It didn’t take long for the reports to start coming into the Watching IBM FaceBook page, formally the Alliance@IBM site. And let’s be clear, if IBM employees hadn’t posted job cut information at Watching IBM the news of this mass firing would have gone mainly unnoticed. After Watching IBM alerted the media of a job cut at IBM they came in droves to see what was going on and to report what they saw. It took IBM a long time to admit that yes, a job cut was taking place, but in its usual practice it was a sterile response devoid of any compassion for the thousands losing their jobs.
There was no compassion or apology from CEO Rometty or the Board of directors for these workers who said:
Our entire remaining US team, including our manager, are RA’d and our six jobs are being moved to Costa Rica. Lucky me, as team lead, I am now tasked with hiring and training the new team members.
One month severance pay versus the six months that I would have received in any prior RA. This is the “reward” IBM gives those of us who have had the best performance reviews and avoided prior cuts and took on all the extra work as a result of prior massive RAs.”
Hundreds of similar comments were posted. Many older employees seemed to have been singled out for termination sparking a warranted concern that IBM was still practicing what many believe is age discrimination in job cuts. Numerous comments were written about losing a job and work offshored or H1b visa workers stayed. Others took the cut in severance pay to task and many expressed outrage at the bonus CEO Rometty received, the cashing in of stock options by executives and the “rewarding” of the Board of Directors for keeping a blind eye to the destruction of employee jobs and the company.
Even retirees jumped in and said it was a disgrace what was happening at IBM. But IBM wrote off retirees long ago. No raise in the pension for 15+ years and if they can get away with it IBM execs will figure out a way to get retiree pensions off the books too.
To IBM employees, retirees and ex-employees the continued destruction of the IBM US workforce, while the CEO and her blind followers in the Board of Directors enrich themselves is a disgrace.
To IBM’s morally bankrupt executives it is simply just another day at the office.
Selected reader comments posted on the "Watching IBM" Facebook page follow:
The soon-to-be-ex-IBMer has worked at IBM for many years and thanks to the head of HR, his severance is one month of pay. That is not a typo. One month of pay. IBM’s longstanding policy of paying two weeks for every year of service was eliminated in January, presumably in anticipation of the upcoming mass layoff. Perhaps IBM realized that since they’ve taken away most of the employees’ benefits already, the options were limited as to what else to take. The ex-IBM employee qualified for the maximum of twenty-six weeks of pay prior to January.
The soon-to-be-ex-IBMer and thousands of others being fired, will retire with a lump sum payment of well, not much. Some will still get the monthly pension they were promised but if you weren’t forty years old when the change was announced, then you lost your pension to a cash balance payment. The pension was taken in 2000, and it was frozen in 2006, which meant IBM would make money investing the employees’ pension and the employees would not. The promise of medical for life was broken in 2000 along with the pension promise and there was a seventy percent reduction of employees’ variable pay. In 2014, IBM discontinued medical insurance for retirees & their spouses who were told when they retired that they would have it for life. IBM cut medical insurance assistance to the retiree spouses to $1300 per year which saves IBM millions and costs retirees’ widows thousands of dollars out of a pension that hasn’t had an adjustment for inflation in over twenty years. They really did it. They hit the retirees.
In 2014, IBM announced that employees would not receive their 401k match from IBM unless they were still employed on December 15 of that year. IBM would also not pay the 401k match into employees 401k investment account until December 31 so they could keep the employees money and invest it themselves.
Frankly, what choice did IBM have? They had to finance the IBM president’s $4.5 million bonus which is an increase from last year’s bonus of $3.6 million. What did Ginni Rometty do to deserve this bonus? She is making IBM history with 15 straight quarters of declining revenue and a drop in the stock price that is unprecedented.
IBM only made $13.2 billion in net income in 2015. They can’t possibly use any of that money to make good on promises to employees as it’s already slated it to go to executive pay, bonuses and stock options. IBM has existed for over one hundred years and was long known as one of the best companies to work for. In the last twenty years, it has become one of the worst. Somewhere along the way, the leaders of IBM opted out of integrity if you understand the meaning of integrity to be doing what you say you’ll do. Perhaps they realized they are Big Blue and there’s no one to stop them.
A story of corporate greed isn’t special. What makes this special is that it’s IBM. When Thomas Watson, Sr. ran IBM, he said IBM’s greatest asset was its’ employees. The employees often had below market salaries but they would have medical for life and a pension in return, in gratitude for their long, faithful service to IBM. Thus, the term “lifers”, became part of the IBM lingo, as most of the employees stayed for the life of their career knowing they’d be taken care of and rewarded for their loyalty.
Well it’s time to pay up and IBM is turning its’ back on those long-serving IBMers. Who would have known that one IBMer, IBM’s head of Human Resources, could destroy the livelihood of thousands in a single day? If you run into her, be sure to congratulate her on a job well done. She did it. She saved IBM millions of dollars. The employees, well, collateral damage in the war of corporate executive greed. Isn’t it ironic that you can work in “Human Resources” without having a sense of humanity?
So, from one IBM family to another, thank you for your special gift. Don’t think twice about those ex-IBMers, they’ll be alright…for a month.
Selected reader comments from the Watching IBM Facebook page follow:
Many of the members of the board held their positions before Rometty was named chief executive officer in October 2011, so they are responsible for both her promotion and ongoing employment. Chenault (who has been blamed for damaging American Express, where he is CEO) has been on the board since 1998. Eskew has been a board member since 2005. Jackson also joined in 2005. Liveris (who has been attacked for lavish spending as CEO of Dow Chemical) has been on the board since 2010. And McNerney since 2009, Owens since 2006, Spero since 2004 and Taurel since 2001.
Several directors own no “shares of IBM common stock beneficially owned by the named person” as of the filing of the most recent proxy. Not a single one. That might lead outsiders to question their faith in the company.
So much for a board helping shareholders before they help themselves.
Selected reader comments from the Watching IBM Facebook page follow:
Those laid off are being told that they are welcome to apply for jobs internally; IBM officials boast of 25,000 openings, but don’t indicate whether any of those are in the United States. (The company no longer breaks down its worldwide headcount—about 378,000 at the end of 2015—by region; a fairly recent estimate suggests the U.S. headcount is about 70,000.)
Employees affected by this “Resource Action” have been posting anonymously on the Spectrum website and on others; they have also been sending reports to Watching IBM, a Facebook page organized by the remnants of the Endicott Alliance, a failed unionizing effort. A few soon-to-be-former employees have contacted me directly.
Many of those commenters are not buying the “workforce rebalancing” spin, or at least, think only a small number of the layoffs are motivated by the need to adjust the company’s skill sets. Instead, they believe the majority of the layoffs are a matter of “workforce relocating,” specifically, out of the U.S. to India, Brazil, Costa Rica, and other countries with cheaper labor costs.
Last week a huge round of layoffs hit IBM just as I predicted back in January. The company is releasing as few details as possible. Nobody, for example, knows exactly how big is this layoff — how many people are being let go? IEEE Spectrum found one source that said the number was 30 percent of the U.S. IBM workforce, a number which IBM says is too high. I also believe 30 percent is too high, especially if you compound it with retirements, contractors being axed, etc.
This round of IBM layoffs looks to me to be in the 20-25 percent range. A similar number of IBM workers were let go last year, but what makes this year’s numbers so notable is that most are regular employees — not contractors or retirees (those were mainly dumped last year to make those layoffs look lower). With IBM U.S. employment in the 90-100,000 range, this suggests that 18,000-25,000 people have just been shown the door at IBM. And they did so under new rules that grant at most one month of severance pay instead of up to 23 weeks that was in effect until the end of 2015. That has to be a kick in the head to all the IBM old-timers who had been waiting for the axe to fall no matter how good they were at their jobs, yet hoping for some kind of package. Well the package is here and it is full of crap. ...
Big Blue is in transition they say. Old businesses like mainframes and midrange systems are giving way to cloud, analytics, mobile, social, and security. The company has done this before many times. Gone are the card sorters and typewriters for example. The theory is that IBM will emerge like Doctor Who from this latest transformation, a new company headed for even greater things.
During such a transition time the job of the CEO is to starve the old businesses to feed the new ones. IBM CEO Ginni Rometty has done this in spades because she has the added job of keeping Wall Street happy, which means increasing dividends and share buybacks no matter the actual economics of her business. It’s all done with the idea that the new businesses will more than make up for the old.
But what if they don’t? ...
What happened? What turned Buffet around? Surely not this one layoff: IBM has been doing these for years, though never so brutally.
The only event that I can see causing this change in Warren Buffett is Ginni Rometty disclosing to her largest shareholder that the basic premise of transition and renewal isn’t working. Things aren't going well at all in cloud, analytics, mobile, social and security land. When those kick in (if they kick-in) IBM will be just one company in a crowd with no particular advantage over the others.
IBM used to be able to count on its size, its people, its loyal customers, but all of those are going or gone. Apple or Google could buy IBM with cash on hand, so it’s no longer the Big Kahuna. IBMers of yore are all gone and for the current breed it’s just another job. IBM customers are leaving in droves, too. Of the whole CAMSS suite only security is an obvious success and the world isn’t ready for a $100 billion security company.
Selected reader comments follow:
Gerstner didn’t need to know anything about TECH or the computer industry. We we all fail to remember is what make a company work — customers. Customers buy a company’s products and services, not Wall Street. Customers provide the cash that becomes a company’s revenue, income, dividends, etc; not Wall Street. Without customers IBM would cease to exist. Gerstner knew that, he fixed that.
What Gerstner didn’t fix was the organization culture that got IBM into trouble in the first place. IBM is actually a poorly managed company and its culture does not promote the best leaders. Its culture does not allow good leaders to operate. That culture produced Sam P. and Ginni.
Early in Sam P’s reign we had a financial crisis, stock market crash, and deep recession. IBM did better than most companies during that time, primarily on the strength of its multi-year contracts. They buffered IBM from the worst effects of the economic crisis. As stock prices plunged and interest rates dropped to zero, big investors looked for places to invest their money, safe investments. IBM was one of those. A lot of money flocked to IBM — simply because it was “safe.” Sam misinterpreted that as being a reflection on his leadership. Sam, like most of IBM’s leadership was a sales person. Sam started selling IBM to Wall Street. The EPS goals, the cost cuttings, the layoffs, the benefits cuts all that stuff was to make IBM even more attractive in the eyes of Wall Street. For a time this plan worked. IBM’s stock price soared and Wall Street was very happy.
What was not apparent at the time was IBM was also cheating its customers and damaging its relationship with them. It is not that IBM’s CAMSS strategy is good or gutting services is bad, it is the damage IBM is doing with its customers that is important. Without customers the best business strategy in the world is useless.
Gerstner, not a tech guy, brought IBM’s customers back. Sam P, not a tech guy drove IBM’s customers away. Ginni, perhaps IBM’s most tech savvy CEO ever is hoping the new businesses take flight before it is too late. IBM’s traditional businesses are now too damaged to be saved. This is a very dangerous time and it started when IBM forgot where its money comes from.
And the VM farm, it used to be IBM x-blades, but since big blue decided to dump that area of the business to Lenovo, it’s now being migrated to Dell as fast as possible. You can’t make this stuff up.
The basic overtone here is that IBM no longer listens to clients and provides terrible service, particularly when you call for support and connect to offshore kids reading from a script who you can barely understand.
At this shop, it’s fair to say the damage is done and strategic direction is not in IBM’s favor. Watching the YoY earnings declines convinces me there must be many other shops out there just like this one.
Steve Jobs spoke about companies that end up with sales guys in positions of power over product development guys, because an increase in sales can yield greater bottom line improvements, short term at least. I imagine he might have had his own experiences at Apple in mind, but those words sum up IBM in my opinion.
Ginny may be very tech savvy, but in key areas IBM invested too little too late, and fell behind. Some of those decisions were on her watch. Microsoft is transforming rapidly and effectively post Balmer. Why couldn’t IBM do the same post Palmisano?
IBM is a big ship, and still can turn itself around. I believed that was true; that it would be recognized that partnerships with customers, that care for their success and pride in quality, would somehow come back into fashion within IBM management.
And while my group has not yet been touched by the latest round of layoffs, we have been hurt in the past and have the group reaction of flinching when we hear of new ones. And I daresay that if, or rather when, IBM elects to let us go customers will notice our absence and be far more alarmed than if all the top 4 layers of IBM execs and managers were to vanish is a puff of burnt-money smoke. And letting go that many highly skilled and formerly motivated people will not save enough money to pay the bonus of a single top level executive. A pity. I mourn, mostly for what might have been and what may perhaps still be if sense, sensibility, and sensitivity return.
Design thinking is not going to help. The good people are gone replaced with grads and people who have drunk the Kool-Aid. The shiny SCAMS is just brightly colored furniture, post it notes and smiley simpletons.
Times are so desperate I got an email to Tweet about IBM about how fun and ‘Google like’ it is to work there. It’s hell. There are not enough projects for the people they are hiring so they get put on pips and shoved out onto projects not related to their expertise. They are ruining people’s lives.
Everyone is miserable. At least we had packages to look forward to and now we don’t have that.
It’s not dated older workers with outdated skills they just shed.
Here’s a great GBS scam. Hire some one with gravitas and hot skills. Send them out front and center to show IBM has hot skills and is doing cool stuff. Use them to close deals. Give them a few days to input into the project and then yank them off for a grad or offshore it. This way the profit margin is higher and the work can be sold competitively. The books for the project look awesome. Bait and switch. Repeat. When the hot skills person gets on a PIP for not hitting utilization targets let them take the blame, sack them and get another one.
Scam 2: To protect yourself against utilization targets charge people hours for case studies, slides and any old sales collateral. Bank time against codes to protect your team while screwing everyone else. The managers that have been around awhile are masters of this.
I hate this company.
A case in point. After watching the place slowly implode for over two decades, after watching ruthless corporate politician execs continually padding their pockets on the backs of the rank and file workers, I pulled a disappearing act and landed at a great place where they actually refer to their employees as ‘people.’ There were several other former IBMers, a few who were RA victims, also on staff at this new employer. Many of us were in positions to advise on hardware/software strategy and procurement.
When the IBM sales cartel would show up, we would find ourselves snickering under the table at their pitch. On one occasion, they proposed we switch from an industry standard product to one of their inferior alternatives by saying ‘but that vendor has moved most of the development (of that product) to India.’ We fell into disbelief that the person would even try that angle and proceeded to remind him of his employer’s offshoring track record. With that, the meeting ended.
Cringely and others are right, IBM is done, cooked, finished. Maybe that is why the leadership ranks are extracting wealth for themselves at a rapid clip, they know the end is near. It will simply take time for the carcass to grow cold and finally turn to dust. And all the while, up to the inevitable end, the CFO and Ginni will continue to spew forth the tag line ‘we are continuing our transition to higher value…’ Yawn.
And Watson is a desperate game of spin. Watson looks to me like a boondoggle. IBM is giving prizes to employees who create Watson apps. They are desperate for Watson users. No details of Watson revenues are ever released. Watson is AI and AI has been touted as poised for a huge breakthrough … any moment now … since the 1950s. Putting all your chips on Cloud and Watson smells like even the spinmeister herself is running out of ideas of things she can still keep spinning.
The CEO is clueless and follows a strategy that is now adopted by most of management. Keep coming up with new fads do quick prototyping on what’s the latest coolest tech and come up with something that is then showcased. It is then thrown to dustbin as it’s creators know it’s a gimmick.
When the big mobile conference came around and I was expecting to go as a leader and speaker in this space I found myself pushed out by the strategy/sales guy, department head and a grad.
There was no work. None. I’d pass people in the halls and no one was working on anything except sales. I was worried my skills would start to slide if I didn’t get back to doing real mobile work. Only training course I did was IBMs design thinking course which is about as practical as a box of frogs, so I left and joined a start up. Hate to say it but I have met more honest fraudsters.
In its latest round of layoffs, IBM is giving long-time employees just one month's severance pay. Over the previous year, it had hired about 70,000 and cut 70,000, meaning nearly one in five employees were either going in or out the door during the year.
Estimates on the size of the latest layoffs vary, but some say it may add up to one-third of the U.S. workforce. The Register reported that by the end of 2017, 80% of its services business will be located offshore. The difference between IBM Services and an Indian outsourcing company like Wipro are diminishing by the day. The layoffs were big enough that Salesforce.com CEO Marc Benioff actually tweeted about it, inviting resumes.
IBM bulls may note that the company is pruning deadwood, and that it's avoiding higher payouts for pensions that are already hurting the balance sheet. But good technology companies don't treat people as disposable parts. ...
Could IBM be bought? At its valuation of $132 billion, the largest U.S. tech employers, like Googleand Apple, could easily buy the company for cash. But if they were interested, it would be for the employees - older programmers, many of them in obsolete areas. Tech is a young person's game. Such an acquisition would be silly.
Could IBM make a comeback? The only way I could see this would be by literally throwing a Hail Mary, buying a company like American Express for its transaction processing niche, moving more strongly into government work by combining with Honeywell, or even picking up CSRA from Providence Equity Partners and focusing on government work. ...
All I can say, in the strongest possible terms, is this. Avoid IBM at any price.
Selected reader comments follow:]
They don't care about employees anymore because they can just go to the Middle East and get someone that knows hardly anything pay for there education and then have them fill a position for a customer.
IBM's customers are the ones that will pay the price for this. They have lost several big contracts due to the fact that H1b visas don't know what they say they know.
IBM will have a hard time surviving with their current CEO as she is a joke. Look at HP and Yahoo; they have fallen because of the same problem. IBM needs to think twice about what they are doing to their employees because it is the employees that make the company money not the managers or the execs.
I think it is funny the execs can take a bonus yet they were told not to give GDP to 2's on the PBC rating thus saving money. IBM is dying and it will continue to die because the execs are behind on what the world is doing.
The future sandbox areas of the market where IBM wants to now transition to and play is already crowded and future profit margins (if any) are slim to none for a ship the size of IBM. Data, cloud, and systems of engagement.
These three areas alone cannot support the future growth of a ship the size of IBM. Once again they are late to market trying to right their now big pale blue ship.
The IBM ship of today is rudderless, and their captain at the helm is inept. However, with very little future organic growth on the horizon they will continue to limp along acquiring "bolt on" companies as they drift and flounder ever nearer the rocky shoreline of irrelevant.
Buy it for the dividend or better yet don't bother at all,
I'm certain that attitude will cost them some highly skilled workers along with the so-called deadwood.
I worked as a systems engineer with mostly IBM products retiring in 2012. Big problem is too little investment in product; too big buybacks and management overhead.
If you understood how the layoff process in IBM works, you would never suggest they can find another job in IBM. HR and/or Operations blocks literally every transfer to another organization. Cost cutting doesn't work if you just move the cost, and that's what these are all about.
IBM has basically been making a living in the last decade by transferring American technology, IP, & Management know how to emerging markets (specifically China.)
Now that the knowledge transfer is done, the Chinese are doing what IBM did, and undercutting pricing.
We've already transferred most of America's manufacturing overseas, & mostly to China. Now, they want to copy our services businesses as well.
And you Americans keep giving away your most valuable asset (knowledge & IP) and giving your middle class jobs to your competitors.
Strict accounting and processes resulted in masses of people being pigeonholed into niche areas. Skills and even work habits degraded. Suffice it to say, especially in services, IBM did not foster a culture of self learning and adaptation...in a day and age of open source products that demand this.
So you're seeing a labor tragedy of sorts as IBM tries to turn itself around. Will it? I'm not sure. Not if Ginni and company remain in charge. No doubt, IBM still has world class engineers...but they're moving on...with no sign that the opposite is occurring in any significance.
Until this settles, I wouldn't buy. I'm holding my shares...just because. In defiance of rationality. I hold hope that an iconic American machines company will endure this and stay around for another 100 years...although, like I said, I'm not feeling it.
The company is chock full of VP's and Directors who add little value as they re-swizzle PPT's and worksheets and extract high salaries.
Sales incentives are reduced each year for an increasingly frustrated client facing population. Client satisfaction is dropping along with that of employees.
Buffet blew it. He was probably sold a bill of goods by Ginni. Love to see that PPT. Dairy Queen and See's Candies are more up his alley.
The dividend is intact for now but eventually will come under pressure as cash flow declines. They are addicted to acquisitions needing to do more and more as the prior ones chew up their tax benefits and their revenue moves into the base. It's a vicious 2 year cycle. Buy-take accounting benefits-fire talent-move on to the next one. After all those acquisitions where is the organic growth?. Nowhere. The board just rolls over and accepts all this. Shameful.
Nothing differentiates this company. After 7 years WATSON is still a toy being leapt over by the market.
But the company has long been poisoned at the top. Top tech management should not come from marketing. When the entrepreneur dies, a product vision needs to replace it.
Consider Microsoft. They put Steve Ballmer, marketing guy, in charge and drifted for a decade. Then they put a product guy, Nadella in. Now they're cooking again.
It's not personal. But that's the way tech works. I've been covering this stuff since 1982 and it's not a mystery. IBM itself nearly killed itself by bringing in marketing guys like Akers who became vulnerable to the first kid with a Clue who came along and understood the product environment. Fellow named Gates.
Now, after Gerstner got them back on their feet, they do it again with Palmisano, then Rometty?
Those who ignore their own corporate history don't deserve a third chance.
One post I read summed it up admirably... wishing good luck to those caught in this RA, *and* to those left behind trying to accomplish the impossible.
IBM business, service and employer/employee models are all broken.
The business model puts the investors first, the customers second and the employees third.
The service model fails due to the constant and never ending layoffs and offshoring. This has seriously impacted IBM's ability to provide good service. It would be very difficult to support even some of IBM's more complex offerings using the service model in place.
Employer/employee Models: There is no longer mutual respect between IBM and employees nor are the goals of each group aligned. It is clear that what is good for IBM's leadership is really not good for the employees. Morale is low and employees neither believe nor trust IBM. It seems that IBM does not really value employees and relies mainly on negative reinforcement to motivate workers. IBM management structure is ineffectual and wastes everyone's time by coming up with meretricious tasks for the employees.
IBM's future is behind it. I advise everyone who is still employed there to get out if they can.
He didn't do much really, except be the primary member of a team which recovered the data from the Challenger shuttle flight recorder tapes which had sat on the ocean floor for 3 months http://bit.ly/1phI4Ch. He's definitely the kind of DEADWOOD IBM needs to continue cutting in order to survive the next 100 years because as everyone knows, nobody in this world uses magnetic tape anymore for backups.
Everyone also knows PhDs cannot continue learning in other areas, so he'd be completely useless in any other part of IBM's business in today's security, cloud, analytics, mobile, and social (SCAMS).
Revel in your dividends today, because while IBM continues to get rid of/chase away/dispose of its assets (i.e., people), there will eventually be nothing left to generate them as it circles the drain to irrelevance.
IBM is run by incompetent leaders that have just keep making things worse. I agree IBM should be avoided, in all aspects, given that IBM technologies are outdated, their business model is outdated and no technology expert worth their salt thinks of IBM these days when architecting solutions. I am waiting to see if Watson makes an impact.
Big Blue last month embarked on a cost-cutting exercise in the UK, putting 1,352 staff on a 45-day notice period to “drive an aggressive agenda to transform its operational model to maintain our competitive advantage”. ...
In a confidential document drawn up by IBM and the ECC, Big Blue said 63 per cent of UK work is completed by employees in offshore locations. The IT giant said it was “targeting Skills For Value initiatives to achieve Global Resourcing ratio of 68 per cent by the end of 2016”.
“This is well short of the Global Blueprint ratio of 24/76 by the end of 2016 and 20/80 by the end of 2017,” the document stated.
Selected reader comments follow:
Yes, I used to have to contend with this, ask an email question of the devs, get a crappy half answer the next day. You follow it up with clarifications and extra questions, get an answer the day after that may, if you're lucky, have what you need in it.
And so on, it can take up to a week, with much prompting, to get an answer to a question that should take 5 minutes.
Especially if IBM were to honour my redundancy package I would be pleased to go. IBM has always been a tough place to work. But IBM has lost its integrity with respect to staff and customers. You see this on a daily basis in management comms with customers when you know the truth and what is really happening. You see it again with they way they managed pensions and in general how they treat the staff. The "Business Conduct Guidelines" only apply to those at the bottom. Management can do as they please. And they do.
They're always looking achieving the Q's targets. "I don't care about the implications for the next year or next Q. I know that if I don't hit this Q's targets I won't be around to worry about the next Q or next year". Hence everything is short sighted.
It can't continue, it won't continue. The funny thing is, the concept of outsourcing and the profits coming from automation, economies of scale etc. is a wonderful idea. But you've got to wonder why none of it is implemented...ah...yes...because it's too expensive!
Of course at the top of the costs is staff. All they see is the cost. So we're the first to go. And those that stay have to cope with the aftermath. It will be interesting this time as staff who are go are going with statutory minimum payments, and are expected to work the notice period. The internal security of systems is generally poor. So we have motive, opportunity and method. Sounds like a disaster waiting to happen.
"The notion that IBM is laying off a third of its workforce, in the US or anywhere else, is completely outlandish and untrue," said IBM communications VP Ian Colley in an email to InformationWeek. While denying that cuts are hitting a third of the workforce, Colley declined to provide actual headcount numbers in relation to this wave of job cuts.
That's not a surprise. In recent years IBM has declined to reveal any actual headcount numbers in layoffs. ...
Meanwhile, over the weekend, Salesforce CEO Marc Benioff reached out to IBM employees in several tweets, inviting them to send him their resumes.
"No one I know realized just how bad things are @IBM. I hope they will be more open to partnerships now," Benioff tweeted. He provided the email address email@example.com for laid-off IBM employees to use when sending their resumes to Salesforce. ...
In an email exchange with InformationWeek, IBM's Colley highlighted IBM's hiring efforts for the 25,000 positions he said are open at IBM. Colley noted in his email that "a significant number of them are in the US," but declined to provide a percentage or actual number of US-based job openings. ...
Colley said via email that IBM also now employs several thousand healthcare specialists, and is working to attract Millennials, medical doctors, anthropologists, and new kinds of data scientists as employees.
Early reports had said that a third of IBM's workforce was at risk for cuts, a number that IBM has since called "completely outlandish and untrue." IBM declined to provide an actual number of jobs targeted for cuts, but noted that the company hired 70,000 people in 2015 and currently has 25,000 open positions around the world, including in the US.
Now, Bernstein analyst A.M. (Toni) Sacconaghi has released an estimate that IBM's job cuts could total more than 14,000 in the first quarter. He shared the job cut estimate number in a report sent to Bernstein clients and members of the press on March 8.
How did Bernstein and Sacconaghi arrive at the 14,000 number? Sacconaghi noted in his report that IBM has historically matched big one-time gains (such as asset sales) with workforce cuts. The gain is used to offset one-time costs related to the job cuts. ...
To arrive at the headcount job cut estimate, Bernstein took IBM's historical cost to cut one employee -- $70,000 -- and evaluated it based on a $1 billion gain that IBM has realized in conjunction with a settlement with the Japanese Tax Authority. The settlement was reported in the company's 10-K report, filed February 23. Bernstein noted that IBM's guidance for 2016 already includes the $1 billion Japanese Tax Authority settlement. ...
"Given various reports that IBM is providing much lower severance in this rebalancing (1 month vs. up to 6 months based on tenure historically), it is possible that the workforce reduction number could be materially higher than this estimate," Sacconaghi wrote in the report. ...
The Bernstein report said IBM can achieve an annual savings of $1 billion in operating costs through this "workforce rebalancing," noting that according to Bernstein's estimate IBM "captures about 50% of the gross savings to its bottom line, as the company typically rehires employees in offshore locations." ...
"While historically, IBM's workforce savings correlated strongly with improving margins, this has not been the case for the company over the last two years, where despite very large cost savings hitting its income statement, IBM's operating margins have contracted meaningfully," he wrote. "Accordingly, investors should be careful in assuming that IBM's incremental restructuring savings will necessarily translate into margin improvement."
Selected reader comments from the Watching IBM Facebook page follow:
The Facebook group, Watching IBM, has increased its following by more than 66% over the last week. The group has taken responsibility for bringing light to the 70,000 job losses experienced by the firm in the past few months. Comments such as “At the beginning of 2015 our department had 25 people in it. At the beginning of 2016 our department has 13 in it,” highlight the decline. ...
With company revenues declining for fifteen consecutive quarters, this should not come as a great surprise for most; IBM’s struggles to re-invent itself as a cloud business have been well documented over recent years. ...
Back in January, Clive Longbottom, Service Director at Quocirca commented that IBM could risk being left behind, should the transition take too long. With AWS, Microsoft and Google continuing to surge forward, that risk is continuing to grow, though the consultancy skills nurtured in IBM will remain in demand “I still believe that IBM will remain a major force in the IT world, it just has to make sure it positions and messages itself effectively to its existing customers and to its prospects”
Pros: There may still be some cachet to having IBM on your résumé just for old time's sake. There are some very smart and wonderful people still lingering at IBM.
Cons: IBM has become a disastrous place to work. If you are not "born IBM" as a college intern or are a legacy of IBMer parents, you will NEVER be True Blue in the eyes of the Brahman who run IBM and your head will always be first on the chopping block, no matter what your performance is.
Your head will spin at the number of barnacles who have been with IBM for 20, 30, or more years, many of whom have never worked for another company. On the management side, this leads to an old boy network constantly looking out for itself (I mean that in a non-gender-specific way — there are many girls in the old boy network and they're every bit as useless). On the worker bee side, there are lots of good people who have put up with the constant drip, drip, drip of a declining company and have never overcome the inertia of leaving. Heaven help IBM if those people ever figure out what they're worth on the open market. It all results in a constant, dull-throbbing-headache approach to work instead of an exciting, challenging environment where you can feel like you're making a difference.
Speaking of performance, IBM uses Personal Business Commitments (PBCs) to evaluate employees and allocate bonus money. PBCs used to be reasonable: stretch goals, but attainable, measurable, and objective. PBCs are now a farcical way to get you to do three jobs, get paid for half of one, and make sure you never get your bonus payout.
And get used to centering your life around the premiere enterprise collaboration suite of the 1980's: Lotus Notes has its tentacles around everything IBM does. You will spend hours every week working around bugs and cleaning out e-mail in boxes so you won't go over your tiny storage quota. You will be expected to do this nights and weekends.
If you are in sales (even sales engineering, like I was), you will be expected to spend four months in "Global Sales School", regardless of your past experience. It will be part of your PBCs and it will be like taking on another job in your evenings and weekends. You will learn the IBM way, since they are not the slightest bit interested in allowing your knowledge and experience to change the way they have done things for decades. Nevertheless, they will insist that this is "an investment in you" and it will of course take the place of any actual training that you need to do your job.
Even the tiniest expense at IBM is now reviewed and re-reviewed and re-re-re-reviewed by layers upon layers of beancounters. You will not be able to travel even for client visits unless the expense was approved a quarter in advance. You will have to explain to your customer why you can't come out and talk about your product in person while your competition flies out and wins the deal.
IBM is just not recruiting the top-notch talent any longer. My former boss resigned recently but not before he was getting laughed at by cold-called sales people and sales engineers to fill positions in IBM's cloud group, which is supposed to be their big investment area. You don't want to work with fifth-tier people who have nowhere else to go but IBM.
My advice to those looking to join IBM:
In short, IBM was a great company and who knows, it may be yet again. But unless you are an incumbent and have an existing emotional investment in trying to turn it around, you have no reason to work yourself to death for terrible wages to help them out. You can do so much better!
Advice to Management: This one is really tough because the sclerosis in IBM management is cultural. I can't advise IBM's management to be something they are not and it's not as simple as tweaking a few things. IBM's brahmin/barnacle culture invites sclerosis and rewards people who cover for each other.
Pros: A very large company with many career potentials. Worldwide presence makes it a great company to work for if you have an interest to work overseas. IBM was ahead of its time in so many ways including embracing social, open source, and cloud as the core of its business. Company has very smart people working in it. Work/life balance is good.
Cons: As much as the company was ahead of its time in many areas: cloud, social, mobile, and open source, it didn't do enough to make a lasting impact in the industry. There are smart, strategic IBMers who had long identified those up-trends. But senior management hung on to status-quo, focusing on mainframes, middleware, and once high margin hardware business.
There is little to no career development. Most people are "tenured" are staying to retire. Executives are compensated based on earnings per share. This inherently steer them to cost cut in places where it matters most: high quality hires, education, and technology investment. Short-term gains and complacency lead to long-term decline of the company. Most executives are just waiting for retirement, leaving a shadow of a company that IBM once was.
Advice to Management: Challenge the status quo. The status quo is no longer viable. Change executive compensation and bonus structure on customer results. It will make them do the right thing for the clients and the company.
There are still a lot of IBMers who bleed blue. Cultivate them to be your future leaders. Focus on your good people. Don't give them a reason to join your competitors. Let go of the low-performers/those just waiting to retire and collect pension. They bring the quality down.
Pros: The people one works with are generally good people. Your manager, his manager and your colleagues are usually supportive and want what's best for you (personally and professionally). IBM is a good stepping stone if you like to get your promotions and/or raises by jumping from one company to the next.
Cons: Your career is at the mercy of people who don't know anything about you or what you do. You can get a ringing endorsement from your manager and his manager but it counts for nothing unless you can convince a third party you've never worked with (or even met) that you are as qualified as your boss says you are.
IBM will pay a new hire more than a long-time employee even if they are being given the same job and responsibilities.
Advice to Management: Trust your managers when it comes to their directs. They are the ones who know who are and are not qualified. For a company that prides itself on its number of patents, our overall management is deathly afraid of thinking outside the box.
Pros: Plenty of self-learning opportunities with access to cutting edge technologies. Technical leadership team like the fellows and distinguished engineers are helpful and willing to mentor and help with career development for the developers. Good place for junior developers to start off their career if you are with the right team.
Cons: Many of the VPs running the business have been at IBM for too long. Cannot provide product vision or leadership. Can only focus on making numbers. Lack of understanding for the product management function (is it a mini GM, outbound marketing or product designer roles?). No product managers can be good at all functions. Lack of access to new tools. IBM's internal built products like Rational are not suited for agile development.
Advice to Management: Bring in people from outside who can provide different perspectives. Product managers need to be more nimble and adapt to changing market conditions. Evaluate dated practices that no longer makes sense like forcing translations into languages where you don't even have a market presence.
Pros: Great people from all over the world and from many different companies creating a great opportunity to learn. Opportunities to work almost anywhere in the world. Still not bad healthcare and a fair 401k.
Cons: The Bad: The pay is higher at other IT companies. The Ugly: They think nothing of expecting you to work 70 hours a week, month after month, and of course there is no compensation for it. Then when you do get a vacation there is no backup so when you get back you need to step it up to 80 hours a week for a while to get caught up.
Advice to Management: IBM is all about the $ and yet the stock is anything but impressive. Perhaps creating a better environment for the employees would enable them to better help you in correcting the problem you have created by being nearsighted to the $?
Pros: IBM is making a deep investment in the data security portfolio. Lots of solid acquisitions (QRadar, Big Fix, Resilient Systems). Compensation for sales position is competitive. Deep penetration into the Fortune 500 with relationships at the very top make large enterprise sales possible. It is possible to reinvent your career at IBM. IBM enables and encourages this.
Cons: Channel sales are a mess. The programs are difficult to understand and even more difficult for business partners to get paid on. Most VARs in the security space don't work with IBM. This is a huge opportunity missed.
The culture is dated. Too many people who have been at IBM for way too long with dated, unproductive practices. Meetings that result in meetings so they can schedule more meetings.
Healthcare is very expensive for such a large company.
Advice to Management: Fix the channel. Cut non-essential sales roles. Keep investing in quality security software solutions.
Pros: Work at home if you support internal IBM (IBM Global Account - IGA).
Cons: No raises, no bonus, average salaries, 401k match paid at end of year, match cut from 6% to 3% for some divisions in 2016, no pension (eliminated 2008), frequent layoffs (1Q of every year), no retirement benefits, steady movement of US jobs to lower-cost countries (India, China, Brazil, Malaysia, Easter Europe), severance package cut in 2016, high utilization targets for consultants, no training budgets, most all training is on-line and must be taken on your own time — 40 hours a year.
Company has had 15 straight quarter of declining revenues and stock price is off 40%. It will be many years before things get back on the upswing and all the employee benefits lost will likely never return (unless you are at top executive level; multi-million dollar salaries, raises and bonus still abound).
Advice to Management: Spend some of the $8 billion in cash you have on the employees in the form of raises and bonus. If Ginny can have a $4.5 million dollar bonus, why can't the rest of the employees have a share.
Advice to Management: Not so much management advice, but more so to those interested in IBM. It's somewhat difficult to provide a very clear review of IBM due to its size. There are too many different business units and organizations where one can land that will have drastic impacts on what could be conveyed here. I've tried to be org-neutral in this review. At the time of writing, the hottest places to be are in anything Watson and in IBM Cloud by way of Bluemix. Very cutting edge work going on in those places, and the opportunity for broader industry impact are absolutely huge. Though, with that, I would venture to say that the work/life balance for someone in those areas (or any DevOps as well) would suffer a bit compared to others.
Pros: Huge choice of jobs and locations, easy to hide in mid-performance zombie land if you're so inclined. You'll see their marketing on the TV at the Masters.
Cons: Getting promotions and raises is all about who you know. All senior management positions go to long-term IBMers with micro-management styles honed in the 1970s. Newly acquired companies are forced to use existing IBM systems that 100% of the time don't work for the newly-acquired businesses. You really are a number; layoffs are regular and dehumanizing. Senior management does not care about people at all.
Advice to Management: Get rid of the old guard; listen to the new hires that come in with acquisitions. In almost all cases they will know more about their businesses than senior IBMers who are brought in to "fix" the business. Figure out how to give autonomy to the line managers so they have a shot at creating some decent engagement from their teams.
Pros: Salary and benefits. Being able to work from home is nice.
Cons: The company lacks leadership, guidance under the current CEO. It's a fend for yourself type environment instead of a team building, help the last man standing type place. Managers only look out for themselves and don't create a cohesive team environment.
Advice to Management: Managers need to start building a team foundation where everyone thrives with new skills and cross training. All the reorganizations of certain groups truly drive a wedge between team growth. The reorgs create uncertainty. People are scared for their jobs with all the layoffs happening. Bad morale for the last 10 years has created a horrible work environment.
Advice to Management:
Advice to Management: This is advice to corporate America: If you continue to offshore all of the jobs overseas, there will be nothing left in the US. Eventually, the offshore resources will demand higher compensation and it will not be worthwhile to offshore the work any longer. Where there be a talent pool left her in the US?
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