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Highlights—September 13, 2014

  • Seeking Alpha:

    Maybe The Stock Market Isn't So Dumb - IBM Reaps A 6% Loss On A $156 Billion Investment. By Peter E. Greulich. Excerpts: Since IBM last split its stock in May of 1999, it has reduced the number of outstanding shares by 46% - from 1.8 billion shares (split adjusted) at the end of 1998 to just less than 1 billion shares in June 2014. As shown on the chart below, this started with a share repurchase of $7 billion in 1999, has averaged more than $10 billion per year, peaked with almost $19 billion in 2007, and resulted in an overall IBM investment of $156 billion over fifteen years. This has all been done as IBM says in its annual reports since 2007 to "return value to the shareholders by reducing shares outstanding." Has it?

    Using IBM's 1999 market value as the yardstick to measure return on investment, the answer would seem to be a resounding no; IBM's market value is 6% less. The answer would seem to be that these repurchases are keeping IBM's stock from - to use a layman's descriptive but applicable term - tanking. ...

    History has failed to evaluate the effects of IBM's cultural change. The watershed event that signaled the end of IBM's culture - to most IBM employee-owners of the time - was July 1, 1999. On that day, Louis V. Gerstner could have offered a choice between the existing defined benefit pension plan or his proposed cash balance plan. Instead he set off the cultural equivalent of a 9.5 magnitude earthquake that sent a tsunami of employee-owner opinions against his new cultural walls: former Gerstner Guerrillas turned to guerrilla warfare to fight him; employee-owners realized his new culture did not support right over might, and IBM was no longer a corporate home. Instead of fixing his problem in the last few years as IBM's chairman of the board - an individual with the most Wall Street credibility since Watson Jr. - he spent his last days at the corporation writing a book to proclaim not only financial but cultural success. IBM's 20th century culture died in 1999. History should record it as so.

    IBM's cultural changes since 1999 have affected the trust and confidence - the true determinants of market value - of IBM's four investors: customers, employees, shareholders and society. IBM Chief Executive Officers have been compensating ever since with share buybacks. This meets the classic definition of insanity - doing the same thing over and over again and expecting a different result. ...

    A myth takes flight - earnings-per-share roadmaps. But now, IBM's 21st century leadership has replaced an eight-decade, believe-in-each-other, full-employment tradition founded in strong business practices with an earnings-per-share myth - a two-decade long, resource-action insanity. It is a myth based on short-term, shareholder-only interests; buttressed with earnings-per-share talking points. In this company, the short-term shareholder, CEO and board of directors profit at the expense of long-term shareholders, customers, employees and society. And it is having its cultural effect: it is a practice that even the best-of-the-best fear; it is a quarterly constant that only spares those with the right last name or high-level connection; it is a destroyer of lives, not because of poor performance, but because a person is in the wrong place at the wrong time.

    IBM's culture is now a Jim Collins' ruthless culture - hacking and cutting, or wantonly firing people without any thoughtful consideration. ...

    For almost two decades, IBM has been without any cultural controls or an experienced leader that spoke and acted as a fellow employee-owner. When will IBM's 21st century culture again be strong enough to span the coming century's greatest economic recessions, steepest stock market declines and poor leadership choices?

    When it, once again, has a CEO who wanders amongst his or her fellow employee-owners, establishes cultural controls that last beyond their time in power, and has the humility to say of today's myths, "I am ashamed." Then the purpose behind a century-old IBM tradition will again be understood, and trust and confidence in IBM's leadership restored.

    Then IBM's revenue growth and market value will recover - without buybacks.

    Selected reader comments follow:

    • Being a new generation former IBMer I can attest that the changes go far from being a change in business strategy, shifting away from selling commodities to trying to provide true value to the customer.

      IBM is no longer a company which values creativity, critical thinking and passion to deliver results to the client. It is sad to see how nowadays anyone acting professionally in IBM is nothing but a rare occurrence and the few people you find eventually leave the company for better opportunities.

      "Think" is not a word that is encouraged as a personal motto to solve problems or deliver value, it is slowly changing more into group thinking, with executives that couldn't care less about their employees, let alone their customers.

    • "It is a catastrophe." Most accurate quote of the day! I was with IBM for over two decades and watched the catastrophe unfold from within. Witnessed some very talented folks get laid off (RA'd) for no other reason than some bean-counter in Somers or Armonk had 'finalized' their latest layoff spreadsheet.

      To get a glimpse of how the 'new' executive group-think works relative to how Peter describes the out-of-touch behaviour, one only needs to understand the 'executive claw-back' program. Each year the employee bonus pool for the rank and file, ever shrinking, was established. Then the 1st line managers were 'encouraged' to withhold a portion of that bucket of money and transfer it back into the executive bonus pool. How's that for staff appreciation?

      I eventually had enough of the catastrophe and exited stage left. Now the only interaction I have with IBM is getting on the quarterly earnings call and listening to the CFO use IBM-speak to duck, dodge and fake.

    • Just a quick note on IBM's 400,000 employees. 79% of them are overseas now. It is no longer even remotely an American company. Not that that matters to investors but it is something to think about. How they get contracts with the federal government with those kinds of espionage opportunities lurking in the background blows my mind. I think they should be banned from federal work completely.
    • Early in my IBM career (28 years ago) While working in Atlanta My manager at the time and I went for a walk and he confided in me he was taking the "A" train out. I asked him why he said because he could not go through laying off any more in his department. He had already cut all the low performers , all he was surrounded with in his department was high performing individuals yet he was being asked to take 1 performers and rank them on a bell curve so he would have 2's and 3's so they could RA the 3's.

      He said , he just couldn't do it anymore. I had a lot of respect for him. He was tearing up as we ended our walk because he was going to miss IBM , he had been hired right out of school and worked his way up through the ranks from just a guy working on the line to a first line manager with a high performing department.

      The bean counters just crushed his soul.

      Even today that are squeezing blood from a stone , they have totally revamped their 401k match to screw the employees one more time. I still recall when they tried to take my Sky Miles saying they were corporate owned. It took the airline to step in and tell them their contract was with the individual not the company.

      Individual—there is a word not heard anymore in the halls of IBM as in "Respect for the individual". I exited stage left after 24 1/2 years (also working my way up through the ranks). As a manger, I saw a lot of changes through the years (none for the better).

      Unlike the manager I had worked for so many years earlier, I shed no tear.

      I quickly moved on and am now finishing up my career (approaching retirement ) with a dynamic company who respects me and recognizes the value I bring to their team. As a manager of a team of some very dynamic young adults most right out of college, when IBM is mentioned... their response usually is they would never want to work for IBM, they're not innovative enough. Within the halls of IBM there is a toxic stench. Financial engineering is the only innovation Rometty has.

      Share buybacks are not going to fix the culture within IBM today.

      Sometimes even Buffett gets one wrong.

    • Outstanding article Peter which focuses on the key points of IBM's failure . Managing the stock rather than the company . IBM's main focuses appears to be that of holding up the stock while its directors make large profits from their option grants.
    • The current exec board do not stand a snowball's chance in hell of turning this company around while the majority of the workforce is disenchanted and disillusioned with the company. The morale is appalling. Truly.

      And while Armonk allows people such as Jonathan Ferrar, whom a High Court Judge described as: "I did not find Mr Ferrar to be an impressive witness. In certain respects, I found his evidence unreliable and he was, on any view I think, inappropriately defensive. He was prepared to downplay his involvement in Project Whisper (see 1109ff below) and his understanding of it when, in my assessment, he knew that it was more than contingency planning for hypothetical options as he had sought to explain his understanding of the project.

      In his original evidence, his summons to the US to take part in the Project Whisper meeting from 15 to 19 October 2008 was not mentioned; nor were the slides for the "work-plan" to reduce DB liabilities under Project Sapporo mentioned let alone disclosed. He failed to disclose to the Trustee board of which he was a member, material which would have been germane to its consideration of Project Waltz."

      As recorded in: IBM UK Holdings Ltd & Anor v Dalgleish & Ors [2014] EWHC 980 (Ch) (04 April 2014) URL: http://bit.ly/1uljP4d

      It just won't happen no matter what financial engineering they choose to employ.

      • Interesting & chilling link on the UK pension court case. I just read most of it. It clearly shows that the top corporate priority in 2009 was making the 2010 EPS commitment. (IBM clearly called it a "commitment" to stockholders.) One would expect the same focus during the next year.
    • Aside from the emotional arguments I just don't see what IBM has in terms of competitive advantage that will make it a great company again. The old maxim that no one every got fired for buying IBM is dead. IBM is a software and service company but is dominant in neither. It has a huge core business but that business is going nowhere. It has strong competitors in service, each with its market niches, and software companies like Oracle and Microsoft that are not in the least intimidated by Big Blue. Because it is a software and services company it has limited capital expenditures and throws off a lot of cash. As someone pointed out, the CEO and Board allocate investment and buying back stock is an admission that you have nothing more productive to invest in. Not even acquisitions of new technology.

      Tech companies are best run by tech people who understand the industry. IBM used the same Jack Welsh philosophies that almost killed GE. Fire poor performers and use bell curves when you get to the good people. Microsoft wisely got rid of that practice before it destroyed the company. IBM seems to have retrenched itself in what will become dinosaur businesses with limited competitive advantage. Cloud services, for example, are not rocket science. IBM is selling below what I sold it for some time ago, despite a bull market and buy backs. There are clearly better stocks in which to invest your money.

    • To the Author's point - the company has gone from leaders who were in touch with their people (who are on the front lines) to leading by spreadsheet and data. IBM is drinking their own kool-aid in thinking that they can make any decision as long as they have the right data. Everything is black and white right? Data is an enabler, but insightful leadership comes from listening to customers and employees, NOT by treating them as a data point.
  • Seeking Alpha:

    The Impact Chinese Disdain For American Tech Is Having On IBM. By Jason Orestes. Excerpts: IBM Corp. has had an expansive reach into China's corporate IT world for over 30 years, with its heaviest imprint most notably made in its e-commerce and financial institutions. However, China has recently begun to actively urge both state-owned and private entities to move away from IBM servers and services, resulting in domestic rivals winning contracts in disproportionate fashion to Big Blue. ...

    IBM is in the midst of nine consecutive quarters of revenue decline. China is not helping matters, with revenue within the region falling a precipitous twenty percent or greater over the last two quarters prior to its most recent Q2 2014 earnings; in which losses in the Asia-Pacific region showed signs of improving, with a 9% attrition rate. Its overall revenue has echoed this decline, albeit in less significant fashion, as it "beat" estimates last quarter, with a decline of 2% total revenue this past quarter. ...

    Conclusion: Granted, there is far more to an investment thesis for IBM than its China market alone, however, that isn't exactly the most auspicious-looking situation either. IBM was the only company in the Dow to fall in 2013. Any bottom line improvement experienced has been largely via layoffs, exceptionally low tax rates, and share buybacks to yield inflated per share results. This is not a particularly quality way to increase earnings, and analysts and Wall Street have taken notice, allowing the share price to largely wallow for the last two years.

  • ZD-Net:

    Mayo Clinic works with IBM’s Watson on clinical trials. Being treated for major illness is often a race against time, so the Mayo Clinic has recruited IBM’s Watson supercomputer to help speed the processing of thousands of medical records. By Colin Barker. Excerpts: At any given time, the Minnesota-based Mayo Clinic, one of the world’s leading medical centres for treating cancer and heart disease, is conducting more than 8,000 human studies as well as being involved in up to 170,000 more that are ongoing worldwide.

    Clinical trials provide patients with access to new and emerging treatments, but matching patients with trials is one of the more difficult parts of clinical research.

    This is a huge task that until now has typically been carried out manually by thousands of people processing records around the world. Now the clinic is to get some help from IBM’s Watson supercomputer, which will use its cognitive computing capability to sift through thousands of pages of information available about Mayo clinical trials in a fraction of the time.

  • Received in a private e-mail:

    I was wondering if you have heard about their new approach to saving money? Rather than lay off workers via a "resource action" they're now forcing certain employees into a one day a week education class, for 6 months, while cutting their pay by 10% for that duration. In essence reducing pay by a significant amount, in the hopes that the employees won't be able to sustain their responsibilities with that pay and decide to quit for work elsewhere, exempting IBM from letting them go and have to pay severance.

    I was shocked to be added to this list, as I'm one of the best in my area, I've been praised every year since joining IBM, and in 2006 was given awards for being in IBM's top 10% of it's employees. I've grown each year but since 2009 IBM hasn't given raises or bonuses to most of its employees (in the USA), because they have a forced rating system, that allows only a fraction of pay increases per dept.

    For example, if you have 10 employees, you are allowed to rate only 1 or 2 with a rating of 1 (1 being the best and 3 being the worst). You must have at least four 2's and you must have at least four 3's. 2's and 3's don't get merit increases, and 3's are the first to get let go. I've always gotten 2+ (which is almost a 1 but not quite enough to get a raise).

    I do ongoing education every year and complete more training to advance my knowledge of my area more than most, yet I'm now forced into this new training and forced to take a 10% pay cut.

    Just more shady stuff from IBM.

  • Glassdoor:

    Top Companies for Culture & Values. Excerpt: Want to work for a company where employees are satisfied with the culture and values? Glassdoor has announced its report of the Top 25 Companies for Culture & Values, based on workplace insights shared by the people who know companies best — the employees. The following companies stand out for high culture & values ratings and insightful reviews.
  • Glassdoor IBM reviews. Selected reviews follow:
    • “Home environment company with great flexibility”

      Former Employee - Technical Service Specialist in Noida (India). I worked at IBM full-time for less than a year. Pros: True result of employ devotion to work has been seen. Most managers truly helps their employs to move to further dream tracks and support their growth. Cons: Never faced one. I am proud to say that. Advice: Work load management is good but still considering new ideas even from fresher needs to understand, It helps a lot for avoiding rework. They are fresh minds, always thinks smarter. That's punchline of IBM.
    • “A fantastic company now facing challenges”

      Former Employee - Anonymous Employee. I worked at IBM full-time for more than 10 years.

      Pros: Excellent working conditions with flexible schedules, leaves of absence when requested and flexible day to day schedules. Strong BYOD support programs. Solid education and training opportunities and internal networking collaboration tools. Quality of colleagues unprecedented in the industry. Excellent research scientists.

      Cons: Work/life balance a challenge due to heavy workloads and expectations. Limited potential for promotion especially for woman. Maniacal focus on EPS earnings per share at the expense of investing in new offerings that clients are interested in, improved delivery capabilities and overall solutions to improve customer satisfaction has unfortunately reduced the ability for employees to generate new revenues. This has impacted employee morale and the corporate culture.

      Advice: Pursue a balanced set of business metrics with EPS in the mix.

    • “Big Blue, It No Like You”

      Former Employee - Consultant in Rochester, MN. I worked at IBM as a contractor for more than a year. Pros: Work-life balance, friendly co-workers, flexible schedule, having a hard time reaching the 20 word minimum so. Cons: No upward mobility, lack of compensation, monotonous work environment, unethical labor practices, a surfeit of management. Advice: Y'all need Jesus
    • “Strange Trip”

      Former Employee - Senior Managing Consultant in Chicago, IL. I worked at IBM full-time for more than a year. Pros: Smart people; great benefits; incredible knowledge base in-house. Cons: Company is throwing everyone to the alligators in order to hit roadmap 2015 earnings target. Major brain drain of late—which is sad.
    • “A lot of indoctrination and dishonesty”

      Former Employee - Cyber Security in Washington, DC. I worked at IBM full-time for more than 5 years.

      Pros: If you are coming, as a seasoned professional, do bargain and max out your offer and the sign-up bonus, You can get a very, very competitive offer when you just come aboard.

      If you play by the rules, don't drop any balls, and follow the crowd, you will have job security and peace of mind.

      Cons: There are no real raises after you are hired. There will be some symbolic raises and bonuses, but they are not worth mentioning. Be ready to work 44 hours a week or more, and get peanuts in return for extra hours.

      I have seen companies that really strive to develop their employees and facilitate educational endeavors. At IBM, you have to do it in your own personal time and at your own expense. No conference attendance. No free access to even IBM-owned tools that you would love to master. After 10 years with IBM, you still won't know what Rational tools do, even if you really would love to know. Yeah, you can take an online course about Rational stuff, but you won't have access to any simulation environment or the actual tools!

      You will come in a professional expert in the latest technology and tools, and in 2-3 years you will have no knowledge of current stuff and won't even know about the latest tools.

      Also, they spend about 40% more time of various compliance mandatory educational courses that majority of employees don't really understand and are not interested in knowing. In private, they despise "those nonsense courses".

      There will be constant drumbeat about integrity and honesty. They will offer a fairly low billable rate to the client, and then will saddle that client with a 44-hour base week, 20+ part-time support employees (that will cause headaches to PM and overruns to the project), and an over-bloated team of 20 guys for the job that can be done by 10. But...who got ever fired for hiring IBM?

      Advice: Read the Cons and consider.

    • “Not the great company it used to be”

      Current Employee - Senior Project Manager in London, England (UK). I have been working at IBM full-time for more than 10 years.

      Pros: Opportunities, variety of roles. Usually very good people to work with on projects. When I joined 19 years I thought this was an amazing company with great inspirational leaders that cared and invested in people.

      Cons: Motivational leadership is non existent compared to the past. The leaders of the business today just shout at people to do more and reduce costs. People are costs that need to be removed. Strategy changing all the time; no clear direction. Benefits are poor and getting worse.

      Advice: Stop cutting costs to focus on EPS which only benefits the top managers with large share options. Consider investing in the people and the business to grow the revenue.

    • “Good company for US employees, disappointing for international execs”

      Former Employee - Director. I worked at IBM full-time for more than 3 years.

      Pros: Good opportunities to move across the company, network, strong culture of mentoring, good executive packages. Good work-life balance if you give up on a career and just plan to cruise along.

      Cons: Close to impossible to rise up executive ranks when not based in the USA. Culture of cronyism and yes-people. Individual "PBC" ratings really destroy team dynamics and actual good leadership, whereas "networking" and "getting visibility" are the way to promotion. Very poor work/life balance for higher up execs.

      Advice: Leverage the best people across all countries, not just US, by changing international reporting rules. Change the TBDM & PBC process that are actually counter-productive (for example, no leaders are rewarded for building great teams). Refocus on the customer. Leverage best practices from acquisitions instead of trying to force fit them into IBM-land and demotivating their top performers.

    • “Boston Area IBM Software Group”

      Former Employee - Anonymous Employee in Boston, MA. I worked at IBM full-time for more than 10 years.

      Pros: I am a twelve year veteran of IBM who came to the company via an acquisition. I worked in the Boston area exclusively with occasional trips to New York and offices that were in Dublin. I was part of the company's software group and spent time as people manager and individual contributor.

      IBM offered a competitive salary initially and a very robust benefits package to employees. They also offered many opportunities for skills enhancement through various education offerings both in terms of internally offered courses or reimbursement. Movement within the company to new opportunities was another attractive feature, but not one that I personally used in my time there. Telecommuting was an option for many and I was able to take advantage of this policy 2 days per week which helped ease the sting of my 90 mile daily round trip commute.

      The company is mature, has many established systems, and a specific way of doing things. People used to working in an environment with a very defined set of responsibilities and processes would do well.

      Cons: IBM desires a high performance culture and purports to pay for that performance. While one can do well initially on base salary, performance is by no means a guarantee of reward. A key factor in leaving the company was lack of reward (of any sort) despite very good to excellent performance reviews (as experienced personally and also experienced by my peers). At my time of employment stock awards were suspended as a means of rewarding our best employees leaving managers with little to work with other than a shrinking bonus pool to offer top employees. Often the result would be essentially telling the employee that despite the business unit doing well their reward for performance would simply be continued employment (this was something experienced prior to the recession).

      Financial pressures on IBM due to the cost of health care also had an effect on the total compensation package. With each year available healthcare plans changed resulting in often having to switch doctors, higher deductibles and less coverage. While the overall coverage offered was still generally better than many other companies, it became a challenge to manage the yearly changes required of moving to a new health care provider's network (transfer of records, finding new doctors in my area, ensuring I had the right coverage for my family, etc...). More than once I had to battle the company bureaucracy to pay for federally mandated coverage.

      Work-life balance became a work-life blend. While policies like telecommuting were in place at the end of my tenure at IBM, executives were actively redefining what work-life meant at IBM. The end result was more of a blending of work and life rather than maintaining any separation. The option to telecommute became more restrictive with the building of a new campus and an expectation of being connected to work, even when on paid time off, became the norm.

      As a mature and large company IBM is process driven to a fault. Innovation and creativity are stifled leading IBM to often fail in recognizing a business opportunity or industry trend (need an example? then consider their delayed entry to cloud computing).

      Advice: The conflict between claiming to have pro work-life balance policies and what was actually happening ultimately led to my decision to leave. The lack of any award system for high performers was also discouraging especially in quarters where the company and business unit did well. Executive face time with employees is insufficient. I can honestly say that my last two general managers are unmemorable and I can not even recall their names. The only thing I can remember is that they wanted their offices remodeled to reflect their status.

    • “I work with good people, but unfortunately the company is mostly driven by meeting EPS goals.”

      Current Employee - Managing Consultant in Arlington, VA. I have been working at IBM full-time for more than 3 years.

      Pros: Very smart employees; good for gaining leadership experience; company still has a lot of prestige (looks good on resume); Competitive starting salary and benefits.

      Cons: Slow and tedious promotion process. (You essentially have to write 16 essays on why you deserve a promotion and this is with the new "less cumbersome" Go Organic process). Executive pay is tied to EPS Goals and any failure to meet those goals rolls down on employees and affects compensation. Company changed 401(k) matching so that match is paid in lump sum to 401(k) at the end of the year. You miss out on investment growth throughout the year and if you leave before 15 December, you don't receive any match for the entire year.

      Advice: Stop being a slave to EPS goals and invest in your people, who are your most valuable assets.

    • “Learn a lot, work a lot, expect low compensation”

      Current Employee - Security Solutions Customer Support in Atlanta, GA. I have been working at IBM full-time for less than a year. Pros: Great place to learn new technologies, company invests a lot in training employees appropriately. Cons: No room to grow, no career opportunities and advancement; they pitch that after one year you can move on to other roles within the company, but the opportunities are not there, and usually movements are lateral with no pay increase. Advice: None.
    • “I worked on a wide variety of technologies.”

      Former Employee - Anonymous Employee. I worked at IBM full-time for more than 10 years. Pros: Working in the field there was a certain amount of independence. The personal contact with our customers was great. The benefits were above average. Cons: Promotions and pay increases did not exist. Direct management has a tendency to micro-manage. We were frequently set up to fail. Advice: Get out into the field for some real world experience.
    • “Difficult environment but okay if you know why you're there”

      Former Employee - Anonymous Employee. I worked at IBM full-time for more than 10 years.

      Pros: Opportunity to learn about client issues and priorities. Decent pay and benefits.

      Cons: Political nightmare. Annual risk of layoff independent of the quality of your work.

      Advice: Eliminate layers of middle management and executives; prioritize the employee stakeholder; eliminate annual layoffs and leave that lever for real emergencies every decade or two; reinvest in technology so that offerings might be competitive.

    • “Great benefits, flexible work schedule”

      Current Employee - Senior Project Manager in Research Triangle Park, NC. I have been working at IBM full-time for more than 10 years.

      Pros: The flexible work schedule and work-at-home options are great for work/life balance, and the benefits are great. Excellent opportunities for education and career growth. Working with people all over the world keeps things interesting.

      Cons: Long hours, an almost 'on demand' availability are expected if you want to move up—you're never really off work.

      Advice: Ultra competitive environment can make reviews seem very subjective—it doesn't seem to matter how stellar you are if someone else in your department is working on a higher profile project. Reviews and ratings should be based on the individual's performance.

    • “Disappointing”

      Former Employee - Intern in Poughkeepsie, NY. I worked at IBM full-time for less than a year. Pros: Research is still very strong. Work/life balance, but only because there doesn't seem to be real pressure on pushing products to production. Cons: Old work culture. Benefits and pay are not competitive. Lack top talent. Employees do not seem optimistic about future. Employees have a lack of motivation. Advice: Need to make dramatic changes.
    • “More and more troubling by the day”

      Current Employee - Anonymous Employee. I have been working at IBM full-time for more than 10 years.

      Pros: There have been plenty of chances for personal growth, as long as you grab hold and run with them. Many work-from-home opportunities if that is your thing. Customers genuinely appreciate the expertise you bring to the table.

      Cons: The company is very bureaucratic overall, and generally run by the accountants for the accountants. The "temporary" spending freezes on practically everything have become "permanent" without avenues for exceptions for things you really do need to do your job. First line management has had most if not all decision making privileges taken away from them.

      Advice: Focus on growing the business and increasing profits through top-line revenue growth. You can't keep cost-cutting your way to higher profits, and share buyback financial engineering tricks are going to eventually run out.

    •  

      “Various Management Roles”

      Current Employee - IT Manager in Dublin (Ireland). I have been working at IBM full-time for more than 5 years.

      Pros: IBM is a large company with teams working in all industries. Through IBM I got the chance to work in a variety of roles and industry. This experience has been invaluable.

      Cons: IBM is a very, very big company and in my believe too big. Based on decision that are often made thousand of miles away by management that are not even aware you exist, key aspects of you employment are decided. Everything from whether you get a pay increase in a given year to who holds the key to the stationary cupboard is influenced by the business performance in countries. That amount of times I heard "sorry but the UK didn't perform last year" would be laughable if it didn't have such a big impact on my ability to do my job.

      Advice: Countries need to have more independence and staff needed to be better rewarded. The current mindset is "quality, once it doesn't cost too much"; this needs to change to a focus rewarding and encouraging achievement. Better employees make a better company.

    • “Great company to start your career”

      Current Employee - Senior Consultant in Herndon, VA. I have been working at IBM full-time for more than 5 years. Pros: Lots of resources to learn. Great people. Flexible hours, depending on your project. Exposure to different projects and experiences. Cons: Hard to move up in a big company. No raises at all.
    • “IBM still thinks its name means something more than it really does”

      Former Employee - Security Architect in Chicago, IL. I worked at IBM full-time for more than a year.

      Pros: Salary was good. You pretty much work entirely from home or a clients site.

      Cons:

      • Turn over is a very big problem, at least in the business unit I worked in.
      • In two years went through six direct managers and really only talked to them once a month, maybe. You are really left on your own to manage most aspects of your job.
      • As an employee, getting support for IBM's own products is very difficult. I found it easier to have the clients ask IBM support for help on issues than trying to go through the IBM channels.
      • No training, you are expected to learn everything on the job.
      • As a consultant, there is no real career growth.
    • “Big Blue is Hip and exciting”

      Current Employee - Senior Digital Marketing Professional in Atlanta, GA. I have been working at IBM full-time for more than 10 years.

      Pros: In 14 years I have had the ability to design a new career twist every year. I keep on the cutting edge and have the opportunity to work in a socially collaborative global organization. I brought in big data and analytics skills. I got to apply them to small and very large scale projects. When digital came along I was an early adopter and evangelist. Every new turn brings something new and challenging. We are not the old Big Blue, we are enthusiastic about changing the world in new ways, and I have been delighted to be a part of it. Where else would I work in a culture like this!

      Cons: They are constantly reducing the workforce in North America and outsourcing to China, India, Romania and Latin America. While this brings a global perspective it make you feel uneasy. Great people have left because of the behaviors of building a globalized workforce.

      Advice: We know our values, we work collaboratively. In a company that is always changing and always growing, it would be nice to know when you are safe from being cut. Even high respect and expertise won't save you. Build methods of in person team building below the senior executive level, and this workforce can innovate!

    • “Not innovating within the software divisions.”

      Former Employee - Program Director in San Jose, CA. I worked at IBM full-time for more than a year. Pros: Work/life balance was manageable. Cons: Job was highly political. There was more work internally selling than actually executing. Advice: Fire some lawyers and eliminate a layer or two of management.
  • Alliance for Retired Americans Friday Alerts. This weeks headlines include:
    • Seniors Increasingly Struggle to Pay Back Educational Loans
    • Latinos for a Secure Retirement Offers Advice to Hispanic Seniors at Summit
    • Sha Na Na’s Jon Bauman (Bowzer) Campaigns for U.S. House Candidate Kevin Strouse John Bauman
    • Sen. Jeanne Shaheen to Face Scott Brown in New Hampshire Senate Race
    • Ohio Alliance holds its Convention
    • Fiesta Speaks at Colorado Alliance Convention
    • Alliance Member Katie Jordan wins Caring Across Generations Contest
    • “Just Care” Offers Health Care and Retirement Advice, is like BuzzFeed for Boomers
  • The Fiscal Times, courtesy of Yahoo! Finance:

    Why Employers Are to Blame for the ‘Skills Gap’. By Rob Garver. Excerpts: Complaints about a “skills gap” that make it difficult for employers to fill open positions have become commonplace in discussions about the economy and unemployment levels. Workers, the story goes, simply don’t have the educational background or professional training for the kinds of jobs that exist in today’s knowledge economy. ...

    The trouble is that economists have become increasingly skeptical about the skills gap narrative, not least of all because of the absence of real wage inflation. After all, if skilled workers were in high demand but short supply, the laws of economics suggest they would be able to demand, and get, higher wages.

    A new paper by Peter Cappelli, a professor at the Wharton School’s Center for Human Resources, should help solve the puzzle of the skills gap. In a comprehensive survey of the literature on the subject, Cappelli reports little hard evidence to support the theory. He notes that when it comes to workers’ skills, the most pervasive problem in the U.S. right now is that many individuals are working jobs for which they are overqualified.

    He suggests that what is really driving the discussion about worker skills is a combination of employers seeking to hold down payroll costs by keeping wages as low as possible – and a longer-term effort to transfer responsibility for training workers from employers themselves to the taxpayer.

  • Associated Press, courtesy of Yahoo! Finance:

    Not so golden: Wealth gap lasting into retirement. Not-quite-golden years: As traditional pensions fade, wealth gap widening into retirement. By Michael Hill. Excerpts: With traditional pensions becoming rarer in the private sector, and lower-paid workers less likely to have access to an employer-provided retirement plan, there is a growing gulf in the retirement savings of the wealthy and people with lower incomes. That, experts say, could exacerbate an already widening wealth gap across America, as more than 70 million baby boomers head into retirement — many of them with skimpy reserves.

    Because retirement savings are ever more closely tied to income, the widening gulf between the rich and those with less promises to continue — and perhaps worsen — after workers reach retirement age. That is likely to put pressure on government services and lead even more Americans to work well into what is supposed to be their golden years. ...

    The days of retirees being able to count on set monthly payments from pensions continue to fade among non-government workers. Only 13 percent of private-sector workers now participate in "defined benefit" plans, compared with a third of such workers in 1985. They've been eclipsed by "defined contribution" plans, often 401(k)s, in which employers match a portion of employee contributions.

  • Washington Post:

    Nearly a quarter of Fortune 500 companies still offer pensions to new hires. By Jonnelle Marte. Excerpts: The most common type of defined benefit plan offered to new hires is a hybrid pension, which is a combination of 401(k) plan and a cash balance fund and is typically less generous than a traditional pension. Fourteen percent of the companies studied offered hybrid plans in 2013, unchanged from the previous year.

    Only 7 percent of employers studied offer new employees traditional pensions, which pay out a certain amount at retirement based on a worker’s pay and how long they stayed with a company.

    So where can you still get a job with a pension? The plans are more prevalent in some industries versus others. For instance, defined benefit plans are still offered by most large insurance and utility companies, according to Towers Watson. But the plans are nonexistent among aerospace, construction and tourism companies, which only offer defined contribution plans, such as a 401(k) plan.

    Utilities companies may have been able to preserve their retirement plans because they tend to be heavily unionized, Glickstein says.

  • Washington Post:

    Yes, you are paying a lot more for your employer health plan than you used to. By Jason Millman. Excerpts: It's not your imagination. If you have employer health insurance, you're probably paying more and more out of your own pocket. ...

    While premiums in employer plans have grown 26 percent in the past five years, that's been outpaced over the same time by the 47 percent rise in the average deductible — the amount of care a worker has to pay for before insurance kicks in.

    In 2014, 80 percent of people covered by employee plans faced an average annual deductible of $1,217, compared to $826 in 2009. About 41 percent of all companies have an average deductible of at least $1,000, which is a big jump from 10 percent of firms in 2006. And 18 percent of firms have average deductibles of at least $2,000, which is up from just 3 percent in 2006.

New on the Alliance@IBM Site

Job Cut Reports

  • Comment 09/08/14:

    Talking to an IBMer (SWG), they tell me all previously approved expenditure is canceled for Q3 and must be entered for approval again... IBM cut the fat a long time ago. Now they've gone through bone and are harvesting vital organs. All to hit a number that is supposed to be an indicator, not a target. Gross. -quitter-
  • Comment 09/09/14:

    One thing that the Alliance needs to consider is that there are a great number of current IBMers who are conservative. I am talking about the home-school parent, Bible believing, anti-government, anti-union types who are willing to take their chances and drink the blue Kool-Aid. I left IBM after 8 years. Best decision I made. No more PBCs, no more games, no more lies. -Martin-

    Alliance reply: We *have* considered the multi-political and religious beliefs of IBMers, all over the US and the world since we began. Our former treasurer made no bones about being a conservative. BUT, he will always be a strong supporter and advocate of fighting for a union contract, just like the rest of us. The long history of unions also includes members' strong religious beliefs as well as Labor and Religious coalitions that stood up for working people and did what they could to organize workers toward a union contract.

    The bottom line is that unions and beliefs in religion are not at odds with each other. Corporations try to divide people by using "wedge" issues, to keep them from organizing. Alliance@IBM's position has not changed in those regards. Our focus has always been to unite workers and bring their collective voice to the bargaining table and protect their rights in the workplace to form a union. And that is a decision that we want the IBMers in the US to understand that they have the right to make, collectively and openly in a union election. Getting to that point is more than half the struggle; whether you are a Christian or an atheist, it doesn't matter. Organize.

  • Comment 09/09/14:

    Of course IBM is hiring in the US. They do a large hiring of unnecessary young workers right before a major layoff. I had a young lady, maybe 25 hired into an office next to me. Her job was VP Communication Liaison. She was so excited and felt great. I asked her to think about her role and what was coming shortly. Sure enough, six weeks later there was an RA. She was let go and many like her. The brought in about forty to fifty 20-somethings and they were all let go in the RA to bring down the average age. So, if IBM is hiring, watch the age. If they are young, they are getting ready to RA. Not that this is news because the cash from the Lenovo sale will go straight to RAs. Ginny has been blocked from IBM cash to do RAs. Thus the desperation for the sale to go through so she can push an RA through. -Anonymous-
  • Comment 09/11/14:

    Economic and political systems are *reflections* of the attitudes and behaviors of people. Instead of trying in vain to clean the reflection itself, clean up your own heart with respect to receiving in accordance with what you give, and teach it to others (especially your kids). People with less self-centered attitudes magically do the right thing by others. That's how it works.

    Until a significant majority of Americans no longer harbor greedy attitudes of money earned through means other than supplying something of value, until they wouldn't do any differently were they running the show, the system/environment will either remain the same or get worse. That's how it goes when a majority has an attitude of wanting more than a reasonable share, and will do anything to get it. America, you're experiencing exactly what you collectively *are*. Make the supreme collective bargain with each other: change your selves, and the cart (system) will follow you to a nobler place. -blue no more-

  • Comment 09/12/14:

    IBM announces internally a mandate of 8 hours training per week for the next 6 months along with a 10% salary reduction during that time. Can you say cost cutting and furlow manipulation? -Anonymous-
  • Comment 09/13/14:

    I don't know if this is considered appropriate but yesterday. 12 SEP 2014, the "GTS US SO SKILLS DEVELOPMENT PLAN" was deployed. Many, I have heard up to 70% of SO staff were informed they were deficient in (client) SCAMS skills (Social, Cloud, Analytics, Mobile, Security (SCAMS)—of course "big blue" prefers CAMSS"). For 6 months starting in October those affected are required to dedicate one day a week (23 total) to skills augmentation. Target skill levels were provided along with a reduction path. For the same 6 month duration all people affected will have their salary reduced by 10% (affecting 401K payouts and bonuses). Supposedly day-to-day work will be rebalanced to accommodate the reduced day-to-day staffing. -Anonymous-
  • Comment 09/14/14:

    IBM announcing 10% salary cuts for approximately 75% of their SO employees. IBM is offering them to work only 80% of there current workload. The remaining 20% is to be used for up training on new products and services. This is clearly a cost cutting measure disguised as a benefit to the employees. Statement is this is through April '15 at which time employees would get their full salary reinstated. Only time will tell if that is true. Either way affected IBMers are in a tizzy. -Bob-
  • Comment 09/14/14:

    The latest SO action is definitely a SCAMS. I'm an SO employee and was notified 9/12 of my salary reduction and the 6-month timeframe to improve my skills. Funny thing is I have spent the whole of 2014 improving my skills and my manager has reviewed and approved my "skills update". I have received recognition this year for sharing my expertise and offered to be a mentor when asked. So just where are my skills lacking? And BTW I have not been offered any assignment to utilize my new acquired skills. -Lacking Skills-
If you hire good people and treat them well, they will try to do a good job. They will stimulate one another by their vigor and example. They will set a fast pace for themselves. Then if they are well led and occasionally inspired, if they understand what the company is trying to do and know they will share in its sucess, they will contribute in a major way. The customer will get the superior service he is looking for. The result is profit to customers, employees, and to stcckholders. —Thomas J. Watson, Jr., from A Business and Its Beliefs: The Ideas That Helped Build IBM.

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