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Highlights—August 29, 2015

  • ABC (Australia):

    IBM tries to block legal action over Queensland Health payroll disaster. By Allyson Horn. Excerpts: Former ministers have given evidence in a Supreme Court hearing as IBM tries to stop a State Government lawsuit over the Queensland Health payroll debacle.

    The technology giant was contracted in 2007 by the Labor government of the time to set up a new payroll system that went live three years later and saw thousands of staff underpaid, overpaid or not paid at all.

    The state launched legal action to recoup some of the $1.2 billion it cost to fix the bungle.

    On Tuesday, lawyers for IBM appeared in the Supreme Court in Brisbane in a bid to block the case.

  • Seeking Alpha:

    IBM's 21st Century Transition Is Failing. By Peter E. Greulich. Excerpts: Some investors attribute IBM's poor 21st Century performance to a short-term technology lapse. They believe that if IBM can just get its technical mojo back - in areas such as cloud, security, data, analytics and mobile - it will recover. These investors are waiting on that one announcement that will make a difference: chip technology, medical acquisition or IBM's Watson. Unfortunately for these investors, the 20th Century IBM was never a centralized, one-trick technology pony. It was a decentralized, constitution-driven, independent-thinking corporation. As a $100 billion corporation, it will not find continual growth in a handful of technologies. A Hail Mary technology may postpone the predictable, but it will not prevent the inevitable. IBM needs execution. It needs constant invention, innovation and motivation from its 400,000 employees, not more directives from Armonk. ...

    Finally, IBM's executive leadership has failed their customers and employees. It is impossible to find a time when Tom Watson Sr. addressed IBM's shareholders and did not talk about their customers and employees. On his way to the 1948 shareholders' meeting, he and his wife traveled 6,500 miles by car and personally shook the hands of 15% (2,850 employees) of the IBMers in the United States. What he learned on these excursions with his corporate-family he discussed with his shareholder-family.

    In contrast to the Watson style, IBM's current leadership is avoiding this discussion. In 2010, it promised a "more contemporary approach" in gathering employee morale information. In 2011, it removed all auditable, externally-assessable data on employee morale from its Corporate Responsibility Report. In its place, the management offered the platitude that it "must hire, support and retain great employees." Shareholders must accept the blame for not requiring this promised information. And they need the information as the board of directors are evidently not watching out for their interests. ...

    IBM's 21st Century return will probably take longer this time as it requires a rejuvenation of its culture. IBM has lost its institutional memory. It no longer remembers what made it one of the 20th Century's greatest capitalist institutions: a work family of employee-owners - guided by a corporate constitution - who made every day decisions as if they carried the owners' burden. It will take a new leader with a new philosophy to change IBM, and he or she will need the right stuff. ...

    Louis V. Gerstner implemented a strategy that added IBM's knowledge worker to its list of interchangeable components. Starting in 1999, a decentralized, performance-based, human-relations system that retained the best and brightest for decades, was gradually replaced with a centralized, financially-based, human resources system that encourages experience to stand near an exit door. Its profit model is based on human interchangeability and expendability, regardless of position. Programmers, technical writers, product and market managers, product testers, systems engineers, salesmen, architects, first-line managers, low-level executives and distinguished engineers are all replaceable. If the financial organization doesn't like the price of human capital in Raleigh, it moves the workload to Ireland. If it doesn't like the price of human capital in Ireland, it moves the workload to Kuala Lumpur. If it finds cheaper human capital in Africa, it moves the workload out of Kuala Lumpur. ...

    IBM's financial organization, using human resources as its blunt instrument, shifts workloads worldwide for quick financial gains - ignoring long-term corporate costs such as deteriorating product quality and falling customer and employee satisfaction. The Chief Executive Officer and the Board of Directors of the last two decades display a complete lack of understanding of the value of the individual - especially their knowledge workers. Lose the knowledge worker and, eventually, you lose your intellectual capital, energy and enthusiasm. This is the long-term cost of IBM's 21st Century strategy. ...

    IBM is failing all its stakeholders. It will continue to fail until its leadership once again understands basic human motivation. Tom Watson Sr. and his son built the 20th Century IBM by understanding what motivates a person beyond a paycheck. It was these human motivations that Peter F. Drucker captured in The Concept of the Corporation: a corporation is a social institution and a community, and it needs to be managed as such. Peter Drucker, if he were alive today would call IBM a "social mess." Although corporations can change quickly, human beings evolve; so what worked just a few decades ago will still work today.

    IBM's 21st Century leadership is a failure in every respect except one: enriching the top-level executives at the expense of all other corporate stakeholders - customers, employees, long-term shareholders and society. Until IBM has a new strategy that invests in people, products and processes; until it displays the desire and the ability to rebuild a positive corporate culture; and until the company's leadership abandons its shareholder-first and -only strategy, it will be unable to refill its moat or rediscover its technical mojo.

    Selected reader comments follow:

    • Ikswo123: The culture at IBM (i.e. the IBM way) was certainly second-to-none as far as balancing employee, shareholder and outside social interests for many years. And the people at IBM I had found to be some of the best I've ever worked with. IBM does have a long term cash cow of course, but a great weakness of the culture is its minimization of innovation. How many spinoffs could have been done with the output of IBM labs?

      I do understand your pain right now, it is similar to the Jack Welch era at GE when the accountants had too much of a say. Typically things start out well, and then the leadership uses the same tool for every problem. Using GE as an example, selling or closing the first 30 money-losing businesses out of 150 or so were probably a great idea, but when GE was down to only 14 businesses from the original 150 , growing new ones should have been top priority. But people can only change so much, and middle managers are horrible at leadership-that can cost them their jobs.

      Back to IBM: The culture reflects the total return mentality of mid-20th century America, similar to the leadership of Reginald Jones at GE, who looked at the impact of a business on society and saw it as an integral part of the social order. The rise of the MBAs in late 20th century America has emphasized shareholder return over total return, with socially damaging results.

      On a personal note, I have seen many retirees and layed off employees go through a similar deprogramming after leaving various organizations with 30+ years of service. It's so much a part of one's identity it is difficult to separate. But in the end, it's only a job, yes? Life goes on.

    • Author’s reply » Ikswo123, I would like to take one of your thoughts and extend it to IBM. You wrote, "Typically things start out well, and then the leadership uses the same tool for every problem."

      I see this as applicable to IBM's divestiture strategy. Three generations of CEO's at IBM have now been on a strategy of "divest not fix." Rather than finding the right leadership within the PC Company (and I believe there was some great leadership hidden away there) and the STG Intel Server organization (yes some were hiding there too) that could take the business and turn it around to advantage they now jettison first and think later. (even though this reduces add-on software sales, gives competition entrance into their best accounts, etc.)

      This has lead to a jettison-only leadership mentality and no turn-around leadership evolving, being promoted and moving through the company.

      This isn't to say that some divisions shouldn't be gradually taken out of business (IBM has done that with time recorders, cheese slicers and coffee grinders) but how you do it, how you put stress on the leadership of the organization to turn it around is when you get break through thinking. Sometimes we human beings have to run into the wall to figure out it is time for a change and find a breakthrough technology to the future.

      Thoughts in this area? Cheers, Pete.

    • Ctobserer50: Peter — Right on! I have been writing in exactly the same vein in SA comment, but you phrase things much better!

      I will repeat what I have said before: yours is a perspective that may be alien to many SA readers, whose interests (naturally) are strictly as active or prospective stockholders. It may be difficult to quantify cultural problems in a corporation, but no one can deny such issues can have profound financial implications.

      Everyone — including SA readers — must understand how extreme the self-dealing of the IBM senior management has become. Palmisano, while considered personable, led a deft campaign against his own employees, and in the end exited with over 200 million dollars, including a 4 million/year nonqualified pension, corporate jet access for family members, etc. It boggles the mind how bad things have become. I had thought GE paying for fresh daily flowers for Jack Walsh was the end-all. Palmisano definitely outpaced Mr. Walsh.

    • 3WallPaul: As a cultural example IBM always sited "rank and yank" as GE's method of managing people and GE was great in the 80's through '90's. IBM perverted "rank and yank" by using it as a way to manage employee costs well after GE abandoned the practice. Companies who "rank and yank" have dropped from roughly 40% in 2009 to 15% now. It has been proven to ruin a participatory helping culture.
    • jstratt: I enjoyed an interesting and unique perspective.

      It doesn't take a genius to see that Rometty is destroying IBM.

      I try not to forget that IBM with proper leadership is a very profitable company. Unfortunately a huge transition is going to have to occur and it will start with a change at the top and on the BOD.

      For now the only question is how much of a massive revenue loss IBM can blame on currency translation.

    • CPB: Peter, Great article. I was at IBM as a project manager from 1999 to 2013 and left mainly because of the reasons you listed above regarding IBM's abject dismissal of the importance of human capital and talent retention. I saw entire functions move from Raleigh to Bangalore, then to the Czech Republic, then Bratislava, then Poland, etc., all within a few years. Same functions moving student body left, with no guiding priority other than to chase lower labor costs. Not only did these moves kill morale and drive talent away, the consequences for the customers were disastrous. It was both callous and bad for business.

      By the time I left, the only way IBM could score a large new logo outsourcing deal was to promise that IBMers would now stay in that customer's hotels or drive another customer's rental cars or some other quid pro quo arrangement.

      I'm afraid the old saw that no one ever got fired for hiring IBM no longer applies. It may again in the future, but like you said, multiple layers of calcified leadership need to be replaced.

    • Author’s reply: » CPB 1969, the names of the cities and countries change but the goal has never changed since 1999: increase profits no matter the cost using using IBM's human-resources organization as the blunt instrument of finance to drive higher earnings.

      Eventually that will fail, or maybe it already has. Net income per employee is now falling. Not a good sign for a "profit driven" corporation, but I did not include that in the article as I have not looked deeply enough into it to have an opinion. It is an anomaly I haven't yet researched. I would encourage another Seeking Alpha contributor to dig into the numbers and have an opinion. Cheers, Pete.

    • Helmhouseconsulting: Sounds like you're thinking of the 1992 IBM. The article doesn't mention services, if my search function is working. The point many miss is the future isn't about "technology" - it's about delivering services. The combination of analytics, Watson and industry knowledge, accessed securely from the cloud on any device we want is what is going to change the world. When that happens, the "moat" will be an ocean separating IBM from the competition.
    • davidbsva: Delivering top tier services relies on top talent and dedication to the client — hour by hour of billing and delivery. So in a sense, relying more on services rather than mainframes should dictate more focus on the employee, as they are the product. That focus is not happening, and is in fact, just the opposite.
    • Author’s reply: » Helmhouseconsulting, I agree to a large degree. Customers in many ways desired a model of "low-cost providers" and IBM has followed them in that direction with its consideration and selling of its low-profit businesses.

      Unfortunately, every day I get LinkedIn notices of some of the best Systems Engineers I have ever worked with at IBM leaving IBM. How will IBM execute on these services they want to deliver? How will they take a few initial Watson installations to hundreds or thousands if they don't have the investment in training people for it? How will they cover up what doesn't work as the sales rep promised (like so many Systems Engineers did in the past) without what I call above "knowledge workers?"

      Doing a press release is much different than making a product viable in the market place. That takes a unified approach of research, engineering, manufacturing, sales and marketing. IBM's wall was technology. But the technology was always flawed in some way, or a sales rep "oversold" its capabilities to a customer. The culture though refused to let an installation come out once it went in — that was the moat.

      Of course that is just a personal experience from "living the dream" as an early installer of the AS/400. It eventually became one of the most solid, application-driven hardware platforms the company ever had but we S.E.s worked nights, days and weekends to keep the first few installed and convert the install base.

      The customer learning curve from S/36 and S/34 (even with the "environments") to AS/400 would have been disastrous without a knowledgeable technical team to build screens to make it easier. Eventually Rochester won the Malcolm Baldrige award and I never saw a better, more customer-driven team than them.

      But it took more than technology or services to make IBM what it is today. Call it hardware; call it software; call it services; or put it together as a strategy with all three and it still comes down to people, products and processes to be successful.

      A humble opinion expressed with passion! Please feel free to disagree. Cheers, Pete.

    • slhny: As a 35 year IBM employee now retired it may be my own bias but I read your main thesis to be that what made IBM a great 20th century company was its conviction that dedication to its customers and its employees would made it successful in the marketplace. It seems obvious that customer and employee loyalty are enormous assets to any business and that IBM had tremendous reserves of those until the last decade of last century. Those loyalties have all but disappeared in the last two decades and the business results seem obvious. I doubt if it is an accident that companies like Apple and Google continue to have great reputations for how they treat customers and employees.
    • LitchfieldJeff: Pete, I too was at IBM when they quit publishing or even sampling employee satisfaction. It was about a decade ago and the last few sets of numbers were low and trending lower. But I'm not seeing that investors care much about this. They are more interested in cold, hard numbers such as those cited by JasonC and others, not whether current and/or former employees have "warm fuzzies" about the company as a place to work. The exceptions, who are willing and able to ignore this data, I think are those who have a personal bias against the company based on prior experience. That's the only way I can explain the obvious discrepancies. Do you have a better explanation for the stock's performance in the face of the types of numbers JasonC and others cite? I'd be willing to bet the biggest single set of IBM stock holders is current or prior employees, right? What do the majority of those in this group have in common?
    • The Midnight Rider: This is the most insightful recounting of IBM's long and (mostly) glorious history I have read over the past few years, and I have been writing and reporting on the company for 30 years. I completely agree that new leadership is needed in order to pivot the company back in the right direction. Unfortunately, I don't see anyone inside the company capable of doing that, or anyone outside the company who is willing to take that challenge on. I think people have to resign themselves to the fact that, even when the dust settles in a few years, IBM is going to be a financially smaller and less influential company in an industry it fundamentally helped shape and drove forward for decades.
    • banmate6: On balance, I agree with Peter. IBM management is failing the company and especially their employees. A culture of financial engineering is not going to trump a culture of technology engineering...the latter as practiced by Google, Facebook, and longer stalwarts like SAP, Oracle, and Microsoft.

      IBM remains in danger of permanent decline, ending 100+ storied years of seminal computer science...of machines technology, which it is fast losing. Ginny and the board still haven't changed enough internally to make it more about engineers than general administrators.

    • User 17287692: Excellent article Peter. I was glad to see you approach some of the real reasons for IBM underperformance, namely the antics of the HR department destroying employee morale.
    • Sedric: Do not underestimate the healthcare thrust of IBM and its partners they could dominate that space.
    • Author’s reply: » Sedric, I would read IBM's press releases very carefully. There is a difference between talking about the size of an opportunity, winning in a market space against the competition and actually executing in that space to drive revenue.

      When you read any company's press release look for the actionable details. I know there are some folks that "buy on the news." In the case of IBM I would recommend buying on seeing the results. IBM's leadership will have to once again win the trust and confidence of investors that its entry into a particular market space legitimizes such a space for it to drive exceptional revenue (similar to what it did with the P.C. AT).

      The reason that IBM in the past could wait and let the market mature and then jump in with all it had was that it was not only "feared" but "welcomed" into many markets as a legitimizing force. In my opinion, that is not happening today and the 140+ acquisitions IBM has done over the last decade and a half would stand as a symbol to that loss of influence. How many of the acquisitions of the 21st Century can any investor name? I would dare say that if they could, they would miss the mark on the most profitable - like Candle.

      Chances are you would get more 20th Century responses of "Lotus" and "Tivoli" than any single IBM acquisition since.

      But hey, just a humble opinion. Cheers, Pete.

    • ozwizard: Mr G...very interesting article...as a lifetime PricewaterhouseCoopers (PWC) guy, I experienced a pretty serious culture shock when we were acquired by IBM in 2002...arguably we should have anticipated same based on the shift from a partnership structure to a corporate structure, but nonetheless it was dramatic and it was characterized by the primacy of the financial folks in driving business decisions with little or no regard for customer satisfaction or employee morale...in the 13 years since, it has only gotten more pronounced.
    • JayNas: Peter: I've read this and several of your earlier articles about IBM, and I'm becoming convinced that you've been on the right track. You were hammering IBM when the stock was far higher than it is today. I had a great paper gain on IBM up to two years ago, but much of that gain is gone. I hurt myself by adding shares when the stock first dropped below 180, and then again when it dropped below 160. Those purchases are obviously underwater. Fortunately, I bought my original stake at around 82, so I'm still in the black. But it appears that it may be time to part ways with IBM.

      I've read the transcripts of quarterly conference calls, and I've been put off by the remarks of the company's executives. They sounded like politicians. They highlighted relatively trivial achievements while sidestepping the fact that big chunks of the business have declined. The usual blather about great opportunities in the cloud with no concrete evidence that the cloud was going to offset the revenue and earnings being lost. They didn't convince me that a turnaround was in the offing, or even that they knew precisely how to turn things around. One got no impression that IBM would be a leader, merely another competitor fighting for its share of a business that may not be as lucrative in the longer term as many believe it will be.

    • Author’s reply: » JayNas, I also think that over time there has been a reduction in the transparency of IBM to the "intangible information" that some investors need to round out their investment decisions.

      Information such as customer satisfaction numbers and employee morale numbers that IBM used to be quite up-front with. This used to part of their corporate responsibility. I believe there needs to be a shareholder request for this information to be published.

      We are left with articles hitting the paper like in Australia. I don't know who is right and who is wrong. The IBM Aussie Software, Hardware and Services teams have always been one of the best in the world from my experience, but letting a mess such as this get to the stage it is shows a lack of executive involvement and does nothing to "win friends and influence buy decisions" in a positive manner of other customers around the world. http://ab.co/1K2tfvS.

      They may win the legal battle but lose multiple customer relationships over this - but then again who cares? All IBM needs is the properly balanced, profit-driven product portfolio, right?

      Oh for the good days when customer issues were reviewed on Tom Watson Jr.'s top issues list. Things got fixed then - personally and fast. The whole corporation turned out to fix the problem.

      Then again, maybe that still happens but there are just too many for them to keep their hands around. The problem is - who knows? Not the shareholders.

      Inquiring minds want the data. Cheers, Pete.

    • knoc: Peter, I wonder to what degree the change in IBM culture you describe is peculiar to IBM or more generally reflects the style and attitudes of a new generation of corporate management and changing philosophy. One comment mentioned the alleged "shark pool" atmosphere at Amazon; it sounds completely at odds with your experience at IBM.

      You, among many others, probably expected to build a long career at IBM when hired. I wonder how many new hires today have that expectation. I frequently read that very few new employees today can expect to remain at the same firm for most of their working lives.

      The current practice of treating employees as human "resources" (an ugly phrase if there ever was one), instead of valuable individuals who are responsible for the success of the company, will simply breed mutual contempt the eventual failure of the organization.

    • davidbsva: There are countless very high quality, successful companies operating today that have low turnover rates and a high degree of customer sat. People will stay at a place that values them, pays them well and challenges them - oh and who trains their management team on how to lead.

      It can, and is done successfully - however - it takes a strong leader. It's a cop out for companies, IMO, to say 'it's a new world' and we don't need to worry about culture.

    • Author’s reply: » Ernie, you have my permission to always write as much as you want into your comments. I am constantly challenged by your perspectives and you are a true salesman as exemplified in the respectfulness of the delivery of your message.

      I truly have two purposes in my writing. One is to try and turn IBM around but it is also too reemphasize that which Jim Collins' highlights in his books; and specifically "Good to Great" about IBM and a whole host of similar corporations.

      If IBM fails, I want history to at least have a record that there was a dissenting opinion to that which so many accept as gospel: Gerstner, Palmisano and Rometty have been good for IBM. I see this as an attempt by the powerful to write their own histories and avoid accepting responsibility for their actions.

      I do believe that the short-term shareholder-first and -only driven capitalism will meet its demise within the next decade. I want to point out that I did not say capitalism, but a shareholder-first and -only driven capitalism. Then the next generation will rediscover for themselves the right path based on human-relations not human-resources. They are a smart group - my kids are part of it. They will get there. They just have to get frustrated enough.

      I believe we are too far down the road to go back to your and my generation's retirement plans, corporate healthcare plans, etc.. Everything has been made mobile and though it may seem counter-intuitive, I want to increase the ability of the good workers to be more mobile.

      In doing so, the great will seek out the great more easily and new corporations will coalesce around these folks and we will jump-start the next generation's IBM's, General Electrics, whatever. I don't know what those corporations will look like structurally but I do know that they will treat human beings with respect.

      If they don't it will be a nasty world to live in and then capitalism itself will be at risk. So, I have more in my motivations in writing than just being an "investor." That probably explains a lot of my writing and perspectives, and how it is different from others on this forum.

      Since I am a political science major that probably also explains it too, eh? As soon as I post this reply, I will mark your comment as an Author's Pick. There are some great insights. Cheers, Pete.

    • Author’s reply: It appears that the pace of comments is slowing down. I will be monitoring the comments through Sunday at which point I will do my normal "Comment on the Comments" and summarize the new insights I now carry because of this exchange. From this point on I will be checking comments a few times a day until Sunday.

      This will be my last post on Seeking Alpha for the foreseeable future. I will be taking what I have written here on Seeking Alpha and adding that to my current book, adding several chapters to the end and a final concluding chapter of "What should IBM do" which many of you have asked me to offer. It is also the number one suggestion I get on Amazon to improve the book. So I will re-title and republish the book next year.

      I am also working on a new book about Tom Watson for delivery in late 2017. The working title is "The Forgotten Man: The Humanity of Tom Watson of IBM." Understanding IBM history is to understand the two men that founded it. Much has not been written about Tom Watson Sr. and every day I learn something new in my research.

      So I will monitor comments a little less actively through Sunday - after that very little. If you ever need to reach me you can do so through my web site: http://bit.ly/1MQ3IF2

      Cheers, Pete.
      Peter E. Greulich,
      Public Speaker,
      and Publisher, A View from Beneath the Dancing Elephant.

    • Ctobserer50: Peter — the post comes late in the stream — but what a stream! This comment list wins hands down for intelligence, completeness, and clarity of expression. I know your analysis will profit from what the SA contributors have communicated to you and to each other.

      I lasted at IBM nearly 20 years before I was laid off. Early on in my IBM tenure, I did try to expand horizons — to build new tools and processes, to try to sell to the outside world. But I never got much organizational support, let alone encouragement. And then when the culture started really to deteriorate with the advent of Palmisano, I just hunkered down.

      Now that I am out and newly installed in a great small company, I see what the outside tech world has to offer — that which we don't see from the inside of IBM. It has been a bracing experience. BIM treated me equitably on the way out, and I am re-established just fine. So to all the commentators that talk about the poor mindset of ex-employees — careful about your assumptions.

      The bad part of it is that IBM always had greatness in it — but decided not really to use that greatness to become a me-too Wall Street "darling." IBM will be around for many more years, but its future form is unlikely to resemble what its current senior management touts.

  • Glassdoor IBM reviews. Selected reviews follow:
    • “Flexible but doesn't treat employees that well”

      Former Employee — Configuration Administrator in Melbourne (Australia). I worked at IBM part-time (more than 8 years.) Pros: Flexible work hours and can work from home a lot. Great when you got a young family. Cons: You are basically just another number (your salary number) for them and they really don't seem to care much about their employees, other than giving flexible work hours. It really started when the GFC hit. Yes, of course you expect savings in a time like that but why would you take basic things away from employees like free instant coffee? Yearly PBC rating program is an absolute pain. The pay is lower than average. In the end they will make you redundant no matter how hard you work. Advice to Management: Bring back the free coffee and realise that life isn't just about PBC ratings.
    • “Project Management”

      Former Employee — Anonymous Employee in Dubuque, IA. Pros: Benefits always good at large companies;unlimited sick time, great education library. Con: Works you to death; expect 24/7 coverage. Advice to Management: How about not giving Ginny a 3 million dollar bonus as you lay off thousands of employees at the same time?
    • “Not the best place...”

      Current Employee — Anonymous Employee in Brno (Czech Republic). I have been working at IBM full-time (more than 5 years).

      Pros: Good "work-life" balance, although it depends on your manager and the service you work for. In most of the teams home office is allowed. The company it's so HUGE that probably will stay where it is for next 50 years.

      Cons: The lower salaries on the market. That's it. In fact, the way how to increase your salary is hidden and not really accessible,; salaries are not measured on job's role, but only on your negotiation skills, Once you get hired for some wage, is extremely hard to get a raise.

      Quality: The worse quality I have ever met in an international company;very poor job's outcome, customer's satisfaction; it's a BIG LIE. Simply the customer has NO IDEA about what does happen inside the IDC. It can only survive in the market due to the highest prices.

      Employees are "handled" like things. Lying is the usual way how to manage employee's frustration and requests, since the major aim of IDC is to save money; nothing else really does matter.

      Advice to Management: Clearly IBM IDC does fulfill and somehow respect contracts with customers, and they are able to do that even by paying few bucks to monkeys working there. So, I have no advice to management. Just don't work there, if you are NOT a manager.

    • “Worst Employer I've ever had”

      Current Employee — Senior Systems Management Integration Professional in Phoenix, AZ. Pros: None — moving jobs offshore to balance the bottom line — the only way they know how. Quarterly layoffs for the last 4+ years; when they announce the loss for that quarter. Cons: You can be recognized at a "top performer" at review time, but get no raise, no promotion, and still get laid off because CEO level management can't run the company. Advice to Management: Woman up and leave the company. You're a failure, have been a failure since you've been in charge, and will always be a failure.
    • “Technical Software Sales”

      Former Employee — Technical Sales in Detroit, MI.

      Pros: Home office, 401k, training.

      Cons: It all depends on the luck of who your management team is. The company can be great in the right place or absolutely awful in the wrong place. In my case, I had great management for years but then made the mistake of moving into a team, where unbeknownst to me, management was a nightmare.

      Employees do not get raises unless they are rated a 1 or 2+. But the ratings must be curved. So most get a 2+ but there must be at least one person on each team that gets a 1, 2 and 3 rating. So if all on a team are top notch someone must be designated as less than top notch even if there is a fine line between them.

      And If you are not a favorite, management gives you a 3 rating whether it is valid or not. After that you will be given a chance to "improve" but it can be rigged against you. It is a very political and subjective system. Also getting a 2+ is not a guarantee that you will get a raise if the company is not making their revenue targets that year and that happens very often. As a result, many employees complain of not getting a raise for years.

      So if you take a job at IBM make sure you work in an area that keeps you well rounded and is well respected in the workplace so that you can leave IBM if you need to. It is too easy to paint yourself into a corner and work on things that are only important to IBM. Then one day you find that you are stuck because you only have experience with a niche IBM product and too many jobs are seeking experience with Oracle and MS products.

      Advice to Management: Get rid of the archaic PBC rating system that mandates that some employees do not get raises just because of the team that they are on. Find a better way to give employees raises that they deserve.

    • “No guarantees”

      Former Employee — Staff Software Engineer in Costa Mesa, CA. I worked at IBM full-time (more than 8 years). Pros: Smart colleagues, nice software tools to play with, great opportunity to learn about industry trends. Cons: Employee evaluation and rating system is nonsensical. IBMers always work with the cloud of imminent layoffs. Risk of being relegated to a dead end project, or from a career perspective, getting trapped into a position where skills and knowledge quickly become obsolete. Advice to Management: Be straight with employees. They are not children. They can handle the truth.
    • “Cheap, Bureaucratic, Boring”

      Current Employee — Internal Consultant in New York, NY. I have been working at IBM full-time (more than a year). Pros: Compensation at the entry level is at or above market; job security is almost guaranteed unless you really screw up. Cons: This is the type of company where your dreams come to die. You are given very little motivation to excel in your position and the consulting program in quite literally drowning in bureaucracy. Advice to Management: Increase transparency, provide employees with incentive to stick around and rise through the ranks.
    • “IBM's best days are behind it”

      Current Employee — Manager of Information Security Services in Hollister, CA. Pros: The ability to work from home. Some flexible hours. No accrued sick time needed; when you are ill you simply take the time to get well again as you are not limited to a certain amount of days. Cons: The last few years have brought longer hours, more stress, flat wages, no upward mobility, no training, loss of pension, the 401k bilk, worsening health care coverage, loss of fellow FTEs with ever increasing cheap foreign labor and abused contractors (who have regular furloughs). Advice to Management: Treat your people better.
    • “Financial Analyst”

      Former Employee — Financial Analyst in Rochester, MN. I worked at IBM full-time (more than a year).

      Pros: The majority of FA's are your age fresh from graduating college so it is easy to make friends. Flex Friday.

      Cons: You will start as supplemental in most cases. If you are lucky, you will get an easy desk where the FA before you isn't leaving the company and will actually train you on how to complete your work. Otherwise, you will get someone who is out the door and you will get about one week of training and you will have no idea how to do your job.

      Your manager in most cases has no idea what your daily tasks are or specifics to your role. Then you will get promoted and it gets worse. They pile on more work with about a 1K bump in pay. This is the point most people leave. They are really good at giving you a ton of work knowing they can replace you with another college graduate.

      The turnover in the COE is unreal; over 35%. The average person lasts a year and a half. Really it's only that high because the people that have been there more than 3 years, their spouse works at Mayo and they are not moving.

      Be ready for a ton of work with no pay and no appreciation. Most likely you will start with 15-30 new hires and after 3 months half will have quit for better jobs.

      My advice is go in with the mindset that there is no career path here and use it as a resume builder.

      Always remember the COE is vastly different than IBM itself. It may fall under IBM but you are basically a cheap labor center from overseas. The COE is a cost effective center and it is ran as such.

      Advice to Management: Be honest with employees. Do not lie about how long they will have to pull double duty or about the roles they are receiving.

    • “Associate Partner”

      Current Employee — Associate Partner in Cleveland, OH. I have been working at IBM full-time (more than 8 years). Pros: Once you get established and are a proven commodity (and it takes years to do), you are basically running your own business. As long as you perform and grow, you will continue to do well and be highly respected. Cons: It takes years to establish yourself. The paperwork is tedious to say the least. There is too mush overhead just to justify your accomplishments. Advice to Management: I would suggest having whomever reports to you on a project, be that person(s) manager so evaluations are done by the person who has the most exposure of that person's performance. I would eliminate the concept of having managers that have never even met the person be part of the evaluations.
    • “Not the IBM we've all known to love”

      Current Employee — Regional Director in Austin, TX. I have been working at IBM full-time (more than 10 years.) Pros: IBM still carries credibility with clients; this fact alone opens doors. IBM is made up of some of the smartest and most dynamic people I've ever known; you are surrounded by frustrated talent. Cons: Its "transformation" seems to be lacking direction. Sr. execs seems to be jockeying for positions of change without regard to IBM's dedicated and top sales forces. Lack of regard for clients that is finally biting IBM in the butt. Advice to Management: Listen with an intent to understand. You're driving a great company into a wall.
    • “Things are slowly getting better”

      Current Employee — Research Staff Member in New York, NY. I have been working at IBM full-time (more than a year). Pros: Lots of freedom to choose what you want to work on and become an expert in. Great work/life balance. Working remotely is common and the environment is very supportive of people with families. Cons: Can be a little slow to react to things. There's lots of politics and bureaucracy. Some folks don't get research anymore; they've been at IBM for too long. The culture is quite insular and we're constantly fighting for funding. Bonuses are small and pay increases are slow as well — they come for past work. Advice to Management: Observe competitors. Become more nimble and open. Smart people care about these things. Don't just talk about being the best; hold yourself to it.
    • “We have lost our way.”

      Current Employee — Sales Leader in New York, NY. Pros: Talented and knowledgeable peers and colleagues. Cons: Sr. Management has lost touch with reality. High pressure, low morale culture. Advice to Management: Spend time learning what the real market challenges and pressures are from your field teams. Come out of your bubble. Create a culture for the employees that is about them being part of something.
    • “Staff Engineer”

      Former Employee — Staff Engineer in Durham, NC. I worked at IBM full-time (more than a year). Pros: Flexible hours. Great pay. Senior engineers ready to help. Mentoring programs available. Great place to gain experience with cross-functional teams. Cons: In my time at IBM, I did not find any cons. I regret leaving IBM. Cannot wait to get back into the company. Advice to Management: None.
    • “I have not met anyone in IBM in the last 5 years who likes working for IBM”

      Current Employee — IT Architect in Remote, OR. Pros: If you are an executive, compensation is great. Cons: If you are not an executive compensation is below average for the industry. Work-life balance means work whenever told to. Employee morale is horrible. Employees always living in fear of being laid off. Employees are called resources. Like resources they are bought wherever they are cheaper (India, China, eastern Europe, etc.) and eliminated wherever they cost more (USA, Canada, etc.) Advice to Management: As a place to work IBM is as sleazy as they come. Bring back the old Watson dictum of "respect for the individual"
    • “So long IBM”

      Former Employee — Anonymous Employee. Pros: Skilled and knowledgeable colleagues. Good immediate managers. Flexible workplace. Cons: Company not nimble enough in the marketplace. Disconnect between corporate leadership and rank and file in the business unit. Limited employee financial growth. Advice to Management: IBM no longer a leader (and losing relevance fast) in the computing word. Need to move to a strategy of true long term investment in computing technology development rather than espousing a myopic view of short term gains in stock market.
    • “the ship be sinking.”

      Former Employee — Service Delivery Manager in Poughkeepsie, NY. Pros: Benefits were great. There are some really talented and smart people...but those numbers are dwindling. Cons: Change is abysmally slow. Technology and tools are second rate. Zero interaction with management team. The adoption of matching 401k contributions not vesting until December 15 is cheap (and troubling). I spent the first half of my career outside of IBM; I wasn't there for the 'good ol' days' everyone seems to reminisce about. Vicious cycle of (1) unhappy customers, (2) cutting costs to meet the numbers, (3) unhappier customers, (4) more cost cutting, (5) lather, rinse, repeat.
  • Alliance for Retired Americans Friday Alert. This week's topics include:
    • Republican Presidential Hopefuls Are Staying Silent Regarding Social Security Privatization but Still Favor “Reform”
    • Voters More Concerned with Curbing Drug Costs than Scrapping Affordable Care Act
    • No COLA for Social Security Benefits This Year Impacts Medicare Part B Premiums
    • Thousands Protest Koch Brothers Event in Columbus
    • Fiesta Makes Presentation to DNC Retirees

    Download a PDF version.

New on the Alliance@IBM Site

http://www.endicottalliance.org/thedisintegrationofemploymentinIBM.htm To all Alliance supporters, send and share the above link to the article "The disintegration of employment in IBM" far and wide. Put it on your FaceBook page; send it to newspapers; send it with comments to your political reps and send it to your co-workers. Help break the secrecy of IBM job cuts. Put some pressure on IBM. -Alliance-

Job Cut Reports

  • Comment 08/23/15:

    Deb, What is also significant is that the last time the stock was this low was the first week of January 2011. So it's wiped out over 4.5 years gains. The last high was about March 15 2013 at 214.92, with last Friday's close at 148.89 that's a $66 per share loss under Ginni's watch. Warren Buffet may be content with the stock's decline; after all he gets handed over $100 million per quarter in stock dividends for his roughly 80 millions shares. If he needs a loss to write off against he certainly has one with the bulk of his purchases having a $1.70/share cost basis. -Gone but watching stock-
  • Comment 08/23/15:

    Job Title: IT Specialist; Business Unit: GBS. Message: Due to my manager, i am forced to go through Performance Improvement Plan (PIP) even though I have not received any PBC. My people manager said, based upon your two projects' performance feedback (unfortunately he was project manager in both of the projects), you have to go through PIP. In both of my projects we did not have much to do. My HR partner is also not listening at all. I told them if you have to measure my performance, assign me to another project and another manager, but she is not ready. IBMers please help me with what should i do. I have only one month for PIP .-Anonymous-
  • Comment 08/25/15:

    Nobody in IBM cares to tell Rometty that employees should be given as much a priority as the client. What builds a company is loyal and quality employees. What destroys a company is disintegration of the morale of the employees. Everywhere in IBM the morale of the employees is at its lowest. Good employees are casualty to the quarterly targets. Employees get punished for better performance because of the job insecurity of their seniors this has given rise to a herd of mentally sick senior management who are forced to think evil and act evil. This company's stock is going to have a free fall and not even Warren can save it. The company is doomed. -Anonymous-
  • Comment 08/25/15:

    Job Title: IT Specialist; Location: Boulder. Message: @UNEMPLOYED 8.24.15: Forced training of foreign replacements is widespread and will continue so long as American workers cooperate and do it. If you haven't lined up a new job once the rumors are flying and the signs and omens are in the air, and you must get the money, then train them incompletely or train them "wrong" if you must - just go through the motions. Your skills and knowledge are yours, acquired through your hard work and often your private funds. Don't just hand over your lunch money to the school yard bullies. Your short term gain is America's long term loss if you do. -Dolores-
  • Comment 08/26/15:

    @IT Specialist - GBS...the PIP is a farce. You will be failed whatever you do. I completed the work assigned to the satisfaction of the lead with no complaints in the time required despite ad hoc work load being added. When I asked the first-line manager in the review whether he talked to the lead about the work I did, he responded that he did not need to. Advise: do the minimum for your PIP-assigned tasks so that they don't have an excuse to kick you out immediately without a package. Start looking for a position outside IBM immediately. I found the blatant dishonesty in this evaluation process astounding, so that they can save a buck to line the pockets of non-performing managers who get raises and bonuses even when they do not meet the targets set by themselves. -anon-
  • Comment 08/28/15:

    Job Title: Senior Financial Analyst. Location: North Castle. @Pete Gruelich. I read your excellent follow up. Thank you. "Think" was and is a company heartbeat IBM was known for. From the top of the executive team to the rank and file, Thomas J. Watson Sr. actually brought this simple motto over to us from his days at NCR and long before we were the IBM company. IBM cannot continue to manipulate temporary financial returns to our IBM shareholders through blatant short-term unethical financial manipulations, relentless RA's, and stock buybacks as we gobble up any and all companies that can spell "cloud, big data, security” blah blah blah...only to destroy them.

    And let's talk about Ginni's and John's photo ops gushing about “Watson”, and how “Watson will be instrumental and a catalyst for medical patients worldwide.” That, as they push our IBM retirees out, with no medical, our current IBM employees out with no medical, and our brother and sister contractors which they never gave medical to in the first place. Ginni and John and the board and the executive team have no such worries about medical, or paying the bills due to their obscene salaries and stock options and golden parachutes on the backs of all the jobs lost worldwide for our IBM family, partners and vendors.

    "Think" is still the underlying core value of our worldwide IBM family. Sadly, it is not at all a tops down driven motto as it was with the Watsons. The executive ranks have replaced "Think", our sacred core value, with another five character motto.. "Greed”. -Respectfully Deb Kelly. proud Alliance@ibm member. Please join!

    Alliance reply: Thank you Deb for your blunt clarity and keen insight to what IBM has become. Since you came from the upper levels of IBM HR, and KNEW what IBM was up to in the 1990's, and today, your valuable views are most welcome here.

    For quite a while, we've been putting hash tags on our Twitter comments that reflect your sentiments exactly. Such as; "Don't think greedy #THINKunion” or "@IBM #THINKunion and #THINKGlobalUnion”.

    We sincerely thank you for your continued emphatic support and hope for the best for you.

    Rick White,

    IT Administrator, CWA Local 1701,
    Alliance@IBM www.allianceibm.org,

    Twitter ID: @Allianceibm,
    Facebook: Allianceibm CWA

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.

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.