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This mad rush to send more work offshore (to get costs better aligned) is an act of desperation. Everyone knows it isn’t working well. Everyone knows doing it is just going to make the service quality a lot worse. If you annoy your customer enough they will decide to leave.
The second issue is you can’t fix a problem by throwing more bodies at it. USA IT workers make about 10 times the pay and benefits that their counterparts make in India. I won’t suggest USA workers are 10 times better than anyone, they aren’t. However they are generally much more experienced and can often do important work much better and faster (and in the same time zone). The most effective organizations have a diverse workforce with a mix of people, skills, experience, etc. By working side by side these people learn from each other. They develop team building skills. In time the less experienced workers become highly effective experienced workers. The more layoff’s, the more jobs sent off shore, the more these companies erode the effectiveness of their service. An IT services business is worthless if it does not have the skills and experience to do the job.
The third problem is how you treat people does matter. In high performing firms the work force is vested in the success of the business. They are prepared to put in the extra effort and extra hours needed to help the business — and they are compensated for the results. They produce value for the business. When you treat and pay people poorly you lose their ambition and desire to excel, you lose the performance of your work force. It can now be argued many workers in IT services are no longer providing any value to the business. This is not because they are bad workers. It is because they are being treated poorly. Firms like IBM and HP are treating both their customers and employees poorly. Their management decisions have consequences and are destroying their businesses. ...
Cloud computing is a prime example of a high volume, low margin, commodity service. If you don’t make the adjustments to operate as a commodity business, you won’t be able to succeed with selling cloud services. IBM and HP continue to cling to their 1990’s business model. Soon they will have no high margin products and services to sell, and they will no longer have any high volume products or services. Every time they sell a high volume, low margin business they paint themselves tighter in a corner. ...
It is only a matter of time until a company emerges that truly understands the value of IT service, because that need isn’t going away. Companies are only as smart as the collective intelligence of all their workers. If all their workers understand the value and business model, they can be a formidable competitor. When that happens IBM and HP will be in serious trouble. IBM ignores 99 percent of its workforce and keeps them in the dark. ...
Now look at the American IT industry in a similar light. American companies have been pretending to offer a superior product for a superior price while simultaneously cutting costs and cheating customers. Do you think IBM respects its customers? They don’t. But what if they did? What if IBM — or any other U.S. IT services company for that matter — actually offered the kind of customer service they pretend they do? What if they solved customer problems instantly? What if they anticipated customer problems and solved them before those problems even appeared? You think that can’t be done? It can be done. And the company that can do it will be able to charge whatever they like and customers will gladly pay it.
Selected reader comments follow:
Of course these execs, being technologically ignorant themselves and typically nothing more than corporate politicians, failed to grasp the service repercussions of their actions. However, since they were ‘the smartest guys in the room’, nobody could tell them otherwise.
So to your post, I went and found a new job with a company that isn’t smash-faced drunk on ‘maximizing shareholder value’ and it has made all the difference in my life and career.
I give IBM about 5-7 years before the wheels completely fall off the chassis.
Pros: You are almost impossible to fire for gross misconduct, you will likely be given significantly less work than you can do, and the company is developing a significant amount of interesting technology (Watson).
Cons: You will never get a "1" on your annual review which is the key to getting any form of promotion/raise/bonus. These will be reserved for people who have hung out in your job position for more than a decade and came up with your manager.
You WILL be paid the same as your peers in the same job role. This entirely disregards how much work you do, your annual rating, or any other factors compared to their annual rating or effort. For example at the time I quit, I was doing the work of 2.5 people in my position while I had co-workers who were doing half of their actual work and getting on just fine.
Continual education only has value if it's IBM's continual education, and even then, you'll have to pay for it. I have a masters degree and put in more than 1200 hours of continual education in the last two years on my own time. Upon completion I was told by management "that's great" and received zero recognition, advancement, or acknowledgment for it. To add further insult to injury, I was then told I could not train in their "program manager" career track because I wasn't qualified (pay grade).
Nepotism is rampant. This may be restricted to my division, but several managers have siblings, kids, or _____-in-laws working for them. As a result, these people will take a remarkable amount of vacation, leave early and arrive late, get the best assignments, and somehow rack up a lot of overtime despite never seeming to be in the office.
The career track is a meat grinder. To get to my position and to advance beyond my position is this: Join the company as an extremely underpaid contractor via CCI or Kelly Services. Get worked to death for an unlivable wage. Prove that you're somehow special (maybe) and get the opportunity to interview for a Long Term Supplemental position (a 3 year contract at a flat pay rate that hasn't been adjusted in 5 years and if/when it does, will NOT be retroactively bumped), where you will then compete against about 100 other LTS staff for a chance at getting converted to an IBM "Regular" (the odds are about 1-3%).
If you make it, you will not receive any raise or special recognition, you're just not going to get fired at the end of 3 years. Beyond this point, there is a layer of managers who have all worked there for at least a decade and who have no career motivation, so your only hope at advancing higher than this is that one of them gets fired or quits, and even then they tend to just double up over the accounts rather than leaving the position open.
Advice to Management: Re-work your services business model. You have annual attrition of 95% and it's a huge waste of talent and effort. Your emphasis on "speed to answer" makes it so that the vendor contractors will hire almost anyone so long as they have a pulse so they pick up the phone, resulting in huge wastes of training, coaching, and HR effort to keep these borderline retarded people still "working".
Your emphasis on "Think 40" for your staff is stupid. You force staff to educate themselves in things that have nothing to do with them (teaching HR about Cloud Infrastructure is akin to teaching field workers astrophysics; is it interesting? Sure. Is it going to help them do their jobs at all? No.) Your strategic initiatives are great ideas but you are executing way too slowly (by the economic definition you have been in two consecutive depressions).
Your system for promotions/retention is insane and borderline abusive. You will hire someone off the street right out of college and pay them six figures, but if someone works for you and gets the same degree, you will not promote them or shop them around to other managers, nor provide them with any raise. This will *always* result in you losing that employee when they get tired of your "see this as a learning experience" BS.
The ivory tower viewpoint of the company is killing the employees. I had two mentors who were 20+ year employees who received the fabled "1" ratings for years in a row, and both were placed on the "Developmental Plan of Action" in which you cut their pay by 10% and give them a day off during the week to "educate themselves to improve". This was done to save the company money in a year that it was going to fail to show a profit in 3rd quarter (2014), and resulted in you losing both of them. Don't insult your employees.
Specifically to Ginny: Resign. Your tenure as a CEO cannot be excused under the "we're undergoing a strategic transition" blanket. It is 100% your responsibility to make the changes in a timely, efficient, and effective manner. It never occurred to you that the divisions you believed were "low margin" were still producing a margin, whereas firing thousands of talented staff to get rid of these low margin divisions has pushed them into the hands of our competition.
You can't get away with giving little-to-no-raises at the company and then pay yourself a multi-million dollar bonus (yes I know the board awarded it to you, but I also know you're super-chummy people).
You and your hair band have lost touch with the pulse of the company in a deeply fundamental way. You use and abuse the staff and expect them to be grateful to work at IBM, despite it not being the same company that it was when you were down in the trenches 20+ years ago.
You live a charmed life atop your tower, and I'm pretty sure you thought Marie Antoinette was spot on when she said "let them eat cake."
Advice to Management: Trust your employees and be understanding when they make mistakes. Treat your employees the way you would like to be treated. Employees are people too; understand that they need time to spend with their families.
Advice to Management: CHANGE the PBC process. It needs to be fair, with less power to the managers who are not close to employees' work in global projects, home office or in projects not directly related to the manager's daily tasks. The goals need to be individual for each employee and it needs to be CLEAR what he needs to achieve to be a HIGH performer.
Pros: Fast progression into a career that normally takes years. They progress juniors and hand out grandiose titles so they can charge more. Lack of visibility so you can do as you please. Work from home. Lots of time, they tend to charge in minimum time blocks so plenty of time. A week to do what could be done in a couple of hours.
Cons: Low quality and lack of real training. All the training is IBM's way of doing things which will not get you a better job. You could be moved off to something else. The seniors are forced to do sales. Everyone is assigned to their own project so no where to go for help. Managers are crap. All anyone cares about is money.
Advice to Management: If you are going to market IBMiX as a design-orientated service then actually make it design orientated and not a sales tool for Watson and antiquated crap software. It's all just pretend.
Pros: The team and the product I worked in was excellent. But there has always been a dearth in sharing the knowledge within the team.
Cons: I can list a ton but to name a few:
Advice to Management: Please RA yourself as you are doing for lower-level employees who don't perform well. For the past 12 consecutive quarters, there was only declining revenues which shows the upper management capabilities.
Advice to Management: All of you need to go away. New management need to take care of their employees and customers and not their stock option value.
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