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Meanwhile, over the past decade globalization has rapidly eroded IBM’s U.S. employment (USE), even as IBM’s worldwide employment (WWE) has grown significantly. From 1996 to 2000, the final year of the Internet boom, as WWE increased from 240,615 to 316,303, USE rose by about 28,000 people, with USE as a proportion of WWE falling slightly from 52 percent to 49 percent. From 2000 to 2008, however, IBM employment outside the United States soared by 116,000 people while USE plunged by 33,000, and the share of USE fell to just 30 percent, with employees in BRIC countries, preponderantly in India, accounting for 28 percent of WWE in 2008. ...
So what proportion of its worldwide labor force does IBM now employ in the United States? We don’t know, because as of 2009 IBM ceased to include its U.S. employment data in its corporate responsibility reports. It even removed the 1996-2008 employment data from its website. IBM clearly does not want the American public to know its U.S. employment record. ...
Is IBM investing in the United States? It has been highly profitable over the past decade, with net income of $96 billion on sales of $933 billion. But 84 percent of its profits — almost $81 billion — have been spent buying back its own stock. The buybacks account for 50 percent more than what it spent on R&D over the decade. Another 19 percent of its profits have been paid out as dividends, so that over the past decade it has given all of its profits and more to shareholders. In the first half of 2011 the beat went on: IBM wasted $8 billion on buybacks, equivalent to 123 percent of its net income and 254 percent of its R&D expenditures.
Why do I say “wasted”? The only purpose of these buybacks is to manipulate its stock price. Who gains? Over the past decade, IBM’s CEO and other four highest paid executives have made a combined $271 million from exercising stock options. That includes $120 million to Gerstner in his last two years at the company in 2001-2002, and over $47 million to Samuel Palmisano, who became CEO in March 2002. In 2010, IBM’s five highest paid executives raked in over $23 million exercising their options. ...
Which takes us back to America’s need for a transformative jobs plan. We cannot reverse the rationalization, marketization, and globalization of employment, all of which (as I have explained elsewhere) often have productive rationales. But we can eradicate the “financialization” of corporate resource allocation that places stock-price manipulation in the name of “shareholder value” ahead of job creation for the American labor force.
What is really going on here? There are a number of issues.
Everyone Knew Months Ago Due to a Good Grapevine
The worst thing that could happen is that people know months before this happens which is always the case for this layoffs. I don’t work there anymore, yet I knew it was coming. This paralyzes the work force putting everyone in self preservation mode by having to make themselves look good, often at the expense of others as I’ve witnessed over the years. The real result of this work stoppage will show itself later in the year when groups have to reorganize and jobs and work done by the affected will be assumed by others. As I’ll explain later, these people won’t be replaced, rather survivors now will have to assume more responsibility for no extra pay resulting in rock bottom morale, extra stress, longer hours, less productivity and lack of loyalty.
Earnings Per Share, or Boiling the Frog Slowly
There are two ways to make money, increase revenue or cut expenses. Inevitably, payroll is one of the highest costs on a financial statement. IBM is self insured, so benefits weigh heavily on this issue. IBM has promised $20 per share dividend by 2015. With the economy being hindered by oil prices, government regulation and uncertainty, making this on revenue alone is unlikely. Therefore, instead of laying off thousands as you near the date, cutting it little by little is a way to keep it under the radar as much as possible. In other words, they are putting the proverbial frog in a pot of cold water and warming it up instead of throwing it into a pot of hot water. The count keeps rising. ...
The original numbers won’t reflect the actual layoffs as IBM is cunning about how to spin this by laying off more after the announcement date raising the actual figure to far more than what people focused on at news time. They wait for the news cycle to move along and then keep swinging the axe.
IBM has an incredible spin machine and can keep some stories out of the major press due to it’s size and power. By calling it re-balancing, it can manipulate and tranquilize the media into thinking that this is just the normal course of nature. The tragic news for employees is that this will continue for a while, disrupting continuity and attitude.
Unfortunately for the already overworked survivors, they will be doing other people’s jobs for which they are not trained. The pressure and tension level is already nearing the unbearable watermark with people being (unofficially) required to work nights and weekends or be labeled not a top achiever. I’ve seen the stress this puts on people and their families. I pitied the children of many of the executives who missed their kids growing up.
With the jobs going overseas, calls at midnight or 5:00 AM are required just to get some work done with others. This disruption in your life is unnecessary as are about 50% of the meetings at IBM anyway (IBM – I’ve been in a meeting). Spouses loathe this increasing demand. Burnout is already happening. ...
Liquid Strategy and Contracting
The workforce strategy now is shifting to what is being described as liquid employees and contractors to move around to the job or need of highest need at the time. There is so much going on at IBM, it requires employees who specialize in the specific areas due to the complexity in the many areas of critical products. With this liquid pool of employees, you will now have a group of people semi-educated on the products, thus removing one of the core competencies that IBM has provided over the years and introduce average ability to the customer. As described below, it can fool the masses in messaging, but execution and delivery will continue to suffer.
When the conversions inevitably ended, IBM execs were shocked, but Opel was gone by then, which may have set another important precedent of IBM CEOs getting out of Dodge before their particular shit has hit a fan. We see that most recently in Sam Palmisano, safely out to pasture with $127 million for his trouble, though at the cost of a shattered IBM.
Thanks for nothing, Sam. ...
Gerstner created the current IBM miracle of offering high-margin IT services to big customers. It was a gimmick, an expedient to save IBM from a dismal low point, but of course it was soon integrated into IBM process and then into religion and here we are today with an IBM that’s half IT company half cargo cult, unable to get beyond Gerstner’s stopgap solution. ...
Where will future IBM growth come from? Wherever it comes from, can IBM execute on its plan to grow new businesses using cheap, underskilled offshore talent? If Global Services is struggling to hang on, how well will this work for the new IBM growth businesses coming up? As IBM infuriates more and more of its customers, how long can IBM expect to keep selling big ticket products and services to those very same customers?
Global Services is a mature business that has been around for about 20 years. In IBM’s 2015 business plan big income is expected from newer businesses like Business Analytics, Cloud and Smarter Computing, and Smarter Planet. Can these businesses be grown in three to five years to the multi-billion dollar level of gross profit coming from Global Services? Most of these businesses are tiny. A few of them are not even well conceived as businesses. It takes special skills and commitment to grow a business from nothing to the $1 billion range. Does IBM have what it takes?
Probably not. ...
IBM is still buying profitable businesses, of course, imposing on them IBM processes, cutting costs and squeezing profits until customers inevitably disappear and it is time to buy another company. It’s a survival technique but hardly a recipe for greatness.
My opinion is that IBM’s services business profit will continue to decline as they try to cost cut into prosperity. Unless they find a way to grow revenue and provide a quality product (service), they’re either headed for a sell-off of the entire service business, probably to some Indian partner, or to a complete implosion. In short, it’s a race to the bottom and IBM is winning. ...
If IBM is planning a 78 percent staff reduction, then that will of necessity involve all USA operations, not just Global Services. Hardware, systems, software, storage, consulting, etc. will all see serious staff cuts. This means IBM could be moving a lot of its manufacturing and product support offshore. Raleigh, Lexington, Rochester, and several other IBM communities are about to lose a lot of jobs.
Every non-executive job at IBM is viewed as a commodity that can be farmed out to anyone, anywhere.
Selected reader comments follow:
Have you ever worked with someone who is truly SPECIAL? Maybe it’s the salesman who brought in millions of dollars of new business…year after year. Maybe it’s the awesome engineer, or perhaps the quiet programmer who cranks out line after line of bug-free code. How about the guy who just has average technical ability, but who will stay with the customer on-site late into the night until their problems are fixed? That lady who can magically calm down angry customers? You know the kind…I’ll bet you’ve worked with such people before.
So have I. I’m pleased to have worked with legions of such people during my IBM years. I’m also displeased to have seen the way they were often abused. Whether it was shabby pay rates, lousy treatment by management, or just plain getting fired during resource actions, I have never in my life seen a company waste so much individual talent. Now that I look back on it, I’m utterly amazed…yet at the same time utterly disappointed.
For what it’s worth, IBM still has great people working for it. Thousands of them, in fact. Bright and capable and hard-working — you name it, they’re still there. But their abilities will never be realized as much as they could be, because the corporate structure and management philosophy will not support it. It’s a real shame.
There was one area which people called the “Roach Motel” because you could check in, but couldn’t check out.
When I was told I was going to be paroled…err laid-off, most people I told thought I was joking. They were shocked that I was getting the boot since I had a skill set that was needed in many areas. Such is life in the churn and burn environment of big blue.
I also love how the manager says that you can try to find a new job within the company, knowing full well that it will be next to impossible to get a transfer when you have the RA mark on your forehead. I knew from a manager I knew well, who definitely had not drunk the kool-aid, that IBM quietly freezes most job postings prior to a RA to make it difficult to impossible for people to find new positions.
Even if you can find a position to apply to and get an offer, it will take executive management approval for it to occur, even if it is outside of the tower you are currently in. The want you out of their tower in the worst way since it reduces their headcount and would prefer to have you out of the company.
When IBM is asked about resource actions and responds, the IBMers always give some chirpy baloney about the people who jobs “went away” being able to interview elsewhere in the company for jobs. It sounds so marvelous. “These people can seek employment elsewhere within IBM.” Who couldn’t like that? Talk to the people who found firsthand the difference between IBM’s rhetoric and reality. Being resource actioned is akin to being blacklisted within the company, and it really is a firing.
One fall out is heavy cost cutting. And, the job cuts you are mentioning is only one facet of this epic greed (or should i say, valiant effort) to meet a seemingly insurmountable target. Not sure what more plots are being hatched.
Like any other big company, IBM too has labs all around the globe (and, i work at a GMU Lab). And, by first hand experience, i can tell you that the skill set is not anyway less in this part of the globe. It is only fair to say that there are highly skilled as well as those that aren’t...every society — oriental or occidental, has such a mixture. It is quintessentially part of the grand demographic design
As far as the non-executive jobs are concerned, IBM seems to be increasingly thinking that they are just ‘resources’, and can be replaced anytime. It is ironical that these non-executive skilled workers, are the ones who are working on the field, making things happen, adding value to the customers. If only they were left alone to do their jobs better!
IBM has a fat mid layer (several hundred VPs, and SVPs, and Directors, and all those fancy names), who are busy killing IBM’s business. These are the people who have spent decades at IBM, and if they cant have growth, and career, where else would they go. All those years for nothing? Their careers come above IBM (quite humane, perhaps). Cutting the fluff in the middle, might save IBM.
What is more poisonous is such culture is spreading, and some senior non-executive managers have caught the virus as well. They put themselves before their people. They threaten, lie to get things done. Uh!
IBM is heading towards a disastrous collapse. God forbid. In any case, IBM will still be remembered for years to come — as a case-study for management students, of how not to run a company! (Hope this is really anonymous )
Every year, the employee is required to fill out a portion of the PBC with their achievements for the year. At first glance, this sounds like a good thing. It’s the employee’s chance to prove their worth to the company and show Mgmt how they’ve added value to the company……….HOWEVER, the employee is never told that their PBC ratings have already been decided a month or two earlier.
The information the employee added to the pbc is totally worthless and Mgmt doesn’t even care about anything in there.
Furthermore, Your PBC has less to do with job performance than it does with saving the company money. You are graded on a bell shaped curve. The Mgmt teams get together and rates everyone to fit inside that curve.
The rating system is totally unfair, and is demeaning to each and every employee. It is not merit based, as IBM wants the employees to believe.
This year, top Mgmt came out with a new bell shaped curve graph. They were told that 60% of the employee population needed to fit into the category of 2s and lower. (Also lowering the numbers of 1s, and 2+s that could be given out).
Last year’s model allowed 60% to be rated at 2+ and above.
In IBM, this is called raising the bar. It allows IBM to withhold a bigger chunk of the variable pay award (Which is already far lower than other related companies in the industry). And it also allows them to forego giving the employee a raise for the year. It is another cost cutting exercise. But the employee thinks they don’t contribute enough to the company. They increase their hours and work hoping to get a better rating the following year. It’s a win-win situation for IBM no matter how you look at it.
Also, I want to add one more thing. The variable pay. Each year, each dept is given a ‘bucket’ of money to hand out to each employee.
Did any of you know, that the executives ask for a kick-back from that bucket of money? For lack of a better word, they ask for ‘donations’ from each individual pool to fuel more executive pay. This is totally voluntary on the part of each manager, but how many managers are going to bite the hand that feeds them. They end up giving up a portion of that pay back to the fat cats at the top of the food chain and the employee that was stiffed out of his raise for the year, is now also cheated out of some of that variable pay.
I hear some of the pay bucket hold back used to be sneaked back into an executive expense budget item so the executives could evade taxes at the GM and above level. They’d pay for incidentals out of that budget items expenses that HQ had banned for all employees or that couldn’t be deducted by corporate like Disease & Deformity free women (“D&D” contract staff) or foreign/customer bribes like the Japanese and the Vienna crowd got caught doing a few years back.
Anyone know if they are still passing older excess inventory through 3rd party subsidiary countries like Central America GSM to avoid US technology? embargoes?
I stopped busting my hump when year after year I saw other people who put out less and screwed up more get the recognition. Definitely not a way to engender passion to one’s job. It’s a wonder that morale is not lower than it already is. As for the hold-back, I was told by a manager friend that it was mandatory for his group.
I do not have any idea of how 1′s are rationed…
I recall speculating with a manager that they were required to hand out a certain number of 3′s in order to increase attrition (I seem to recall that two — or was it three — consecutive years with a PBC 3 would be turned into a 4… which rhymes with door) and he said nothing but sure looked like he didn’t want to agree with me… and he was one of a small number of managers that were the exception to the “Idiots Become Managers” mantra.
I’ve worked with four GREAT managers in my life… and the last one was an IBM manager.
As for GBS… I’ve seen some of the work GBS does, like a file transcoder for mobile phone billing records exchanged with other companies…
How can a GLOBAL business, with a date and time field, leave out the f**king time zone? The practical upshot of this is, should that company operate– or front– phone switches outside their expected time zone, the differing times mean that some of the calls we get happened in the future. (It might have been less of a problem if the GBS folks had converted local time into UTC/GMT for this record. I was appalled when I looked at the functional spec the phone company forwarded to us since we had to interpret the file format.)
That being said, I suspect the IBM is like the Sirius Cybernetics Corporation where their minor design flaws cover the major design flaws. (I’ve seen an application Verisign developed that was a PERFECT example of this kind of principle.)
I had been inside IBM for almost 9 years and was caught in the undertow of 2007 RIFtide… and, despite the hard times as a red-shirt (contractor) since, I feel bad for those still caught up in the gears.
It might’ve been nicer if the patent I filed wasn’t abandoned just as the USPTO was going to issue it… and, no, it wasn’t a S/W patent.
People talk about the dead Watsons providing power to upstate New York by attaching generators to the spinning bodies, has anyone consider how much more power they’d've gotten by connecting up to Herman Hollerith?
Things probably look shitty if you’re a 25 year veteran in STG. If you’re in SWG or GBS, on the other hand, the future is bright. The company is changing, guys. Those who don’t change with it can say goodbye.
The EPS is artificially inflated due to layoffs, stock buy backs, draconian rules on what can be reimbursed, not paying OT (IBM was sued, not sure if successfully, for this), nonexistent raises/bonuses, and most of all- off shoring every fucking job they can, including all of US payroll function. The senior executive team are a bunch of greedy, immoral bastards.
In less than a year, Palmisano had destroyed the “flattened” management and added all these layers, who contributed nothing, because none of them wanted to “own” anything. It was all about not being responsible for delivering anything.
As part of the Global CIO team, I had the opportunity to sit in Randy McDonald’s (Head of IBM HR) office and listen to him spout off about how he only wanted people at IBM for an average of 5 years, and how people were just replaceable resources. It’s this style of management that has contributed to the most talented people leaving IBM, either through RA’s or resignations.
I now work for a Business Partner, and see the attrition that is damaging IBM. We find a good IBM salesman, who will work to close deals and deliver value to the customer, but IBM either forces that person out (to “manage income”) or they leave for a company that will actually pay them for what it’s worth, or they “reorganize” and lose all the customer knowledge and experience.
IBM is no longer the pre-eminent sales company that it was through the 1980′s. Global Services has always been a smoke & mirrors organization, with the true cost/value of contract hidden in a maze complex deals…
The “Gerstner Turnaround” was really all about re-branding “Mainframes” which had gone out of “style” as “Servers” and then selling more of them at less profit. Everything else was in cooked books and smoke & mirrors services deals.
So here is exactly what to do, down to the letter. Print this out, if necessary, give it to your CEO or CIO and have them hand it personally to your IBM account rep. Give the IBM rep one business day to complete the work. They will fail. Then go ballistic, open up a can of whoop-ass, and point out that these requirements are all covered by your Service Level Agreement. Cancel the contract if you feel inclined. ...
Selected reader comments follow:
Business Recovery Services ‘BRS’ is a farce. Equipment available, qualified personnel on site? My team once received a substantial award for signing on a customer for lying to them about that.
Several years ago a customer once said to me having heard it at a trade show. IGS, you can always buy better but you will never pay more.
Having seen IBM as a research based company with good products, it is depressing to see that the company is now only making money of its services business. Sadly, the people providing these services are never paid well. Many of us have not received any raises in years. The PBC ratings are manipulated to reflect that one is inefficient, although in no way one is so! Non-technical managers are appointed to manage technical people, with frequent change of managers! Only the top management requires all those millions and stock options to survive and the regular employee does not. Regular employees have to pay to buy IBM stock! Even the stock option for $1000, allotted as pat of IBM’s centenary, can only be exercised in 2015, by which time perhaps all of us would become ex-IBMers!!
I strongly believe that the top hierarchy of IBM should be classified as crooks-in-suits!
With all the overseas off-shoring, trained folks are not retained at all, even in those overseas locations. It is like a revolving door with people coming and leaving. Most leave, as they are poorly paid, as compared to other companies, especially in India. It is no wonder that customers are not happy with the services provided by IBM.
This isn’t the problem, Bob. I understand your point, but being able to respond to ad hoc audits isn’t going to help. And, honestly, saying you can fix IBM in a week is ludicrous.
But you’re on the right path. It will take a groundswell of IBM customers to get the attention of the execs. IBM’s customers are dedicated and committed to IBM for the long haul. You can’t ignore the investment they’ve made in hardware, software, services, training, and so on. They aren’t just going to throw that away.
Instead of a confrontational “do this now or else” approach, what’s needed is a true, autonomous, Voice of the Customer organization to be formed, separate from IBM, which would be the group which holds IBM’s feet to the fire about delivering. It can’t work on a contract by contract basis with customers individually. The customers have a collective financial position which could get the company’s attention in a very influential way. We used to have groups somewhat like this, like Share and so on, but they were weak and had little real influence. This group would need to be known as the real collective influence on IBM and not be passive. It needs to brandish a very large financial stick to beat IBM over the head with when the company doesn’t deliver. Call it a union of IBM customers who all move together. Let them call a strike and stop contractual payments if IBM doesn’t deliver. Collectively, that would work.
Stop nickel and diming IBM, and playing gotcha politics with them. Think Big. Hey, there’s the name of this new organization! THINK BIG. You have to do things on a scale which surpasses IBM if you want to have the kind of influence over the company you’re talking about. Only a group comprised of the majority of IBM customers, who speak to IBM with one voice, can do that.
If IBM customers began to create their own sets of reports measuring SLA attainment, and documented every breach, then used that as the opener to discussions with IBM, that would help. If they did this as a group, that might really provoke some change.
The problem is not being able to answer those questions. IBM has processes in place to manage that aspect of the services they provide. The mantra on well-run engagements is “Compliance First – Service Next” – and the Compliance aspect generates the answers for the questionnaire being posed in the blog. The problem is with the “Service Next” aspect. Both these engagements are fraught with issues about being able to deliver beyond just keeping the doors open – which is really all the questionnaire is focused on.
As for the off-shoring – IBM has been selling the kool-aid for over 12 years that cheaper off-shore “talent” will improve your bottom line by significantly reducing IT costs. And the CEO’s of their client base has drank heartily from the pitcher (Oh Yeah!). It wasn’t until 5 years ago that IBM got serious about doing the same off-shoring internally. Most of this cost-cutting, EPS improvement is driven by the PwC faction within IBM. (IBM acquired PwC Consulting in 2002)
The MBA Bean Counters in the PwC faction are doing all they can to meet Wall Street’s needs for sexier numbers so they can be rewarded with a higher Stock Price. IBM is not sexy – Revenue growth is in the single digits, not double digit growth like those found at sexier startup companies. The only way IBM can show sexiness without those types of revenue growth rates is to improve it’s profit margin – which means significant cuts in expenses. That’s where the off-shoring and hiring of cheaper, less-skilled labor in the US comes into play.
Execs do not get as rich from the salaries they garner from companies like IBM – as they do from the increase value of the Stock Options they are awarded. Stock Options reset the $0-price of a stock to the strike price. Over the past 10 years, Options have been issued with a Strike Price around $80-120. With the stock north or $200 recently, these options are worth a significant amount of money – with far more capital gain (100 times cost) than if these execs were forced to buy the stock @ $100 (merely doubling their investment).
This is a large part of what is driving the actions taken by IBM. The other large part is that IBM is redistributing the work force offshore to localize the work force to where the new business is coming from – offshore.
I personally fired somebody from my project that couldn’t even write software for a simple report. I later found that India had moved the sorry resource to an even more complex part of the system where they could do greater damage because they knew that nobody was lining up resources or keeping track.
IBM is thoroughly corrupted inside and my former colleagues are playing the game. As US employees we accepted the internal corruption ourselves. We saw organizations providing bogus sales numbers yet we look the other way because we too may have been paid on those numbers.
The IBM help desk in India participates in the corruption by closing older tickets and informing their internal customer to open a new ticket so that their time to resolution is not badly affected.
This fish stinks through and though from decades of internal brain washing reducing employees integrity a little bit at a time. Glad to be gone but I wonder if my soul is intact.
I have associates in other large US companies and I see what IBM used to look like. The look and feel of success is thrilling and motivating.
Besides the constant thread of an RA, the depressed feeling of working for a bankrupt company does not motivate me to achieve. But, do not worry, because the sales numbers are never good enough there are plenty of micro managers ready to tell you how to do your job even though you know they only succeeded because the sold product during the dot com era.
It is however fairly service oriented. You haven’t really addressed what is going on in Software Group or STG which is where products get made. This was something I was looking for.
From my vantage point IBM management does not understand what it sells. It does not understand how to create much less sustain efforts to create and market products. IBM servers and software are not any better than it’s competitors. IBM *COULD* be the Apple of the business world but it’s not. For some the perception from the glory years remain and they think IBM is more than worth it but the reality today is buying IBM isn’t a good choice.
These things are fixable. The change however is a management one. I doubt there is the motivation. Failure of product/services just results in more layoffs.
There was a point in time in the not so distance past where intersite rivalries were quite bitter. Gerstner put a stop to that. As a result, it didn’t matter where one was located, we focused on what was right for the customer, what was right for making product.
The management enforced “rivalry” now is intercountry. Preference is being given to India, and China who both have very poor track records when it comes to IBM accomplishments. Brazil is much better. It doesn’t matter what makes good engineering sense. It doesn’t matter what is right for the customer. India, China and Brazil are the answer over and over again. The skills aren’t there as Bob has rightly observed.
IBM needs to change from a system fixated by minimizing for engineering costs to maximizing for revenue and profit by sale of top quality systems, software and solutions. IBM needs to be blind as to location and cost of employee and get back to quality. Apple does this and they are fabulously successful. There’s no reason why IBM couldn’t and shouldn’t be as well.
It’s funny but US employees for instance have currently 4 year cycles to get an update to their current one and only office workstation / laptop. Doesn’t matter if the laptop can’t do the job. Nothing will be done until the time period is over. It’s not uncommon to hear about employees going out and buying their own replacement just to get their job done.
There is dedication by IBM employees. It’s IBM leadership that has failed.
I would like to hope your articles will turn things around at some level. I do know some executives within the company get it.
Mr Cringely’s laundry list of questions about support can be collapsed into one question. Ask IBM to tell you about the Service Activation Deactivation process. SAD – yes, sometimes acronyms speak louder than words – was instituted at the inception of the massive US layoffs. It is essentially a process of watchers watching the watchers watching the doers. It was put in place to stabilize the problem, well documented here, of untrained, unskilled, inexperienced workers supporting large, complex data center environments.
One might think that an IBM data center is operated in the fabled ‘lights out’ manner, with machines autonomically running machines with automatic provisioning, and sensor based self healing problem detection and resolution. Indeed, that is what the Smarter Planet strategy is selling, e.g., machines that can be leveraged to manage our electrical grids, water systems and so on.
The SAD fact is that this is no closer to reality than it was in the days of the 360; in fact, mainframe environments are probably closer to the mark than the more common decentralized, distributed data center environments that exist today. So while Smarter Planet is being sold as a panacea, and Watson is playing Jeopardy, the reality is SAD – an army of people making sure the wheels don’t come off, using an extremely labor intensive process. Some have wondered whether it would be less expensive to just let the wheels fall off. From a customer perspective, it’s a bit like buying a performance car, then getting it home to find there’s a bunch of mice on a treadmill under the hood.
hat’s the SAD part. We once put a man on the moon in less than ten years from a standing start. That used to be us. American ingenuity, IBM know-how, can make Smarter Planet a reality, instead of just another failed marketing slogan. We have the technology. We’ve proven repeatedly we have the native intelligence. The world is at a crossroads, and there is no more time for delay. Can IBM truly accept this challenge? To do so would make it a revered institution once more.
The same thing happened to Sony some time ago that preceded their downfall from the top of techno gadget world. Middle managers, many of them not from the US or Japan, took the business opportunities and processes they learned from US and Japan shops and shipped them overseas to duplicate the same product at fraction the cost.
Trouble was, all the creative that invented and designed new things either left or let go, for sake of efficiency to market or cost trimming.
The thing is, the middle to upper management at IBM, HP, Yahoo, AOL, and so on, no longer have any loyalty to anyone, much less to a company or its people. The same product and processes they learned to use to pad their bonuses and severance packages they can repeat anywhere.
They are only there to milk the cow dry, not to take care of the ranch.
Smarter Planet (she’s fighting back). Dumber people. Slogans are the only products that IBM management can create.
The IBM that many of us knew and loved 20 or 30 years ago had some key qualities – excellent customer service and respect for the individual (employee). If you take care of your customers and employees, your investors will probably do well too. When I joined in 1992 to do operating systems work it was a long dream come true.
Old IBM had problems – it was bloated with many people who essentially retired on the job. Performance problems were not dealt with using the existing mechanisms because people were too afraid to hold others accountable except in the most egregious cases. Group-think dominated. Old IBM was not sustainable and there had to be changes to make IBM a little leaner, a little more agile, a little less risk averse.
Lean doesn’t have to be mean though. In the last 10 years the culture as devolved from “respect for the individual” to “office survivor.” For 364 days a year people are supposed to team and collaborate selflessly – and then on day 365 somebody gets thrown or voted off the island. The unrelenting drive to cut costs instead of growing revenue has had some nasty effects on employee morale and the quality of products and services. In the quest to become competitive IBM has become average. And you can’t charge above average prices for average or below average products and services.
Pockets of resistance exist in IBM, but they are aging out. You can’t turn time backwards; you have to move forward. The new IBM isn’t the core problem – it is a manifestation of problems we have as a society. IBM was able to grow and prosper because it had the benefits of our society; a good educational system, clean air, a reasonable government, etc. IBM now (and many other companies) don’t seem to recognize or care; they owe no allegiance to anybody. (See “mercenary” in the dictionary.)
I’m proud to have worked on some great projects with some great people while I was there. But I’m dismayed to see what happened.
I joined the Software Group with a particular skillset that’s not about installing and configuring software (ITSM – I’m ITIL Expert with plenty of process consulting experience) . It was a hire-for-fit rather than hire-for-specific-role — and I think the intention was good. But they’ve been totally unable to find work for me to do, and meanwhile paying me a full salary.
Of the 21 months I’ve been with IBM, I’ve been working and billing for about 10 months. I haven’t done a single day of work in 2012 yet. My management tree has been completely unable to engage me on anything.
And it’s not like I don’t want to work. I’ve been talking to everyone who’ll listen in IBM over the last 6 months, and I’ve found 3 different positions in other division of IBM that needed someone with my skillset and I could’ve done the work. But my division wanted to *internally* charge the other division $1600/day for my time (blue dollars) and the other division could only afford $850/day. So I couldn’t do the work. Yes, IBM would rather have me do nothing and pay me a full salary + benefits than work for a paying customer, because two groups can’t agree on an internal rate for my time.
And yes, I’m interviewing at other companies at the moment. I’ve had a couple of offers, but I’m taking my time to make sure I pick the right company for my next position.
I see the effects and the failures of this daily. Customers are leaving, others are upset and suing or threatening to do so. These resources cannot do the job, yet IBM rewards them by giving these incompetents more work to do. The executives literally do not give a damn – all that matters are the short term numbers, making that 2015 target and collecting their bonuses.
We have our own name for “2015 Roadmap” – we call it “Death March 2015″. The company will pick us off one by one until there is no US personnel left other that boots on the ground that are required to service machines. The hall talk is that these survivors will become contractors – perhaps sold off to some service company like Qualserv.
The experienced craftsmen and women that used to design, build and support product have been pruned out of the business through getting RA’d solely because of maniacal cost-cutting.
If IBM had to write a new operating system from scratch, there is no way the company could do so – the skills and experience are gone.
IBM can’t develop its own new software either – the software portfolio innovation is through acquisition of agile, innovative companies that built products IBM wants. Then IBM croaks off half the employees of the companies they buy, effectively killing off the innovation machine they just bought.
IBM executives are such morons – they actually expect US employees to implement Death March 2015 and to sacrifice their own jobs for the good of the company. This after IBM declared war on its US employees when they misused LEAN to dump employees.
Every quarter, you live in fear that you will be sacked – it is a terrible place to be sitting between an executive and his bonus.
Services executives continue to deny there are problems, meanwhile blaming US employees for the failures of their overseas counterparts. But the bean-counters are happy whenever the penalties for missing SLOs are less than the savings of using global resources. Net – the money counts, quality and adverse impact on the customer doesn’t.
IBM services clients would be well-advised to hire some IBM services business castoffs – we know where and how IBM works (or more aptly said doesn’t work). We know where the dead bodies are.
Last, as an IBM vet with 30+ years of service, I can say that IBM is now one of the worst companies to work for in the US and is doomed to fail. The heart and soul of the company is mortally wounded – it is too late to change course to recover.
The question is not whether IBM will fail, it’s a matter of when and how precipitous the failure will be.
None of the top dogs want to reveal how truly greedy they are, so they spin this nonsense about shareholder value. As if they care in the slightest how happy their shareholders are. Of course, if things really went to pot and there was the possibility of officers or board members being replaced… But again, its not the happiness of shareholders they care about. It’s all about their personal lust for money and power.
If they (the top dogs) could find a way to keep their money and power without having to keep the shareholders happy, it would be lights out for shareholders.
If life were fair, companies wouldn’t place shareholder value at the top of their list of priorities. No, it would be satisfying customers first, making an honest profit next, then treating employees fairly, and on down to all the other stakeholders. (Just my opinion, of course.) Satisfied customers, not happy shareholders, are the key to company survival. Let’s get real, kiddies.
When companies go bankrupt, is it due to unhappy shareholders? No, it’s because they ran out of money. Which situation in turn is likely due to not being able to satisfy their customers — their main source of sustainable money.
Of course the part that got lost in all of this is if you balance the needs of the customer and to a lesser degree society and employees your are taking care of the shareholders. By having satisfied customers you keep them and grow your business. Help society and you get good will and positive perceptions that again help to grow business. Satisfied employees tend to produce better results which takes us back to satisfied customers. Grow the business and the shareholders see an increase in value (either dividends or stock price). But this is a long term plan not quarter to quarter.
In your part three you brought up failed IBM strategies as a problem. Most of what I saw were failed software projects. In at least one of the strategies, OnDemand, I know that IBM had existing products that customers were generally satisfied with. What the customers were looking for were ways to modernize the way these programs were accessed by the end user. The rank and file development folks were saying it was better for the customer and IBM financially to improve the existing product. Instead we “stabilized” them and forced the OnDemand solutions on to them. As there were competitive products to IBM’s a number of customers switched. Their rationale was we have to do the work to move to IBM OnDemand anyway so what does it matter if we look somewhere else to fill our needs. When a customer left management did not care.
The problem here is how to fix the development management process. In many cases IBM technical folks are aligned with the customer technical needs however IBM management is off in left field. The result is failed products and a loss of customers. However to IBM management, always trying to chase the next big thing, these are not failures just obsolete technologies to be discarded. This same thing occurs to companies IBM buys. As they get more integrated into IBM, the less responsive they become until one day they too become obsolete technology. This churn is unsustainable as there are too many competitors in today’s world that the customer can turn to.
To fix this issue will require a change of culture. While I don’t believe you have to be an automotive engineer to run GM you have to love and understand cars. Likewise to run IBM I don’t feel you have to be a software or hardware engineer but you better love and know how to use computer. To this end I would require management come from technical backgrounds at least at the levels that determine product development and marketing. I would require more direct contact between the customer technical staff, IBM development staff and IBM product marketing staff. This will eliminate the “phone game” that always takes place in the current IBM structure.
Last I would reduce the number of executives involved in the product development structure. During the point in my career where my division president was 4 levels above me I was able to reduce my development cycles. Most of this was due to decisions being made in a timely fashion instead of a bunch of mid-levels arguing over turf and what colors the foil presentation should use.
If you really think demanding this list from your PE/DPE will make their knees knock with fear you are sadly mistaken and it makes me doubt everything else you have said about IBM in these articles.
IBM does make a lot of money from the service business but the statement that the outsourcing of 70%+ of their employees to offshore is merely to get more profitable is to misunderstand the real agenda. Global Services is on the auction block. As soon as the numbers match up to what some Indian company wants it will be sold.
By 2020 IBM will only be made of management, sales and the research centers which generate the highest concentration of revenue for the company because they don’t have to bulk manufacture anything, just invent it and license the patents to everyone else.
If you want to change the way IBM works then you have to do it as a consumer. Don’t buy products that license their technology from IBM. Good luck with that because there are few alternatives.
And yes, IBM off shores, but off shoring is a cut throat business, hence your second article is probably correct to a large extend
But how is that different from apple’s model, it designs in California, but all its products are put together in China? In relative terms it off shores various degrees more than IBM, and it does so for the very same reasons, ample available, ‘unskilled’ cheap labor… or, you could call it slave labor?
Where and why does IBM off shore and does it matter?
It offshores in delivery of ERP projects, in response to price pressure from the highly standardized SAP & Oracle Corporate IT software choke. Off shoring is done for software integration, testing and maintenance. This is a price sensitive market, hence all the big SIs have to resort to off shoring to be competitive. And with that, do we strangle the development of highly skilled labor? No, the highly skilled labor will set the requirements, off shoring is merely the delivery mechanism. Just like Apples ‘designed in California model, assembled in China’ model
Bob, please get over your IBM aversion and blind admiration for Apple. They are variants of one and the same model called profit maximization.
The interesting question is how corporate IT will get rid of the ERP Oracle/SAP choke.
Make friends with one of these guys, and you can become a ‘master inventor’. If you are on the WRONG division — GBS, GBS AS, CIO — you pretty much get no help in getting your patent filed. You get 5 mins to pitch your idea to a committee and if you don’t know the lingo, forget it. It is really really hard on your own. If you get past the initial hurdles, a tech ignorant outside attorney will help you write it up — badly.
The IBM patent system is too easy for the select few, and way too damn hard for the vast majority. End result is there are a lot of successful, but totally craptastic patents written by the professional patent machine and the rest with so little guidance and help it is laughable.
IBMers — got a great patent idea? Take it to your next employer.
IBM is now working hard to eat the same poop they are selling other companies — SAP ERPs. Horrible, horrible software that only a CIO who has never seen it or used it can love. The mantra is out of the box, and use perpetual training since with this software you need to be taught where to click. Perpetual because of 40% attrition rate in India. You never stop training people— it is incredibly expensive but the cost is hidden in a different BUDGET. IBM pays way more overall but each exec gets to claim they met their numbers since not one of them needs to look at the big picture costs which should include the never ending costs of training, that they are spending more than ever overall.
Not only is quality poor, but often outsourcing drives the cost up because of the turnover — sometimes functions are implemented more than once because the new people didn’t even know if it had been implemented once already, and because no one can use SAP’s Solution Manager, not even most of the SAP consultants.
In the last Resource Action, I have never seen more irreplaceable people canned. And no, they won’t be replaced, not really. Quality will continue to decline and it feels like some of the infrastructure is positively crumbling. IBM truly believes everybody except the execs are interchangeable cogs, that there is no so such thing as technical talent (only exec talent) and no such thing as a SME. The average IBMer has less than 5 years experience, and boy is it telling. Talent in the East just jumps ship to get bigger salaries, whereas in the first world, talent is under appreciated and trapped by mortgages and college tuition, and have no choice but to wait for the end. Denial is our best friend.
IBM has replaced Respect for the Individual with a new motto: “KNOW THE PRICE OF EVERYTHING, AND THE VALUE OF NOTHING”.
Until I got there they didn’t even have a working hardware monitoring console and no way to know what patch level was on any particular machine.
Second, I now work for an IaaS division of one of the large Indian outsourcing companies. One of our big money makers is migrating customers onto our shared mainframe infrastructure. Customers are abandoning the endless cycle of maintenance contracts and software upgrades (with IBM) and having us do it for them. We can host multiple customers on a larger Z series and the customer gets to pull the plug on the big iron. This is helping to eat away at IBM GS and at their mainframe services revenue.
Point is, IBM GS has been having problems with customer satisfaction for years. Ask American Express, among many others. Couple that with the erosion of their hardware business, and you’re absolutely right, IBM is looking like one big cooked goose. They got Compaq (and then HP) and Dell to follow along in their footsteps, too. No wonder why both those companies have also been stumbling.
Sadly, good riddance given all of this.
You see, IBM has been working on addressing these types of gaps over the last decade; and to a degree some steps backward occurred as “the more and highly skilled resources” outside the USA left these type of capabilities in the closet while they focused on keeping production environments running properly. How about that “highly skilled employee” who faked being a mainframe system administrator for several months before being caught. Sorry, I digress.
What I was hoping you were going to say was for clients to request and demand IBM employee surveys be performed and published to the very clients being supported by these personnel. I have seen this happen and IBM’s initial response was to *not* share the surveys; knowing full well they were obligated per their contract to do so. Needless to say, the results were shared and did not satisfy the client. IBM was told to do more to recognize and motivate their employees. This client had the right idea.
Customers, shareholder and employees need a balanced management approach to sustain long-term growth and prosperity for both parties. Today, I can unequivocally say Shareholders are #1, Customers are #2 and Employees are a distant #3 as you can possibly get. I am not bitter or vindictive. I don’t need to be. The facts are here and they are black-and-white. Fortunately for me, IBM is doing a great job supplying these facts. Disney,State of Texas, etc….. SMART COMPANIES!!!! Interview them please!!! Again, sorry…. I digress.
The only employees that seem to love IBM was the “highly skilled employees outside the USA” and “those that say they are happy just because they believe they need this job at IBM”. I have not run into an IBM employee Band 10 or below that hasn’t a story about how the greater IBM executives with employment contracts and lucrative salaries have screwed them over one way or another to the point where they have become experts in dealing with internal adversity more so than satisfying the client.
The brand is tarnishing from the inside and it is beginning to show. You see, the CEO has a list of troubled accounts and those tend to get all of the focus everyone above and below shares in the blame. I have seen instances where IBM has determined a solution was UNDERLIVERABLE per our standard risk management approaches and went ahead with the deal anyway.
You can only imagine what the employees had to do just to survive being an IBM employee servicing a client that simply expected IBM to deliver what they promised they would deliver; and performed enough spin doctoring to survive. Then!!!! Only to be told we got a below average rating because the account was not profitable. HUH?!?!?! REALLY!?!?!?!
In closing, surveys, surveys, surveys…. Clients should see them and demand IBM to be transparent and explain how this statement is wrong…. Shareholders are #1, Customers are #2 and Employees are a distant #3.
"Morale is pretty much rock bottom," said Lee Conrad, the national coordinator for the Alliance@IBM, a labor union at the company. "It's like IBM no longer values the expertise of U.S. employees. Going to work everyday for IBM is a challenge for a lot of people." ...
Conrad said workers have been telling him the cuts are a result of moving jobs out of the country. "The work is being moved offshore to places like Bratislava, India, China, Philippines, all around the world," Conrad said. "This is frankly, what IBM calls its re-balancing. They're re-balancing from here in the United States and moving the work out of the country."
Conrad says that sources within the company whom he won't identify told him IBM now has some 6,700 RTP "regular IBMers," or full-time employees, not contractors. That number will drop to about 6,000 when IBM completes the recently announced sale of its "Point of Sale" business unit that employs several hundred people in the Triangle area.
In 2006, IBM sold its PC division, which was primarily based in Raleigh, to Lenovo. That decision was among the biggest in reducing IBM's local work force. In 2007, IBM had some 11,000 employees in RTP and the site was widely acknowledged as Big Blue's largest campus. ...
Asked why sources were providing Alliance with employee numbers, Conrad cited anger and frustration. "They are tired of seeing what is happening at IBM in the United States," said Conrad, who worked at IBM for 26 years before quitting to organize Alliance as an affiliate of the Communication Workers of America. "They are not happy." ...
The latest round of layoffs at IBM totals nearly 1,900, according to documents provided to the union, but insiders have told Conrad that the actual count is around 2,500. Based on workers' comments posted at the Alliance website and on emails sent to WRAL, some layoffs have occurred in RTP.
The first, grow their ranks. and the second, to draw attention to what they call out-of-control outsourcing at Big Blue. ...
"We're trying to send a message to IBM to stop off shoring the jobs and we want them to stop taking federal and state subsidies and tax breaks as long as they are off shoring jobs," said organizer for the Alliance at IBM, Rick White.
“The recent termination of 2,500 IBM U.S. employees shows that IBM clearly does not value the experience and expertise of U.S. workers,” Lee Conrad, national coordinator of the Alliance, said in a statement. “To have IBM U.S. employees help transfer work out of the country and then get terminated is outrageous and a threat to all jobs and our economy.”
IBM no longer releases headcount numbers by country. The Alliance estimates that the IBM U.S. employee population is now at 95,000, down from 132,000 in 2005. Meanwhile IBM employee numbers worldwide, especially in low-cost countries continue to increase, the Alliance maintains.
In its press release on the pickets, the Alliance@IBM calls for no tax breaks or incentives for companies that shift jobs offshore and terminate U.S. workers, full disclosure of IBM job cuts and where the jobs are being shifted, and an end to moving work offshore and firing U.S. workers.
Midgley said the company’s success is not being shared with its employees. “They won’t give us raises, they’ve frozen pensions,” he said. “Our standard of living keeps going down, but the execs are making profits. We’re not sharing in the success of the company.”
Longtime IBM software engineer Paul Sutera of New Paltz said workers were being asked, in some cases, to train their off-shore replacements. “Speaking for myself, IBM is planning a series of ever-increasing layoffs of U.S. workers — experienced, tenured employees — and replacing them with Third World new hires,” he said. “Often, we’re expected to train them before a loss of a job.”
Jeff Couture, spokesman for the IBM facility in Essex Junction, declined to comment on Tuesday’s protest.
Cornelis De Vente, who met his wife, Phyllis, on his first day at IBM in 1955 and traveled from Atlanta for the annual meeting, agreed. “I know that Tom Watson Sr. would be totally proud,” De Vente said of IBM’s first chief executive. “It’s a great thing for the corporation.”
The morning event, which ran less than an hour, was what you might expect from “Big Blue,” a business machines company that has grown to more than 400,000 employees and $100 billion in annual revenues since its founding in 1911. ...
Palmisano, who chimed in frequently during the shareholder question session, likened the potential there to that of China 25 years ago. “We have the same hope for Africa maybe a quarter century from now,” he said.
He also handled some of the thornier questions, rejecting the idea of a stock split and offering no answer when asked about a cost-of-living increase for retirees and whether Rometty was offered membership to the exclusive, all-male Augusta National Golf Club during this year’s Masters tournament. ...
And in less than an hour, the meeting was over, allowing the IBM executives and board members, like Boeing CEO W. James McNerney, to go on their way and leaving shareholders, like 30-year IBMers and recent retirees Howard and Joyce Sykes, to take stock. “I think IBM’s got a great future,” Howard Sykes said.
I'm using my retraining allotment to take some courses I've wanted to take but couldn't get funding for. When you do start your search, definitely take advantage of the LinkedIn profile options - breaking your resume out into the different sections, updating it every week or so to keep it fresh (Reading List app is great for that).
Right Management was useful for financial seminar but little else. My consultant has yet to "reformat" my resume in spite of numerous requests from me. They don't seem to know what a tech writer does or how to "customize" my resume to generate better response. Their first suggestions were to follow their standard Word template that does NOT showcase Word skills at all - which would get my resume kicked out of any recruiter's search for writers. Good luck with your next steps.
This is a good time to re-connect with former IBMers who worked with you in the past and know the value you can bring. Although I did get some interviews without having connections in the company, most of my high-quality leads came from ex-IBMers. That's how I landed my current position.
I think the best advice I got from Right Management was to treat job search like a job. Make a plan and work your plan. The most important thing is to take care of yourself and stay positive. Good luck!
Why are balances so low? The financial crisis is partly to blame. It knocked $1.6 trillion, or about a third of the total value, off the nation's 401(k) accounts. But the larger truth is that most Americans do a poor job of anticipating the future and saving money. People don't seem to grasp that the pensions their parents' generation enjoyed have been almost entirely supplanted by 401(k)s, leaving them largely on their own to fund the final stage of their lives. In one recent survey, 43 percent of workers between the ages of 45 and 54 said they weren't currently saving for retirement at all. Very few 401(k) participants contribute the annual maximum of $17,000, and people tend to stop funding their retirement — or even borrow against balances — when they change jobs or have debts to pay. Most 401(k) account holders have little knowledge of how to manage stocks and bonds over decades to produce the best returns.
How did we come to depend so much on 401(k)s? The Revenue Act of 1978 created 401(k)s — their name comes from the relevant subsection of the Internal Revenue Code — as a way for corporate executives to supplement their traditional pensions with extra cash. But when employers realized that they could use them to slash their pension costs by shifting the burden of retirement funding to employees, they adopted 401(k)s in droves. In 1980, 60 percent of private-sector workers with retirement plans had employer-paid pensions; by 2006, only 10 percent did, and 66 percent had 401(k)s. The chief selling points of 401(k)s are that they allow workers to take savings with them if they change jobs and to decide how — and how much — to invest in their retirement. But even automatic enrollment and free financial counseling haven't compelled people to save enough. ...
Skimming off the top Future retirees don't have only themselves to blame for paltry retirement savings. Excessive management fees also play a role. Every day, Americans pay about $164 million in 401(k) fees to the financial industry. "There are enormous dollar amounts involved," said Frank Cirullo, a former plan consultant. "Employees are getting ripped off." Fees vary from plan to plan, and can run anywhere from 0.5 to 2 percent of assets per year. An extra 0.5 percent annual fee can cut an employee's savings by 10 percent by the time he's 65, according to Vanguard. Most 401(k) fees have long been hidden, but under new rules taking effect this summer, plan providers have to give detailed breakdowns of all the fees to employers, who in turn have to inform employees. Savers can only hope that transparency kicks off competition that will lower fees.
At the very least, the increasing focus on retirement savings is a reminder that tax treatment of the accounts, once considered permanent, is anything but. Here's what you need to know about lawmakers' eyeing your nest egg.
"In response to the concerns you have raised, the Agency is suspending its participation in the English language training project in Mindanao pending further review of the facts," said USAID deputy assistant administrator Barbara Feinstein, in a letter Monday to Congressman Tim Bishop (D-N.Y.). "Furthermore, the Agency has established a high-level task force to review these matters." ...
"We have a serious jobs deficit in this country and the fact that we would spend U.S. taxpayer dollars to prepare foreign nationals to take over jobs that can easily be done by Americans is shocking" he said. AT&T, Expedia, and JPMorgan Chase are among the U.S. companies to have outsourced call center operations to the Philippines. Bishop said more than 500,000 call center jobs have moved offshore in the past five years. ...
There are about 23,000 Filipino students currently enrolled in the program, which requires 400 hours of training over two years.
Converting to a Roth IRA is pretty simple. All you need to do is tell your bank or other financial institution to convert some or all of your traditional IRA funds to a Roth. That's the easy part. You can keep your funds at the same financial institution. You can even keep them invested in the same investments. All you're doing is changing the type of account.
The tricky part is figuring out (1) what the tax cost of converting to a Roth will be, (2) whether converting to a Roth will save or cost you money over the long-run, (3) whether it makes sense to take advantage of the government's one-time only offer to spread the cost of a Roth conversion over two years, and (4) how much to convert. I want to make one point clear: you do not have to convert all of your traditional IRAs to a Roth. You can convert none, some, or all of your traditional IRA savings (whether deductible or nondeductible) to a Roth.
The companies included in the analysis were the largest of those that disclose their U.S. and non-U.S. employment in annual securities filings. All of them have at least 50,000 employees. Collectively, they employed roughly 6.4 million workers world-wide last year, up 7.7% from two years earlier. Over the same period, the total number of U.S. jobs increased 3.1%, according to the Labor Department. ...
Where American companies are creating jobs is a hot political issue. President Barack Obama has proposed tax benefits for companies to create jobs in the U.S., and tax penalties for those with large operations in other countries. His tax-overhaul plan—which has no real chance of passing Congress this year—would require, for the first time, that U.S. companies operating overseas pay a minimum tax on their foreign earnings.
The L-1B visa gives employers access to a large labor force that has very few rights in the workplace. First, employers are not required to pay L-1B visa beneficiaries a minimum or prevailing wage. Workers are not in a position to negotiate better wages, because they can be easily fired, which renders them out of status and requires that they leave the country immediately. Second, the L-1B visa is not a long-term investment in the U.S. economy since only a small fraction of L-1B visa beneficiaries will be sponsored by their employers to stay in the U.S. permanently. The L-1B visa is really about businesses having ready access to a powerless, low-wage workforce.
The L-1B visa also has a significant impact on U.S. workers. U.S. workers can be fired and replaced with L-1B visa beneficiaries. A report by the Department of Homeland Security, Office of Inspector General in January 2006 found “[t]hat so many foreign workers seem to qualify as possessing specialized knowledge [that it] appears to have led to the displacement of American workers.” Labor unions support the use of nonimmigrant visas for high-skilled workers, but also strongly support assessing the impact of work visas on the U.S. workforce.
The L-1B visa is largely a black box. We do not know how many beneficiaries are currently working in the U.S., where they are working, what their qualifications are, and how much they are earning. We should have answers to these very basic questions and a thoughtful debate before the standard for “specialized knowledge” is weakened. ...
Editor's note: I can attest that IBM abuses the L-1B visa program extensively. Before leaving IBM recently, most of my IGS projects were staffed with over 50% (and sometimes nearly 100%) employees from IBM India here on L-1B visas. The IBM India employees included program managers, developers, database administrators, business analysts, and others...hardly employees with "specialized knowledge." In fact, many of the IBM employees were newly hired into IBM India and their first IBM job was in the United States on an L-1B vista.
Unlike the H1-B visa, which is more closely monitored, the L-1B visa program has provided IBM with a means to bring unlimited numbers of offshore employees to the U.S. to staff projects, instead of employing North American employees. It is a travesty.
Alliance reply: OK let's review: It doesn't matter what IBM brass does; it's what IBM workers need to do to "stop the madness". Whether IBM brass 'sense the ship is sinking' or not, makes no difference. Their actions, that imply desperation may be in fact; rats repositioning chairs on the deck. It's the IBM workers that need to unite and do something that can steer the ship in a new direction. First step: Organize. Gather yourselves together and take action to let IBM brass know that you've had enough. Staying away from public pickets only encourages IBM brass to continue with their same destructive policies. Overcome the fear. Join Alliance@IBM and let's do this!
But that isn't the whole story. Many employers have been shifting more costs to retirees even as they receive billions of dollars in government subsidies to offset their own costs.
Knowing what's really driving up the amounts you pay can help you anticipate what's ahead. At the very least, you'll be more skeptical when you receive the next glossy notice announcing changes to your plan based on factors beyond the companies' control. Here's what to look out for.
Myth #2: Doctors in Canada are flocking to the United States to practice. ...
Myth #3: Canada rations health care; that’s why hip replacements and cataract surgeries happen faster in the United States. ...
Myth #4: Canada has long wait times because it has a single-payer system. ...
Myth #5: Canada rations health care; the United States doesn’t. ...
And remember: We’re spending way more on health care than any other country, and for all that money we’re getting at best middling results. So feel free to have a discussion about the relative merits of the U.S. and Canadian health care systems. Just stick to the facts.
The study projects what deductibles and coinsurance would meet the requirements of a Bronze plan, presenting two alternatives: One with a deductible per individual of $4,375, with consumers paying 20% of their health care expenses once meeting the deductible. The other with a deductible of $3,475 and patient coinsurance of 40%. Under both plans, total patient out-of-pocket costs would be capped at $6,350, as required by the health reform law. Deductibles for families would be double these amounts.
"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.
It was quickly flagged at the Washington headquarters of the American Legislative Exchange Council, or ALEC, a business-backed group that views such “false claims” laws as encouraging frivolous lawsuits. ALEC’s membership includes not only corporations, but nearly 2,000 state legislators across the country — including dozens who would vote on the Ohio bill.
One of them, Bill Seitz, a prominent Republican state senator, wrote to a fellow senior lawmaker to relay ALEC’s concerns about “the recent upsurge” in false-claims legislation nationwide. “While this is understandable, as states are broke, the considered advice from our friends at ALEC was that such legislation is not well taken and should not be approved,” he said in a private memorandum.
The legislation was reworked to ease some of ALEC’s concerns, making it one of many bills the group has influenced by mobilizing its lawmaker members, a vast majority of them Republicans. ...
“We know its mission is to bring together corporations and state legislators to draft profit-driven, anti-public-interest legislation, and then help those elected officials pass the bills in statehouses from coast to coast,” said the president of Common Cause, Bob Edgar. “If that’s not lobbying, what is?” ...
Even so, the effectiveness of ALEC’s bill-production system is a major part of the group’s appeal to businesses. A membership brochure last year boasted that ALEC lawmakers typically introduced more than 1,000 bills based on model legislation each year and passed about 17 percent of them. A members-only newsletter from 1995, found in an online archive of tobacco company documents, bluntly characterized that success ratio as “a good investment.”
Even regular reporters noticed that the factory in question closed under, yes, George W. Bush — a fact Romney failed to mention, although his campaign scrambled to cover for him afterwards.
What I didn’t see mentioned was the point that this was a drywall factory — that is, a supplier of a product largely used in home construction. It’s one thing to say that Obama should have revived the economy as a whole; it’s another to say that he should have brought back the housing bubble!
Finally, why should we believe that Romney’s policies — basically tax cuts for the rich, as usual — would yield great economic results? Well, I guess you can point to Bush’s example; how did his administration at this point compare with Obama? From BLS data:
One potentially powerful class of shareholders — employees — seems to be rousing, too. And, to the degree that employee-shareholders band together to have their say on the boss’s pay, they can be a formidable force.
They won't call it "hysteria," of course. They won't even call it "ideology." But they're really peddling an ideologically-driven assault on two of government's finest programs, Social Security and Medicare, in the form of a "Grand Bargain" which President Barack Obama has proven all too eager to embrace in the past.
Don't fall for the hysteria or the hype. Benefits cuts to Social Security and Medicare will only make things worse. Social Security is essentially healthy, and its long-term issues can be fixed by lifting the payroll tax cap. To fix Medicare, which should be our sole concern, we need an overhaul of our health system to remove the corrosive effects of the profit motive on our medical economy. But they don't want to talk about it.
Let’s just get this out of the way: Times are tough. But most people are smart enough to know that these tough times were long in the making and will be long in the fixing. There are no magic words or silver bullets or emerging bubbles that will quickly and easily return us to a pre-recession, pre-collapse sense of prosperity.
That is because we were all complicit in a lie. The government spent too much (on tax cuts and wars), many banks gambled too much and many people borrowed too much. That was the economy. All that money swirling around lulled us into a false sense of security.
When it all fell apart, an overextended government had to help overextended banks and overextended borrowers. The money stopped swirling. Jobs that flourished during the boom became scarce.
The debt grew and the economy shrank.
The government underestimated the crisis and underfinanced the stimulus package aimed at fixing it. So things got worse before they slowly began to get better. And structural economic issues, like the deflation in the housing market, remain.
In an oversimplified nutshell, that is what happened: a complex mix of poor choices and inadequate responses. Now we have to ask ourselves if things have fundamentally changed forever.
The president tried to help fix a mess that he didn’t make, but the fixing has come slowly. Is that failure? Romney and the Republicans say yes.
And, if they can keep framing it as a failure, they can push for, and maybe even push through, their brutal budgets, which cut programs that help the poor and struggling and benefit the rich.
Jobless or overextended college graduates aren't even allowed to declare bankruptcy -- a privilege that's extended to every reckless investor and mismanaged corporation in the nation. Once they finally find work, college graduates face years of garnished wages to repay the loans that funded their often-overpriced educations. If they haven't repaid that debt by the time they grow old -- a very real possibility at the cost of a college education today -- they'll even be forced to surrender part of their Social Security benefits. ...
Meanwhile banks have been slicing and dicing student loans into derivative financial instruments called "SLABS" -- student-loan asset backed securities. We've seen this movie before -- the one where big banks mass-market loans to a population with stagnated wages and dwindling economic prospects, then bundle them and sell them to investors who haven't reviewed the way they were underwritten and sold.
Hey, what could go wrong? ...
Why are these graduates facing such a bleak job market? Because Wall Street's gambling on other financial bets crashed the economy, leaving an entire generation without much of a future to give them optimism and hope. Their parents can't help them much, because most of their assets were taken by Wall Street, too. So as an entire generation of college students graduates with unprecedented debt -- and joblessness that's unprecedented in modern memory -- they're looking forward to a lifetime of reduced expectations.
Look at the record.
Sweden’s job growth (as a percentage) rivals Germany’s since 2006; present unemployment at 7.5 percent is low among advanced economies; inflation averages about 2 percent; economic growth in the past five years slightly exceeds Germany’s; and government debt as a share of the economy is lower than Germany’s, according to a detailed presentation this week from Anders Borg, Sweden’s finance minister, at the Peterson Institute for International Economics in Washington. ...
Conservatives can take heart that many post-crisis policies came right from their playbook. Sweden’s income tax base was broadened and tax rates were sharply reduced. (In 1996, the average marginal rate — the rate on the last bit of income — was 46 percent; in 2010, it was 33 percent.) Spending was cut on old-age pensions, child allowances, unemployment benefits and housing subsidies. Union power over wages was reduced. Many markets (banking, air travel, telecommunications, electricity production) were deregulated. Low inflation and balanced budgets became broadly embraced popular goals.
On the other hand, liberals will also be reassured. Although Sweden trimmed social benefits, it hardly abandoned the welfare state. Overall government spending is still about 50 percent of the economy (gross domestic product), much higher than in the United States ,where the usual ratio is about 35 percent. To reduce income tax rates, the government raised other taxes. Gasoline and cigarette taxes were increased; so were taxes on dividends and capital gains, hitting the rich. Altogether, deficit reduction totaled a huge 12 percent of GDP from 1991 to 1998. Slightly more than a third of that came from higher taxes. ...
Can the Swedish model be applied elsewhere? It requires, Borg said, a broad political consensus about what needs to be done. Although spending cuts are “preferable to tax hikes,” deficit reduction should rely on both. He also argued that Sweden has been much more successful than the United States in controlling health spending. As recently as 1980, health spending in both countries — as a share of GDP — was roughly equal. Now Sweden’s spending is about half the U.S. level. Among other things, he said, Sweden has relied on higher patient co-payments to discourage people from overusing health services.
These shareholders had a story to tell, and Wells' Chairman and CEO John Stumpf was not in a listening mood. They'd purchased stock in the bailed-out Wall Street giant, and then travelled from around the country to tell the board how its corporate citizenship gad ruined lives and wrought profound economic pain on entire communities. ...
Last year, about eight activists had attended the annual meeting. This year, more than 150, with shares in hand, descended on the bank's global headquarters in downtown San Francisco, only to be greeted by throngs of police manning barricades around the building's entrances.
What followed was, literally, a runaround that lasted several hours, as police at one barricade sent shareholders around the block to another, only to be told by officers there that the only way in was at the blocked entrance from which they came. Organizers said that some shareholders – not affiliated with the protests – continued to be let in, a move organizers said was illegal.
About 25-30 community shareholders did manage to make it into the meeting before Wells executives declared the room full. But one woman who got in reported that the room was largely empty, and another said that many of those in attendance were Wells Fargo employees (this could not be independently confirmed). The woman also said that as soon as one of the community shareholders attempted to speak, they were immediately threatened with arrest and removed from the building.
“It’s an inexorable equation,” Sen. Charles Schumer, D-N.Y., told The Fiscal Times. “If they lower the top rate from 35 to 25 and say that capital gains and dividends must stay where they are, it is impossible to be revenue neutral without clobbering middle class exemptions that have broad support.
Among the biggest tax deductions with huge political constituencies are these:
Camp and other Ways and Means committee Republicans and Democrats began preliminary conversations last week on how they might begin to whack away at the thicket of special tax provisions, including “tax-favored retirement accounts.” However, Camp cautioned that an “overwhelming majority of full-time workers rely on those provisions.” Indeed, an analysis by the Hamilton Project shows that while eliminating the biggest tax deductions would yield substantial savings for the government, it would sharply cut into the after-tax income of families in almost every income bracket.
The purpose of this friendly get-together will be to express the banks' displeasure about financial regulation, particularly a Fed plan to limit the banks' exposure to derivatives tied to the credit of foreign governments and other banks.
According to the WSJ:
bankers will tell regulators that the rule is based on "unrealistic" standards and could foster "potentially destabilizing" market shifts, according to two draft letters reviewed by The Wall Street Journal.
In other words: Nice economy you've got there. Shame if anything should happen to it.
Together the four too-big-to-fail banks attending this meeting had $166.2 trillion in "gross notional" exposure to derivatives and the end of 2011, according to the Office of the Comptroller of the Currency, or about 72 percent of the $230.8 trillion held by all U.S. banks and U.S. subsidiaries of foreign banks.
A USA TODAY analysis of corporate filings finds scores of firms paying for execs' club privileges. The perk remains pervasive among regional bank and financial firms. Of more than 130 companies paying for clubs, nearly 50% are local or regional financial firms. The cost can be eye-popping. In last week's proxy filing, California-based Pacific Mercantile Bancorp says it bought a $125,000 membership for CEO Raymond Dellerba for "business development purposes." PMB didn't respond to requests for comment. ...
Country clubs are frequently part of a broader perk program that includes stipends for investment planning, medical costs, cars, use of the corporate jet and other goodies.
The documents, which were among the millions of pages submitted in Lehman's bankruptcy, show the list of top earners each were pledged $8 million to $51 million in cash, stock and other compensation. How much, if any, of the stock was cashed in before the bankruptcy wiped out its value couldn't be determined.
Still, the rich pay packages for so many people raised eyebrows even among compensation experts and provided fresh evidence of the money-driven Wall Street culture that was blamed for triggering the financial crisis.
"Many people are going to be stunned at how well some people were being paid," said Brian Foley, an executive compensation expert in White Plains, N.Y. "This wasn't a matter of five or six people being paid a lot."
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