I heard from dozens of readers this morning about a message IBM sent to its current employees concerning their 401K plan — changing it from a contribution in every paycheck to a single contribution at the end of the year. Of course if you are laid off that means no annual contribution, less retirement savings, but a real bonus to the company. This, in itself, isn’t worth a column. It’s just Scrooge IBM being more Scrooge-like in search of that 2015 earnings target. What is worth a column is putting this news in the context of IBM having failed its recent internal security audit, which should concern IBM customers.
What, they didn’t tell you?
How well is this screwing U.S. employees and offshoring their jobs working for IBM? Not very. When IBM supports your IT the company has to meet standards for data protection and security. OS’s will get all their security patches, antivirus software will be current and running, user-ID’s will be closely managed, backups will done, etc. There are industry standards for this stuff. IBM does a self audit before getting its annual industry review. For 2012 IBM failed its internal audit. The annual review has been postponed and there is a big push to fix stuff. If the crisis is not fixed, this could be a huge problem for IBM Global Services.
Can the offshore support teams do this work? Yes. The problem is their time is tightly managed and they are not allowed to take any initiative. Management is focused on oiling the squeaky wheels so they don’t think past immediate problems. Managers, too, are not allowed or are afraid to take initiative.
IBM has built a management culture in which you do only what you are told to do when you are told to do it. If you are not told to check the backup reports every day, they are not checked. Often staffing is so tight that 100 percent of the team’s time must be spent fixing active problems. No time remains to check anything that hasn’t already been declared broken.
IBM has wiped out personal responsibility at the server admin level. The problems are well known internally and IBM’s management turns a deaf ear to them. Any IBMer or manager who speaks out usually lands on a layoff list. Now IBM has an audit crisis and management is surprised and upset, yet it’s their own damned fault.
The immediate story here is IBM employees being screwed out of their 401k match but it soon will be IBM customers whose systems fail an SAS70 audit. If I was an IBM customer the message I would send to Big Blue is “Stop dreaming up ways to screw your employees and focus on actually doing your job.”
IBM customers, ask to see the audit reports on your systems! Can IBM provide you full and current documentation to prove you are in audit compliance? Ask to see it.
Help me, IBM. I’ve fallen and I can’t get up!
Wow! this sounds just like how management works in Beijing (I live there)
What you’re seeing is now what is going to happen in 2013 with IBM. I am predicting a major restructure in IBM ( chop chop chop ) in the U.S. as well finally a spin-off of the outsourcing side of the house and perhaps even some hardware components. High value services and software is where IBM wants to be. Of coruse you have those pesky drones in the way, but at least they’ll save on that 401k match money!
“The immediate story here is IBM employees being screwed out of their 401k match”
IBMer are a pretty docile bunch, nothing but some grumbling happened when the pension plan got looted so the runt could pad the earnings.
We have no leverage with IBM. Complaining only gets you fired, which in this economy is the worst of two evils. Every few months I write my congressmen and senators asking them to look at IBM’s business practices. I suggest others do the same. As bad as IBM has been to its employees what it is doing to the USA economy is worse.
The thing to do is let them know how you feel by using your feet; i.e., LEAVE. I spent 10 years banging my head against the Blue Wall, and I ended up bruised, disillusioned, and earning less in real dollars than when I started (when you factor in the pitiful raises and increases in medical insurance premiums and cost of living). The only thin you can do is deprive them of your skills and hope that they will learn their lesson. (They won’t. This is a company obsessed with wringing every last cent out of the company. “Shareholder Value”.)
BTW, the union efforts, while noble, are a Quixotic effort. IBM has endless resources and kennels of lawyers to fight such an effort, and — sad to say — unions are viewed so unfavorably these days, it would be foolish to think they have a chance of succeeding in unionizing IBM workers. Life is too short to piss it away on a lost cause.
sad, because unions are somewhat democratic, depending on how well they are run.
At least they are an institution that by and large supports our way of life and our government.
The alternative is domination by the Oligarchs and eventually something like 1917 or Tahir square..
Agree. The only folks that have any leverage for a union are the customer facing ones. Everyone else’s job can be done someplace cheaper (executive’s view). Entire product dev teams are being moved off shore, well, the jobs are moving, not the people. Software dev in not like an assembly plant where there is significant infrastructure that is hard to move, so the workers have some leverage when the line gets shut down. In software, all you need is a computer and an internet connection. So IBM’s stance is “if you don’t like it, leave. Programmers are just replaceable parts”. I certainly don’t agree, but this is the reality in the software world within IBM. Getting a dev group to walk off the job in a strike, would just result in the jobs being moved faster than planned, something that would have the bean counters jumping for joy.
Based on experience I’ve had with unions, I wouldn’t join one anyway. One doesn’t need to look to far to see the results of the “me first” attitude and the failure of union leadership/membership to recognize that pricing the workers out of the global market doesn’t help them in the long run.
Maybe that’s part of the problem. No one today, gives a crap about the long run anymore, just maximize the numbers for this quarter.
We are not losing our employer match, that remains every paycheck. Up to 6% match.
What they are changing is the automatic contribution.
Even if you don’t contribute at ALL to your own 401K, then IBM still puts 2% in.
That is moving to lump sum on DEC 15th.
Is it still crappy?
Maybe, this is the first company I worked for that even did this extra contribution, let alone 6%.
At risk is $1K if you make $50K. Not a small deal, but not a huge hit either.
What it does mean is a lot of IBMers don’t have the reading comprehension to understand the change and are over-reacting to a perceived 8% hit.
Now THAT scares me.
Bob said he heard from “dozens” of employees. I’m surprised there was so much misunderstanding. Perhaps it was the language barrier. 🙂
Seriously….not sure you are reading the writing on the wall here. That 401K move will be used to shore up the numbers for awhile with immediate cash balance, then get killed completely as the company continues to slide over the cliff with loss of market share and real revenue. I think IBMers have pretty strong reading comprehension. I think the execs are somehow predicting they can build a smarter planet with dumber people. Talent will continue to walk. I guess all I can say in response to the above post is….ummmm….hang in there? You are doing a great job? Maybe you’ll get a decent bonus next year?
I’m having trouble with your RSS feed. My reader can see the feed for comments but can’t see one for the articles themselves.
We are ALL having trouble with my RSS feed. This has to do with the demise of Feedburner. We’re moving to an alternate service, Feedblitz, but trying to do so without making everyone resubscribe. Google has somehow lost the column RSS feed but hasn’t lost the RSS comment feed. Weird, eh? The young and lovely Jennie is doing her best to save the day within the all too real limits of Google support.
I think this performance of IBM is not wise.. customers data is most important. if break out… will result unexpected affection
Wow, spammers are getting more sophisticated. The comment sort of seems relevant to the post, but the link and username clearly are not.
Perhaps it would help if Bob elimiated the website link option in the header. If we need to link to another site it could be in the body only.
First retirement has been squashed.
Small companies have squashed 401K match.
Now a large enterprise is moving towards no 401K match.
Employees are just happy to have a job these days (I know I am!) and so who could think to complain?
I sense the advent of reverse third generation house holds, where the father moves in with his son after he ‘retires’, who in turn move in with his son’s son when they ‘retire’.
You got it. Welcome to the New Feudalism. It’s a Smarter Planet.
Same old madness, simply on a bigger and nastier scale. I worked there for over 25 years and witnessed the executive ranks morph from a talented technologically savvy professional leadership team into a bunch of lying, sleazy, immoral, disgusting political pigs who knew nothing about modern computer technology. They have moved as far from being “human” as the alien figure in the movie “Predator.” It’s game, set, match for Services, I wouldn’t outsource my laundry to them.
Yeah that sleazy behavior pattern? That’s the Price Waterhouse model we now use. It turned IBM from IBM into yet another big company trying to screw its customers and its employees, while leeching onto large government contracts based on a past reputation which no longer even remotely resembles the current ability to deliver.
Well…yeah, but the bottom line is that the people at the top, who have massive stock holdings, have an incentive to do whatever they can to jack up the share price. It’s a Smarter Planet.
Tinfoil hat time – not only does it save IBM the interest on the pay as you go system, and not only does it short anyone who leaves during the year, but hey what if IBM simply changes their mind or becomes unable to pay or otherwise dumps the program, during the year.
I look at IBM and wonder how they survive at all at this point and wonder if it won’t just implode on very short notice.
I’ll do you one better than that…. I guarantee they’re using this to shore up the Q1-Q3 numbers and not accruing for the payout in December. Then, after looking at “better” numbers for Q1-3, they’re going to look at that looming year end hickey and state that they’ve got to cut that cost or risk alienating investors. Poof, no more matching. So much for stealing the pensions and replacing them with 401(k). I am so glad to be gone from there it’s not even funny. You’d have to be crazy to want to start there as a new employee. The only reason I can see anyone staying is because they’re under the old pension.There’s no other reason. Gone in March of 2012 and working somewhere that appreciates me!
Attaboy. Leaving is the best option. They will pay for it in the end.
Same here. After five years it was time to move on. I LOVED my coworkers and gained a lot of experience but the hours and stress were too much. Helped my account save just shy go $500k in green dollars and was told I didn’t do enough to earn a raise. Never had a single performance problem and got high marks from customers. Best career move in my life was the day I resigned.
Couldn’t agree more. I too left the company after stomaching all I could from the (lack of) leadership and upon seeing the *much* greener pastures on the other side, was a bit sad I hadn’t left earlier in my career.
Yes I”m ex IBM too. Seriously the place stinks to high heaven, talk about corruption and cronyism. I could’t believe some of the things I saw while there. Can’t wait to see IBM implode.
No one is under the old pension – unless you retired before they stole it away from us. At that time they pointed to the 401k and now they aren’t even pretending anymore. The reason they can take such a bold “screw you employee” move is because they WANT US TO LEAVE and save the severance. They know we can’t coordinate a mass exodus. There has to be an entire level in purgatory reserved just for IBM management
Big companies can get away with this in a sluggish economy.
The problem is going to be recruiting talent when the economy gets better. Tech staff have a long memory, – good luck hiring any talented tech next year.
Hiring tech staff next year? Well, not in this country to be sure. Read the Cringley essay on the “lack” of stateside IT talent – I think it was ServiceMaster recruiting in Memphis, TN – certainly a hotbed of available expertise.
IBM will continue to hire in INDIA only. Cheaper,faster,better and looks good for SHAREHOLDER VALUE.
so, has there been a sea change out there, and now people and entities care about data security? Wow! That’s news.
IBM will hire more PR types and market this situation away….down a river of bubbles.
One question, two remarks:
Q: In reading the article, I’m not seeing the connection between deferred 401K comp contributions (abhorrent that it is) and the problems uncovered during audits. Did I miss something?
R1: In my history with offshoring, I have observed that the offshore teams typically don’t show initiative or out of the box thinking. Routine, cookie cutter tasks seems to be the sweet spot. Proactively addressing issues, figuring things out that isn’t spelled out…not so much.
R2: Whether it’s IBM customers or HP (or whoever), requesting and receiving the audit report is standard practice (although often under NDA).
There is life after IBM. Join us!
https://www.linkedin.com/groups/Life-After-IBM-4708026
These IBM posts just get sadder as they go along.
I worked for them in the late ’70s. They had an internal motto called the “IBM Triangle.” Imagine an equilateral triangle labeled “Product,” “Customers” and “Employees.” I didn’t stay with them long, but it seemed like they genuinely tried to live up to it, treating all three sides well.
What are they now, the “IBM Point?” Reverse geometry lesson.
The triangle now seems to be Shareholders, Executives, and….I don’t know, how about Evil?
No, @A Different Russ, I don’t think it’s “Evil” exactly, though that’s implied. More precisely: Greed is the 3rd leg of the triangle.
IBM doesn’t care about retaining US workers. In face, they want them gone. Except for the sales team and executives. Ginni said it in one of her first interviews (forget which magazine)
All te rest of us grunt workers can be offshored somewhere. I imagine there is no shortage of potential India employees.
IBM is nasty employer, and hopefully karma will get each and every senior exec making these decisions.
I amsure IBM is about to dump their hardware business at the beginning of 2013, likely candidates are Lenovo and Toshiba.
The day I open up an email from RMAC COMM (Randy MacDonald’s announcement alias, Randy is IBM’s SVP of HR) and there’s good news inside I’ll be so surprised that I’ll likely fall off my chair.
The culture inside IBM USA is becoming toxic. There are seemingly countless VPs, and fewer and fewer people who are individual contributors. It’s a rare day when I don’t work 12 hours, and though my co-workers and peers are vocally thankful for my help I won’t see a raise or a promotion unless I leave.
The money is good, but I am not a happy employee.
The way you worded this in the beginning of this post is that IBM isn’t contributing the employee’s contribution, then later say it is just the employer match. Which is this?
I was wondering the same, Cringely. Would you clarify this point, please? Thanks.
What Bob said at the beginning “a single contribution at the end of the year. Of course if you are laid off that means no annual contribution” seems unrelated to the end about the “match”. Perhaps the word “match” is another way of saying “contribution” and the issue is merely the timing that only affects people laid off prior to the end-of-year contribution.
There is a message board for individual firms on YAHOO Finance and it is a hornet’s nest of anger about the 401K issue. Some of these boards are a joke, such as the GE board which is just politics now. Nobody discusses General Electric. But the IBM board has gone from relatively stupid to sudden ANGER about the 401 issue, I have never seen such a consistent run of posts on a single subject, indicative of the employee base being fired up. If Ginny wanted to get them angry, she found a way to do it.
On the audit, I am not surprised. Failures are common and the list of the Lost is impressive: AmGen, ServiceMaster, AstraZeneca, State of Texas, etc. IBM is not the great company it once was. I was with a Business Partner 1990-91, during the Akers collapse and then it had some of it’s panache still left. I still have respect for the AS/400, a glorious database system in it’s day. But IBM today is all about RoadKill 2015, reducing US headcount (expensive) and hiring third world emps or consultants (enormously cheaper, look up the salary comparison for an education) and increasing shareholder value AT ALL COSTS.
Read W. EDWARDS DEMING for an eyeopener too, a forgotten savant of Quality Control. Among his pet hatreds was the desire for US firms to run solely for the benefit of Shareholder VALUE. And his quality control mottos and rules would work perfectly well for the failed audit.
How soon we forget.
While most of the anger expressed here is deserved, IBM and other companies are now competing against companies in India and other countries. Their competitors are hiring employees in India which does lower costs.
All of this negative energy could be turned positive. What are some things that US companies can do to lower costs while hiring more expensive employees? While answering this remember that Americans, and American companies buy goods and services based on cost.
Thanks Tim for the great segway.
The US will hopefully never be in a position such that employees will need to compete on individual price only. US Employers and employees will need to be competing at the higher levels. More value for the $ overall. I have worked overseas with many of the foreign workers that we all hear about. Believe me, the American are by far still the best,,, if you let them be. But IBM’s business practice does just about anything/everything to make sure that does not happen. (Yeah, I am ex-IBM Global Services South, taken in by an outsoucing deal) We lost ownership/responsibility of our systems; bureaucracy was introduced to an extreme level; proactive fixes were not allowed; honest communication with our employer and customer was gone and individual achievement potential was reduced to zero.
By far, the best description given to me of converting over to IBM was that we were being assimilated by the IBM Borg. We were no longer to think, only obey the commands of the collective. We did, and IBM-GSS lost the 10 year / $1.6B contract within 2 years.
The IBM Borg culture is not unique, my corporate IT job at a major insurance firm ended in 2004 when Computer Sciences Corp came in, told us a ton of lies and introduced superior procedures and protocols that slowed everything down, we became time clock drones and service level went to hell except for the fact that our particular group in Manhattan, having survived the World Trade Center, did not entirely obey the rules. When the ticketing system in Secaucus NJ crashed for more than a day, we were TOLD NOT TO DO ANYTHING PERIOD. This is good customer service? All of us were fired in December, 2005 after CSC sucked the knowledge out of us and brought in kids to do our jobs.
Been there, done that friend.
Don’t be stupid, if I had an opportunity to decide if I wanted to blow $10k on a proven US quality products, or $5k for the absolute crap that comes from India, It would be a VERY tough call – I’m certain I would take the 10k for ongoing support, maintenance and timezone purposes, and tell India and the morons responsible for “Shareholder Value” to go invest in more shorts, as their ideas have no vision, innovation nor long term survival potential.
The company I’m working for had to replace a server, IBM has the contract to manage the server, admin, backups etc. Before the server was to be replaced we asked for the backups be avaliable, just in case. 2 months of hounding them. We told that there was no backups, 5 years this server was running without being backed up. Well we went ahead with the server replacement. Several weeks later I get a call from IBM that the network was getting hit with large traffic at 9 in the morning, they gave me the IP address. In checking, I found it was IBM’s backup server that was causing the issue. How could they not know there own server was causing the issue and why was the backup schedule at 9 in the morning.
There are 420,000 Employees versus 1 Randy and his 1 boss. Surely something can be done. Join us!
https://www.linkedin.com/groups/Life-After-IBM-4708026
There’s a bit more to the cost savings from paying 401K benefits annually: think of the reduction in the time to pay your mortgage if you pay it every two weeks instead of monthly.
IBM get to pocket all that compound interest for the year and every worker loses.
Just a technicality Bob. SAS70 audits are dead. They are now SSAE 16.
The data center company I worked for up until recently still does SAS70 audits, quite a few of their big customers require it.
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I am an ex-IBM employee. I endured 9 years of misery with that company and the best thing I ever did was LEAVE! If you are an IBM employee you need to leave before IBM gives you your walking papers. IBM is in a downward death spiral and the best way to be prepared is to no longer be an employee of IBM.
The best decision I ever made was leaving, and I have taken some good IBM talent with me. So long IBM!
The 401K was, as identified above, not taken away. I think IBMers can read, and certainly between the lines. The company feels like it is being gutted for a sale or major merger to me. Every internal cost has been chopped, and the sound of bone is apparent in the latest ones. The only thing that matters to the exec staff is profit and sales. People are not managed whatsoever, their time is and the company takes holidays and weekends gratis. I am fortunate enough to have my benefits covered, so when the 401K was put at risk that was it. If you have the luxury of leaving IBM do yourself the favor. The company probably has another 3, 4 years at this pace and it will fail. The execs running the show think IBM is too big to fail, and certainly too big to care. Just like Rome. Or GM. IBM will become a company with ho-hum product at too high of a price and more pissed off customers than happy ones (ooops….already there….). Most current outsource gigs are so far in the toilet it is truly ludicrous….IBM has to chop every contract delivery cent so it can add lawyers as they fail. It’s like a turbo charger in reverse. Decreasing market share is the only direction for IBM at this point. For you remaining IBMers….go get a decent job with a decent company. If you are stuck I can only imagine your pain and offer some sympathy. Try some basic career planning and action as an alternative, see if you can work your way out of the asylum.
We are told by IBM that they believe the lower they rate us each year at our reviews (low review = no $$) – they believe that is more incentive for us to work harder. And, despite getting top reviews from the company I contract to, I consistently get low reviews from IBM. We are also recently told that now our reviews will be based on how much revenue we bring in (bring in outside work) – even though I am IT develpment and have absolutely nothing to do with that.
SO, IBM, here’s what you’ve gotten: I have made sure every manager I work with in this company (and it is a VERY large one) – knows that I absolutely recommend NO more business with IBM than they have to. And I have colleagues who have acquaintances that IBM is trying to hire, I’ve told them about the absolute discraceful treatment of employess, and talked them out of taking the job. It isn’t going to make any difference to me, they’ll always find an excuse to rate me low, regardless of the work I do.
So I truly hope IBM upper management reads this post and gets an inkling of what their treatment of their employees REALLY does…….. they might actually care, since it is hitting them in the pocketbook. What, never thought in a million years it might backfire on you? tsk, tsk, tsk…
Best thing to do as an IBMer is not to follow the rules and do not to listen to your manager.
GDF is NOT working, infact it’s causing the larger accounts (the ones that actually pay your salary) to leave IBM for Accenture, HP and others. If they give up on the GDF model your job might be secure, if they continue with it you might as well start getting your resume ready. It’s almost as if they know this and are doing it purposely so they have an excuse to move most jobs to India and now Africa to save money.
Morons at the ITD SO centers just keep following management like sheep and can’t see the forest for the trees. I will not pity them when the caca hits the fan.
Customers – don’t worry about your data. Because we failed the 2012 audit, we’ll protect you by making sure only IBM managers & can surf the web. At IBM, we care. That’s why we are “green”. That’s why we make sure to give campaign contributions to the “correct” people/party. That’s why we’ll tell a local city that we’ll hire 100 college grads while secretly laying off 500.
[…] rumor I’ve heard is that IBM, which not long ago changed its 401K contribution policy to push what had been a biweekly payment into an annual one right at the end of the year, may have […]
[…] rumor I’ve heard is that IBM, which not long ago changed its 401K contribution policy to push what had been a biweekly payment into an annual one right at the end of the year, may have […]
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