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The move is unusual, according to work-force experts, but could become a trend in retraining programs as both corporations and workers struggle to stay competitive in a fast-changing economy. Some disgruntled IBM employees say the step is a cost-cutting tactic disguised as a training program. IBM says the program is limited to a small number of employees and is meant to avoid laying them off.
Last Friday, some workers in the company’s outsourcing business received emails informing them of the program. It stated that “a recent assessment” had identified workers who “have not kept pace with acquiring the skills and expertise needed to address changing client needs, technology and market requirements.” The email then added, “You have been identified as one of these employees,” according to a copy sent to The New York Times by an IBM worker. ...
Employees receiving the offer are given little choice, other than to look elsewhere in the company “for opportunities for which your skills may be a better match.” ...
The workers are in the IBM business unit that manages technology operations for other companies, in long-term outsourcing contracts that typically extend for five or more years. The IBM workers log billable hours, and if they spend a day a week on training, that amounts to 20 percent fewer billable hours. IBM regards the 10 percent salary cuts as a form of “co-investment” with the cost shared by workers and the company.
Some IBM workers don’t see it that way. One person who has worked for IBM for more than 20 years said that the skills assessment referred to in the email was not tailored to individuals. All the workers in his group, he said, were being assigned the same training program. He noted that the Indian workers who were part of the same team doing similar work for the same client were not involved.
“It seems like a cost-cutting exercise that is being presented as a training program,” said the IBM worker, who asked not to be identified because he feared consequences for criticizing the company.
A recent assessment revealed that some GTS US SO executives, managers and employees have not kept pace with acquiring the skills and expertise needed to address changing client needs, technology and market requirements.
You have been identified as one of these employees.
The missive goes on to explain that from October 16, 2014 through March 31, 2015, all IBM staffers pegged for the program will be required to devote one day a week, or up to 23 days total, on "skills and expertise development."
During that period, their pay will be adjusted to 90 per cent of their base salaries and their retirement plan contributions and stock purchase deductions will be reduced accordingly. The memo says they will be restored to full pay effective April 1, 2015, once they have completed the program.
The required training reportedly encompasses "cloud, analytics, mobile, security, and social," which IBM shortens to CAMMS. But some angry commenters at the trade union website Alliance@IBM see the entire program as nothing more than an underhanded cost-cutting measure and have chosen to rearrange the letters.
"Friday when I was told I was 'not affected' by the SCAMS action, I was also told I would get to pick up my SCAMSed colleagues' work," wrote one commenter, going by the sobriquet Suffering-in-GTS. "And no, I'm not getting their 10% paycut added to my pay. So ALL of the US GTS employees are getting the CAMSS-shaft, one way or the other."
Another commenter claimed to have been flagged for the program despite having devoted much of the year to skills development, saying, "I have received recognition this year for sharing my expertise and offered to be a mentor when asked. So just where are my skills lacking?"
One anonymous source told ComputerWorld on Monday that the program only affected a single-digit percentage of IBM's total workforce. But another Alliance@IBM commenter said that within the Strategic Outsourcing organization, as many as 75 per cent of employees may be affected. ...
In February, Big Blue said it expected to eliminate as many as 15,000 workers by the end of 2014.
Selected reader comments follow:
I knew a guy once who used a similar strategy to get rid of girlfriends he didn't like - pissed them off until they left. He was not well regarded by those who knew him.
IBM have a serious problem, which is that they are wedded to their deal with the Wall Street devil, also known as the 2015 Roadmap. They have promised a $20 EPS by 2015 and they must show they are on the right track. This has meant layoffs after layoffs.
In some (many) ways, 'Wall Street' is to blame. The current situation with high-speed trades based on sometimes torturous algorithms has led to strategies of jumping on any mis-pricings, with stocks being held for mere minutes or changing hands - in some cases - many, many times per second. This type of trading is completely agnostic to long-term growth or any fundamentals of the traded company.
Even where HFT is not used, this situation has created a culture of NOW profits.
The end result is that IBM appears to be sacrificing its long-term profitability as a company in order to convince the analysts, whose prognostications are then jumped on by the howling hordes of investors.
The show goes on. For now.
I have personally witnessed this myself.
Also, salary/hour reductions for the outside contractors is nothing new.
Pushing for steadily increasing EPS while revenue steadily declines is simply not sustainable. The way they are making this 'work' is to jettison anything that does not directly add to their EPS for the current quarter. And each quarter that means getting rid of staff.
Wall Street simply does not care for a profitable and sustainable IBM; they care only about making money from them. If that ends up sinking the company then so be it - there are always more companies to make money from.
Over the past decade IBM has made record profits by cutting to the bone. Buying back shares to help reduce the number of shares on the market to help boost their stock price.
Now they have a problem.
No SO customer will buy from IBM if IBM can't provide the skills required. That makes the SO employee dead weight. What good is an employee who knows Lotus Notes when the market wants someone to support Outlook?
Or if an Oracle DBA is certified on their regular products but not Exadata?
Or they don't know 'Big Data'...
So IBM has to retrain their employees. Those who don't skill up are gone.
IBM also has to figure out how to subsidize the cost of the training. After all, you can't charge the client if your employee is off training.
This isn't a good thing for IBM. It says long term, IBM is toast because they can't attract the necessary talent and they don't invest in their people.
To your point, on US contracts, customers don't want offshore labor onshored. They will beat up IBM on this and reduce IBM's profit margins.
This is definitely yet another warning sign of IBM's impending doom.
The saddest part about all this is that even Wall Street no longer cares about the $20 number, ever since they figured out how IBM would have to achieve it -- many of them would actually be happier if IBM were bold enough to say "the business landscape has changed radically and that goal is no longer appropriate; at this phase of the cycle, reinvestment is more important than EPS".
Frankly, everybody in IBM, from top to bottom, will be relieved when we are finally rid of the albatross
Also worth noting that IBM is also inflexible in terms of travel, e.g. you travel in your own time to get to and from your place of work. an example given to me was a job offer in Glasgow which would mean that I was travelling on Sunday afternoon to be in the office at 9:00am on Monday and travelling Friday night to get home after midnight.
It was made clear that you and your skills were 100% the property of IBM to use and abuse as they wanted. What amused me, was that so many so-called smart people were willing to give up all their spare time to help IBM make money, whilst all the time being under fear of being 'put on the bench'.
I've been through the IBM TUPE process once, and saw it for exactly what it was. An opportunity for IBM to make a short term profit, sweat the assets and dispose of anybody who wouldn't play by IBMs rules.
Luckily I managed to manipulate my way into redundancy, but I feel sorry for any IBMers remaining.
The few long-term IBMers I knew thought it was perfectly acceptable to spend only one night a week at home with their partner and children, and rarely took all their holiday. It seemed to be more important to slowly move up the IBM ladder than actually have a life outside of work. What was laughable was that these long-term IBMers were not even that well paid, and put up with all the shit.
In my brief stint with them (I had to do 12 months), they openly stated that I would be receiving an "under-performing" review not based on my ability to do my existing job, but because I refused to be pushed into taking a job on the other side of the country. One which would have meant me being away from home for 5 nights of the week, and only seeing my wife and children at weekends.
Well "fuck you" IBM, thanks for the money (it'll pay for my kids to go to university), the summer at home and a new job with a company which cares about its staff. Incidentally, I'm also now in the position to influence contracts with 3rd parties. Guess which company is not going to win any contracts on my watch :)
And here's the thing.
Your utilization target should be reduced by those hours spent on training. Or rather those hours should count towards your utilization because they are company mandated. Of course...IBM won't do that.
Then it's up to your manager to rate you as a 1, 2 or 3. If you're rated as a 4, you have 90 days before you're out. And of course there can only be one number 1. ;-)
The catch is, you often have to walk up to your boss and ask to be sent to class, or a workshop, or whatever. Sometimes you even have to write half a page justifying how the company would benefit from you having an improved skill.
This is called "initiative."
What I would guess is that there's a vast tonnage of people at IBM who are lacking in this thing. This is probably a remediation effort to make up for a presumption that having that word on a resume meant the employee had the attribute.
Those who have been keeping up-to-date feel screwed by shouldering the extra work, but I'd wager they've been being screwed by their skillless coworkers for some time now. It's now simply more obvious.
Me: I'd like some additional training in agile software development. I think it would really help improve delivery on my projects.
IBM boss: Well, I can't send you on a training course for that, but I can point you towards online training.
Me: Thanks, I'll take a look.
IBM boss: Hey your utilisation has gone down, why are you booking so much time to training?
Me: I'm only booking 3 hours a week to training.
IBM boss: Well, you're going to have to stop that until your utilisation recovers.
Me: OK, I'll reduce it and learn in my own time.
Me: I've learnt some new stuff from my online training and I'd like to make the following changes...
IBM Boss: We can't afford the time to implement those changes. Just continue with what you're doing; oh and by the way we had to let Jo and Bob 'go', so here are four more projects for you to manage.
sometime later in review...
Me: I've been looking around for my next role. All the roles want agile experience, so none of the hiring managers will take me on. I've trained online but no one seems to want to give me a chance because I have no real experience.
IBM boss: Never mind that, your utilisation is poor, so I'll have to mark you down. No bonus for you, and if you don't buck up your ideas you'll be getting 'the letter'.
IBM acts just like a pimp. They hire out their employees (keeping a nice juicy cut), slap them around a bit to keep control then drops them as soon as their skills are no longer required. If you are happy to remain in an abusive relationship then good for you. But I've got more respect than that and chose to leave for much happier pastures.
1 day per week for 6 months adds up to about 200 hours of training. Assuming a salary of $80k, that's about $4k that an employee pays for training minus income taxes, so let's say $3k.
$3k for 200 hours of real world, useful, hand-on training is a pretty good deal. But to say that it costs the employee $3k is quite disingenuous. That's because an employee is being trained on company time. So here's another way of looking at it: Instead of an employee taking time off work and paying for outside training, and assuming he was earning $40 an hour, he is actually *being paid* $25 an hour for 200 hours of training.
In my mind that's a $5000 bonus, and now I'm a little jealous.
One IBM IT professional, who asked not to be identified, said he was "shocked" to be added to the list, particularly since his work has been consistently praised by managers.
By reducing pay "by a significant amount," IBM is acting "in the hopes that the employees won't be able to sustain that pay and decide to quit, exempting IBM from letting them go and have to pay severance," the employee said. ...
Lee Conrad, national coordinator at the Alliance, a Communications Workers of America local, said that "IBM employees have no problem with learning new skills but to combine that with a salary cut is outrageous and unacceptable. IBM continues to drive morale and employee loyalty down with each new slap in the face like this," said Conrad. "IBM needs to be mindful of further demoralizing workers and adversely affecting customers," he said.
Selected reader comments follow:
I remember when Sammy took over and he and Lou were in Vegas at an IBM sponsored training event for its employees (believe it or not, IBM did usually sponsor training for employees). Sammy commented he would take part of his annual bonus and give it back to the employees. Of course everyone cheered but of course this never happened. Now Sammy has retired and brain-washed Ginny into thinking the IBM 2015 goal is all that matters.
As an ex-IBMer, I asked for training on multiple occasions only to be told there was no funding available. Someone else posted current IBM employees should challenge this with defining exactly what skills are lacking to make sure they adhere to the current dictatorship (oops. I mean directive).
Lou please come back and save IBM from itself!
IBM and its leadership team don't have one original thought between them and only care about the stock price which they have driven up artificially so they can all cash out and live happily ever after while they screw the little guy.
I lost my pension, retirement health care, and now 10% of my pay until they "let us go" next year. Humiliating? Yes. IBM's products have not kept pace with innovators in the industry, it's all marketing hype.
Smarter Planet looks like a U.N. commercial. Clients are ultimately dissatisfied and we spend most of our time in crisis management. They won't listen to people on the ground; they listen to Ivy Leaguers who are great on concept, but poor on tangible results.
No one should really be shocked! It's been going on like this in the tech sector and corporate America as a whole for decades. It's all to appease the almighty shareholder who, as a whole, are mindless and easily duped into thinking that any level of cuts in personnel can somehow translate into further sustainability or an increase in actual profits. How is it possible when service or operations suffers?
Investors need to wake up and realize that when ANY given industry shows they are cutting PEOPLE, in a large or prolonged scale, it means the sector as a WHOLE for that business is contracting or has contracted and money in that sector is drying up or gone.
I'm sorry Joe! Shouldn't be happening to people like you who know the business and the customer!
"And...", says another long time boot licker. "Let's make the selection of staff arbitrary. Like picking names from a hat. That will add confusion and an element of fear because we are bound to pick people who don't need skills improvement. Doing this will keep the backlash to a minimum because the people not picked will just be happy they were not selected, and will keep their mouths shut. The cry baby selectees who do complain, we just ignore. Giving them more incentive to quit."
"Outstanding!" says the most senior suit. "Demoralizing, insulting confusion...and fear. Two very clever people just earned a very nice Christmas bonus. Make it happen!"
A source involved in the discussions between the companies told the Journal's Albany Bureau on Thursday that the sides are optimistic that an arbitrator can iron out the details. An agreement has stalled in recent months, including failed negotiations in the past few days, the source said.
The move toward arbitration is the latest sign that the Armonk, Westchester County-based IBM and GlobalFoundries haven't given up on a deal. IBM reportedly wants to sell its chip manufacturing assets in East Fishkill and Burlington, Vermont, to GlobalFoundries — which has a growing chip factory in Saratoga County. It has said it plans to keep research and design functions. ...
Also, as part of any sale to GlobalFoundries, state officials are pressing IBM to expand its job-retention commitment past 2016 and to expand it to nearly all of the roughly 14,000 IBM employees in the state. IBM has facilities in Endicott, Broome County, with about 700 workers, along with its offices and facilities in Westchester and Dutchess counties, including its mainframe plant in Poughkeepsie. Nearly 7,000 IBMers work in Dutchess. ...
Between 2000 and 2013, IBM received $880 million in tax breaks in New York, a report earlier this year said. GlobalFoundries, meanwhile, received more than $1 billion in incentives from the state for its massive manufacturing plant in Malta, Saratoga County.
At one time, IBM manufactured more semiconductors than the entire merchant producers combined. The decline of IBM semiconductor has taken 35 years. In this same time frame, Intel has grown from a small, struggling company to a $55 billion world-leading powerhouse of semiconductor technology. In the same time, TSMC has gone from a dead stop to over $20 billion in the semiconductor foundry business. ...
I think IBM is in a secular decline. Sales have declined for three years. For IBM to give up a defining technology like semiconductors smacks of Kodak and Control Data. From here, any financial engineering at IBM to prop up earnings is at its limit. Short IBM outright, or buy 20% out of the money put LEAPs. I will be playing IBM puts during earnings, since I think it will become a serial disappointer.
Pros: Compared to other IT consulting companies, the culture is pragmatic and focused on delivering the right thing for the client. IBM is obviously huge, so it is what you make it. You'll work with very diverse teams. Some teams will be great, others will be poor. If you are willing to put in 60-70 hour weeks doing 40+ of client delivery and 20+ of business development and figuring out how to navigate the internal processes, you'll do great and get promotions and advance. If you want to work 40-44 hours a week just doing client work, you'll have a secure job, but don't expect a raise no matter how stellar your performance is at the client site.
Advice: The bottom few layers of managers are being consistently stripped of any power to actually make changes or make their own decisions in the interest of helping out their employees.
Advice: There is no advice available since the single role of the third world (or maybe second-and-a-half world) branches is to obtain decent results with reduced costs. The anarchy within this location ensures that the people that make more money the salary do their best to keep delivering just to make sure that the cash-cow will keep going as it does. (The contractors that have good "friends" in the company with whom share some of the profits, etc.)
Pros: Flexible working with the right leadership team. Great opportunity to learn via online education, finding the time to do it is a different thing.
Cons: Pay rises stopped some time in the 90's. Everyone is too frightened to ask in case they get put on the twice yearly redundancy list. No perks. Staff canteens are more expensive than Marks and Spencer yet worse than a Little Chef.
Advice: They know what they need to do—look after their staff. They choose not to.
Pros: Great benefits. Great colleagues, for the most part. Great brand and history of innovation. Flexible work schedule.
Cons: Layoffs are constant. Everyone is constantly concerned about job security. Most people are afraid and stressed. Many people have one foot out the door and are evaluating other opportunities. This does not lead to innovation or effective work product.
You cannot move within IBM...even laterally. It was always difficult, but it has become nearly impossible. This is especially true across divisions. Everything is currently frozen. Transfers are blocked.
Salary is generally below market rate. You may start at market rate, but salaries rarely go up.
Financial model and EPS goals are preventing sufficient investment in future innovations.
Advice: IBM used to be a great place to work in which people were pleased to go the extra mile. Restore employee confidence. Respect the individual. How your employees feel will eventually be how your customers feel...how your customers feel will eventually be how your investors feel.
Pros: Great company as a whole, really invested in the new hires to learn the material. Really appreciate all the training they provided.
Cons: As an excited, motivated new hire into IBM, I found that I was doing nothing and in a large company with so many people, it's easy to get forgotten. That's why I left the company.
Advice: Need to not only nurture the young talent, but need to give them challenging projects with upper level visibility that will make them want to stay at a company. With so many startups offering so many more perks and better salary, IBM will need to re-evaluate how they hire new fresh graduates.
Pros: Work from home arrangements, name recognition, dealing with a global team...you will meet everyone from everywhere, but only if you travel on business. Benefits are still good, compared to other places, but being reduced each year.
Cons: IBM has a huge work from home culture, however I wouldn't necessarily call it work-life balance, as you are always expected to drop what you are doing 24/7 for conference calls. Your manager may be in another country and from a culture which is not similar to your own...but you will change managers every year and the only thing the new manager will know about you is what your previous manager tells them in the turn-over meeting. I probably had 8 managers in the last decade while staying in the same job role. I only ever met 2 of them in person.
Advice: Not really worth the time; the band 9 and 10 managers have no power to influence or change anything, and the people above them do not listen to anything from "the ranks"
Pros: People recognize IBM as a leader in the world of high tech. Co-workers are overall great to work with—quality. Expenses are paid promptly and the online expense tool is easy to use. "LOVE MY JOB but HATE THE COMPANY"
Advice: Fix your restrictive 401k matching for new employees or employees who leave prior to Dec 31st. Fix the bean-counter mentality. With 400,000 employees FIX THE USABILITY of your (extremely poor) internal web site.
Pros: Good salary and benefits, compared to some places. Smart people, decent work life balance. The company has name recognition.
Cons: Company leadership isn't great. More interested in financial strategies to boost stock prices than actually innovating or being a leader in technology. Outsourcing is a big problem. When you outsource, sure you save money on labor, but you also lose a lot of good talent and replace it with inexperienced, not so good talent, and thus the quality of your products begins to suffer and you lose customers.
Advice: The middle managers I encountered were fine, although being a bit more transparent and not so "professional" would be preferable to me.
Pros: There was a time before Ginni took over as CEO, for many years, there was no focus on employees. That focus is coming back. There is lot of emphasis on employee engagement, employee education and well being. Hope this trend will continue and would make a meaningful impact for employees.
Cons: IBM is no exception compared to other big companies. I believe, that's the curse of being part of big company. You have to deal with politics, bureaucracy, competing priorities etc. Amazon/Google of the world will have the same challenges once they get to IBM's size.
Advice: Employees are your assets, just take care of them. Employees have lot of pride being IBMers, just give them little more to be happy in their lives.
Pros: Flexible hours, working from home.
Cons: Management is top-heavy. Jobs of hard-working U.S. employees are constantly being outsourced, off-shored, downsized. Cost-cutting is the only goal. Ageism is rampant. No job security. Project Management is a joke: efficiency and hard work is ignored, old knowledge/experience has been retired, cut up and replaced by multiple foreign workers who don't know or understand how anything works together.
Pay has decreased every year, no bonuses, OT no longer paid. No pension, 401(k) company match only at end of calendar year if one is "lucky" enough to still be employed.
Employee morale could not be lower. Non-management employees considering unionizing.
Employee desktop tools are last century; offshore "Help" desk not helpful as they cannot understand questions or "don't know that product."
Advice: Why is cost-cutting the top goal of every IBM organization? And why are hard-working employees the first casualties of cost-cutting? Start appreciating the knowledge and experience of your seasoned employees. Start rewarding employees for hard work and productivity. Stop off-shoring U.S. jobs.
Pros: Invest in employees and benefits are nice. Paid vacation is solid and unlimited paid sick days.
Cons: While your skills will grow your career will stagnate. Over time they try to extract just enough of each employee to keep them right at the edge of breaking.
Advice: I really feel anything written here is irrelevant to IBM upper management. The apparent value they give to the employee is a facade. The goal is profit and it's okay to forget that actual human beings work for you. Mind slaves with no union.
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