for themselves, the generally don't pay higher taxes. The billions in taxpayer subsidies for Big Oil, trillions in bailouts and bonuses for Wall Street banksters, and hundreds of billions for war profiteers are always accompanied by demands for more tax cuts at the top.
And, truth be told, billionaires aren't even receiving these benefits by voting for them. Instead, they always get them through the simple process of buying politicians. For example, Sheldon Adelson spent $150 million in the last election. That's more than any American spent in any election in American history. And he spent all that money to give himself the "benefits" of derailing an Obama Justice Department investigation into his casino in China and to get his taxes cut even further.
Billionaires also corrupt democracy to get their benefits through billionaire-funded think tanks, like the Koch-funded American Legislative Exchange Council that writes legislation to benefit Corporate America, and then has Republicans state lawmakers introduce and pass laws in state after state, across the nation.
But despite this very clear reality of who is demanding largesse from our government, it's still working people and average voters who are targeted by right-wingers and their viral emails as the selfish "takers." That's the reason why the Business Roundtable is saying the best way to fix insurance programs like Social Security and Medicare is to raise the retirement age to 70 and voucherize Medicare.
In the long run, then, the federal government must raise receipts above historic averages; slow the rising costs of healthcare; or, more plausibly, do some of both. To non-Americans, neither should be difficult. This is because of two salient features of the contemporary US economy: extreme income inequality and health inefficiency.
First, the CBO has noted in another paper that “the share of total market income received by the top 1 per cent of the population more than doubled between 1979 and 2007, growing from about 10 per cent to more than 20 per cent.” Taxing these huge winners a bit more heavily seems a politically obvious move.
Second, behind these forecasts for government spending lies a dramatic prospect for overall private and public spending on health, which would rise “from about 17 per cent of GDP now to almost one-quarter by 2037”. Already, the US spends a far higher share of GDP on healthcare than other high-income countries. In 2010, its total health spending was 17.6 per cent of GDP. The spending of the next highest, the Netherlands, was just 12 per cent. Even the US public sector spent a higher share of GDP than the UK. Yet US life expectancy, to take just one indicator, was a mere 78.7, against 80.6 in the UK (see chart). ...
The federal government is not on the verge of bankruptcy. If anything, the tightening has been too much and too fast. The fiscal position is also not the most urgent economic challenge. It is far more important to promote recovery. The challenges in the longer term are to raise revenue while curbing the cost of health. Meanwhile, people, just calm down.
Lawmakers should examine other alternatives, including requiring drug makers to give the government “a better deal” on medications for low-income seniors (85 percent) and making higher-income seniors pay more for coverage (59 percent), according to the survey conducted by the Kaiser Family Foundation, the Robert Wood Johnson Foundation and the Harvard School of Public Health. (KHN is an editorially independent program of the Kaiser Family Foundation.)
This site is designed to allow IBM Employees to communicate and share methods of protecting their rights through the establishment of an IBM Employees Labor Union. Section 8(a)(1) of the National Labor Relations Act states it is a violation for Employers to spy on union gatherings, or pretend to spy. For the purpose of the National Labor Relations Act, notice is given that this site and all of its content, messages, communications, or other content is considered to be a union gathering.