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Last month, IBM Chief Executive Officer Ginni Rometty tossed out the company’s goal to reach $20 a share in adjusted earnings by 2015 after sales dropped for a 10th straight quarter and demand for servers and other hardware dwindled. Rometty, who took over in 2012, had been trying to transform IBM while adhering to the five-year profit forecast laid out by her predecessor, Sam Palmisano. ...
IBM is trying to streamline itself to improve speed and agility, Rometty said in a memo to workers last month. The company has fired and furloughed employees, taking more than $1 billion in workforce restructuring charges this year. IBM has said it plans to cut more jobs, resulting in a fourth-quarter charge of as much as $600 million.
Selected reader comments from LinkedIn's IBM Official Alumni Group: The Greater IBM Connection follow:
IBM from a software acquisition standpoint mirror's Computer Associates strategies these days buying install base and milking annual maintenance revenue. IBM has even backed off on innovation in consulting which was their key lead into today's customers. The consultants no longer control the accounts, but provide instead piece meal technical services. Look at recent major competitive bidding for consulting services in the public sector. IBM gets beaten regularly!
IBM has the money and the resources to turn around, but it needs a new CEO with a clear direction from the board.
Another underlying issue is the over-reliance on numbers. I am a scientist and believe in the importance of numbers and have developed new ways to quantify. So I am certainly not against quantifying when appropriate. The problem comes in looking at complex things and only being able to measure some aspects and then *imagining* or *pretending* that nothing but what you have measured is important or even exists. One way this has manifested is in the decision to acquire rather than grow organically.
When a company invests in the skills and technology internally, there are many side benefits compared with acquisition but these tend to be hard to measure compared with the existing customer base of new acquisitions. Of course, there are all sorts of shady assumptions involved when calculating what the new acquisition will really mean for IBM sales, but acquisitions are frankly a "sexy" thing for executives to be involved in as opposed to growing a business organically.
Despite this and many other issues, there are still a large number of highly talented people in IBM and I think it would be premature to say they are going out of business at this point. The issues are all still soluble if they are addressed quickly and honestly.
IBM's philosophy is quite different:
Until IBM shareholders wake up to the money trap their funds are wrapped up and force changes at the top of IBM, we can expect to see EPS guidance lowered and FCF drying up every quarter.
I wouldn't have used DEC or Compaq as comparative businesses. I would have used Radio Shack that did much the same thing IBM has done, borrowed funds to buyback shares until the FCF dried up completely and they couldn't borrow further funds.
I hope that IBM have the grace to look back at other businesses that have pursued ever grandiose EPS guidance.
What products is IBM leading the market with today? Where is its innovation? Where is its revenue growth? IBM made some progress in cloud, but compared to Amazon and other major cloud providers, is irrelevant. IBM is losing ground in consulting, and hardware is a joke. They keep selling off manufacturing operations because they are not competitive!
IBM keeps acquiring companies, but would someone name one new innovative product that they have introduced in the past 5 years and how well is it doing?
Sorry to be a naysayer here, but unless someone in the boardroom steps up and makes some changes the great blue lady is headed for some very hard times ahead. Look at the comments of the market analysts and professional investors!
Back in its heyday, IBM was noted every bit as much as a sales and marketing company selling and promoting its products as much as it was a technology company, in fact maybe it was more of a sales and marketing company than anything else. Today after Gerstner who put a quick patch on a hemorrhage there is no sales organization left, and the folks in marketing are promoted from various areas but are hardly professional marketing people.
IBM has lost its biggest edge, namely control of a huge population of customers. The Business Partner model has never worked and is killing them today! Furthermore, IBM is not clearly delivering a sales message to its partners or backing up its positions with incentives.
U.S. District Judge Naomi Reice Buchwald in New York granted IBM's bid to stay the lawsuit as it involved issues central to an arbitration pending before the International Chamber of Commerce.
And the same goes for the plant in Burlington, Vt., which is also part of the deal in which IBM will sell its chip-making business to GlobalFoundries sometime in 2015.
That's a good sign for the several thousand people who make a living from the Dutchess County plant, and the area's economy, which benefits from its payroll and spending. Burlington's facility also has a major impact on the Vermont economy.
Recognizing that corporate responsibility can offer a company a competitive advantage today, we became interested in IBM as a pioneer in establishing a skills-based volunteerism initiative that also influences its talent and professional development strategies. Several executives at the company offered to talk with us to figure out why the program has been so successful—not just as a philanthropic gesture, but as a talent development system. As Litow put it, “If participation in these programs increases our retention rate, recruits top talent, and builds skills in our workforce, then it’s addressing the critical issue of competitiveness.”
IBM - Qantas’ key data centre partner since 2004 - had hosted the airline’s Oracle E-Business Suite R11 platform out of its Sydney data centre, with Tata Consultancy Services providing application support, until May this year. ...
IBM has two remaining contracts with Qantas: a seven-year, $200 million contract for project delivery, signed in 2009; and its data centre deal - which also includes mainframe and mid-range computing, and which will expire in 2017.
Pros: Working from home on Fridays (and sometimes other days as well). Looks good on CV (although I have a very strong feeling that may be short lived).
Cons: No strategy at all—if the market has a tool called Outlook, they build a replica called Lotus Notes. If the market has Google Analytics, they build TeaLeaf. They somehow always build tools that were around 5 years ago rather than tools to solve a current problem.
There is a lot of hype about small achievements. In fact some of the hype I would be ashamed to associate with. Example is an innovation award for someone who made the timesheet tool work on mobile. I can't believe they would win an innovation award in 2014. If it was 2004, I would have happily applauded.
IBM is a time bomb waiting to explode. Thankfully I got out before there were 400K people out there searching for jobs.
Advice: You need to make it a policy that no person from within IBM is allowed to be CEO. They simply cannot have leadership skills due to the work culture where you need to be scared all the time to succeed in IBM.
Currently there is this fear in all employees that managers try to instill which not only demotivates people, but makes them feel like they should not be proud of doing a good job and the only thing that matters is politics.
There are still some people who are very good at what they do, although that is becoming increasingly rare within this company as demonstrated by the number of accounts failing and customers pulling out due to poor quality of work. Message to IBM—if you use the good people wisely, you still have a very very small chance of surviving the next 10 years.
Work/life balance depends on the account you are in. Most programmes are on the brink of being pulled out of IBM and its very difficult to be part of these dying programmes. For the first time, I know what it is like to slowly start dying. Quite depressing.
More and more people are calling up helplines for depression and the environment is slowly becoming quite unbearable for most people.
The whole company is a mistake. It should not have been given an opportunity to succeed and then create this black hole of extremely political and incompetent people (who keep patting each other on the back and calling each other 'great people' for some reason)
Advice: Build in time to allow training on the new technologies instead of just saying "Ooh shiny, this is state of the art and we should use it. Implement it tomorrow!" Stop using a "bell curve" to rank and rate folks. With a thin workforce everybody is usually going above and beyond what is expected. At least in my group we are all at the top 5%.
Pros: Many opportunities to gain experience in a variety of roles worldwide. One of the best training programs in the industry. Some of the most incredible technical professionals that I've ever worked with.
Cons: Executive management is entrenched and focused on financial gimmicks to improve/support the bottom line, while bleeding and flogging of the senior management, mid-management and employee ranks who, as a result, have lost the needed morale to grow revenues.
While top contributors are seeing measly raises and bonuses, many in the employee ranks are worried about getting laid off prior to Dec 15 losing their entire 401k match for the year. Standout employees are leaving in droves, rapidly shifting the employee mix to those that are just shy of retirement and others that are complacent with little to no drive to innovate.
Advice: Find a new CEO. Focus on top line growth. Stop using revenue misses as an excuse to down shift employee reviews...it is incredibly demoralizing.
Pros: Ability to work from home. Flexible work environment. Reasonably good benefits.
Pros: There are a lot of nice people at the individual contributor level, and if you are lucky you will get the rare "professional and fair manager" to work for. The IBM logo is good to have on your resume.
Cons: In sales, IBM is capping many commissions and, in some instances, creatively avoiding them altogether. Technical positions are seeing salary reductions.
Advice: Value the customers and the customer-facing employees, and the value to the shareholder will follow. By emphasizing the shareholder exclusively with the stock buy backs, the resource actions, and minimizing investment in product development, we are focusing on the short-term performance at the expense of the company's long-term success and client and employee satisfaction. I would also recommend that senior management be open to actionable input from lower levels as opposed to today's very top-down approach.
Advice: Invest in the employees that represent IBM. Invest in training. Build a community across the staff. Consistently compensate the top 50%, not just the top 10%. Move people management tasks to the programs they are assigned.
Pros: Technical breadth and customer opportunities are hard to beat since IBM still is one of the largest tech companies in the world.
If you can find them, there is an IBM expert on everything (kind of like the Federal Government).
Cons: IBM used to a stable career choice, but with Resource Actions an annual event for the last five years, it's hard to imagine being able to last long enough to retire or even make a difference here. The typical IBM employee now is a new hire, lasts 1 to 3 years (just long enough to show one or two stable roles on the resume), then takes the resume to get a job somewhere else.
The first and apparently only response to negative financial quarters is—do an RA, freeze hiring and salaries, eliminate training and customer travel, shift work to lower skilled, lower paid resources, shift work offshore.
Advice: Now that you've abandoned the Roadmap 2015 financial targets, stop laying off your employees and treating them like the source of the problem, instead of the only possible solution you can have as a services and software company.
Pros: The company provides decent health benefits, flexible working hours, and the ability to move into different job roles during the course of your career. There are so many jobs at IBM that it is not that hard to get hired. However, there are many problems at IBM. There are more cons than pros.
Cons: Read Robert Cringely's book. It is all true.
Advice: Read Robert Cringely's book and fix the problems.
Pros: Really, really great people. Nothing not to like and respect about other IBMers.
Cons: Leadership. The 2015 plan sucked a ton of flexibility and energy out of IBM's innovation and execution. Cost cost cutting has been painful with respect to things that really matter (salaries and innovation investments).
Advice: Boosting dividends seems more about boosting executive pay at the expense of the ability to innovate. The reinvestment rate is less than what it could have been.
Pros: Good pay level. Decent benefits. Don't have to work hard. Can work from home. The company reigns supreme at cutting costs for everything. Company has high integrity in that it does what it says it will do (although the amount of running around you are made to do is Olympic in level).
Cons: Not much compensation upside. Highly political environment. Leadership is often clueless and disconnected from what is really going on. Constant resource actions (code for layoffs). Teams are not provided with needed management data. An unbelievable amount of broken systems. Constant automated emails that make no sense.
Getting technical support for the average person is ridiculously hard (have to chat with someone off shore). Lotus Notes is terrible. Executives get top shelf support, while everyone else is treated poorly. Open Office is terrible. Approvals on top of approvals are oppressive. Culture has no sense of humor.
Advice: Wake up and get out of your holes to find out what is really going on out in the field. Engagement is lower than low. Try experiencing life as an employee. Think about how you can help teams do their job. Instead of picking off and letting the good leaders go for bringing up the real problems suggest taking the wax out of your ears and helping people.
Pros: Variety of work and unique projects if you are able to schmooze with the right people but you will probably need to clamber over tens of other ultra-competitive people to get there and you will need to be lucky enough that your availability happens to coincide with an interesting opportunity; otherwise you will be pressured into taking whatever vacancy exists to ensure you are being 'utilised' so that IBM can justify having you in the company.
It is all too easy to land in a completely random job role for 6-12 months just to fill a gap which has no alignment to your actual potential, skills or desires.
Pay is about the only thing which compensates for all this with a good starting salary and expense claiming system. You do need to negotiate what you can claim for however.
Cons: Very very very poorly managed at all corners of the business. Disorganised beyond belief to the point that the department I belong to changed its name three times in a single year (and the work I do day-to-day is entirely unrelated to my department as a result of the situation described above).
Absolutely no people managers or genuine leaders whatsoever.
Senior management consists of these socially inept characters who are ruthless and self-centred. They push there way up the ranks which they can do easily by lying and sucking up to more senior people who are just as conniving as they are. Once they gain rank they exert intimidation tactics to get results from those lower than them using their influence over end of year reviews to blackmail staff into doing things.
There is an obvious and uncomfortable fear culture that pervades the company.
IBM has no identity anymore which is so sad because they used to be such an iconic brand that was truly innovative. Now they just cobble together these highly bespoke IT systems and market them under the guise of cloud, analytics, mobile, big data etc. They over-promise their capabilities and the time in which they can deliver things and then dump everything on the shoulders of poorly trained and largely inexperienced staff in an attempt to save as much money as possible.
The promotion process is terribly flawed because you are reviewed by people who never actually see you working so they rely solely on written feedback from others. My manager collates the written feedback collected by the 36 people she looks after, comparing them and ranking them against each other. She then has to defend her rank order against other managers like her until there is a forced distribution of ranking levels which they all agree on. This means that two people who might perform equally well are given different ranks at the end of a year. It is the epitome of a profit-obsessed corporation.
Do not go here if you are looking to be inspired or to feel personally valued (even though ironically you will hear the buzzword 'value' thrown around everywhere along with a whole host of other set phrases and waffly anecdotes which all the consultants like to reel off when they have no clue what they are really talking about).
Advice: Don't allow people who are unable to manage people to have senior roles with responsibilities over other human beings. I suspect it is pointless me saying this though because there is no single person in a position to execute this advice. Authority is so diluted which is why it is so hard for anyone to make a decision in the place! I didn't come across a single manager who knew how to encourage or inspire their staff to do things. It was all task oriented and fear driven.
Pros: I believe salaries here are good relative to other employers in the Raleigh/Durham, NC area. There is a lot of opportunity for technical challenge. Flexible working hours (but definitely expect to work over 40 hours/week).
Cons: Maniacal focus on cost cutting to compensate for current lack of revenue growth. This translates into regular "resource actions" and continuously trying to do more with less.
Advice: Senior management needs to show appreciation for front line employees via their actions and spending priorities. The focus on expense cuts, the headcount freezes, the inability to move between divisions...these are limiting career opportunities and killing employee morale.
Pros: IBM has a lot to offer to college grads and recent hires. Working from home is a great. I have had the pleasure of working with people in different countries and learned so much about other cultures.
Cons: IBM culture has changed over the year. IBM is so focused on cost cutting that they have impacted their ability to execute quickly. In my role, we spend too much time dealing with this impact of cost cutting (people gone, funding cut, too many top priorities competing for the same resources). IBM now embraces "work force rebalancing". It is actually a cost cutting "tool". Numbers are set and that trickles down to headcount reduction. If you are looking for job security, this is not the safest place to be.
Advice: Advice to management—work on leadership skill. It seems that you have forgotten that your 430,000 resources are people. I would suggest that every manager get refresher training on how to treat people. Tough and firm is a skill that many lack; many have crossed the line to belittling.
Pros: Fair salary, good health care benefits. A CEO that has a solid vision for the future of the company.
Cons: Bureaucracy. Long-time managers and long-time employees refuse to change. Travel freeze and expense cuts. No pay raise in more than two years. Perception that the company is cheap and in financial trouble. No stability and constant fear of layoffs.
Advice: Change is necessary. Listen to your CEO. Embrace employees that want to grow with the company, not those that want to do the same thing they've been doing for 20 years.
Having worked as an engineer for 37 years, ultimately at ABB Inc., where he retired 11 years ago, Mr. Tussey said he never paid much attention to the fees in his retirement plan and “assumed the company was looking out for my best interests.”
But after seeing a television program on the negative impact that 401(k) expenses can have on retirement savings, he hired a lawyer, who filed a class-action lawsuit in 2006 against ABB and plan administrators. ...
In many retirement plans, a significant amount of future retirees’ funds are devoured by fees. According to a 2012 study published by the progressive think tank Demos, high 401(k) fees can drain $155,000 from an average household over a lifetime. Higher-earning households can lose even more — up to $278,000. ...
But the legal landscape may change substantially. In October, the Supreme Court agreed to hear a 401(k) fee case. If the court rules in favor of employees, the floodgates could open for more retirement plan lawsuits.
The management of IBM is broken. It will only be fixed through force. That force can only come from a few sources:
I don't want to see A happen. B or C are the only options that could stop the decline. It will not happen naturally. The leadership required does not exist in the IBM of today. If you are not part of one of those agents of change then your energies will be better rewarded elsewhere. -Anonymous-
Anyway when I left, $1000 (even had it been cash in my hand right there and then) was not going to make one jot of difference to how I felt about that place or the decision to leave. Execs get millions in zero-cost options and they seem to think that a paltry insult like $1000 of stock is going to make people stay on. Makes it clear how little they understand the workforce. -Glad To Be Gone-
12/14 is one day before 401k match on 12/15 right? Additionally, all deferred vacations are to be done away with for workers who have delivered over weekends etc. and executives are asked to "urge" workers to bill an additional 16 hours to clients prior to EOY. I wonder what the clients would think if they saw the 16 hour billing email? In my opinion, our ethics have been demolished. -GBS_AP-
Alliance reply: So your advice is don't protest and don't make waves, just keep your head down and the RA's will pass you by, right?
How's that been working for IBMers, so far? Your advice sounds like an FLM's advice. Are you an FLM?
IBMers should do the opposite, en masse. Don't shut up, SPEAK UP! In large numbers, too. The company may not respond to you, or they may RA you, or they may "THINK" of some other negative anti-worker-profit-only-driven program to put against you; but they can't ignore you in large groups of IBMers, standing up for themselves!
Besides, does anyone still working at IBM believe that Corporate *really cares* what their employees think? Seriously?
Maybe someone should mention that to Ginny and whatever puppet is supposedly running IBM HR as a cost savings opportunity for 2016. -Left On My Own Terms In 2013-
Alliance reply: IBM executives and the CEO do not need ideas nor strategies any more egregiously anti-worker, than they already have in place. How about recommending that instead, IBMers join forces with their co-workers and work toward a collective employment contract? What a concept!
Alliance reply: The best way for you to help Alliance would be to go to our donate page and make a donation of your choice. You are correct that there is no union in India, for now; but we are working on linking IBM India workers with a similar Alliance type organization. Thank you for your support of our efforts to keep IBM workers all over the world, informed. There is a donate link on the right column of this page.
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