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Highlights—March 8, 2008

  • The Four Hundred: IBM Ponies Up Another $15 Billion for Share Buybacks. By Timothy Prickett Morgan. Full excerpt: Go ahead, call me stupid. Or old-fashioned. Or just plain Puritan. But I will never in a zillion years understand the logic of share buybacks--and especially those on a massive scale like IBM has undertaken since the mid-1990s. And last week, IBM's board of directors authorized the company to shell out another $15 billion to buy back shares on the open market.

    As IBM itself pointed out in its announcement of the share repurchase authorization, the company has bought back a staggering $94 billion in its own stock from 1995 through 2007 inclusive. IBM still has $400 million in buybacks it can pursue from a prior authorization. Last week, the company said that it would probably spend around $12 billion--out of cash flow from operations--to purchase shares in 2008. This share buyback effect will increase earnings per share this year compared to last year (because there will be fewer shares in the comparison), which compelled IBM to raise its earnings guidance by a nickel per share for 2008, which puts it in the range of $8.25 per share. But, IBM also tightened its range, which was between $8.20 and $8.30 per share prior to this announcement. Basically, IBM told Wall Street that it was confident that it was going to hit the low end of its earnings targets from only a few months ago, and it will spend $12 billion to buy a nickel per share to hit what was the midrange of its targets.

    This is not just folly, it is obvious financial engineering of the most ridiculously wasteful kind.

    While IBM's managers are busy doing whatever it is they do, they could have done some truly remarkable things with $12 billion--not the least of which would be to pay people to work and improve the IT products of the world. Maybe make something those zillions of people want to pay a premium for? Call me silly, but to reach its targets of $10 to $11 per share earnings by 2010, IBM will have to fork out several tens of billions of dollars in share buybacks. Doncha think the $135 billion or so in share buybacks between 1995 and 2010 that IBM will likely pay could have been used to much greater purpose?

    IBM's execs, who get paid in stock options that require them to pump up stock prices as high as they can to maximize their own payoff (just like every other public company), have little choice but to endorse share buybacks if they are cynical about their own prospects to develop hot new products to generate equivalent earnings. There's always the acquisition strategy, of course. IBM will have been able to buy SAP two times over by the time 2010 comes around, for instance. But here is what really annoys me about such strategies. If a company has confidence in its product development and looks for or creates new niches to chase, that company's stock price will naturally rise because new products drive new earnings. In IBM's case, it is old products--mainly mainframe hardware, mainframe software, and related services--that are creating the cash. And some day, that profit stream will dry up and IBM will not be in position with a new, vibrant, and profitable set of product lines. (Whoops! We invested in stock instead of products!) IBM could end up being like Apple had Apple not invented the iPod. All kidding aside.

    I would prefer for IBM to wake up and do something useful with the piles of money it extracts from mainframe shops that are basically addicted to their COBOL code. Like just give it to the executives and employees with a pat on the back. Or maybe re-create a pension plan? (Silly me, I must be a communist.) Or better still, create new products and new markets and maybe live on as a corporation worthy of admiration and respect. This is just the height of laziness and a complete lack of creative thinking as far as I am concerned. I hope the ghost of Old Tom Watson starts haunting Somers and Armonk.

  • CNN/Money: Tech execs paid lobbyist $600,000. Excerpts: The Technology CEO Council, a group of top executives from the information technology industry, paid Mehlman Vogel Castagnetti $600,000 to lobby the federal government in 2007. The trade group, whose members include the chief executives of Applied Materials Inc., Hewlett-Packard Co. , Motorola Inc. , Intel Corp. , IBM Corp. and Dell Inc., paid the firm $300,000 in the second half of 2007 to lobby Congress, on trade policy, energy efficiency and heath care technology, according to a disclosure form posted online Feb. 13 by the Senate's public records office. ...

    Among the group's top priorities are access to Chinese markets, expanding the use of technology in the health care system and protecting against computer piracy, according to the group's Web site.

  • Yahoo! IBM Employee Issues message board: "SDCOE and VC" by "amax41". Full excerpt: My god when is it that Sam will retire?? We are dying here! Not to mention this company has no hope with Daniels at the helm either. Release this morning the SDCOE "Solution Design Center of Excellence" - what has quickly become nicknamed "Bandaids Designed by Idiots to F___ the Customer". Part of my job is now allegedly out - however in the spirit of Customer Satisfaction and also not allowing them to lame my skills - I refuse to use this SDCOE for any process. I also refuse to implement any garbage they design.

    VC? Bet you are wondering about that - this is the beginning of the "Virtual Consulting" era... some guy will talk with you, not understand what you want, ask a guy at the SDCOE what he thinks, design something that won't solve your problem, and have India do the work remote.

    Oh yes the important part - How does IBM now gauge a successful project?? Easy - they get paid. If at least 80% of the dollars are in their hand the project is successful. I have witnessed this to a horrible level.

    It's bad enough to now be losing money due to no raises...the bonuses are weak, pension killed...the roller coaster of "am I layed off or not"...now this.... someone please just put this company to rest.

  • Yahoo! IBM Employee Issues message board: "Bonus CEO says significant increase? I didn’t see an increase." by "ryanmarina". Full excerpt: My manager (PDM) told me that he was surprised at how small his bucket was - especially after all the hype about how much more money was going to be put into the pool.

    I was surprised too that my bonus was not larger on a Percentage basis this year after all the hype. I have been in the same Band since I joined IBM over 10 years ago. The last 3 years I have gotten a PBC = 1. With so much "consistency" in my PBC Rating I should be able to gauge what the fluctuation is in bonus pay and thus see how much "more" was added to the bonus pool. My bonuses over those 3 years were 10.2% two years ago, 7.5% last year and this year 9.8%. Based upon management's comments, I was expecting the Bonuses to be better than 2 years ago.

    I don't see any major increase in the bonus pool unless you are only comparing it to last year's pool.

  • The Register (United Kingdom): Japanese bank sues IBM over 'difficult' system overhaul. By Austin Modine. Excerpt: A Japanese bank is suing IBM for $107m over a systems contract it abandoned because Big Blue's proposal was too difficult to carry out. Suruga Bank, based in the Shizuoka Prefecture, filed the lawsuit in Tokyo District Court, seeking 11.1bn yen.

    Suruga first announced it would replace most of its systems with IBM's "Next Evolution in Financial Services Systems" (NEFSS) in Oct. 2004. The IBM package included a Java-based banking application from Fidelity Information Services and various flavors of IBM database software that can run on mainframes, Unix systems and x86-based boxes.

    At the time, IBM heralded the deal as the first NEFSS adoption in Japan, predicting full-scale operations ready for Suruga in the second half of 2007. But when IBM gave its proposal, the bank turned up its nose at the changes. "We are suing because we decided it would be difficult to implement the system they suggested," a spokesman for Suruga told Reuters.

  • New York Times: A Verdict for Workers, for a Change. Excerpts: The Supreme Court ruled last week that a group of employees suing for age discrimination should get their day in court even though they filed their complaint on the wrong form. The decision is noteworthy because it suggests that this court could be pulling back from what has often seemed like a knee-jerk inclination to rule for corporations over workers and consumers.

    A group of couriers over the age of 40 sued Federal Express, claiming it tried to push out older workers. The issue was whether they submitted a proper complaint to the Equal Employment Opportunity Commission within the legal time limit. FedEx claimed the couriers filed the wrong form, but the court ruled, 7 to 2, that an intake questionnaire and a signed affidavit — which the E.E.O.C. considered a valid complaint — met its “permissive standard” for what was acceptable.

    It is surprising and welcome to see the court apply any sort of permissive standard, considering how it ruled in a similar case just last year. Through a tortured and illogical reading of the law, the court ruled, 5 to 4, that a Goodyear employee missed the deadline for filing a complaint that she was paid less than male colleagues.

    That was one of a series of rulings in recent years that stretched the law to come out against little-guy parties. In one egregious decision last year, the court ignored its precedents to hold that an inmate lost the right to challenge his murder conviction because he missed a deadline — even though he had filed the appeal by the day the federal district judge (mistakenly) told him to.

  • In a Yahoo! message board post, "thekanck" responds to this question: In a statement, IBM Chief Executive Sam Palmisano called the stock repurchases "one of the key elements of IBM's 2010 road map for earnings per-share growth." What are the other "key elements"? Full excerpt: My guess would be: 1) convert more US employees to hourly classifications thus cutting payroll expense; 2) be extremely stingy with approvals of OT for all hourly employees while "encouraging" the remaining exempt staff to work as many hours as possible; 3) Increase size of international workforce size at expense of US employees; 4) Maintain tight controls on employee discretionary expenses like education, conferences, reference manuals, office supplies, cell phones, home office related expense; 5) Extend replacement cycle on IBM issued laptops & PCs. You know... all the normal things a dynamic growing business with a vibrant dedicated workforce would do... silly ;-/ TK
  • Yahoo! IBM Pension and Retirement Issues message board: "Question for the Board - Update" by "ibmsr2d2". Full excerpt: As luck would have it, my manager on a one on one call last week brought up the fact that he would have to put me on a performance plan if I don't make exceed sales number in the first quarter. He's even forgotten that I'm doing other work outside of my mission that he agreed to (forcibly) which may give me some outside contracting opportunity.

    I acted disappointed and somewhat afraid, but this development I think was very good news for me personally. Getting 13 weeks severance and one year medical + CORBA and retiring at around the same time I planned for anyway is a hell of a lot better than nothing!

    Any downsides to taking the "performance related" severance and running out the door as fast as I can?

  • Yahoo! IBM Pension and Retirement Issues message board: "Re: Question for the Board - Update" by "Dan Britton". Full excerpt: I went through exactly the same thing last year. While professional decorum prevents me going on a rant about "how can you be a 2+ one year and out the door a few months later", I saw this as an incredible blessing. I am 56 and have been retired since 1/31/08. You will be shocked to find the most efficient machine within IBM is the one the escorts you to the door. In fairness to my manager, he encouraged me to find something else, even bringing a job to me that I was more than qualified for and at the same level (no cut in pay). But my heart was no longer with the company I had joined in 1977 and my father had worked for 41 years. The package made it a no brainer as that, plus my pension, ought to produce income for a year that was roughly my salary. I don't think packages are going to be around much longer, which also factored into my decision. Think of the whole thing this way; you're dating someone and it's a real pain and you'd like to break up, but the act of breaking up would produce more crap than sticking around would, so you stick around and endure. Then one day she (or he) comes to you and says "I can't see you anymore." You're outraged! "How dare you." But it's really what you wanted all along. Let me know if you'd like to chat offline. I've seen this happen to most of my old team in 2007.
  • Yahoo! IBM Pension and Retirement Issues message board: "Beware the PPA plan" by "larrytuc". Full excerpt: I was employed by IBM from 1981-1993 and let go in the great downsizing of 1993. I was rehired as a regular in 2001. I am now being "resource actioned" again and my last day will be March 31st unless I find another internal job (very slim chance of that). I'm currently 58 years old. Anyway, during my career whenever I was asked I always said I wanted to stick with the prior plan. Turns out I really had no choice. When I was rehired in 2001 I was automatically dumped into the PPA plan. If I were to retire, for 19 years total service all I am entitled to is a one time lump sum of $30,000 or an annuity of $184.02 a month. Talk about IBM screwing it's employees. My annuity amounts to in an entire year less than 25% of what Sam will get in 1 DAY.
  • Yahoo! IBM Pension and Retirement Issues message board: "Re: Beware the PPA plan" by "madinpok". Full excerpt: My understanding is that an employee who was in the prior plan and left IBM and then was later rehired will be placed in the Cash Balance Plan only for the new period of employment. I think you are still entitled to your Prior Plan pension on top of that. The lump sum of $30,000 that you mention sounds like it might be what you earned during the past 7 years in your second employment period.

    As an initial step, call the Employee Services Center and ask them whether they recognize you as a re-hired employee and whether you are a participant in both plans.

    Also, for an official, legally binding answer, you should write the Plan Administrator (mail it via certified mail, with a return receipt) and ask for an explanation of your pension benefits. Be sure to mention that you had two periods of employment, one under the prior plan and a second under the C-B plan.

    In your letter, tell them that if they claim your Prior Plan pension was rolled into the C-B plan, you would a complete accounting of the value of your prior plan pension and the opening balance that resulted in for your C-B account. Let us know how it turns out!

  • BusinessWeek: Big Blue Goes for the Big Win. IBM's director of R&D is shifting the tech giant's focus—and making a few enormous bets. By Steve Hamm. Excerpt: It's a snowy February day at IBM's office in Yorktown Heights, N.Y., and John E. Kelly III drops by a cramped conference room to talk about his plans for IBM Research. The organization is already considered one of the world's best corporate research labs. Yet Kelly, a 27-year IBM veteran who took over as research director in July, is planning surprisingly dramatic changes. "We have to do bolder things, bigger things," he says, speaking about his plans publicly for the first time. "If we don't fail a third of the time, we're not stretching enough. On the other hand, when we win, we need to win big."
  • CNET News: Apple shareholders want input on executive compensation. By Tom Krazit. Excerpt: Scott Adams, representing the AFL-CIO, urged shareholders to demand a "say on pay," bemoaning the runaway surge in executive compensation. "The U.S. system for paying the CEO is broken," he said.
  • Fortune: Buffett: Don't bank on big returns. He chides investors who expect their portfolios to see double-digit growth, and says Berkshire's success has been so great that it is unlikely to see "outsized gains" in the future. Excerpts: Pension problems ahead. Natural disasters aren't the only worry on Buffett's mind. He is also concerned about the bill that will come due when U.S. companies are forced to tell shareholders they have been pumping up their earnings by under funding their pension plans.

    Most big companies have been vastly overestimating the kind of returns their pension plans can realistically expect to earn, Buffett writes. He writes that a survey of S&P 500 companies with pension plans shows the companies on average expect their pension assets to earn an annual return of 8%. With more than a quarter of those assets invested in cash and bonds, Buffett writes, the implicit expected annual stock investment return is 9.2% - and that's after fees. "How realistic is this expectation?" Buffett asks.

    ...Buffett goes on to note that were stocks to return 10% annually throughout this century, the Dow would hit 24 million by year 2100. "If your adviser talks to you about double-digit returns from equities," he writes, "explain this math to him - not that it will faze him. ... Beware the glib helper who fills your head with fantasies while he fills his pockets with fees."

    Buffett adds that the presence of "layers of consultants and high-priced managers," or "helpers," at financial advisers and mutual funds is another factor pulling down returns for individual investors as well as pension plans.

    With all that in mind, why are companies making investment assumptions that could be vastly overstated? Buffett believes it's a case of CEOs manufacturing earnings growth now, at the expense of problems that will manifest themselves only later. Assuming higher returns means having to set aside less money now to build their pension funds. "What is no puzzle ... is why CEOs opt for a high investment assumption," he writes. "It lets them report higher earnings. And if they are wrong, as I believe they are, the chickens won't come home to roost until long after they retire."

  • Yahoo! IBM Employee Issues message board: "Re: Bonus CEO says significant increase? I didn’t see an increase" by "ibmaccountant". Full excerpt: Every man has a price by which they can control you. You are pragmatic and now realize it, bravo! You have seen the edge of your total compensation and that's good. Now you know what your worth. If you don't like it, then you need to act. Just be aware that as time goes by if you don't stand up for it they'll just abuse you more and more. IBM management is incented to do so.

    You need to give management the perception that you are a retention risk, not a problem. Get outside sources to give you job offers, letters of praise and hint they might just want you to join their organizations. Internally, discuss opportunities with other units and teams. It's a fine line between risk and problem, but you have to play it or they'll play you like fiddle.

    When you are ready to really leave, then play the card once, maybe a few months before you start passing your resume. The moment you are perceived as a problem, if they want to keep you, you'll get more compensation which will help in pumping up the salary in your resume. This only works once and you should be committed to leave before you do this.

    BTW, as the recipient of 11 straight PBC 1's in my career I can fully and unequivocally guarantee that you won't always get the promotions, the top bonuses, etc. The only thing a PBC 1 can guarantee is one cycle where you won't get laid off for performance. You can still get laid off for other reasons. It is the gift for management, because when you are at the top of the grid and rating, they can force you to do anything and they know you are now captively "Pavloved" (an IBM Middle Management School term )into moving higher and higher on the performance curve until you finally collapse burned out and ready for disposal as a used up resource.

    Certification is a tool used for delaying compensation for performers and a political tool to punish 1st and 2nd lines as well as problematic employees that can't figure out how to toe the line. If your bonuses aren't looking better and you can't get certified, there's someone aiming a heat seeking missile at you and looking for tone right now.

    There's probably a more politically oriented and anointed person in your organization that is getting your bonus and will probably certify before or at the time you do. That is, if you aren't sacrificed or canned just to keep her/him moving up the ladder.

  • Yahoo! IBM Employee Issues message board: "Re: Bonus CEO says significant increase? I didn’t see an increase" by "bits_bytes_and_bugs". Full excerpt: That is correct, and retirement medical is probably the most onerous lever that IBM has to keep retirement-eligible employees still working at the blue pig until IBM decides to blow them away. So many retirement-eligibles are still at IBM because they need the medical coverage, otherwise they'd be fleeing this disaster.

    As others have stated, the FHA can be taken away at any time - including after one retires. So much for being able to plan one's retirement - you have to assume it won't be there and if it still is it's the icing on a very sour tasting cake. I can't even begin to imagine the rates for IBM's retirement medical after the FHA is taken away.

  • Yahoo! IBM Employee Issues message board: "Re: Bonus CEO says significant increase? I didn’t see an increase" by "ibmaccountant". Full excerpt: This is a great example as to why IBM is known as the "Home of Mediocre Management" and why it's considered also the "Land of Great Propaganda and Fine Print". The system is designed to protect and nurture mediocre or poor management, never allowed to create good leadership, and continually fools young smart high-potential people into thinking they'll get rich to only then be disappointed by the fine print in leveraged commission, bonus and pay plans.

    Your manager may be right, or he could be hiding behind a facade blaming Palmisano. He could be deflecting his decisions or inadequacies as a leader. This is routinely called "transparent management".

    First of all, the pot AT THE CORPORATE LEVEL (bonuses) may have been greater. Unfortunately, the fine print deception starts here. The pot amount or even its total net changed is never disclosed, so you won't by design ever know the truth.

    Next come the operating units. It's always bad to be a poor performer or even a good performing unit at the bottom of the ranking in a good year. You could have been at the top in a bad year the year before and not get as much money when you are at the bottom of a good year. After Sam pulls the bonuses for the operating Sr VP's and then allocates the bonus pools for the various units, you might be screwed right then and there. Remember, IBM is a socialistic dictatorship, not a company that pays for merit. If for example you are an investment unit you might get a disproportionate amount of bonus "because we want to show the unit is the place to be".

    As the money trickles down, the process is repeated. Each level of management pulls money out for their reports then allocates according to whatever performance criteria they chose, not what they've told you. The criteria may change at any time and may not even be remotely justifiable or fair, but that's IBM for you.

    When it gets to 2nd or 3rd lines, a new criteria emerges. That of retention needs and desire to screw the captive brain washed "Hitler Youth". If there is a fear you are valuable and need to be kept, more money goes to your pot. If they want you gone and/or they know you are brain washed or kept in a leash, you'll be fed just enough to stay above starvation. Local managers have complete control over your compensation AS IT IS HANDED DOWN TO THEM. If you aren't getting your fair share you are being singled out as a gullible sap, someone they want gone or someone perceived as paid too much, or your management and unit isn't perceived from up above as worth it.

    I'd go to your management and ask for an accounting of the bonus. I'd also encourage you to ask others what they got, even across other units. IBM is the land of the mediocre. If you're good, you shouldn't be there. You can make a living working for someone else, but you can't get wealthy. It is your job to make management wealthy, not the other way around.

  • Dvorak Uncensored: Classic 1967 'Computer Monster' video. Excerpt: In 1965, information technology company IBM commissioned a set of films for their sales meetings. [Jim] Henson worked on these films with David Lazer, the head of IBM’s film and television division; Lazer went on to leave the company and work for Henson, producing many of the Muppet productions over the next twenty years, including The Muppet Show and The Muppet Movie. This film was so successful that Henson performed the sketch in 1967 for The Ed Sullivan Show, and it was remade as a Muppet Show sketch.

    This is the version that was shown on the Ed Sullivan Show in ‘67. I imagine most DU readers have seen this video before, but I think the comedy is timeless and still hilarious. I still miss Jim Henson. Notice how the “Computer Monster” is the predecessor of the “Cookie Monster” and has teeth.

News and Opinion Concerning Health Savings Accounts, Medical Costs and Health Care Reform
  • Washington Post: Retiree Couple Needs $225K for Medical. By Eileen Alt Powell. Excerpt: A couple retiring this year will need about $225,000 in savings to cover medical costs in retirement, according to a study released Wednesday by Fidelity Investments. The figure, calculated for a couple age 65, is up 4.7 percent from the $215,000 estimate for 2007, the Boston-based financial services company said. And it is similar to other projections for health care costs in retirement _ daunting figures given that longer life spans also are requiring workers to increase retirement nest eggs.
  • The Commonwealth Fund: Health Policy Reform: Beyond the 2008 Elections. Excerpts: With the 2008 presidential election in full swing, health care reform has jumped to the top of the nation's domestic policy priorities–and with good reason. Growing evidence indicates that the U.S. system falls short in critical areas. The number of Americans without health insurance is climbing steadily: 47 million people were uninsured in 2006, an increase of 8.6 million–more than 18 percent–since 2000. In addition, an estimated 16 million Americans are underinsured and paying high out-of-pocket costs for their care. Even people with good insurance coverage are feeling the effects of higher out-of-pocket health care costs, which are causing them to cut back on their retirement saving contributions. Meanwhile, the quality of care is highly variable and delivery of care is often poorly coordinated, driving up costs and putting patients at risk. In short, our health system is failing to perform as it should. With rising costs straining family, business, and public budgets, access deteriorating, and quality variable, improving health care performance is a matter of national urgency....

    The Commission's work indicates that expanding access to health insurance coverage is the single most important step to achieving a better system. Presidential candidates from both the Democratic and Republican parties have proposed plans that seek to expand health coverage, albeit in different ways. And although increasing coverage is critical to improving health system performance, research points to a number of other policy steps that need to happen, from speeding the adoption of emerging information technologies that can enhance health care effectiveness and efficiency to building new payment mechanisms that reward quality of care instead of quantity.

  • Houston Chronicle: Cuomo Expands Probe of Health Insurers. By Michael Gormley. Excerpts: New York Attorney General Andrew Cuomo said Thursday he issued new subpoenas to Aetna Inc., Cigna Corp., UnitedHealth Group Inc. and WellPoint Inc., and other health insurers in a broadening investigation of possible fraud costing consumers hundreds of millions of dollars. Cuomo is also looking to subpoena testimony from the chief executives of those companies, as well as from executives of Empire Blue Cross Blue Shield, Excellus, and the combined Group Health Inc. and HIP Health Plan. "The CEOs are responsible for their corporations and these actions had a significant impact on families all across the state," Cuomo told The Associated Press. ...

    Cuomo says he believes the companies used the UnitedHealth Group-owned Ingenix to set rates, which resulted in consumers being reimbursed at unfair and unjustifiably low rates. Low reimbursements mean higher out-of-pocket costs for consumers when they choose or need physicians outside their health plans. "Ingenix is a wholly owned subsidiary of the industry and the company is determining the rates that the insurance companies use to reimburse consumers," Cuomo told The Associated Press. ...

    "I believe consumers have been defrauded," Cuomo said. "I believe the companies have been allowed to do it nationwide. I believe there is a certain corporate arrogance to these companies." He said the companies, which face less competition and record profits after a series of mergers, aren't fulfilling their commitment to pay fair reimbursements. "The CEOs are responsible for their corporations and these actions had a significant impact on families all across the state," Cuomo said.

New on the Alliance@IBM Site:
  • Alert: Be aware that IBM is blocking e-mail from the endicottalliance address to IBM internal e-mail and filtering from employee to employee with the term Alliance@IBM
  • Tell IBM to rescind employee pay cuts. Effective February 1st, IBM unilaterally reclassified 7600 employees from exempt from overtime to non-exempt AND cut their pay 15%. IBM is also rebanding employees to lower bands which will also affect future wages. IBM Executives are meeting with employees around the country who are getting their salary cut. Is this simply damage control?

    Keep the Pressure on! Take a stand! SAY NO to Pay Cuts! Tell me more...

  • Plan Now! Make your voice heard at the IBM Stockholder meeting April 29th in Charlotte, North Carolina. Details to follow...
  • Thirteen of 300 – A Glimpse into the IBM Resource Action of December 17, 2007. By an affected IBMer.
  • From the Job Cuts Status & Comments page
    • Comment 3/01/08: Just got told by my manager that if I don't make my numbers by end of Q1, I'm RA'd. Everyone in GTS Sales (BDE, ITSM, SSL) that was a "3" for 2007 gets canned via performance plan and severance choice if not at 125% of quota (if you can figure out what your quota and your territory is) by end of Q1. Directive from HR. -GTS Saleslady-
    • Comment 3/03/08: I have been working for EUS for almost 7 years as tech support for the Astra Zeneca account. Last Thursday, the remaining IBMers on the account were all put on the Resource Action list. We are being replaced by a desk in Hydrabaad. What makes it worse is, Astra Zeneca recently purchased a company called Meddimmune. Our management is currently at Meddimmune in Maryland learning the account. All of the CCI CONTRACTORS currently on the AZ desk were offered extensions to work on the Meddimmune account through August..while all the IBMers were let go and not offered a chance to stay on through the summer. -Anonymous-
    • Comment 3/03/08: I work for ISC, Customer Fulfillment and we lost 67 people between Atlanta and Raleigh in an RA announced 2/29. We can try to find a job within IBM if we want; but we all know this is a waste of time. -forkyouibm-
    • Comment 3/05/08: I have been on the AZ acct for 7 years - On Feb 1 we got a note that said "Happy 7th Anniversary", by the 28th we got a call that said - see ya! We don't need ya! How disheartening. How many of us are stockholders? Has anyone else thought of sending a letter to be read at the stockholders meeting on April 29th? Does anyone at the Alliance know how that works? I feel like I busted my behind for these people for 7 years and because of some stupid ass 2nd line manager who thinks they will get a bonus - we are gone. When this all goes into the crapper I'm praying to have a nice stress-free job somewhere else so I can sit back and laugh! -Anonymous-

      Alliance reply: The stockholder meeting is tightly controlled and very little dissent is allowed. Just getting to speak, outside the proxy presenters, is very difficult. Besides, the stockholders only care about 1 thing--is the stock price going up. Employees who are stockholders are a very small percentage. We would suggest you write the letter and we can put it on the Alliance web site. More people will see it.

    • Comment 3/05/08: Interesting thing about this "overseas" garbage - Did you know that all the U.S. IBM Executive Helpdesk calls still come to the U.S. ??? Even though "IBM Internal", which supports all IBM users, has been overseas for some time now? Why is India, etc., good enough for the "common" employees, but not acceptable for the money-grubbers? Heaven forbid the EXECUTIVES have to deal with a foreigner! They still get to speak with Americans. What's good for the goose is good for the gander... and Sam should be tarred and feathered to look like that gander. I agree with "fedup", try him for treason.. -Penniless-
  • General Visitor's Comment page:
    • Comment 3/06/08: This came out Tuesday: "Each year we are challenged to improve upon our business performance to drive continued positive growth in the AIS Service Line. In order to meet our 2008 business objectives, we have aggressive utilization targets that require that we drive at or above 10% every week as an organization. This equates to an average of 4 hours of billable overtime per person each week.

      I do recognize that many of you spend time travelling that is not considered billable. You should continue to log that time as nonbillable for the actual time worked. However, to achieve our growth objectives, our model requires that each practitioner average a minimum of 44 billable hours per week. For those of you who are currently exceeding this run rate, I thank you and encourage you to keep up the great work. For those practitioners averaging less than 44 hours per week, please work with your project management to structure your workload to accommodate the minimum of 10% overtime. Exceptions, including contracts capped at 40 hours, should be brought to your Practice Leader or RDM's attention for escalation. Billable utilization has a major impact on our financial results, so your efforts do make a difference. I sincerely appreciate the value, innovation, hard work and commitment each of you deliver on a daily basis!

      Donna D. Satterfield AIS Americas Cross-Sector Leader Global Business Services" -Leaving-

  • Pension Comments page
    • Comment 3/04/08: -72 a week- And, good for you too. I did the long days and weekends for weeks at a time when I was young. Then I noticed that I was letting my life pass me by. After that, I did 40 hours per week unless their was an emergency. I got to see my kids grow up, and still made good money. I'm retired now, and IBM doesn't give a crap about me. But, my family does, and that is what counts. - Wouldn't change a thing if I could do it all again -Anonymous-
    • Comment 3/04/08: Former IBMer here! I left last July after much disgust with LEAN-related staff massacres. My IBM career spanned nearly 9 years so I have a few PBCs under my belt. I was a remote employee. With very few exceptions, I honestly believe that my manager didn't have too much of a clue as to what exactly I did, what I worked on, etc. other than the fact that my accounts were all happy with me and that we would have a brief monthly chat during our 1 on 1.

      Whenever the time came to write up my PBC rating of myself, I think that I having a gift of worthsmithing was invaluable. I was always able to justify at least a 1, mostly 2s, and finally a 2+ rating, once those came into existence. I truly believe that a key is not only what you say but how you say it that counts. It's difficult for a manager to down a rating when you indicate that what you've done has either saved some cost and/or increased customer sat.

      I know this is such a stinkin' chore to do at the end of each year, but it helps that whenever a project turns out right, keep some notes in your own little PBC file so that you can "spin" it during PBC rating time at the end of the year. For those of you still employed by Big Blew, I feel for you. I know the company is unstable and senior management have all lost their minds, but if you're willing to stick with it, please join the Alliance. If I hadn't left when I did I would have joined! Unfortunately, I didn't know there WAS an Alliance until after I left. Good luck to all. -Mistressofthei5-

  • Raise and Salary Comments
    • Comment 3/05/08: So I'm thinking since cost cutting is so in vogue that we should follow our companies lead, do a little cost cutting ourselves...chip in.. We have to help them save. You know I just can't afford maintaining my nice wardrobe of suits for work anymore. With these cost cuts sweats and ripped jeans are all I have to wear.. I mean my mortgage and car payments and my health insurance and retirement come first. and now there's just nothing left over to throw away on these luxury items. I'm sure my management will understand,

      We are only trying to save and reduce our cost too. Hey and I'm sorry if I can't afford to do my laundry as often either as you know , we are only trying to save ...our customers will understand that ...and if we show up on site all sweaty after riding a bike to a customers site it's nothing personal we are just helping to save money..you understand gas is so expensive and then there's the environment thing too. Yeah I know you give us money for gas but that just drives up the nations imported oil debt and my personal cost at home for my after work use of my car.. using all that oil...cuz, you only pay for business use of my car..I'm not finding the trade-off to my advantage anymore with gas approaching $4/gal.

      So thanks, but I think that I'll be riding a bike to the customers site now on. As a final note I want to thank you for lowering our tax bill by lowering our wages. Now our community gets to lay off some of our teachers and my kids have to sit in an overcrowded classroom. I don't know I thinking about home schooling now, however that is pretty time consuming so I hope that you understand that it's nothing personal if I need to stop working overtime as we are only trying to save that's all. -Oz-

    • Comment 3/05/08: Location = USA Message = To appealingibmer - I had my meeting with HR earlier this week. I hope you see this posting soon enough for it to be useful to you. The types of questions they asked me - Tell us about the project(s) you work on. What are the types of tasks you perform each day? What portion of your time is spent on each task? How long have you worked in this job? Who provides your work direction & how often? Do you work with users? Do you do any computer programming work? The person who did all the talking was very thorough in collecting specifics on my position. She seemed to be using a detailed script and was nice about the whole thing - I'm sure she's just as excited about these meetings as we are. She said I'd hear the results within a few weeks. Good luck to all of you who will be having an interview. -An Upset and Concerned IBM Employee-
    • Comment 3/07/08: Ok, now a different issue that is blatantly illegal which IBM HR is trying to do. One of my co-workers is a weekend warrior (in the guard/reserves). Last year, this person had to attend a school which lasted about a month. Now it's time for the annual bonus & this person is getting the bonus pro-rated because they were gone for a month! Can you say illegal or what? I told this person to call their employer relations liaison in the military & they would contact HR to set them straight.. -A_member-
    • Comment 3/07/08: Looks to me the calculation to used to figure, yearly and Hourly pay is formulated in the Favor of IBM. It uses 48 week's to figure the yearly pay and then divides that with 52 weeks to break down to a weekly and then hourly rate. Loosing 4 weeks of the year and lowering the hourly rate. Then of course the OT rate is lower also. Check your pay rates. Compare now to before the 15% robbery. You may have a statement from your last review that states your monthly and Yearly pay.. -PC-
  • PBC Comments
    • Comment 3/03/08: Prior Yr PBC = 2; This Yr PBC = 2+; This Yr Bonus = 6.4%; Prior Yr Bonus = 1.4%; Message = Even mid-year last year, my new manager thought more of me than his predecessor, hence the clear disparity. -Anonymous-
    • Comment 3/03/08: Prior Yr PBC = 2+; This Yr PBC = 1; This Yr Bonus = 10%; Prior Yr Bonus = 6%; Message = 10% is nice, don't get me wrong, but only in the relative sense. I'm not sure it was worth it to be honest. There just doesn't seem to be a way to work harder to get any better than 10% bonus.. so why bother? -Anonymous-
    • Comment 3/05/08: -Mistressofthei5- After 33 years with IBM, I found that keeping a PBC log was invaluable. I have a Notes DB just for this and made an entry each month. I sent that doc to my manager each month too even though it wasn't needed/wanted. I always put my PBCs in it and my actions against those PBCs. If nothing else, it made the yearly evaluation write-up a snap. 100% copy&paste. I can send a copy of the DB to anyone that wants it. -Anonymous-
    • Comment 3/06/08: Prior Yr PBC = 2+; This Yr PBC = 2+; This Yr Bonus = 4.49%; Prior Yr Bonus = 4.09%; Message = I don't get it. Been here ten years and I still don't get it. It comes out to $285 more than last year's bonus, even though they don't call it that now. Wasn't this some kinda banner year? And why are other 2+'s getting 10% bonuses?? Is it likely that my boss just gave everyone a 2+ so he could spread the wealth rather than actually giving a bigger payout to top performers? Or are the guys getting 10% with the same PBC rating as me maybe underpaid and that makes the % weird? Find that hard to believe as I am not even at midpoint for my band.

      I'm not about to look a gift horse in the mouth (and some will argue that this is no gift, but earned through hard work), but it messes me up to think that our team took a 20% hit with last year's RA, we're about to take another hit and the work just keeps piling up. I feel so disillusioned on what should be a happy day, getting my payout info. Instead I just sit here wondering whether it would even be worth it to try and achieve a 1 on this team. It sounds like if my dept paid out less than 5% on a 2+, then the 1's probably didn't do that much better. I'm starting to agree with a previous poster that my time above 40 hours is better spent on another job; the o.t. is worth exactly nothing to IBM since that's what they pay me for it.

      And for those newbies who regularly chorus "you knew the deal when you took the job", no we didn't. My band and job have changed so many times in ten years (and we don't get a say in such things at all) that whatever I may have thought I agreed to ten years ago, eager just to get my foot in the door, is meaningless at this point. Yeesh, I sound so bitter and I'm really not.. just kinda non-plussed.. all the time now. -Huh?-

  • International Comments
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.

  • "Managers who may not be able to manage" by "civilliberty". Full excerpt: t has finally happened in my area of the business. I am a project manager. Most of the people working on my projects received the pay cut. Before the pay cut, specific work would take about 5-6 hours OT a week. Now the people are telling me this same work required another 3 additional hours of OT for maybe 8-9 each week. Of course, not only does this blow my budget for the project, but it is freaking out our managers. Everyone allegedly has pre-approval for 5 hrs OT each week. Now, people are coming right and left for this additional approval. My execs/bill payers are not going to like the blown budget and HR isn't gonna like the OT. But our mgrs can't say no because the work has got to be done. -Anony-
  • "Between the Rock and Hard Place" by "ancientblueconsultant". Full excerpt: Looks like despite IBM's tradition of studying a problem to death some arrogant executive acted impetuously and vengefully and immediately created another set of new problems under the law of unintended consequences.

    In addition to all the problems you've aptly described, they now have the problem of explaining these changes in government and commercial hourly contracts. This may finally explain the mystery as to why IBM introduced new contract templates in 2008 that brought about penalties and other disincentives for clients to have retainers and contingency hourly contracts. They want to be able to manipulate their employees at will and divorce individuality from the services business. In other words, they want the freedom to screw their "resources" at will and cover it up from the customers. They also want the freedom to financially engineer anything they want in a customer relationship through the use of modular service product protected via severely restricting contract language. They intend to make a 30-40% profit in EVERY deal, no matter what happens. One day, customers will wake up and see their business model and run like hell away from them, just like Microsoft and others.

    If they successfully (and the outcome is still in doubt)make services into a canned product like McDonalds or Wal-Mart, they may lose the client looking for quality and a fair price but possibly gain market share with the bottom feeders. Is this strategy change in business a result of some insight or desperation? Time will tell.

  • "Will commoditisation ever occur?" by "civilliberty". Full excerpt: Despite IBM's best efforts to mass produce common consulting services I think the process of producing a canned product cannot succeed simply because there is too much variation from company to company in it's use of different technologies, different configurations of the same technologies and different business rules and how they have been implemented whether via packaged software (ala ERP) or legacy systems.

    The only way to achieve this is for software and companies to converge - perhaps a small number of mega-corporations world-wide who standardise their software and business processes. IBM is too small in too big a world to wield this influence I suspect - though they seem stuck in a time-warp where once they were king.

  • "You are cheap (perhaps)" by "civilliberty". Full excerpt: I understand bands have been re-classified since I was last there (about 2 years go). A band 7 is now a senior consultant where previously it was just a consultant. This reflects 2 things:
    1. People who were experienced enough to be band 8 but weren't getting promoted for a variety of reasons (IBM's lousy treatment of employees and the higher charge out rate to clients).
    2. Using an employee to perform higher duties at lower pay - typical IBM wage arbitrage.

    Though you may think IBM is doing you a favour, I suspect you are being taken advantage of. Your one consolation is that you are developing a management skill set (if this is what you want)which you can sell to the market at a market rate post-IBM.

    As ABC said though, you either manage or design/architect - not both - at least not at once. Both are demanding enough in their own rights such that to do one or the other properly requires your complete attention. IBM makes this mistake with it's business analysts too where they spread them across a number of different activities (business analysis, management and design etc). The good business analysts I have known are good at that activity but bad at any other, there may be exceptions though. I would not be surprised if IBM has given you a role because you were available and told you that it was being an architect when it was something else - HR are generally woeful at understanding roles (I had a colleague being put forward for a role classified as business/analyst when it was in fact a network administrator's role - poles apart).

    You first need to be able to define for yourself the difference between management and architecture and then decide which one you want to do.

  • "Work that free OT!" by "GBS_BC". Full excerpt: Each year we are challenged to improve upon our business performance to drive continued positive growth in the AIS Service Line. In order to meet our 2008 business objectives, we have aggressive utilization targets that require that we drive at or above 10% *every week as an organization. This equates to an average of 4 hours of billable overtime per person each week.

    I do recognize that many of you spend time travelling that is not considered billable. You should continue to log that time as nonbillable for the actual time worked. However, to achieve our growth objectives, *our model requires that each practitioner average a minimum of 44 billable hours per week*. For those of you who are currently exceeding this run rate, I thank you and encourage you to keep up the great work. For those practitioners averaging less than 44 hours per week, please work with your project management to structure your workload to accommodate the minimum of 10% overtime. Exceptions, including contracts capped at 40 hours, should be brought to your Practice Leader or RDM's attention for escalation.

    Billable utilization has a major impact on our financial results, so your efforts do make a difference. I sincerely appreciate the value, innovation, hard work and commitment each of you deliver on a daily basis!

  • "But don't buy anything!" by "alwaysontheroad4bigblue". Full excerpt: Yup, we need to donate our OT but at the same time, the company as asked us to continue the spending freeze. Employees must fund the cost of their own supplies, software, books, home office telephone line, network connection, courses, conferences, printer ink, backup hard drives, and pretty much every other expense that companies would consider the cost of doing business.

    This is true even for the cases of traveling and work-at-home employees that don't have IBM offices, so therefore cost IBM nothing in terms of traditional office expenses.

    Somehow, though, the company found the funds for a $15 billion stock buy back, which amounts to $43,000 per world-wide employee, or $118,000 per U.S. employee. Stock buybacks, of course, help drive up the value of stock options and grants for our senior executives.

    These policies illustrate all too well how little value IBM places on its employees.

If you hire good people and treat them well, they will try to do a good job. They will stimulate one another by their vigor and example. They will set a fast pace for themselves. Then if they are well led and occasionally inspired, if they understand what the company is trying to do and know they will share in its sucess, they will contribute in a major way. The customer will get the superior service he is looking for. The result is profit to customers, employees, and to stcckholders. —Thomas J. Watson, Jr., from A Business and Its Beliefs: The Ideas That Helped Build IBM.

This site is designed to allow IBM Employees to communicate and share methods of protecting their rights through the establishment of an IBM Employees Labor Union. Section 8(a)(1) of the National Labor Relations Act states it is a violation for Employers to spy on union gatherings, or pretend to spy. For the purpose of the National Labor Relations Act, notice is given that this site and all of its content, messages, communications, or other content is considered to be a union gathering.