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    Highlights—March 24, 2007

  • Yahoo! message board post "New SWG Salary Scheme" by "ibmaccountant". Full excerpt: The pay system is certainly broke from a grunt employee in the trenches perspective. On the other hand, from an executive or "chosen" employee, it is just fine.
    This program is an attempt via good internal brainwashing propaganda (officially called internal communications) to reduce IBM's largest expense and make it an "investment" that can make the gerbils run faster on the treadmill.
    The desired effect is that they can point out to some very highly paid individuals which will burnout quicker and then suddenly disappear in the low paid masses on the way out. The big question is whether the short highly paid period is worth it for your lifestyle and health. Some will be lucky and cross the barrier to upper level management where over subscribing quotas and targets assures you success no matter how badly the troops suffer.
    The company executives have decided to cross the rubicon of morality and implement the ultimate intra-competitive environment. IBM will become a "flash" tech multinational. Great for quick wins, but not for the long haul. Teaming will go to hell. It's everyone for themselves, folks.
    I guess the shareholders can't get to play this game on executives like they play it to the employees.
  • USA Today courtesy of the Clarion-Ledger: Departing Delta CEO refusing bonuses. By Marilyn Adams. Excerpts: Turning his back on a potentially lucrative payday, Delta Air Lines CEO Gerald Grinstein said Monday that he is refusing any stock, stock options or cash when the carrier emerges from bankruptcy.
    Grinstein, who has led the United States' No. 3 airline since January 2004, said he wants Delta instead to invest what he would have gotten in post-bankruptcy bonuses, to be used for scholarships and emergency hardship assistance for Delta employees, families and retirees. Under a post-bankruptcy compensation plan unveiled Monday, Grinstein could have been expected to net about $10 million, including such bonuses, over about three years.
    Delta hopes to exit bankruptcy in May. Grinstein, 74, who plans to retire this summer, said it wouldn't be right to take money intended as an incentive for future executive performance. "I'm leaving, so it doesn't fit me," he said in an interview. Besides, he said, "Corporate pay packages have gotten out of control. It has become a salary derby out there." [...]
    By contrast, United Airlines' management wanted 15 percent of that airline's stock divided among the top 400 executives when it exited bankruptcy last year. When bankruptcy creditors objected, executives ended up with 8 percent.
  • New York Times: Some More Numbers to Juggle in Figuring Out Retirement. By Damon Darlin. Excerpts: When a group of economists argued recently that Americans might be saving too much for retirement, Fidelity Investments could not have disagreed more. The crux of the economists’ arguments was that financial services companies were overestimating the percentage of preretirement income needed to live well when no longer working. The companies’ online calculators usually place that figure at 85 percent. [...]
    The economists — a loose confederation of financial experts from universities, research institutions and the government — said their research led them to believe that the rate could be closer to 65 percent for many people.
  • InvestmentNews: Executive perks disclosed to public. By Sam Lewis. Excerpts: Based on the annual proxy statements of 100 companies, the study shows that the disclosed costs of executive benefits has increased on average by more than 130% between 2005 and 2006. The increase is attributed to new SEC disclosure regulations.
  • Yahoo! message board post: "Sell your IBM stock before the collapse" by "Mike". Full excerpt: Actually, in the late 90's, the number of outstanding shares stood at 2.2 billion. Today, that number stands at 1.5 billion, - a 30% reduction. Sam has pretty much closed the revolving door on stock option resales and buy-backs.
    The finances of the company are intriguing. It's now a huge cash cow, with an underpaid and overworked staff in many areas. Its business plan is focused on some far-out services that seem to be popular with the customer set. IBM marketing seems to be effective because it has successfully sold into customer fears of the unknown future.
    I'm reminded of the good old days pre-360, when I last saw this pattern. We were underpaid and worked our buns off. But, - we were appreciated and treated well otherwise.
  • Yahoo! message board post: "Separation Document" by Janet Krueger. Full excerpt: The separation document is a 'covenant not to sue' document and is purely for IBM's protection, NOT the employee's.
    However, IBM has the right to withhold any promised separation pay if the employee does not sign it within 30 days. IBM does NOT have the right to withhold any earned salary or vacation pay.
    If IBM is not offering any separation pay, then there is absolutely no reason for the employee to sign, although IBM will still ask them to sign it.
    If IBM does offer separation pay, then the employee has to choose between whatever separation pay is being offered and the right to sue IBM in the future; if the employee is considering suing IBM, visit a private lawyer quickly to see if there are any possible grounds for a lawsuit; IBM does not leave the separation pay on the table beyond the stated deadline. If the employee takes the separation pay and then proceeds with a lawsuit against IBM, the employee could be held liable for all of the legal fees IBM incurs defending themselves and IBM does not hire cheap lawyers!
    There have been several lawsuits, including Thomforde v IBM, where the covenant not to sue was held to be invalid and unenforceable; please note that IBM revised the covenant the day after they lost the Thomforde appeal; the chances anyone could convince a court the new covenant is unenforceable are MUCH lower, especially if the judge in that court was appointed by Reagan, Bush, or W...
    Also, if the employee decides to leave the separation pay on the table and proceed with a lawsuit, the employee should be prepared for a protracted and expensive battle; IBM has no qualms about dragging employees they have dismissed through the mud and doing everything in their power to ruin their reputation. Hope that helps!
  • Yahoo! message board post by "art_vandalay_". Full excerpt: Two questions that I have always wondered:
    1. Does getting separation pay mean that you are giving up going after unemployment benefits by accepting a package?
    2. I have been told that IBM was offering 2 weeks for every year worked as far as the separation package in the past, but someone told me that has now been reduced to no more than 3 months of pay. Anyone know if that latest offer is true?
    By the way, IBM is implementing a big push to get all of the sales reps to sign "revenue recognition" certifications this year. Anything done that is not standard must have paperwork -from the rep - with a bunch of check offs from admin. Pretty obvious what that is all about.
  • Yahoo! message board post by Janet Krueger. Full excerpt: Unemployment insurance is regulated by the states, not by the federal government. Generic statements here about what impact someone's separation pay had on their ability to collect unemployment insurance are completely meaningless unless you know what state they are in.
  • On Wall Street Magazine: Exploring the New Retirement Roadmap. By Stephen P. Utkus. Excerpts: It's the tale of two retirements. When PepsiCo's Chairman and CEO, Steve Reinemund, retired from the company last May, the 58-year-old executive told the press that his plans were to spend more time with his wife and their four children. "My wife and I are looking forward to the next adventure and figuring that out," he told The Dallas Morning News.
  • New York Times: Partner Adopted by an Heiress Stakes Her Claim. By Pam Beluck and Alison Leigh Cowan. Excerpts: On an island liberally sprinkled with the affluent and well-connected members of such clans as Bush, du Pont, Rockefeller and Cabot, the Watson family occupies a special place.
    The family, descendants of Thomas J. Watson Sr., the founder of I.B.M., owns more than 300 acres worth nearly $20 million on the northern tip of this sea-splashed idyll 90 miles northeast of Portland. Over four decades, various Watsons summering here have flown helicopters and other aircraft; driven antique cars and collected scrimshaw. The family has held an annual square dance at their compound, Oak Hill.
    Recently, though, the Watson name has surfaced in a different context, a most unusual lawsuit. It concerns Olive F. Watson, 59, granddaughter of the I.B.M. founder and daughter of Thomas J. Watson Jr., the company’s longtime chief executive; and Patricia Ann Spado, 59, her former lesbian partner of 14 years.
  • ComputerWorld: Father of Fortran programming language dies. Excerpts: John Backus, the man who led development of the first mainstream programming language, Fortran, died Saturday at the age of 82.
    His lifelong mission after joining IBM in 1950 as a programmer was to work on ways to simplify computer programming. The vendor encouraged him to set up a research project and hire a team of developers. In 1957, the fruits of their labors appeared with the debut of the Fortran programming language.
    "Fortran changed how people wrote programs on machines and also changed the way compilers were built," said Frances Allen, fellow emerita at IBM and 2006 recipient of the A.M. Turing Award, in an interview Tuesday. "It was a gigantic step at the time." [...]
    Backus remained with IBM until he retired from the company in 1991. Backus was a bit of a maverick, wearing jeans to work and to events at a time when most IBM staff dressed more formally, Allen said. "He was a very precise person, but not a fuss," she added. "He was always seeking to understand things better and was always interested in new ideas. He was a person who was very pleasant to be with. You always had the feeling he was very interested in things around him."
    According to Allen, Backus liked to relate how in the four years he and his team were working on Fortran, he'd always tell his project manager that the project was six months from completion. "He actively proposed that failures should be rewarded as well as success," Allen said, adding that Backus very much believed in risk-taking to make advances in computing.
  • InformationWeek: IBM Helps Fund Web Hosting For Anti-SCO Site Groklaw. By Paul McDougall. Excerpts: Groklaw, a widely read Web site that has sided with IBM in its legal battle with The SCO Group, receives free hosting from an academic research project that is in part funded by IBM, according to the project's director. Paul Jones, director of the University of North Carolina's ibiblio project, confirmed in an interview that ibiblio provides free Web hosting services to Groklaw and that ibiblio is funded in part by grants from IBM as well as several other tech companies with a strong interest in the promotion of the Linux operating system. [...]
    Groklaw for years has been a thorn in the side of The SCO Group, which sued IBM in 2003 claiming that IBM's contributions to the Linux operating system contain computer code purloined from SCO. Since then, Groklaw has become an online repository of case documents and fierce anti-SCO editorializing by the site's editors -- including chief blogger Pamela Jones, who is not related to Paul Jones.
    Through it all, Pamela Jones -- who is famously secretive regarding any details of her identity beyond her name -- has denied allegations by SCO that Groklaw is an IBM front or is receiving financial support from IBM. Groklaw editors also have denied SCO's claims that Pamela Jones doesn't exist and that most of the material on Groklaw is penned by IBM attorneys.
  • Yahoo! message board post: "Separation Documents" by "smwall04". Full excerpt: Why should a employee sign any documents upon separation?
  • Yahoo! message board post "Re: Separation Documents" by "ibmaccountant". Full excerpt: No unless they are reviewed by an attorney that you, not IBM, has selected and your attorney has deemed them to be appropriate to sign and you will be renumerated economically or otherwise.
    If you are separating and you are not lucky enough to have the old pension plan, they really don't have anything on you except maybe 2 week's pay and you vacation pay. For new IBMers, they have essentially cut themselves out of anything to hold you or threaten you with. Don't forget that they can't give you a reference, negative or positive, so any threats there are baseless.
    Don't forget that if they ask you to stay beyond the normal 2 weeks you can ask for additional compensation for that time they wish you to stay beyond the 2 weeks notice AT ANY RATE OF PAY YOU CHOOSE.
    The only area where there might be a need for any type of separation agreement per se is if you have any patents in process. The agreement should clearly state that even though IBM will be the assignee, you are the one or one of the inventors in the USPTO application. Don't sign anything that takes the right to be named the inventor to any of your disclosures.
    I have heard and seen cases where they are going through the Invention Disclosure and Submission database looking for incomplete disclosures and giving them to other employees to submit. You need to make sure all your ID's,if you have any are submitted with you as the inventor. If any get rejected, you need the answer in writing in case they try to "renew" the idea as an ID with another employee. You should agree to participate in the preparation of the patent application if they need your help, in exchange for your name in the patent as inventor.
    If they suspect you have some idea like if you had been involved in innovation or advanced technology they may try to trick you into a agreement to force you to not work in certain areas or patent. You should resist this and get an attorney help you.
    The key is an independent attorney to help you with no ties to IBM.
  • Yahoo! message board post: "Sell your IBM stock before the collapse" by "ibmaccountant". Full excerpt: Mike, Although I respect your opinion, I'd like to propose some changes to your text to present more accurately the company's current financial condition, IMHO:
    Actually, in the late 90's, the number of outstanding shares stood at 2.2 billion. Today, that number stands at 1.5 billion, - a 30% reduction. The reduction in the amount of outstanding shares, interestingly roughly matches the difference between the value of the equity at its peak and the current value (132 versus 90-105 range) which essentially means the 30% reduction in shares has covered up a much larger erosion in corporate equity value. Sam has pretty much closed the revolving door on FUTURE stock option resales and buy- backs, but has protected the Senior Vice President circle that had already been issued options.
    The market maker at the NYSE continues to do daily buy-backs for order balancing, but a much level than before.
    The options issued to executives already vested and granted continue on the books. He has now shifted to executive stock grants which from SEC forms submitted appear to be at much less than market value. Stock grants at lower values are expensed with less impact and the executive takes the capital gains personally at a lower effective tax rate than the corporation. Thus you see the pattern of large grant exercises with a matching stock sale to cover the capital gains hit for many executives. From a shareholder perspective, it is much harder to gauge the impact of low cost grants until they are completely sold.
    The finances of the company are intriguing. It's appearing from a current accounting perspective to shareholders now as a huge cash cow, with an underpaid and overworked staff in many areas.
    The services business, although not growing as well as the rest of the franchises has had some improvement in its margins due to a reduced loss in the backlog of active contracts. Its business plan is focused on some far-out services mainly focused on off-shore labor arbitrage that seems to be popular with some of the large customer set. There has been a consistent failure in growing the services business into new markets such as US SMB. This problem is now moving into the hardware and software space as well, with slowing server sales and a new market position as number 2 behind HP. The volume and profitability of the core technology services business may also be affected adversely with the rise of the BRIC based mega-consulting companies such as Tata Consulting Services and Wipro.
    IBM marketing seems to be effective for large accounts because it has successfully sold into customer fears of the unknown future. The rising SMB accounts have not accepted this yet from 2006 results. There is new focus and acquisitions in 2006-2007 to address this current market shortcoming.
    I'm reminded of the good old days pre-360, when I last saw this pattern. We were underpaid and worked our buns off. But, - we were appreciated and treated well otherwise. We also did not have the high personnel attrition rates we have today. In 360 we had a new market, the current hardware, software and services businesses are all accepted and mature markets. The operating units focused on new markets, E&TS for hardware/software/services and GBS for thought leadership have not grown as expected.
    The US demographics and the potential rise in labor costs in BRIC countries could derail the IBM services business strategy of international labor arbitrage. A major problem could occur if countries like India suddenly see an outflow of IBM local work to other lower wage countries and they impose taxes or sanctions to try to stop the outflow of work after seeing what happened in the US. IBM may have exposed clients to issues when BRIC countries impose economic or political sanctions trying to prevent the US problem from happening to them as they improve their labor costs.
    Although the trend to virtualization and remote hosting in the data center plays to IBM's past historical strengths in servers and its partnerships in storage, the skills in these areas are focused on older employees which could depart en masse as a result of the pension freeze scheduled for January of 2008. The exploitation and success of new emerging technology areas has not yet shown results in operating units like E&TS.
    Although I must admit that profited immensely from the collapse of IBM stock in the past, I don't believe it will collapse again unless IGS growth slows more or the labor arbitrage problem appears. On the other hand, I also believe the equity is fairly fully valued and will not necessarily grow as well as other companies in this segment like HPQ.
    A sudden change in the direction of the value of the dollar could also affect the equity dramatically.
    I predict that the buying of selected companies and the selling of poor performing IGS units like ITS will happen throughout the next few years which will make it harder to follow IBM accounting.
  • Yahoo! message board post: "Boca Raton" by Lee Conrad. Full excerpt: Hearing of job cuts at Boca. Work being sent to China. Anyone else heard this?
  • Yahoo! message board post: "Re: Boca Raton" by "slvrfxxx". Full excerpt: Yes, you phrased it right... job cuts.... NOT a resource action. (per any manager you ask). IBMer's have been told to find other jobs, no deadline at the moment, and that IBM would help locate other jobs for them. No packages or severance is mentioned at the moment. If you can't take the job offered, what then? After all IBM did help locate you another job... and if you spouse has a business and can't move it to Oshkosh, then what is IBM offering?
    Affected employees asking 'how many cuts?' are told only dollar figures, not headcount being reduced. Contractors, some with 30 years IBM experience (i.e. 15 years employee, followed by 15 years as a contractor) are being let go. (What pension?) At least one married couple with small children are both being told to find other jobs. My estimate (including support staff, and the trickle of personnel reductions from the beginning of the year ) is about 50 jobs. By June... I can't see how IBM would be able to justify keeping to keep the building open, unless the myth of attracting new missions to Boca is successful.
    The Boca building initially was filled to overflowing when it opened. Now, the numbers still there would fill only one of the four floors. The canteen closed its doors last Friday and has been replaced with the coffee vending machine moved to the canteen space from the fourth floor.
    Some people 'spared' from the cuts now have the task of packaging development and test activities for export to China.
    Most contractors have been given 2 weeks notice... some groups are 'OK' till the end of June, pending deliverables.
    Morale? What's that?
    BTW, I am a contractor, who, after 8.5 years at IBM was given a 3 rating, and got laid off, was told to take the package. And then, was hired back within weeks to the exact same job. Go figure.
    My guess is that the upper management who engineered this drastic cut is in a hurry to maximize her compensation under the 2007 guidelines before the 2008 guidelines take affect.
    What will happen to IBM's technical leadership and ability (assuming an actual desire to do so) to attract Americans to work for IBM in the future when all these jobs are moving to China? Where's the incentive to 'be a programmer'? Plumbers will probably be earning better living conditions by then.
  • Yahoo! message board post: "Re: Boca Raton" by "thekanck". Full excerpt: Fox: I don't think the "leaders" are looking that far ahead ;-/ Further I think they would like to continue or accelerate current "attrition" rates until the US population is cut by an additional 50% or so -- this will leave mostly "face people" (sales reps., Project Mgmt leads, technical team leads) and of course the executives as the lion's share of the US workforce.
    Plumbers and the other trades & services (HVAC, car repair, ...) will all do well and have natural protection. No one in Romania can fix your busted car or replace your water heater for you. Many Americans never learned to do these jobs for themselves.
  • Yahoo! message board post: "The new IBM salary plan s**ks" by Linda Guyer. Full excerpt: The new plan gives no raises to PBC 2's unless their current salary is below market average (however IBM defines market average). So expect to see raises in India and Brazil, no raises in US and Europe, most likely. "top performers" at 2+ and 1 ratings will get raises. Undoubtedly part of the global job shifting strategy. Why reward decent US employees anymore?
  • Yahoo! message board post: "Re: The new IBM salary plan s**ks" by "alwaysontheroad4bigblue". Full excerpt: This helps explain why so many employees had their ratings reduced from "2+" to "2" this year.
  • Yahoo! message board post: "Re: The new IBM salary plan s**ks" by "bugbert_99". Full excerpt: Why would ibm give raises to '2' performers or '3's or '4's if any of those are even left. Raises given before a layoff only cause larger severance pay which ibm avoids at all costs. Rumors of imminent and large layoffs are now rampant, pointing to May 2007. Of course I have pointed this out that maybe this is only a rumor to keep everyone stressed out and working as hard as possible. Good luck to all.
  • Yahoo! message board post "Re: The new IBM salary plan s**ks" by "art_vandalay". Full excerpt: As far as I know (at least for any commissioned US employees) there are no longer any raises even if you are rated a "1." That was explained to us by management. If you make your number (100%), then you get a 3% one time bonus. Raises no longer exist for us. The reason given is that we are paid higher than the equivalent sales reps of our competition.
  • Yahoo! message board post "Re: The new IBM salary plan s**ks" by "blue_in_pok". Full excerpt: In my department there seems to be 1 'sacrificial 3' each year. One poor person who magically becomes a 3 and is in danger of becoming history. Our 2nd line says that there haven't been any 'layoffs in the time he's been in charge' all the 'layoffs' are being disguised as 'performance firings'. Real cute !
    As for the salary/bonus plan: Raises have been a joke long before this new 'plan', I feel the real change is with the 'bonus' side of things. The bonus will be based on some 'growth' calculation. What a joke, if IBM was growing, we wouldn't need this 'new plan' and stock would be worth more than $90-95. I have a feeling that they are planning on a bad year in '07. Tell ya' what, if my bonus is based on the same 'growth metrics' as Sam's perks, I'll be happy.
  • Yahoo! message board post "Re: The new IBM salary plan s**ks" by "bits_bytes_and_bugs". Full excerpt: Bugbert - there have been numerous three-digit stealth layoffs including one recently at POK. Management has not communicated these to employees. I am absolutely certain these will continue for the foreseeable future.
    Yes, there was a report in one of the financial rags (BusinessWeek India edition, I think) quoting our fearless leader himself proclaiming that the IBM US employee population will drop from 130,000 to 40,000. From the context it appeared he was referring to services personnel.
    The odd part of this is that many of those who first moved work to India, are now moving it back due to quality/productivity issues and customer backlash. IBM is lagging the curve, not leading.
    What I hear from those involved in offshoring to India is that the infrastructure remains unreliable and unsteady, the personnel have few skills and even less experience, the necessary international telecommunications costs are extremely high, turnover is rampant, salaries growth is up to 40% per year and there are significant cultural issues to overcome. All of these adversely impact the quality of service and the cost vs. benefit of the offshoring.
News and Opinion Concerning Health Savings Accounts, Medical Costs and Health Care Reform
  • Workforce Management: Backfire at Boeing: Misadventure in High-Performance Health Care. How the aerospace company's effort to institute performance-based health care raised the ire of workers and physicians and landed its insurer in legal hot water. By Jeremy Smerd.
  • New York Times: Proposals for Mental Health Parity Pit a Father’s Pragmatism Against a Son’s Passion. By Robert Pear. Excerpts: It’s Kennedy versus Kennedy as two members of Congress from the same family face off over competing versions of legislation that would require many health insurance companies and employers to provide more generous benefits to people with mental illness.
    Representative Patrick J. Kennedy, Democrat of Rhode Island and chief sponsor of the House bill, has criticized as inadequate the Senate bill introduced by his father, Senator Edward M. Kennedy, Democrat of Massachusetts. Representative Kennedy is trying to mobilize mental health advocates to lobby for what he describes as “the stronger of the two bills, the House bill.”
  • National Public Radio (NPR): Health Care Back in the National Spotlight. By Julie Rovner. Excerpts: It has been nearly a decade and a half since the last effort to overhaul the nation's health care system. But the issue is back, driven by recent state initiatives seeking ways to provide universal health care and by the 2008 presidential campaign.
  • Washington Times, courtesy of Physicians for a National Health Plan: The health care crisis. By Alex Gerber. Excerpts: Also hovering like dark clouds over our health-care system are 47 million medically uninsured Americans — having risen 5 million since President Bush assumed office. That the uninsured have poorer medical outcomes has been well documented. Indeed, there are wards in our nation’s capital where health statistics are akin to those of Third World countries. The National Institute of Medicine has reported that 18,000 Americans die yearly for lack of health insurance, and our economy loses $60 billion to $ 130 billion per year due to poor health and early death.
    The problem of runaway health costs and huge numbers of medically uninsured is related to the unanticipated nature of accidents and disease. The answer to preventing a medical calamity from becoming a financial catastrophe is budgeting in advance through insurance as we do for a possible house fire or auto accident.
    But there are modifying factors with health insurance, revolving around society’s decision that health care, unlike owning a home or an auto, is a fundamental right. Thus, health problems beyond an individual’s control — diabetes, congenital birth defects, being hit by a drunk driver — should be insured by the community’s pooling of resources (not unlike the collective responsibility civilized societies assume for allaying the costs of natural disasters like hurricanes or floods). Since Otto von Bismarck introduced this concept in Germany more than a century ago, all modern industrial nations, except the world’s richest, have come to this conclusion.
    The reason for this American anachronism is buried in history. During World War II, the War Labor Board froze wages and workers were in short supply. To lure them, employers picked up the tab for complete health insurance. National health-care costs in those days totaled only $40 billion yearly — less than 5 percent of the Federal GDP. Due to the influence of its well-paid lobbyists in Washington, the private insurance industry has maintained its dominance of health insurance to this day.
    Many health-care insurers are more interested in the bottom line than in the public’s health. The obvious way to increase profits is to decrease benefits by excluding poor health risks from insurance programs. This adverse selection of “cherry picking” plus the 10 percent to 30 percent overhead of marketing, advertising, stockholder dividends and huge executive salaries — none of which cures a single patient — is largely responsible for health-care costs that have “broken” our health-care system.
  • New York Times: Doctors’ Ties to Drug Makers Are Put on Close View. By Gardiner Harris and Janet Roberts. Excerpts: Dr. Allan Collins may be the most influential kidney specialist in the country. He is president of the National Kidney Foundation and director of a government-financed research center on kidney disease.
    In 2004, the year he was chosen as president-elect of the kidney foundation, the pharmaceutical company Amgen, which makes the most expensive drugs used in the treatment of kidney disease, underwrote more than $1.9 million worth of research and education programs led by Dr. Collins, according to records examined by The New York Times. In 2005, Amgen paid Dr. Collins at least $25,800, mostly in consulting and speaking fees, the records show.
    The payments to Dr. Collins and the research center appear in an unusual set of records. They come from Minnesota, the first of a handful of states to pass a law requiring drug makers to disclose payments to doctors. The Minnesota records are a window on the widespread financial ties between pharmaceutical companies and the doctors who prescribe and recommend their products. Patient advocacy groups and many doctors themselves have long complained that drug companies exert undue influence on doctors, but the extent of such payments has been hard to quantify.
  • Los Angeles Times: Vet shot in Iraq fights for benefits. Sgt. Joe Baumann is battling a military ruling that he does not qualify for a disability benefit or healthcare. By Rone Tempest. Excerpts: A sniper shot Sgt. Joe Baumann on a Baghdad street in April 2005. The AK-47 round ripped through his midsection, ricocheted off his Kevlar vest and shredded his abdomen. The bullet also ignited tracer rounds in the magazine on his belt, setting Baumann on fire. Almost two years later, the 22-year-old California National Guard soldier from Petaluma, walks with a cane, suffers from back problems and has been diagnosed with post-traumatic stress disorder that keeps him from sleeping and holding a job.
    The question pending before a military review board at this big Army post south of Tacoma is whether to grant Baumann a military disability pension and healthcare or simply cut him an $8,000 check for his troubles.
  • Bloomberg News, courtesy of BlueCross BlueShield Association: Universal health plan could yield savings. Study: Spending could be cut by $60.7b per year. Excerpts: Expanding government health insurance coverage to all Americans could reduce healthcare spending by as much as $60.7 billion a year, according to a study by a nonpartisan research center. The estimated savings would include a $33.9 billion cut in the cost of prescription drugs, the New York-based Commonwealth Fund said in a report yesterday . The organization evaluated proposals introduced in Congress in recent years, including some that would allow everyone to enroll in Medicare, the government health insurance program that now serves older Americans and the disabled. [...]
    Bush's healthcare proposal, calling for a tax deduction for health insurance, would cover 9 million people that are now uninsured and save about $11.7 billion a year, the study said.

New on the Alliance@IBM Site:

  • Can You Trust IBM’s New Employee Compensation Program? Excerpts: IBM wants you believe that its “new employee compensation approach” is going to be wonderful, and that you’ll finally be rewarded fairly for your hard work. Here’s why you can’t trust IBM, and why we need a contract rather than empty promises.
    For the last several years, pay increases have been little to none with the bonuses shrinking. Oh yeah, remember how “variable pay” was changed to “performance bonus”, only to be changed yet again, hyped now as “growth-driven profit-sharing.” Already you can see IBM executives like to “innovate” a new scheme-of-the-year, always changing the plan because they can’t get it right.
  • AFL-CIO Weblog: Productivity and Wages: We Make It. They Take It. By James Parks. Excerpts: Workers in the United States are the most productive workers in the world and they work longer hours than workers in any other developed country. Yet, even though our economy generates more than $13 trillion in income, the economy is not delivering for workers.
    Meanwhile, the gap between the richest in America and the rest of us has grown significantly over the past 25 years. Here are the facts:
    • The top 1 percent of the nation now takes in an astounding 16 percent of national income, up from 8 percent in 1980.
    • The average CEO of a large corporation makes more than $10 million a year, while the minimum wage for workers amounts to about $10,000 a year. Recently, the U.S. House and Senate each passed a minimum wage bill to increase the current $5.15 an hour rate to $7.25, the first increase in a decade, but the bill is being held captive to special interests seeking business tax breaks.
    • Average wages today are only 15 percent higher than in 1980, despite a 67 percent increase in productivity.
    • From 1990 to 2002, for every extra dollar earned by those in the bottom 90 percent, each taxpayer at the top brought in an extra $18,000.
    • Stagnant wages and family incomes, increasing income insecurity, eroding health care benefits and disappearing pensions have left working families struggling to make ends meet.
  • From the Job Cuts Status & Comments page
    • Comment 03/21/07: Have noticed that jobs are posted, then after a few days the original posted band gets down leveled. Then the job gets posted for internal/external. Some of the jobs require high level technical skills, but dropped to low band level. -skiprock-
    • Comment 03/22/07: 26 years - 3/19 my last day as I became part of the redeployment process Oct 19th - looking internal - fruitless - well - all knows the story - they are for the most part the same. At the same time somewhat relieved - I finally got the call that was different than "you're not affected" I have felt for long time - it was a matter of time - I'm glad to see others have had good experiences on the "outside" - that is good to hear. Joe - we've all seen you before - when the real work force is let go - you better hope you can perform - you will have to -NO Team-NO Customers-
    • Comment 03/23/07: I work with several people at CHQ and overhear a lot of stuff. There are a bunch of efforts underway looking at areas to outsource, reduce costs, and move work. If there's a business case to do it, it's just a matter of time. The days of empire building are long gone and the total emphasis is on reducing costs and generating more revenue in the short term. There are very few exempted projects and areas. Just about everything is on the table as a candidate for cuts. There is expected to be a lot of turnover in the next few years in people resources across all geographies and a fair number of mergers, acquisitions, and divestitures to be driving a good part of that churn. Forewarned is forearmed. -Anonymous-
  • From the General Visitor's Comment page:
    • Comment 03/19/07: I'd like to know if there are any Deskside Service Reps. in the US who were not put down to a band 3 on 1/1/07. We have found some reporting to our manager and are wondering why only certain employees were chosen when it was suppose to be everyone in the US in that position. -Anonymous-
    • Comment 03/20/07: Why have a IDP Individual Development Program?; which is a IBM plan to determine what you want to be when you grow up ! As management is no longer approving training or education for their employees ! If you want to go back to college and need a tuition reimbursement program you will now have a better chance of getting educational approvals by working at Burger King! The old motto was "a company is only as good as its educated workforce" It now appears IBM is taking a backstep to future education benefits while other companies are far ahead in technology because of their trained workforce. In the final analysis IBM will be paying for it deeply as consumers will be considering companies who invest in their employees, which is a reflection of product quality and control. These bean counters will only cut cost so much before they are forced to close their doors. Last person out please leave the light on! -Anonymous-
    • Comment 03/22/07: Sorry, but the IDP is alive and well, that is if you are in Argentina, Brazil, India Etc. I often have to deal with a week or more of developers in our team that are off taking classes of some sort. More and More its apparent that IBM is telling us in North America , that as a work force we are not needed or wanted. -Anonymous-
    • Comment 03/22/07: I read these comments and listen to my co-workers and they just want to go with the flow. Wake up people! The flow is leading towards a waterfall! -fightback-
    • Comment 03/22/07: Is it true what I heard, that this month's Variable Pay was the last one ever for the average employee? That the program is being eliminated effective immediately, and that only the executives and those working at HQ are eligible for any future bonuses? If so, then that will really motivate those remaining? -Anonymous-
    • Comment 03/22/07: IBM Blows - no raises, no bonuses, no thanks for bringing in $600 million in sales - they just don't get it. -Anonymous-
    • Comment 03/23/07: Re: "IBM is taking a backstep to future education benefits"...Didn't we read that IBM is sinking big bucks into in-house education for Indian workers? In that case, it seems to be more analogous to the "surge" in Iraq, than to forward thinking. IBM has bought into the Indian strategy and will now do whatever is necessary to try to make it work. I know most of the comments here are from the US and EU, but it might be interesting to get the perspective of our Indian colleagues.
      From my perspective, as a retired stockholder, IBM is now in a bidding war for the best Indian talent (let's see where the newly-announced salary uplifts occur--not necessarily in the US), and will have to spend educational dollars on the rest. In other words, the strategy simply doesn't scale. But like many of the US leaders in Washington, IBM leadership will probably spend whatever it takes to try to make the chosen strategy work, whether it is the right strategy or not.
      Sorry to ramble on so, what I meant to say was simply: IBM may be investing in the future, but it does not see the US as key to its future. (And, btw, as a retired stockholder who worked decades at IBM, I *do* think it is a horribly naive and perhaps unrecoverable mistake for IBM, Microsoft, whoever, to write off the US workforce as they appear to be doing.) -alreadyGone-
  • Pension Comments page
    • Comment 03/19/07: I began collecting my Pension in 1999 and began paying $90 month for Health Care Benefits for my wife and I , extracted from my Pension Check. This year 2007, I am paying $615 a month for my wife and I. Needless to say this is approximately 6 3/4 X's increase significantly reducing my pension check every month. By the time I Retire at age 66, most if not all of my IBM Pension check will be paying for Health Benefits.-Anonymous-
  • Raise and Salary Comments
    • Comment 03/16/07: Has anyone else seen the new compensation program, announced on w3, effective this year? Variable pay gets replaced with "profit sharing", and there are two raise pools, for top performers and under market average pay people. The article says you can be paid from both pots -Anonymous-
    • Comment 03/16/07: Found out today on w3.ibm.com that IBM is making changes to their market based pay and compensation plans. About time!!! The pay and performance in IBM sure is broke but is this now an honest and conscientious attempt to be willing to fix it? I read the article last month about how IBM performance based pay needs to be overhauled in the latest Think Twice and now maybe it will come true! Ya think IBM might have read it previously also and took heed?! Time will tell. -sby_willie-
    • Comment 03/17/07: Read the new compensation details closely.. the market adjustment is one-time, the performance bonus is now a single worldwide metric, and the raises will only go to 2+ and 1 performers... so in a 'normal' distribution, 50% or more of us will see no raise each year.... I hope everyone likes their current salary..... sigh -near the exit-
    • Comment 03/17/07: I am skeptical that the new compensation program will work out for the best for most employees. Maybe it will be good for a few exceptional performers, but not necessarily for the rest. When was the last time that IBM made a change that benefited the employees financially as a whole? -fooledagain?-
    • Comment 03/17/07: From now on, I'll post an update around the 15th of every month. Here's a summary of the results so far:
      • Band 6: 19 respondents, avg: $63K, standard deviation: $8K, range (min/max): $52K to $78.5K
      • Band 7: 28 respondents, avg: $73K, std dev: $14K, range: $58K to $110K
      • Band 8: 27 respondents, avg: $96K, std dev: $16K, range: $60K to $120K
      • Band 9: 19 respondents, avg: $116K, std dev: $19K, range: $90K to $152K
      • Band 10: 11 respondents, avg: $142K, std dev: $27K, range: $107K to $190K. For band 10, it is not clear if the numbers above include the yearly bonus or not. I hear it can be significant (10%-20%). Can someone confirm? -Anonymous-
    • Comment 03/17/07: Most companies like AMD and other high tech already pay competitive salaries and have quarterly profit sharing. IBM is just trying not to fall behind too much, although for some people this is too little too late.. -Maximus-
    • Comment 03/18/07: Salary = 67500; Band Level = 7; Job Title = Staff Software Engineer; Years Service = 3.5; Hours/Week = 40-50; Div Name = Software Group; Location = RTP; Message = solid performer -Anonymous-
    • Comment 03/19/07: Band Level = 10; Years Service = 33; Hours/Week = 60+; Message = To the one who says that IBM readily shares pay data: Not true! IBM will, at individual management discretion, show you your relative total Band pay range as a result of a pay action. If you don't get a raise, there is no pay action so you won't get Band data. In IGS and S&D, IBM managers routinely refuse to share Band data and HR says you cannot overrule local management.
      The National/Premium/Regional deal is just a subtractor or adder, so it can be done easily if your lucky enough to have your band data shared with you.
      In sales, on highly leveraged plans, managers know the funded sales commission bucket and the expected commissions, but that is not shared with employees, because that would tell you if they don't expect you to make your quota (odds of making 100%).
      This totally goes out the door for other bands. People would like to know what other bands make, especially if someone wants to know what is the reward, if any, to get a promotion (is it worth it) or the reduced chances of salary increases when you get banded down.
      Many who ask for this data in IGS and S&D if it's not given to them are immediately labeled as problem employees. -Still Searching for Pay Numbers-
    • Comment 03/19/07: Salary = 64550; Band Level = 7; Job Title = Software Tester; Years Service = 25; Hours/Week = 40; Div Name = STG; Location = POK; Message = Got 2's until this year when I started in a new area with a new assignment, downgraded to a three. One raise over five years (three years ago), even with 2's (previous PBCs and present version). Comment was that I wasn't "aggressive" enough even though I learned a whole new process and completed my assignments. Now I don't even have a chance to get the "market based" increase . My 2nd Line verified that my pay is low for my band but says he can't do anything about it because of my 3. -bummed_out-
    • Comment 03/19/07: Message = In IBM HR's remarks in w3.ibm.com by Randy MacDonald he refers to IBM's "..most important expense is it's employees..". So that is how we are and have been treated: as an expense. No wonder they want to do competitive salary adjustments now and will revamp the variable pay/bonus pay/ performance pay again (they change this so much over the years and still haven't gotten it right) since they are using us as the key IBM cost cutting metric! Since they have been skimming or holding back the salary from a lot of underpaid but high performing employees does anyone think you are going to get back now what IBM has held back from you in pay so far? Shouldn't he say "our employees are IBM's most important INVESTMENT"??? -sby_willie-
    • Comment 03/20/07: On the salary comparison on 3/17 it was asked if Band 10 levels included bonus or not and stated that Band 10 bonus was 10 - 20%. Well that might have been in the past but this year IBM pulled a fast one, yes the range can go up to 24% however they failed to mention it can now start at zero. PBC 2 and 2+ Band 10s received same percentage as band 1 - 9 PBC 2 and 2+performers. -Anonymous-
    • Comment 03/20/07: Salary = 103,250; Band Level = 8; Job Title = Consultant; Years Service = 4; Hours/Week = 40; Div Name = GBS; Message = OK...within market, but I must admit, IBM benefits are pretty good and must be factored in. Salary is higher in boutique firms, but matching 401k and other benefits suck. -anon_blue_and_blue-
    • Comment 03/20/07: Salary = 90000; Band Level = 7; Job Title = Sr Consultant; Years Service = 8.5; Hours/Week = 45; Message = Kind of avg, I guess. But I agree with those people who said you generally get what you deserve. -WhatCanYouSay?-
    • Comment 03/21/07: Salary = $3111.60 per paycheck; Band Level = 08 (since May 1997, old PBC "2"'s and new PBC "2+" for almost all of the time); Job Title = Senior I/T Specialist; Years Service = 23; Hours/Week = more and more; Div Name = keeps changing Location = Southbury,CT Message = -Still Searching for Pay Numbers- is absolutely correct in his comments! -sby_beamer-
    • Comment 03/21/07: Salary = 125K; Band Level = 9; Job Title = Sr. IT Arch; Years Service = 14; Hours/Week = 40 + travel; Div Name = GBS; Location = CA Message = ~ 6mo at IBM. -Anonymous-
    • Comment 03/22/07: Salary = 118K; Band Level = 8; Job Title = Digital Designer; Years Service = 24+; Hours/Week = 40; Div Name = STG; Location = Fishkill; Message = Consistent 2+ performer. But I have only gotten one small 3.3% raise in last 5 years. I have been told over and over I make too much money for my band. -Anonymous-
    • Comment 03/22/07: Salary = 73000; Band Level = 7; Job Title = IT Specialist; Years Service = 12; Hours/Week = 46; Div Name = 6C; Location = CA; Message = Wow, I'm getting lots of info at this site... thanks. -Anonymous-
      Alliance Reply: Please consider signing up as a dues paying member ($10.00/monthly) or making a donation to help us continue to provide the information on this site, to you and all IBM employees. Thank you for your support. Join Alliance@IBM
  • PBC Comments
    • Comment 03/09/07: Prior Yr PBC = 2+; This Yr PBC = 2; This Yr Bonus = 1750; Prior Yr Bonus = 6000; Message = Was promoted 7 to 8. Never anything below 2+ level of rating. Was told "almost a 1" last year and if I keep doing what I'm doing, then I'll make a 1 this year. Was told it was a "bad year" this year. Its very odd that our business units have no metrics anymore. -always looking-
    • Comment 03/09/07: To the person who had two 1's in a row and received a $4000 bonus each year - was it really worth it? That's $80 extra per week. Assuming you worked a basic 40-hour week - which I'm sure you didn't - that's an extra $2.00 per hour. Work 50 hour weeks and it's only $1.60 more per hour. That's a horrible ROI. You'd almost be better off financially working a regular week and getting a second job as a Wal-Mart greeter. -Anonymous-
    • Comment 03/09/07: Why do we every year have to come up with all kinds of creative poop to "distinguish ourselves" from our peers while promising to do this and that for IBM? And if we do not manage to live up to our good intentions because our workloads become so heavy, we are dunned? I want to know what IBM promises us in return? Not even a raise...just the honor of maybe keeping our jobs and thinking up more gobbly de good for the next year's PBC's. Forget doing anything relative to the On Demand Community or their ECCC boola boola that they are harping on us about...when it comes time to look at your PBC, they say "well that was just volunteer work; very nice of you but really doesn't count" (no matter what they tell you otherwise - been there). -Anonymous-
    • Comment 03/10/07: Prior Yr PBC = 2+; This Yr PBC = 2+; This Yr Bonus = 4.4; Prior Yr Bonus = 4.4; Message = I'm told I am one of the people near our cap of 5% for Band 8 at 2+.-Anonymous-
    • Comment 03/12/07: Prior Yr PBC = 2+; This Yr PBC = 2+; This Yr Bonus = $4k; Prior Yr Bonus = $4500; Message = Upon giving me my variable pay this year, my manager said they were given less money than previous years and it was true across the company....tough year 2006 was. I find it hard to believe that Sam got $19M, including bonus last year...plus I read that 2006 was 'Palmisano's best year at IBM, as the company made $9.5 billion in net income, and shares of the tech giant rose 18 percent.' I find this hard to believe the why the employees are getting less than last year. Beyond that, Sam had the gall to write the following in the annual report when the employees get screwed again......"I am happy to report to you on a very strong year for our company. In my [Annual Report] letter last year, I said that we believed we had positioned ourselves to capture the most attractive growth and profit opportunities in our industry. In 2006, we did just that, setting new records in profit, earnings per share and cash performance." Samuel Palmisano, IBM Chairman and Chief Executive Officer...............what a disgrace, all a fraud. Time to leave this company that thinks so little of its employees. -Screwed again by IBM-
    • Comment 03/12/07: This Yr PBC = 2+ This Yr Bonus = 4% Message = my first bonus with IBM - am sure it will be less next year.. -Anonymous-
    • Comment 03/14/07: Prior Yr PBC = 2+; This Yr PBC = 2+; This Yr Bonus = 3.99%; Prior Yr Bonus = 5.3%; Message = According to Sam we had a record profit, earnings per share, and cash were delivered in 2006. Gee, so that always add up to less bonus pay! Call it IBM's version of fuzzy math. -Anonymous-
    • Comment 03/15/07: Prior Yr PBC = 2+; This Yr PBC = 2+; This Yr Bonus = 3000; Prior Yr Bonus = 3800; Message = Manager never called, never left e-mail, etc. I found out from the pay stub on 3/13/07... Respect for the individual? Sure. Thanks for your efforts employee. Sure. When will this all end? -Anonymous-

Vault Message Board Posts

Vault's IBM Business Consulting Services message board is a popular hangout for IBM BCS employees, including many employees acquired from PwC. A few sample posts follow:

  • "In May" by "wonderaboutibm". Full excerpt: You won't hear anything (about the new salary scheme) except for generalities until May, perhaps early June, since no adjustments are done before the pay period ended 6/15.
    Be forewarned not to expect much of anything. It's entirely possible the salary pot this year will be even more stilted than usual -- between the perennial fair-hired boys and girls, and what passes for market adjustment, leaving the classical "merit" raises even more of a laughingstock than ever at Big Blue.
  • "I don't want to leave just yet" by "426_227". Full excerpt: I'm getting my MBA part-time and my current project work schedule is absolutely ideal for my course load. I am on a project with absolutely no IBM supervision or oversight, which means I have non IBM managers who are actually good people and have no problems with me leaving at 3pm to get to class. I had previously not left because I was learning new skills, advancing on projects, making a comparable salary to those I knew who had left, and I was afraid of the devil I didn't know (as pork aptly put it). Fear was a great motivator. I'm still afraid to leave as I love my project. It's time to leave, at the first of September. But until then I'm trying to work the system as best as I can.
  • "Similar Problem down the Food Chain" by "GTS Grunt". Full excerpt: In GTS, which I consider down the food chain from GBS, the lure of large deals has also created a similar problem. In the last 6 years, we have become addicted to the big roll-out/deployment deals with Cisco and essentially abandoned the SMB customer and the technical strategy business. In addition to these foolhardy moves, we became brazen anti-IBM and shutdown the very lucrative IBM technical support and finishing work that was a steady annuity among our remaining loyal customers, especially AS/400-ISeries.
    The results? GTS has really not made money in over 6 years and has a declining market share and at best a stable gross revenue. Cisco has stabbed us and started their own services arm, the SMB community has turned to business partners for their technical services, SWG and GTS and GBS now have their own technical services teams and our pipeline is drier than the Sahara because we abandoned those small 25-200K "starter" technical strategy deals. The disaster in GTS/ITS (they can't even settle on one acronym) makes GBS look like an organization firing on all cylinders.
  • "Guess I have to answer my own question..." by "wonderaboutibm". Full excerpt: Goldenrod could not or would not answer my question, so I will have to answer it myself. The question was: "Let's suppose that IBM really does want to get rid of 65,000 U.S. and European employees and replace them with BRIC people within two years (there are credible press reports to that effect.) Goldenrod -- do you honestly think that IBM India would be up to snuff in handling such a major disruption in any smooth fashion?"
    We all know that IBM has over 55,000 Indian employees (up from virtually nothing a couple years ago,) and we all know that IBM management views these 55,000 as purely servicing markets outside of India. We also know that a similar situation obtains in many other developing countries -- and that, in fact, IBM shops around for the lowest labor rates, which may or may not be in India. In the absence of a significant demand increase that would absorb these extra resources (which there does not appear to be in IBM's case,) it stands to reason that IBM's plan is to substitute "high-rate" resources in developed economies with "low-rate" resources from the third world.
    American management has always listened attentively to the siren song of cheap, cheap, cheap overseas. In the 1980s there was the Irish "software factory" craze. The idea was to do all the software analysis and design work in the U.S., and farm out the coding and testing to the cheap but well-educated Irish. Somehow that movement fizzled out, although I don't remember all the gory details. There was a boomlet in Indian outsourcing in the early 90s. but that, too, died away.
    Now we have offshoring and outsourcing that has reached much closer to critical mass. We have given the Indians, the Chinese, the Russians, etc. a free ride -- all of western-developed software technologies and methodologies, the high-capacity communications and infrastructure channels, and so on. Surprise, surprise, they can learn how to use all this giftware. No surprise, no surprise, it's easy to code and test the brute force way, and not so easy to develop the real infrastructure for robust IT work.
    So there is my answer: maybe in another 10 to 15 years, the BRIC and other countries will have developed the intangible know-how really to compete with the Boulders and the Raleighs and the Santa Teresas and the Hursleys and the Bottengins, but not until then. In the meantime, yes, IBM will rush as much high-value-add IT work overseas. Along the way there will be spectacular failures, much squandered money, and many dashed hopes. And then finally the pendulum will swing back toward global labor sanity. But before that happens, buckle your seat belts for a very rough ride. And be prepared for heaps of misinformation and lack of communication.

"The test of our progress is not whether we add more to the abundance of those who have too much; it is whether we provide enough for those who have too little." — Franklin D. Roosevelt
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