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IBM’s shift in workers is not about skill or job rebalancing. Sam is replacing older American workers with low wage college hires, as well as contractors and foreign workers who are typically young, male, and without benefits. The global employee count is almost 500,000, but the decimated American count of 105,000 in 2009 is now estimated to be about 98,000
Sam is not retraining Americans. He says IBM spent $600 million training and retraining “and people can’t move up the skill ladder. So we have to replace them. I think it appropriate and fair. You give them the opportunity to reboot and help them transition. But if they don’t do it, then they don’t do it.” This rationalization is disturbing and untrue. It shifts responsibility for being fired to employees saying many tens of thousands of Americans are not able to learn.
instead, while the HR team and written performance objectives require employees to create skill plans, which are used as a determinant as to who is fired, the business end for years has told us there is no longer a training budget. Skill plans and mandatory conference calls that detail improved, sophisticated career path programs are ignored and replaced by the rare approval for a class or conference for a few employees. Paranoia to cut costs is so strong my manager repeatedly chastised me for spending $30 on a company course I had thought was free. The truth is, IBM would not train Americans already targeted for replacement because they are considered expensive – the reason for offshoring so many positions they want filled by low wage workers. The flood of layoffs attests to this. Many laid off employees are required to train their foreigner replacements to do their job. This demonstrates they have the skills.
Then, it does not matter what skills an American has.
IBM employees typically find their next project by applying to internal job posts. “Americans need not apply” seems apt. An email reply to an application for a job in my neighborhood stated that the first group considered is foreigners. It reads, “The cost difference is too great. IBM India may not have visa ready resources with the specific skills, so many times U.S. resources do fill seats”. ...
Sam, your layoffs are mean-spirited robbery. The last work day is 4 days or so before month’s end so we lose a week of earned vacation pay. IBM’s “stealth” layoffs skirt the Warn Act with small numbers at many locations on different dates. Instead of 60 days notice and pay, we get 30. This unfairly gives IBM a massive cost savings as we are kicked rudely to the curb.
Food stamps, a Social Security check and a modest IBM pension couldn't stop the cycle of bouncing from motel to parking lot. ...
Julie Sager, financial stability program director at Triangle Family Services, says she "didn't used to see so many successful, college-educated people." “We see a lot more of those now than we ever did," she added.
Selected reader comments follow:
A lawyer who specializes in labor law should be able to help you understand it better, but will probably tell you that it comes down to a take it or leave it choice. There is zero chance that IBM would agree to modifications.
If you choose not to sign, you will still have access to COBRA coverage (at your expense) and then your retiree health insurance coverage (probably under the FHA). But besides the severance pay, you will probably also be giving up the transition medical plan, under which IBM will continue to pay for part of your COBRA coverage for 6 months to 1 year.
"Employees who are offered employment arranged by IBM with a third party, and who will initially receive comparable terms and conditions of employment, will not receive the payment or benefits of the resource action. The resource action project office will, in its sole discretion, determine when IBM has arranged employment that initially provides the employee with comparable terms and conditions of employment."
Since "IBM is providing you with Right Management Career Outplacement services as part of your transition package." Does use of this service constitute "arranged by IBM"?
Also have concerns with the following: "Any employee going to an IBM subsidiary or affiliate as a regular employee...will not receive the payment or benefits of the resource action."
When I raised this concern with ESC, I was told "they had no idea who might be IBM subsidiary or affiliate" and HR had to seek legal advice. I am still waiting for a reply. Anyone else familiar or concerned with this wording? Thanks.
I don't think anything that occurs with Right Management would count as employment arranged by IBM with a third party. Right Management is a placement service that will help you write a resume and search for a new job. But finding that new job is up to you. In this case, you should expect to receive the separation package.
If you find employment with a vendor that IBM is engaged with, I don't think that will count as something "arranged by IBM" unless IBM actually played a role in getting you the job. Nor would I consider them an affiliate. If you get the job due to your own networking with your contacts at that company, you should be able to get the severance package.
IBM HR should be able to answer these questions. If they can't, then it is probably worth an initial discussion with an attorney who specializes in the labor field. A phone call or letter from your attorney may also motivate IBM to give you an official answer.
If you are turned down, appeal the decision. Make sure you supply documentation that shows that IBM froze the pension plan as of 12/31/2007. There is a statement to this effect on page 5 of USHR113, which is available in the files section of this group in the folder called "IBM Retirement Benefits Info."
The low/medium/high deductible plans will cover you in any state you travel to. If you choose one of the HMO or EPO plans, you will be restricted as to where you can get your medical care.
The plans are indeed expensive, but so is most medical insurance. As an employee, you pay only a fraction of the cost of the plans and IBM pays the rest. As a retiree (especially with the FHA) you are pretty much on your own.
The cost of the retiree plans is about twice the total cost of the plans for active employees. This is because IBM places retirees in a separate group and, since they tend to be older and have more medical expenses, the premiums are higher.
Depending on the state you live in and your health, you might be able find a less expensive plan on the open market. But it is far from easy to do and you need to be very careful to make sure you understand what the insurance will really cover.
Cons: - salary is not at the higher end of the market rate (it's at the average end); - performance rating can be subjective depending on manager you get; - depending on demand, may not get a role you like; - lots of red tape to do in your own time; - work life balance sometimes hard to find if project is behind schedule.
Advice to Senior Management: I've seen many great and clever employees leave IBM due to the salary not being competitive enough. It appears like IBM would rather pay more for an experienced hire rather than increase the salary of an existing IBM employee. IBM need to either become more competitive with their salary or improve their employee recognition programs or employee benefits to retain their employees.
Cons: Too many processes and inefficiencies to get the simplest task completed. While the working arrangements can be flexible (depending on your manager), there is a lot of pressure to get work done even though there are limited resources available. If a team member retires, resigns (yes, that happens) or is "resource actioned" (i.e., laid off), IBM does not replace that member, and remaining team members are expected to pick up the slack. There is no sense of job security, no matter how well an employee performs, or how well the division or business segment does in terms of generating revenue. There does not seem to be any rhyme or reason to decisions to lay off an employee. I've have personally seen IBM lay off highly skilled, knowledgeable, positively-reviewed, and experienced employees, in very successful, revenue generating projects. Too many meetings. By the time I get out of meetings, almost the entire day is gone.
Advice to Senior Management: Reduce required meetings, and try to eliminate inefficient processes and requirements. Ask the typical employee how much time is lost on attending meetings and trying to obtain needed resources to complete a project on time. You would be shocked!
This company is so large it would take a nuclear attack to sink it. Yet its very scale means those jockeying to be captain of the ship can afford to spend their entire time backstabbing, stealing credit from rivals and waging turf wars. Shareholders, customers, staff – they are almost ignored while the various leaders seek status at any cost.
Possibly in previous eras, bosses were less selfish. Even ambitious types, who clawed their way up the corporate ladder, seemed to care more for the institution where they worked. Now their personal career is all that matters. The individual’s priorities are the only agenda, even if that conflicts with the workplace. Perhaps this is revenge for the way modern capitalism has dispensed with much loyalty towards personnel, how the traditional relationship between employee and employer has frayed and become highly legalistic and hollow. ...
More likely though, demented office politics represent an external manifestation of various mid-life crises. Boardrooms are overwhelmingly populated by men aged 45 to 60. By this age, most of the players have worked out that more money doesn’t bring happiness; time is taking its toll; maybe the striving and sacrifices weren’t really worth it; and the participants tend to become more acutely aware of their mortality, shortcomings and missed opportunities. Regrets and anger can become the dominant emotions, as optimism and hope gradually diminish.
Thus the boardroom can end up resembling a psychiatric ward. Motivations diverge violently, and maintaining a rational sense of purpose can become impossible. Meanwhile, new technology, changing demographics, the rise of emerging economies, the financial emergency and other threats mean many western organisations face an existential reckoning. Plenty are standing on a “burning platform”, as the CEO of Nokia put it – yet those in charge bitch and scheme even as the flames lick their boots.
Part of the problem, experts say, is that while the Roth 401(k) is fairly simple to understand, determining whether one is right for you is often anything but, requiring a careful assessment of both your current and future tax situation. "It's both a macro and a micro decision," says Gil Charney, principal tax researcher at the Tax Institute at H&R Block, a division of H&R Block Inc.
Who might benefit from a Roth 401(k)? Broadly, it is the same population for whom the Roth IRA is a good fit: those who expect their tax rate to be higher in retirement than it is currently. That may include investors who think the government will raise taxes in the future. By contrast, individuals who expect their tax rate to be lower in retirement are better off with a conventional 401(k) that delays the payment of taxes.
Alliance reply: It can't be made "illegal", but it can be countered and made useless to IBM management by one simple step: Organize IBMers and get a written collectively bargained contract that prevents management from making themselves wealthy on the backs of IBM employees. Executives, right on up to the CEO have contracts that stipulate what the company MUST pay them on their retirement. All of the CEO's benefits, bonuses, stock options, salary, and perks are also negotiated for them in a written contract. It's perfectly legal. And so will a contract between IBM and the IBM employees also be perfectly legal.....IF IBMers decide to organize and stand up and fight back. Get busy fighting for your jobs, or get busy losing them.
Alliance reply: Yes, one thought. Not much you can do about it now. It is perfectly legal for IBM to do this. For IBMers still employed, there is only one thing you can do about it: get organized and fight for a union contract. IBM can break its own rules, legally, and there is nothing you can do about that. You are an "At Will Employee". IBM can treat you terribly, upon your RA and there is very little that you can do at that point. US IBMers that are still employed, need to LEARN from the RA experience. ORGANIZE. Get busy fighting for your jobs or get busy losing them.
P.S I forgot to add, I worked in the Software Group under the notorious Steve Mills. I worked L2 support. In 1993 when 3 finger Lou came in, lot's of people got let go, some I have to say were bumps on a log, but others it was truly unjust. I am a paying member and no longer belong to IBM, so my question to ALL of you, what's your problem besides not having enough cheese with your whine to join! Aye Captain??? -Steve-
"My bookkeeper says, 'Ooh, this is kind of high, Pam,'" she said. "But I see the benefits 100 times over. I want my employees to be productive and healthy and happy." Software developer Sartell Group is bucking the trend. Nationally, the number of small businesses offering insurance at any level dropped last year, despite a new tax credit designed to encourage it. ...
Henry Bromelkamp has been providing fully paid insurance with no co-pays or deductibles for 33 years. He says he does it because it makes good business sense. "People's first reaction is, 'Henry, that's so generous,'" he said. "Actually, I think I'm a very good businessman and capitalist. I'm doing it to make money." Bromelkamp Co., with 16 employees, develops software to help nonprofits and foundations manage grants. ...
Bromelkamp says it's vital to offer a competitive benefit package to attract the best job candidates. In addition to paying all of his employees' health insurance, Bromelkamp funds the maximum amount allowed in a Simplified Employee Pension Plan account. In return, workers earn significantly less in wages. ...
"When I advertise for employment, I don't tell people what their salary is," Bromelkamp said. "I tell them what their compensation package is." The trade-off puts more money in the workers' pockets and into the business because of reduced taxes, he said.
He tells the story of a woman who interviewed at his company four years ago and was making about $80,000. He offered her $55,000. To ease her jitters, Bromelkamp presented a spreadsheet breaking down her current paycheck, showing that about 40 percent of her take-home pay went to pay for health insurance, 401(k) contributions, child care, Social Security, Medicare, and state and federal income taxes. When Bromelkamp picked up the tab for health, retirement and child care, the worker moved into a lower tax bracket, avoided taxes on health care expenses and had more in her pocket despite a 30 percent pay cut. ...
Bromelkamp said he wins, too. He reduces payroll and the taxes tied to it -- including unemployment, worker's compensation and disability -- and he can deduct the cost of health insurance. "I don't know why every company doesn't do this," Bromelkamp said. "It's not like health care is a luxury. You can't say to an employee 'we can't afford health care anymore.' Somebody's going to pay for it. And it might as well be in pretax dollars."
Editor's note: The approach taken by these small businesses is actually what IBM followed until the pension and retiree medical heists of the 1990's and beyond. For year, employees were told in department meetings that although they were receiving lower salaries than what they could get at other employers, they would get their payoff in retirement with a generous pension that included regular cost-of-living increases, and lifetime medical insurance. As history shows, though, IBM reneged on its promises in favor of creating "phantom" earnings, thereby driving up the bonuses received by its senior executives. See Retirement Heist for the details.)
Industry experts have said that electronic health records could generate huge savings — as much as $80 billion a year, according to a RAND Corporation estimate. The promise of cost savings has been a major justification for billions of dollars in federal spending to encourage doctors to embrace digital health records.
But research published Monday in the journal Health Affairs found that doctors using computers to track tests, like X-rays and magnetic resonance imaging, ordered far more tests than doctors relying on paper records.
There are many possible explanations for why Americans pay so much more. It could be that we’re sicker. Or that we go to the doctor more frequently. But health researchers have largely discarded these theories. As Gerard Anderson, Uwe Reinhardt, Peter Hussey and Varduhi Petrosyan put it in the title of their influential 2003 study on international health-care costs, “it’s the prices, stupid.”
As it’s difficult to get good data on prices, that paper blamed prices largely by eliminating the other possible culprits. They authors considered, for instance, the idea that Americans were simply using more health-care services, but on close inspection, found that Americans don’t see the doctor more often or stay longer in the hospital than residents of other countries. Quite the opposite, actually. We spend less time in the hospital than Germans and see the doctor less often than the Canadians.
“The United States spends more on health care than any of the other OECD countries spend, without providing more services than the other countries do,” they concluded. “This suggests that the difference in spending is mostly attributable to higher prices of goods and services.”
Prices don’t explain all of the difference between America and other countries. But they do explain a big chunk of it. The question, of course, is why Americans pay such high prices — and why we haven’t done anything about it. “Other countries negotiate very aggressively with the providers and set rates that are much lower than we do,” Anderson says. They do this in one of two ways. In countries such as Canada and Britain, prices are set by the government. In others, such as Germany and Japan, they’re set by providers and insurers sitting in a room and coming to an agreement, with the government stepping in to set prices if they fail. ...
“In my view, health is a business in the United States in quite a different way than it is elsewhere,” says Tom Sackville, who served in Margaret Thatcher’s government and now directs the IFHP. “It’s very much something people make money out of. There isn’t too much embarrassment about that compared to Europe and elsewhere.” The result is that, unlike in other countries, sellers of health-care services in America have considerable power to set prices, and so they set them quite high. Two of the five most profitable industries in the United States — the pharmaceuticals industry and the medical device industry — sell health care. With margins of almost 20 percent, they beat out even the financial sector for sheer profitability. ...
The players sitting across the table from them — the health insurers — are not so profitable. In 2009, their profit margins were a mere 2.2 percent. That’s a signal that the sellers have the upper hand over the buyers. This is a good deal for residents of other countries, as our high spending makes medical innovations more profitable. “We end up with the benefits of your investment,” Sackville says. “You’re subsidizing the rest of the world by doing the front-end research.”
"But dependency on government has never been bad for the rich. The pretense of the laissez-faire people is that only the poor are dependent on government, while the rich take care of themselves. This argument manages to ignore all of modern history, which shows a consistent record of laissez-faire for the poor, but enormous government intervention for the rich." From Economic Justice: The American Class System, from the book Declarations of Independence by Howard Zinn.
“We remain concerned over their ability to withstand stress in an uncertain economic environment,” wrote Sheila Bair, the head of the Federal Deposit Insurance Corp., in a previously unreported letter obtained by ProPublica.
The letter came as the Fed was launching a “stress test” to decide whether the biggest U.S. financial firms could pay out dividends and buy back their shares instead of putting aside that money as capital. It was one of the central bank’s most critical oversight decisions in the wake of the financial crisis. “We strongly encourage” that the Fed “delay any dividends or compensation increases until they can show” that their earnings are strong and their assets sound, she wrote. Given the continued uncertainty in the markets, “we do not believe it is the right time to allow transactions that will weaken their capital and liquidity positions.”
Four months later, the Federal Reserve rejected Bair’s appeal. In March 2011, the Federal Reserve green-lighted most of the top 19 financial institutions to deliver tens of billions of dollars to shareholders, including many of their own top executives. The 19 paid out $33 billion in the first nine months of 2011 in dividends and stock buy-backs.
The Fed allowed the largest financial firms to pay out $33 billion to shareholders last year, money they won't have to cushion themselves if a new crisis hits. That $33 billion is money that the banks don’t have to cushion themselves – and the broader financial system – should the euro crisis cause a new recession, tensions with Iran flare into war and disrupt the oil supply, or another crisis emerge.
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