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a fly that bites livestock, especially a horsefly, warble fly, or botfly.
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an annoying person, especially one who provokes others into action by criticism.
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Sometimes being a gadfly is exactly what’s required. That’s certainly the case with IBM and has been for the almost eight years I’ve been following this depressing story.
Gadflies came up because IBM finally reacted today to my last column predicting a massive force reduction this week. They denied it, of course — not the workforce reduction but its size, saying there won’t be even close to 110,000 workers laid off — and they called me a gadfly, which was apparently intended as criticism, but I’m rather proud of it.
So what’s the truth about these job cuts? Well we’ll know this week because I hear the notices are already in transit to be delivered on Wednesday. (I originally wrote in the mail but then realized IBM would condemn me if they are coming by FedEx, instead.)
I think IBM is dissembling, fixating on the term 110,000 layoffs, which by the way I never used. Like my young sons who never hit each other but instead push, slap, graze, or brush, IBM is playing word games to obscure the truth.
There are many ways to spin a workforce reduction and here’s how one IBM source explained this one to me just this morning:
“If you are following the Endicott Alliance board (an organization of IBM workers) you know that they are only ‘officially’ laying off several thousand (maybe 12K I’m guessing), but others are being pushed out by being given poor performance ratings. This includes people on their ‘bridge to retirement’ program that took that option, thinking it kept them ‘safe’ from resource actions (layoffs/firings). There is a loophole that says they can be dismissed for ‘performance’ reasons, which is exactly why many of my long-time, devoted, hard working peers are suddenly getting the worst rating, a 3. It’s so they can be dismissed without any separation package and no hit to the RA or workforce rebalancing fund. Pure evil. The same trick allows IBM to not report to the state’s WARN act about layoffs. It used to be something like 10 percent of employees ‘had’ to be labeled 3’s, but recently the required number of 3’s was way, way upped according to some managers. So that’s how they are doing it… Some managers have teams of hard working people that put in tons of overtime and do everything they are asked, and by requirement some must be given 1’s, some 2+, some 2, and unfortunately some 3’s. It’s 50’s era kind of evil. They also got rid of some employees by ‘stuffing’ them into the Lenovo x86 acquisition, shipping tons of people over there that never even worked on x86 stuff. Lenovo has discovered this and has given some of them a way better package (year salary and benefits), and taking it up quietly with IBM.”
I love this Lenovo detail, which reminds me of when Pan American Airways was failing in the early 1980s and sold its Pacific routes to United Air Lines. With that deal came 25 PanAm 747s, but before handing them over PanAm installed on the planes its oldest and most worn engines.
My further understanding of Project Chrome is IBM plans to give people notice by the 28th (Wednesday) so they will be off the books by the end of February. That timing pretty much screams that these are more than just layoffs, which could involve weeks or months of severance pay. It suggests outright firings, or offshore staff reductions, or contractors released, or strongly motivated early retirements as mentioned above. None of those are layoff’s, though there will undoubtedly be layoffs, too.
What really matters is not the terminology but how many people IBM will be paying come March 1st.
A source reputed to be from IBM today told TechCrunch “the layoff number was 10 percent of the workforce (or 43,000) and that the layoffs would be conducted in approximately 10,000 employee increments per quarter until the company righted the ship.”
What if that takes 11 quarters?
For the last few months, I’ve heard that senior managers have been pleading with IBM executives not to go through with Project Chrome because it will break accounts and inevitably lead to IBM’s failure to meet contract obligations, losing customers. But that’s apparently okay.
Just don’t call them gadflies.
I had the same thought, after looking up the definition of “gadfly”, especially as applied to journalism.
IT is my second career. Banking was my first and I really miss it. At the bank, if terminated you got a minimum of 3 months severance plus another month for each year of service. Vacation allowance was also higher. In addition, if your manager thought you did good work on a project you might be sent on a semi-necessary trip to a nice climate, or told to take your significant other to the best restaurant in town and turn in the receipt. In short, banks were very employee friendly compared to tech companies.
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When you factor in the H1B scams and tricks to cheat people out of their pensions, tech companies are simply evil.
Look at page 73 of ibm’s 10-K. They got rid of 50,000 people and still going. ibm corporate lies to their employees, to their customers, and to their media. You going to trust them with your IT infrastructure?
“IBM’s big layoff-cum-reorganization called Project Chrome kicks-off next week when 26 percent of IBM employees will get calls from their managers followed by thick envelopes on their doorsteps. By the end of February all 26 percent will be gone.”
Now it’s not layoff anymore?
“A source reputed to be from IBM today told TechCrunch “the layoff number was 10 percent of the workforce (or 43,000) and that the layoffs would be conducted in approximately 10,000 employee increments per quarter until the company righted the ship.”
What if that takes 11 quarters?”
So instead of “by end of February”, it’s 110k by almost 3 years later now? That is a significant reduction in workforce by volume, but considering they’re still hiring, it’s hardly an unusual rate of reduction.
Your argument is pathetic at best, and now taking back things you said and setting up insurance for yourself by saying it will occur in unmeasurable places so you can’t be proven wrong?
Just give it up and admit that you were wrong. Just because 1/4 of your contact in IBM is getting notices doesn’t mean it’s a company-wide phenomenon.
Your BS is greater than IBM’s management.
LOL!
@ROFL, Obviously what needs to be counted is not what IBM calls “layoffs”. It should be total number of employee departures. This number will be substantially larger than the 10,000 that they are owning up to. Employee “voluntary” terminations due to incentives when told either take it or get fired or terminations because of “poor performance”, etc just mask the real issue which is total numbers of IBM employees being forced to leave the company by management.
As for the other claim of IBM looking to hire up to 45,000 new employees, one really needs to analyze the demographics of that group. Proportion of hires in the US, proportion of new college hires, starting salaries of new hires, etc.
It sounds like @ROFL is an IBM manager toeing the party line.
If you are one of the 110,000 who loses his/her job, I don’t think you care what IBM calls it–layoff, reduction in force, whatever. ROFL can spin it however he wants, but when 110,000 no longer have jobs, it’s effectively a layoff. It’s even worse when the company doing it shafts employees by giving them poor reviews just so they can weasel out of commitments.
Companies lay people off, but *how* it’s done makes a huge difference.
You could not be more wrong. Cringley is correct. Its obvious you either don’t work at the company or are a plant to put in false information. I think the 110k number was floated on purpose just to make it look like 10k layoffs were nothing in comparison. Like being told you owe the IRS 100k, only to be told its only 10k? Yes you would be relieved. Its all a game and it’s disgraceful. Some integrity shoving folks out of jobs they have sacrificed their personal lives for. You wonder why IBM employees take this all so personally? Because that is how the company pretends to be, it pretends that it is hiring you for a career, when in fact its only hiring you to squeeze what they can out of you, then once you are personally destroyed, family life and health sacrificed, you are put out to pasture and not with any dignity or integrity but with the least amount of money they can possibly give you without generating a law suit. Who will work for this company in the future? Only desperate souls on their way to another job and just killing time…
When business grow beyond the ability to be effectively managed, they should fail. This is the normal business cycle, Why should we expect them to continue, except for the government bailouts and strong arming of the new start-ups.
Or, broken up.
The pieces then might thrive, rewarding the shareholders that risked investing in the original deal.
A badge of honor, you should add gadfly to your LinkedIn profile
ROFL is an ABS (Armonkian Blue Suit)
“Your BS is greater than IBM’s management.”
That’s not saying much about IBM’s management, although as ex-IBM I would now trust Cringely more than top IBM management. The employee churn is where they make money regardless of the pain and suffering they inflict to the brand blinded youth they con into thinking there’s a career and good times to be had in working at IBM. That’s why they’ll be hiring all the time right up to the day the company goes belly up. Why not? You keep up with appearances for propaganda purposes!
I love that Lenovo story….I had been wondering how so many mid-range, networking and mainframe folk I knew had wound up so quickly in the PC desktop and laptop groups……and the analogy to Pan Am! As an IBM manager during the Pan Am debacle, I had to deal with a number of IBM employees stuck down in Latin America when Pan Am exited in a hurry from various countries. It’ll be fascinating if it happens again and how IBM will try to preserve its now battered brand from further damage.
I didn’t read beyond the second paragraph (not counting the definition) as I was just curious in what circumstance they called you a gadfly (I don’t care about IBM and, no offense, these columns are meaningless to me as it’s about the corporate state mostly rather than any tech developments per se, of course I see value for lots of others in this, not criticizing at all). And I wanted to congratulate you, as you say I think in the context you should be proud, and it’s obvious they care, on some level, about what you’re writing, you’re getting attention. Cool,excellent to see, congrats Cringely!
Bad management of a large, otherwise great company, is a feast for a gadfly.
I hope you don’t get so fat that you can no longer fly. All gad and no fly is no good.
better a gadfly than a circle fly ( the ones that always circle a horse’s tail. }
The ‘market’ loved that IBM was potentially laying off so many people and the stock price slumped when IBM denied it. What does that tell you about the state of the world today? And just in case you foo foo it, you pension/401k/IRA/whatever is probably tied to that same market, I know mine is so we are just as much responsible for this debacle as IBM management.
It tells me that the Chainsaw Al Dunlap method of management is still in vogue.
or just that uncertainty isn’t popular with traders… or that some algos are parsing the press releases and coming up with different ranges and trading about them a bit…
Interesting post.
1) You definitely earn some credibility points with this one. IBM is going to look really foolish for responding to your article, if what you say is true. “Care to comment on Cringely’s response??” Response: “Uh, normally we don’t comment, except when he is totally wrong, but if he again calls us out for dissembling after our response, then we really don’t comment.”
2) I wonder if Watson can do text analysis to figure out who your source was, if that is an email.
3) Is Warren Buffett simply blinded by political correctness in his adoration of Ginni, making his first technology investment with a woman CEO and one of his worst ever (proving the younger warren right about technology, how convenient), or has the old guy simply lost his touch?
Watching Ginni run the IBM ship into icebergs makes me consider this politically-incorrect idea. Can someone point to one successful Fortune 500 female CEO ever, in history? Meg Whitman might be the exception that proves the rule. Aside from her, I cannot think of any other.
Carly Fiorina — trainwreck
Ginni Rometti — car crash
Mary Barra — dumpster fire
Marissa Mayer — nothingburger
Of course, the flip side to this is the fact that most male Fortune 500 CEOs stink as well. So maybe I am focusing on the wrong details.
Gender has nothing to do with it, because all I have to do is trot out Mark Hurd (NCR, HP, and now Oracle) and Robert Allen (of “Allen and Two Temps” AT&T fame) to invalidate that list. And I still can’t fathom why Larry Ellison gave him the top job at Oracle; Larry must want Mark to gut Oracle, too.
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What really matters is not the gender of the CEO, but that the CEO gets consumed by short term goals to satisfy Wall Street rather than the long range planning that requires throwing out the “What have you done for me lately?” mentality.
Indra Nooyi
Gender doesn’t have anything to do with it, but Meg Whitman has never excelled. She presided over eBay during its decline; she was on the Board and voting at hp when it made so many stupid decisions. Now, she’s an insider figurehead presiding over hp’s parting out. Whitman is a non-inspirational leaders, and surprisingly non-visionary for a tech CEO.
Good point. I agree.
from every Prospectus: “Past success is not an indicator of future earnings.” Buffett has evaluated IBM on the basis of past success. I don’t think his team has done all the analysis on this stock. the likelihood is he will trickle it back into the whirlwind once that is done, and get back what he can before the value tanks.
You’ve really missed the boat on Buffet. He’s counting on IBM floundering and buying back stock. From his 2011 results letter to shareholders (https://www.berkshirehathaway.com/letters/2011ltr.pdf):
“Today, IBM has 1.16 billion shares outstanding, of which we own about 63.9 million or 5.5%. Naturally, what happens to the company’s earnings over the next five years is of enormous importance to us. Beyond that, the company will likely spend $50 billion or so in those years to repurchase shares. Our quiz for the day: What should a long-term shareholder, such as Berkshire, cheer for during that period?
I won’t keep you in suspense. We should wish for IBM’s stock price to languish throughout the five years.”
At this point Cringley you’re just grasping at straws, looking like an attention wh0re. 110k? That’s just dumb. I dunno who’s more stupid… You or the people that believe the BS you make up.
You look to be a beneficiary of IBM in some way.
envious much?
That’s some serious backpedaling. You originally said “By the end of February all 26 percent will be gone.” And now you’re like, “we’ll maybe I wrong”. Just say it… You have no facts and are just speculating and exaggerating for the sake of page views. John is right.. You have lost any credibility and are just looking for attention at this point. Ya might as well write for buzzfeed.
Look at some of the above comments and tell me they’re not hiring sockpuppets like Macy’s at Christmastime.
So, a lawsuit should be in order, if they are manipulating the performance reviews as an excuse for firings. Looks like while Eliot Spitzer was chasing headlines while blackmailing Wall Street companies, he should have been looking at Armonk.
And Spitzer has blame in the financial meltdown. His shenanigans pushed out a senior AIG person, who would not have put the company so far into derivatives, had he still been in charge.
“So, a lawsuit should be in order, if they are manipulating the performance reviews as an excuse for firings.”
It wouldn’t be their first time doing this. Their management have been amazingly foolish (I’m being kind, not that they deserve it) for a long time. I had front row seats viewing their abject stupidity for a long time, now I’m just a spectator.
The reason IBM responded this time, is that Cringely’s column is right now linked from The Drudge Report.
24 hours and counting.
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I’ve no doubt the bell curve on ratings has shifted and these people will be performance managed out the door, offshore is a no brainer, who cares, contractors as well..
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Despite the number IBM service will decrease and cracks will widen. Does big blue have enough time to paper over the cracks, only the shadow nose.
Hello there,
The IBM problem is the level of management, they are cutting off specialists and leaving those dinossaurus managers, without any technical skill. Sample, manager taught collegues that they do not need know how to perform a task, they need to know someone who can perform that for you.
I generally applaud your insight and your comments regarding IBM but I think you may have stepped in it and walked it around the room a bit with your 26% comment. There’s no question there will be significant layoffs but it doesn’t do anyone any good to make a statement like that and then come back and try and nitpick and split hairs all in an attempt to prove your point. You said 26% would be gone by February. We’ll probably find out that number was wrong.
As an IBMer who has to live through this crap I can say that this doesn’t help us. It only makes a bad situation worse. Certainly, keep up the good work but in future please think a bit before you post numbers like this. It doesn’t help.
Agreed. I am an ex-IBMer as well, and have no love for the company. But I knew that number was wildly exaggerated when I read it, and it really plays into their hands by creating sympathy for Big Blue where none is due. Admittedly, predictions are always tricky, but I would err on the side of caution. (BTW, he a while ago, he predicted that Global Services would be sold off, and that has yet to happen.)
At this point … does it matter if Cringley is right or wrong? IBM is a shrinking company. It may not lay off 100,000 workers in this (upcoming) RA … but over the course of the year or beyond (as it shrinks more and more) … it will get close to or reach that number. Good on Cringley for calling IBM out. There is nothing IBM can hide now because once loyal employees who chose not to speak out are now speaking out, because speaking up within IBM is fruitless.
It’s really sad that a big player in tech is facing bad times. But on the other hand there are literally thousands of tech companies hiring if folks want to look around. This is a good time to be in the software/computer business. http://salarytalk.org will list out companies that are hiring employees and base salaries they pay them across the UnitedStates with data from US Department of labor, h1b sponsorship.
Is IBM unique? Look at this article about EMC conducting layoffs: https://www.theregister.co.uk/2015/01/29/emc_results_q4_layoffs/ Are they becoming irrelevant as well? HP is splitting into two companies because they can’t compete as one with how many annual layoffs. What you are seeing are companies continually transforming and those that don’t like Sun Microsystems become irrelevant.
Just confirming that many “Transition to Retirement” IBMers will be retiring sooner than the previously agreed December 31 2015. Yes, T2R participants cannot be RA’d…. but if they were given 3s on their PBCs, they can (and will) be let go “for performance reasons,” which is not (technically) a layoff.
Maybe you can adopt as your new logo
https://encrypted-tbn2.gstatic.com/images?q=tbn:ANd9GcTpHnlggmkS-S3d4u1_67esIpJbItMdA9P4PHIscOmaMemP_2TuEw
IBM Layoffs buzz is gaining momentum……https://www.linkedin.com/pulse/6-things-id-do-i-got-laid-off-ibm-j-t-o-donnell?trk=tod-home-art-list-large_0
As one who is closing in on 30-years in the Hi-Tech industry it strikes me that IBM to close to death spiral. Watched it happened to SGI, SUN, DEC, and others. Some are up able to ‘pull up and out’ but most don’t. Some end up being the ‘living dead’ where the company still exists but is essentially dead (e.g. SGI brand bought by Rackable and moved to Fremont from Mt. View) to the market.
My gut feel is IBM will be slow ‘walking dead’ where the ‘brand’ keeps them around for a long time but they will slowly fad out or be taken private (once they hit a much lower market cap) by private equity who thinks they can either revive it or suck it dry profitably.
Private Equity won’t touch IBM as it appears that current IBM management has already sucked the company dry. There will be nothing left to loot once they get done. I bet it gets bought by Tata sometime in the 2020 decade at 10 cents on the dollar.
nah, Tata has some business sense. the fad these days is for giant multinationals that get out of a fading business (either in total or for them) is to license the brand to whatever opportunity comes up. Tata would license “IBM” from International Business Machines for the sole purpose of selling accessories and providing software and support. that’s how the vision would run. a lawyer someplace would manage the affairs of the brand.
You said 26% GONE by February 28.
If 26% are not 100% gone by then, you should definitely come out publicly and admit you were wrong. Period. No ‘b-b-b-b-b-ut they gave packages to 10% and have announced that they are selling x division.” ANYONE can predict that. That’s not news. Just BAU for a company trying to get back on its feet.
You were very specific about 26% gone by February 28, Mark. Own it. You’re either right or wrong. No mushy middle here.
Cringely might have some ‘splainin to do on March 1st, but that’s a ways off. Like Curly said in City Slickers, “Day ain’t over yet!”
Even if Cringely’s off by 10 or 20 thousand, it won’t change the fact that IBM is a complete mess. Or that they are treating their employees like dogs. I’m not sure why I’m even taking your comment seriously, but it was a good chance to repeat that IBM is a once great company that has turned into a train wreck.
The problem is that Mark pulled a number out of his butt instead of doing actual research.
Anyone can say that IBM is a mess because it is. Nowhere did I hold up IBM as a company of virtue. That still doesn’t take away from the fact that this is plain and simple bad journalism.
Anyone can say there will be a lot of layoffs, because there will be. That doesn’t deserve a byline in Forbes or any other magazine that prides themselves on good journalism.
The only reason Mark’s article is getting any attention is because of the mindblowing time and factor he threw out there. 26% by February 28. If it doesn’t happen, he should retract and apologize, period.
Geez, who cares if Cringely isn’t spot on with the layoff number? And, he doesn’t answer to you or anyone else. You don’t seem to get the gist of his main point about IBM – i.e. IBM is SCREWED under current leadership, and maybe for good! He’s right about IBM’s crash and burn. Why do some people come here to nitpick minor points? I have a seat reserved for you on the Cluetrain, free.
I was RA’d in 2013 and it was the best thing that ever happened to me to get out of IBM. I was 1 of 4 in my dept we we’re all old timers in our 50’s and 60’s and great performers. My question is “Why isn’t anyone looking into the blatant age discrimination IBM is doing? I always thought that was illegal?”
My dad went through this several years ago with EDS. It’s a long road, and often you get very little after the lawyers are paid.
Bottom line: They have kennels of lawyers, and plenty of time. Do you?
IBM are famous for not letting people go, but they do pack people up in to a some other division and sells off that part of the company. I’ve heard this story many times about IBM. The Lenovo story is similar to how I heard how parts of IBM were sold off in the past, and letting whoever it was that took over the division deal with the lay-offs.
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I won’t claim to know anything more about IBM; I don’t. But I do know about service. If what Bob says is even fractionally correct about IBM it’s already finished. It will be like the dam buster’s raid during WWII. Might take a few big hits, or clients to leave, but when IBM starts to crumble it will be quick and nothing will stop their clients breaching IBM’s dam.
Hey Bob, do you think layoffs will impact IBM’s bid for the $11 billion DoD contract? They are partnered with Epic, and supposedly the strongest team for the bid, but this news can’t be a good sign. Way too much internal instability. DoD is supposed to decide this June which team gets the contract.
IBM is engaging in spin and damage control.
The bigger picture is that they are getting rid of a lot of people. Possibly not the 26% that Cringely originally stated, but still a number much larger than zero.
The bigger picture is this is happening because IBM’s leadership sucks.
The bigger picture, as a young worker with a 401k, and soon hopefully an IRA, is that I will do everything possible to avoid consciously buying IBM stock until management there gets a clue.
The bigger picture is that as someone in IT, I will be very hesitant to do business with Big Blue until they demonstrate that they are committed to their customers. (The fear that IBM will just outright gut and flay whole teams just gives me one more reason to hate and distrust WebSphere.)
It is not really the layoffs that are at the core issue for IBM. The core issue is their core business are crumbling due to poor management at the top of the company and the layoffs are just the fruits of their decisions. What is really horrific for IBM is when customers walk away because they know they are getting far below what they contracted. Customers bailing on IBM is not something they cannot dissemble or dismiss since it results in a loss of revenue and then accordingly layoffs as we are seeing today. The fact that they are having layoffs like they are is the smoke and the board of directors should have serious concern about the fire within!
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The livelyhood of 400,000+ people is at stake and not to mention the roots into other aspects of the economy that IBM affects. If IBM continues as they are, it will be like an ever widening sinkhole where a once proud company stood.
The problem that I saw in ten years at IBM is they cannot compete on a price/value level with most modern tech firms, and once the flow of easy money stopped, that’s when the real mismanagement started. IBM requires too high a profit margin, is extremely risk adverse, and has a lot of bureaucratic overhead. Then, as profits diminished, rather than reinvest in things that matter — employees, training, wages — they hired a bunch of bean-counting boneheads that have made cost cuts that put projects on skeleton crews filled with overworked and under-qualified people. You can’t charge BMW prices for a Ford Taurus, and there are plenty of other options out there these days.
When Cringely said 26% I think he meant to refer to the US workforce, even though he followed with the worldwide number. Roughly speaking that would be taking the US workforce from say around 80K down to around 60K. Let’s hear IBM deny that.
I am reminded of the multi-year 79% reduction. It was a mostly USA staff reduction and it looks like IBM is definitely on track to get there.
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One has to admire IBM on its ability to keep things quiet. They are well into laying off 4 of 5 people in a very large USA workforce, and have managed to stay out of the press, off the radar screen of government labor departments, etc.
Anybody that’s lived IBM the last decade knows these human resource management practises mentioned have been actively used at IBM over the last many years. It’s just hard to believe a company would treat it’s human resource assets so poorly. Forget all the allegations and rhetoric….when a company (especially one which runs a Professional Services business) views it’s human resources as liabilities and ‘chattel’, the soul of the company is completely gone. Hard to imagine a customer wanting to enter into a services-based long term contract with IBM, and no sympathy if they do and it turns sour in a short while. There’s no vision or customer service commitment left at IBM. Even IBMers see it.
I thought it was interesting, and perhaps telling, that the IBM response came from the “official” blog: IBM Hong Kong. And this “official” blog is hosted on a WordPress.com site. Not ibm.com domain name, wordpress.com. The ‘response’ has no one’s name… so can’t be verified.
In IBM of Mexico, the selection of personnel to leave the company is arbitrary and dishonest, it is people who have SI given and is giving good results for the company, the selection is being done by cronyism and not a professional judgment or just for results. If you work and are a valuable person you are fired with no problem saying it is not for performance is situation restructuring of the company ignoring the qualifications that can have 1, 2+ or 2, but if you ARE FRIEND, FAMILY and / or COMPADRE of a manager and still have 3 rating and you are not paying off for years, you will not be fired from IBM, unfortunately it is a very Mexican practice.
Currently the experience they have current managers to manage people is negligible, are like politicians are are jumping from one job to another without having a good experience to have directed people. They do have friends that help managers to continue in power without the slightest experience.
They think this is correct?
I can say it carried enough weight for my manager to mention the Cringley article to me, as in I am not on “the list”.
More importantly, I know that contractors are going to be held to tighter standards. Many contractors are not being released when the contract work is done, but rather get sucked into other unrelated tasks and end up being overpaid for those tasks. E.g. a Band 8 contractor is being used for band 7 or 6 tasks.
Should be an interesting Week…
So, basically IBM has officially declared that you are Socrates. Just watch out for the hemlock. 🙂
I am safe… they no longer provide coffee service at the office!
Gadflies certainly are as important today as they were in the days of Socrates, but it is important to remember they effect more than just giant corporations. For instance if a journalist makes very specific claims which end up being false, it is important that the gadflies react and remind us later about the lack of credibility of him and his sources, so society doesn’t get fooled next time he reports on something that ends up being an unfounded rumour.
Unfortunately too many times claims are made in a vague way so it’s hard to establish if they are correct out not. So I thank you for being so specific, we should know for sure about project chrome tomorrow.
Congratulations on your Gadfly designation. I’m confident you’ll be promoted to Upstart in short order.
perhaps he’ll make it all the way up to “detractor” or even “adversary.”
comfort the afflicted, afflict the comfortable.
So do you think that they will intentionally change the layoff plan and spread it out or reduce it perhaps thanks to your article? If so perhaps that is something to be proud of saving tens of thousands of jobs if only for a few months…Not something to be embarassed about or apologetic for if they dont meet their deadline of end of feb…
Sadly the path that IBM has been on, could be the same for many other companies. For years other companies have followed the IBM model and its changes. Before the Bob Moffat insider trading the SEC held IBM accounting up as the best model for others to follow. All of the US based companies follow the same rules , laws etc. In the past a CEO’s salary was not tied to the companies stock performance. Once the laws changed to link the top executives pay to stock price performance the downfall of America started. First it was wise for companies to have huge layoffs and offshore work to reduce cost and make the stock price go up. Then when that tactic was used up the next phase was buying up smaller companies that made great products (often with bad results). When all of those are bought up they buy back their own stock with a loan. And finally companies can try to roll out something old with a new name and try to sell it. Once all of the parlor tricks have been played out the bag is empty and the loan comes due on the worthless stock they bought back. The model needs to change if we are going to save our greatest companies and our nations economic future. A lot of great people have left or will be leaving IBM soon, I wish them the best this was not their fault.
Bob’s mistake was calling it a “layoff.” IBM would NEVER “layoff” that many employees. First, doing so means a huge charge for “restructuring” (i.e. severance packages). There are other ways to do it. As Bob pointed out, one way is giving a huge percentage of the workforce a “3” PBC rating. That automatically puts the employee on a performance improvement plan (triggering what amounts to dismissal after a period of time, 30-90 days). Dismissal after a low PBC means termination for cause – much less expensive than severance.
Another way is expediting retirements and/or not back backfilling open positions (also cancelling open reqs). Again, a very inexpensive option from IBM’s point of view
No matter the means, however, I can add up the various paths to 26% pretty easily. While I don’t think 110K is realistic, at least half might be very likely.
I remember another time IBM called out a Cringely blog as false with a strongly worded internal email (“outsourcing” network services). And of course, Cringely was spot on. I’m confident that IBM is planning to get rid of 26% of the employees, the how is the more interesting question. IBM has become masterful at getting rid of employees without drawing much attention.
Rumor had it 10% of IBM’s workforce received 3’s (poor ratings) in 2013. This year, by management decree 15% of the workforce is to get a 3. If 2/3’rds of the 3’s get fired that’s 10% of the workforce or 40,000 folks. Many of my grey haired coworkers are being asked to accept early retirement. It sounds like IBM is trying to cut about 10% this way. If you add in the 10,000 or so IBM is claiming will be “resource actioned” you start getting close to 90,000 employees and are in the 20% range of the work force. I think Bob’s use of the word dissembling is perfect for this situation. I’ll give IBM 3 months, then let’s see how many workers will be left.
Well, 43,000 is about 1 years worth of layoffs at “about 10,000 per quarter”. And they wouldn’t be required to issue “forward-looking” plans about layoffs more than a year in advance. So 11 quarters sounds like a pretty good guess.
Of course if the STILL can’t make their numbers for Wall Street, these numbers are sure to accelerate.
In Australia it started today (28 January in Aus and 27 January in the US) with people being retrenched. I have so far heard of 10 people gone from the one account before the day was out. This is never announced in team meetings as it is a confidential issue which the affected person may choose to disclose or not, so it’s hard to know who is gone until March. Thanks Ginni…………
Please tell me it wasn’t the NAB. IBM are a disaster now can’t imagine what it’d be like if more people left.
Dark day for Big Blue.
A friend of mine just contacted saying she was hit with the RA. Seems that a few people from her department were chopped. Alliance website has not posted any of the recent posts, so waiting to see what materializes.
RA’d today after 14 years with IBM.
Manager thanked me for my heavy amount of unbilled work in saving a major account last year and said he had no explanation and was sorry, but he had no choice in the matter and I was gone.
looks like ginny is making out just fine….per yahoo finance she sold $10M in stock in 2014…..great timing for her…….now she only holds 7K shares……..
Cringely was correct. The firings are in progress now. What was once the epitome of American business has become the poster child for all that is wrong with American business. Thanks Bob – for telling this sad story, for relentlessly speaking truth to power, for not backing down, and for supporting workers. BTW, IBM’s future is cloudy indeed – Lance Crosby was forced out this week as well.
I still haven’t seen any evidence that the firings will reach 26% by February 28. So, the jury’s still out on Mark’s predictions. Anybody could have predicted layoffs, it’s been happening for years, so it’s not like that was a surprise.
We are looking at 3600 per day for the next month. Already we have seen 12. So the question is, what fraction of layoffs would be announced at this blog?
Far too much negativity on the great IBM company. Sky’s the limit for IBM…..It’s getting rid of the bottom achievers and hiring the best. Everyone wants to work at IBM – global entity. One of the strongest bands ever (you can confirm it). Ginny R. leading the charge. Partnership and relationship with Tim Cook is going to be worth Billions. Go Ginny!
Sam? Sam Palmisano? Is that you?
Nah, it’s Bob Moffat posting from behind bars. Bob “get a dog, if you want loyalty” Moffat.
Wonder how many other senior excutives are looting IBM for all its worth.
This is what happens when you let finance people run an engineering company – they quit thinking about how to build value and just pay attention to the spreadsheet numbers.
Bingo!
LOL. I just can’t stop laughing. You have no idea..
That is a classic statement. . Drink more Kool aid.
You are huffing Blue Paint. It’s a race to the bottom, and IBM’s in the lead. I worked there ten years and left for greener pastures four years ago. I got sick of the constant layoffs and cost-cutting that included wages and education. The deadwood was trimmed years ago. These are not reasoned decisions, just pea-brained bean counting. It’s just Workforce Rebalancing performed by accounting knuckleheads who press a button in a piece of software and force middle management to do the dirty work. One thing you are right about: there are many clueless people out there, like you, who think that having IBM on your resume is meaningful. It is not anymore, unless it means you can put up with a lot of $hit and eat it too.
Good luck. You will need it.
seems like Robert was way way offf .. 26% this week ? stock moved due to his comments . suprised the SEC is not asking questions.
26% by February 28. That’s a month from now.
Curious what his portfolio looks like.
Cringley.. don;t let em get to you.. fact is.. when the wash is all done.. your numbers will be proven right. The evil forces would love to make you look like an idiot. then they can continue their dirty work. Fact is.. those of us who know.. KNOW and we know you are correct in your assessment.
What’s good for the goose is good for the gander, you know. Companies that don’t show loyalty *to* their employees should not expect loyalty *from* their employees.
Things are definitely in motion at IBM, as I just was given my 30 day notice, it remains to be seen what the final number will be.
The IBM rope is not as short as people think it is, there is room for recovery despite disastrously bad management following hitting the jackpot with the 360 (a rising stock market hides all sort of bad investment managers, a hugely profitable business line discourages the removal of bad management which can corrode any company). Rometty, bless her peanut brain, is grasping at viable straws like Watson, cloud and populist “social media” while fighting a rear guard action to keep cash coming in from old line businesses that she is unable to properly monetize.
That is the view from Wall Street.
Functionally though, the only value a company has is the output of the employees. Large layoffs are (almost always) a symptom of management failure to properly mobilize the workers to accomplish valuable goals. Removing knowledge workers means that much less product creation (unless the management is completely incompetent and has people doing useless work) and that much less future revenue; layoffs in sales impact in a few quarters, in research maybe in a few years. The company isn’t really saving any money, but Wall Street doesn’t care about this facet since Wall Street exists solely to generate income right now for rentiers… Jeff Bezos getting a pass, but his successor will be held to the fire…
IBM has perhaps one or two more chances to pull out of the c-suite induced dive, due to the remaining employees integrated into working wholes. The likelihood is on a par of Paulus defying orders and saving the 6th army despite casting off the 20 EPS idiocy. Like it or not Rometty has her buns in the drivers seat and one has to ponder whether she is up the answer given by Bruce Willis as McLane: “That’s what makes you “that guy.” “
Mike…a very well written analysis of the current situation. Ms Rometty has totally forgotten that old adage, our most important asset is our people.
Re: ” Wall Street exists solely to generate income right now for rentiers .” There are two sides to that coin. The rentiers expect a return on their investment, but in making the investment are taking on the burden of the risk of starting and operating the businesses to which they give their cash. Wall St. is just a sensible way to allocate limited resources to the most deserving companies. When the undeserving IBM is forced to let people go, they are admitting that they are unable to use those human resources efficiently, making them available to other companies which are.
I agree with the sentiments expressed by some of the posters that the # quoted by Cringely caused a lot of stress to a lot of people. And he should apologize unequivocally for causing needless stress to employees at IBM.
The numbers may be off but let’s not put the stress IBMers have been put under by managements frequent and over zealous culling tactics on this pundit. I think the expression is “Don’t shoot the messenger” – and while this messenger may have got the numbers wrong* he isn’t the one handing out pink slips, decimating teams, crushing employee morale, destroying customer good will, and driving an established corporation into the ground.
*Feb 28th hasn’t swung around yet, so the accuracy element remains to be seen.
You are deluded or uninformed. Layoffs have been a quarterly feature of life at IBM for several years. At this point, most people are shell-shocked.
I don’t think Cringely needs to apologize *at all*. It seems to me that he gave the numbers he heard.
If you look *through* the spinning IBM’s doing on it, it still seems reasonable.
My manager got retrenched last week, and I got RA’d today (as did at least one other in the team). Cringely’s report didn’t cause me stress rather the opposite.
According to several people I know in IBM AU, there were approximately 4000 employees given notice in the Asia-Pacific region this week.
Interesting, If you read the below article. 50,000 Indian IBM jobs are lost by March 2015. Note this was written Nov 4 2014. That’s close to half the loss needed for the magic 26%. IBM is going into a death spiral.
http://wraltechwire.com/as-ibm-reportedly-cuts-50-000-india-jobs-ceo-replaces-global-services-leader/14146112/
It is sad to see that on publication of massive layoffs that will eventually destroy the company, the stock seems to climb.. perhaps they are waiting to liquidate assets and take their cut?
Huh? The stock is down 25% since last year’s high.
You are correct stock is down, but what I think they are pointing out is the over 3 dollar increase that happened right after the article posted. Mind you as soon as IBM actually went through with it, the stock dropped back down.
I guess it will take few weeks to find out whether you or IBM is telling the truth. One thing I think you need to go after is that big companies just don’t work anymore in IT and Software. There are too many layers of management, too many chiefs while they cut Indians and don’t train the ones they have. The successful companies are smaller and more innovative. Look to business partners of the big 4-5 software companies to get around the bureaucracy if you have to use big company software. It’s true at HP, IBM, Microsoft, Oracle, SAP, all of them. There companies would easily be worth more in the market broken up as each business unit focuses on it’s business. IBM has 93 brands on acquisitions and each is worth more apart than as a part of IBM. IBM is schizophrenic. Services and software should never be in the same company. I’m in software. The goals are conflicting. Software is about providing the most functional value to a customer at a fair price with great documentation, support, and intuitive interfaces that forgo training to perform specific tasks. Then add training if the software is more complicated and for weaker customers. For services, the game is “we are your expert, we know what to do”. You hire services because you either can’t or don’t want to integrate the systems. As services, you convince the customer you are the “subject matter expert”. HP, IBM GBS/GTS, InfoSys, CSC, WiPro, TaTa mainly exist because “big companies want to do business with big companies”. When services and software are in the same company, then management lets the software team slack off on documentation and training, so they can double charge the customer for services to train the customer and provide professional services. If the software is great, you don’t need professional services. For a software company, professional services are a “crutch” keeping your software from being great. Good for Oracle, bad for customers. Big software companies hate small companies and punish them with software audits and other punitive processes that make customers hate them. They tell reps and salespeople that “we love SMB” then just absolute hate them in accounting, sales, and support. This has to stop. If you have to measure the usage then “build it into” the software and then when they exceed their license send the salesman to go have a friendly conversation about expanding their usage. Don’t send the software audit mafia to “shake them down”, Microsoft! By the way, if you don’t have 6-7 layers between a line person and the CEO you can sure help the customer by making your brands into smaller business and making the software cheaper for the customer. Every management layer has a price and impacts profit, what value do they add? Think in terms of how Warren Buffet runs his “other” businesses. He puts in good management and they run businesses with no more than 4 layers of management. Perhaps he can make IBM more valuable by breaking it into at least 5 smaller companies, or maybe 93 brands.
The 2007 10-year plan had forecast a US employee population at 35K by 2017. Looks like they are on target for US. The real surprise is the BRIC technical headcount losses. The plan to have all technical skills commoditized and out of the US seems to have failed.
While Cringely may not exactly hit the predicted numbers, I predict he will probably be very close. That said, close only counts in horseshoes and hand grenades. Cringely, you ‘da man for your insightful articles over the years about IBM. Thanks for exposing the ineptitude and hypocrisy at IBM.
I am one of those white haired IBMers with 18 years of service and who got my first 3 ever on my PBC. While I did not receive my walking papers yet, I soon expect that to happen. As others have stated, the 15% of us who who were mandated to receive a 3 won’t even get a severance package nor will we be counted among the layoffs, because IBM can lie and proclaim to the world that we were under performers.
I say it is time to form a class action lawsuit for age discrimination against IBM.
Rometty is so typical of the low-hanging fruit psychopaths who are running corporate America. Of course, just like our president, she blames all the problems on her predecessor, an excuse which always works with the American public. Fortunately, people throughout IBM finally realize that they have been gamed by a flawed system and inept management. Rometty and her ruling cabal have managed to create golden parachutes for themselves, but bottom feeding scum like those under the top level managers will be thrown under the bus with nothing but a lump of coal.
IBM makes a practice of promoting the most inept people to management positions. Members of my group were joking about how Rometty was attempting to spin the negative results into something positive. It is all smoke and mirrors with these types.
It is really funny to read the comments from Rometty’s cabal. They were sent out to put out her disinformation, but those who are affected by her RA know and speak the truth.
Good corporate governance means, at a minimum, “Separation of Powers” between CEO and Chairman of the Board. IBM still has one human wearing both hats—the top manager of the many-layered management pyramid in charge of formulating strategy—and the Chairman of the Board (of Directors) tasked with representing shareholders and ASSESSing the CEO.
The Chair can greatly influence what gets on the Agenda, which Directors get on what committees etc
One human wearing both hats has too much power and opportunity for gaming the system.
John Galt I agree. You speak the unvarnished Truth.
I also liked recent commenters
nuhhuh
DoctorMisterme
TheFielder
Mike (for the 6th Army analogy)
Just found this fascinating comment from another commenter with nome de web “KommiFornia”.
S/he found this Jeff M analysis of the 2013 IBM numbers. But the ghist of it is the CFO fixation of “presentation” over ingredients (to use a restaurant analogy) is concealing internal dis-function.
The Jeff M piece also spotlights how IBM CFO focusses exclusively on Shareholders but not mentioning Customers whereas purportedly Amazon speaks to and of their Customers.
Though-provoking.
http://jeffmatthewsisnotmakingthisup.blogspot.ca/2014/01/ibm-ive-been-manipulated.html
If Jeff is mistaken then I would love for someone to help educate me/us on where his analysis is faulty.
IBM Ginni also holds the title of President (Three titles in all).
To my understanding that is an older term, compared to COO–Chief Operating Officer.
To my understanding the terms President and COO are co-equal.
Regardless of the title, the President in my view is responsible for executing the strategy that the CEO formulated.
To use Apple as a great example, Steve Jobs was CEO, visionary formulator of Strategy and Tim Cook was the COO, diligent and vigilant executor of factory operations, supply chain logistics etc. It was Tim Cook COO who creatively implemented the requirement to ensure off-shore factories had the necessary inputs and it was Cook who locked up DHL (I believe) for the Christmas rush so that Apple could physically ship product to market (and perhaps Competitors could not–haha).
One of IBM’s chronic problems is internal governance whereby one human (Ginni for now) is both formulator of strategy, executor of strategy, and judge assessing management (self assessment?!).
It would be like POTUS also holding titles of Majority Senate Leader, and Chief Justice of SCOTUS too.
And I haven’t even spoken of the CFO and his Financial Engineering yet.
BTW, I agree with Cringely and the IBMer comments citing problems within IBM multi-layered management.
Here is a Harvard Business Review article on COO:
https://hbr.org/2006/05/second-in-command-the-misunderstood-role-of-the-…
I am appalled the hallowed Financial press and its analysts/pundits/”experts” are not calling for separation of powers.Remember these financial pundits never spoke up of the disaster to hit GM in 2008.
One person wearing 3 hats (CoB,CEO,President or COO) is too much work in a huge corporation in a very challenging situation, ripe for gaming the systems of governance and controls, delays decision-making due to over-reliance on Ginni authority, and impairs succession planning.
Has anyone mentioned that at IBM 2015 is the year of the EMPLOYEE ? perhaps they stepped that back
On the CFO, I of course was not on the investor teleconference but somebody should simply ask CFO to explain in his own words and with a comprehensive example: What is Cloud? A simple sounding question that I doubt he can fully flesh out.
Then followup with your closer, “can zSystem (mainframe/System z) be in the Cloud?”
To the commenter who wrote of investors inputing cash and wanting a return….that is all fine and dandy.
For a long-haul buy-and-hold shareholder that *not* an IBMer/insider. But for a shark who comes in for a typical 18 months duration they can strive for “eat the seed-corn today” because they want short-term ROI.
Next we should ask the head of software development to explain the tax implications of outsourcing. I bet he can’t do it!
Here is an amazing long term comparison of tiny Microsoft “surfs” surpassing Big Blue IBM. Hard to swallow.
I know IBM CFO is new….but this trend is ominous and demonstrates what happens–as a commenter(s) wrote—what happens when financial engineering bordering on financial *alchemy* eclipses real world engineering and Customer First.
https://www.zdnet.com/article/tiny-microsoft-overtakes-the-mighty-ibm/
Thank you Mr. Cringely
Apple is consumer whereas IBM is enterprise (Microsoft is both). Fair enough. And Kudos to Ginni for the strategic move to partner with Apple. Two companies that can complement each other in mobile commerce where 1Billion smart phone holders conduct increasing transaction rates with complex back-end infrastructures.
But, here is the tale of the tape for Apple (FY ending September 27,2014) and Microsoft (FY ending September 30, 2014) and the hollowed out blue-washed IBM (latest ANNUAL numbers I can find–as an amateur) are FY2013 (So new numbers might be worse).
The “Current Market Cap” is truly current—today’s close.
apple FY ending 2014-SEP-27
cash 179B
Long Term Debt 30B
revenue 182B
net income 39B
Current market cap 671B
Microsoft FY ending 2014-SEP-30
cash 85B
Long Term Debt 20B
revenue 86B
net income 22B
Current market cap 338
IBM FY ending 2013-DEC-31
cash 28B
long Term Debt 32B
revenue 100B (FY2013)
net income 17B
Current market cap 150
Amateur Observations:
IBM cash is negated by its long term debt. So 100 years of a going concern is zilch.
IBM net income (others can verify/confirm) is 17B for a whole year.
In contrast, Microsoft has 65B in cash above and beyond long term debt and 22B in net income for a year.
And then in walks Apple.
The ginormous numbers are: Cash above and beyond is 150B!!! And money rolls in with Net Income 39B for FY ending last September 27. Wow.
Both Apple and Microsoft have separated Chair from CEO.
And so has Intel (3 humans: Chair, CEO, and a President).
Analysis: leave that to others for interesting perspectives
Prediction: IBM is at risk of a Kodak moment.
Kodak’s “best” year was 1999 shortly before its death spiral.
The Atlantic cod tonnage caught peaked shortly before that species collapsed.
I want IBM to win–not watch the IBM Board and the executive management they installed flounder.
THINK
Sources of this amateur (me)
https://finance.yahoo.com/q/bs?s=IBM+Balance+Sheet&annual
https://www.google.com/finance?q=ibm&ei=0yHLVKm_LMnJsQfskoCACw
http://appleinsider.com/articles/15/01/29/as-apple-nears-200b-in-cash-us-senators-once-again-propose-a-repatriation-tax-break
I am tech, not finance nor management. I have worked both inside and outside IBM. I hold no stock in any of the three companies.
Makes me wonder if/when Apple will just eventually buy IBM, selling the unneeded pieces off for cash.
when in doubt ask a USN Submarine Captain. I’m not kidding.
http://qz.com/334636/heres-how-a-retired-submarine-captain-would-save-ibm/
5 or more years ago they did an internal audit and discovered that the cost of processing an average PO was something like $500, but 80% of the PO’s processed were considerably less than that. A decree was passed giving FLM’s the power to spend up to $500 without any approval and up to $5000 with only the SLM’s approval. That lasted about 12 months. Last year it took 4 levels of management approval to order a set of business cards. Buying necessary equipment is a 3-6 month process and a whole nuther story all together. Change is hard so don’t see this happening any time soon. Expect next quarter revenue to be off another billion (1Q15).
De ja vu !
What were the last words before the Challenger space shuttle disaster:
Let the blonde drive
Since none of the casualties were blonde, perhaps you’re referring to one of the survivors?
Instead of the obvious sexist reference, how about something that actually happened.
.
In the discussion whether to send up Challenger, one of the engineers was against it. He was told by management to take off his engineering hat and put on a management hat instead to make the decision. That, in a nutshell, is the same problem that IBM has: they’re not listening to the grunts who know what is needed.
Isn’t this how all tech companies operate? Fire your most seasoned employees after wrapping up f’d up projects, and then handing the reigns to a 20 year old you pay minimum wage w/ no experience? It’s just awesome how they call these re-orgs and all of sudden your performance comes into question – when ironically you never have had a weekly performance review like everyone else has had, nor has performance ever been mentioned as being an issue. I’ve even had my computer hacked and wallet stolen by employers looking for dirt so they don’t pay unemployment – though they never succeeded. IBM just another tragedy.
I decree tech dead as such. Backdoors in code, NSA crap, and this garbage….why would anyone want a career in this industry? My cycle is 2 years tops in x job, making usually top pay… But gone after the messes are cleaned up. I’m in my 40’s, coincidence? Thank God I have more than computer and networking skills to offer….none the less a fearless attitude.
And the crap there is shortage of suitable industry candidates – more like shortage of one’s with experience you can pay nothing.
First to IBM4Ever, I’m one of those bottom performers your talking about. The problem is my review had glowing comments and I have never considered myself a bottom performer, nor has anyone that has ever known me. Quite the opposite is true. My major crime has been giving IBM the past 17 years of my life and being over 55. To Cringely I’m sorry to say your estimate is probably wrong. I’m trying to figure out how many we lost in our group and by last count we are at 30% spanning 3 teams. I also just heard that due to the carnage Ms Ginni has caused she is now getting a pay raise and and increased bonus. I hope this is so she can pick up all the work that we bottom performers were spending 60+ hours a week doing. On to bigger and better things.
WSJ is reporting the bonus at 3.6 million for the job done in 2014. Seems fair right?
And ex-Blue’r here is the breakout of other top executives including CFO.
Note the “total compensation” via stock handouts is a larger component of total compensation than cash so Ginni could pull in 13 MILLION bucks for 2015.
And the CFO is paid via roughly the same algorithm. The CFO also gets stock handouts so he, with is own hand literally on the IBM money digester, can “accidentally” accrue augmented compensation whenever the stock price per share goes up. What a surprise. Wow.
https://www.businessinsider.com.au/ibm-ceo-ginni-rometty-gets-a-raise-2015-1
Mr Cringely, thank you. I hope you do a PartTwo or join in the commentary your timely piece has stirred up.
In the event that my comment is too long I split it.
Thank you ex-Blue’r for the timely alert of that Ginni performance-based incentive bonus.
Her total compensation including a 6% raise for the 1 percenter (its only fair, right) and stock handouts means her total compensation for 2015 could hit $15 MILLIONS.
I consider this as objective proof that companies like IBM that still allow one human to wear three hats have sub-optimal corporate governance. As noted below Apple, Intel, Microsoft, separate these distinct functions.
The Board of Directors has the fiduciary duty to (all) shareholders and selects, assesses (and finds successors) for the CEO.
The Chairman of the Board is the leader of that Board and has additional influence over Agenda, Board committees, and more.
The Chairman can act as a sounding board for the CEO.
The Chairman, together with the Board, can endorse or modify or reject the CEO’s strategy for the way forward.
The CEO as the top of the management pyramid formulates strategy.
The President (COO) executes strategy.
Unlike many leading companies such as Apple, Intel, Microsoft,
IBM corporate governance uses the sub-optimal structure of one human wearing three hats: Chairman of the Board, CEO, President.
Ginni wears three hats: CoB, CEO, President. She formulates strategy, executes strategy, assesses herself, and the Board of Directors which she Chairs awards her a bonus and stock hand-outs that will total 13Million bucks when Big Blue is in very rough seas.
Here is the breakout for other executives including CFO
http://www.businessinsider.com.au/ibm-ceo-ginni-rometty-gets-a-raise-2015-1
Mr. Cringely, I have split my comments due to length, embedded urls, or …
* **
CFO, as financial engineer & Chief of “Transformation” (two things that don’t belong together) receives majority of his compensation via more stock hand outs. Why is this legal?
Neither IBM’s current Board , executive management, nor Wall Street financial analysts that watch IBM (that don’t seem to understand IT industry) seem to be aware that IBM is at-risk of a self-inflicted Kodak moment. Or that Nortel was another venerated century old transnational in a dynamic industry that made dozens of acquisitions until it entered its death spiral.
In my opinion someone with clout such as Warren Buffet could push for modernization of IBM corporate governance such that the distinct positions of Chair, CEO, and President (COO) are split just as Apple, Intel, Microsoft and many other companies have done.
According to Reuters (link below) the IBM Board of Directors consists of 3 Directors, 10 ‘Independent’ Directors, and one Chairman of the Board for a total of 14 members at the table.
Chairman is Ginni (also CEO and President)
The average age of the Board (14 members) is 63.5 years of age.
Apart from Ginni (an IBMer since 1981) the vast majority of the remaining 13 members are “Captains of Industry”. Most of those “industries” are 20th Century industries that came of age since the 1930s. For example chemicals, petrochemicals, aircraft, conglomerate consumer products, pharma. One is from a credit card (ie. high transaction volume).
Most do not appear to have a science-based education or industry with the exception of one is was a Bell Labs physicist and one or two with engineering type degrees.
Most have been or still are associated with Fortune 100 corporations (that might be IBM clients).
Some even have associations with Hedge Fund/Investment funds/Trusts etc.
In my opinion, going from Google, Yahoo, and Reuters short bio blurbs, there are no (0) people on the IBM Board with experience operating IT systems for large high transaction rate mixed consumer/B2B workloads in any of Banking, Insurance, Airline, Retail (like a Walmart). There are no (0) people with Cloud, Mobile, nor Big Government (Analytics), nor Security.
How can this Board assess, endorse, or modify what Ginni brings to the Board?
I do want to emphasize that they are distinguished in their own fields.
And that the most scientific background is from the female physicist.
And that IT industry does not discriminate against females.
http://www.reuters.com/finance/stocks/companyOfficers?symbol=IBM&WTmodLOC=C4-Officers-5
In summary they are mostly old, old-line, smokestack & factory floor titans of 20th century industry.
This IBM Board would make a good subject for another Mr. Cringely spotlight. Mr Cringely, over to you Sir
Worked thirty years at this once great company that has gone to hell in Ginny’s handbag. The last few years were in management – what a fiasco. Mr. Cringley, you have it right, and don’t let anyone tell you different. You know incompetent scum when you see it. I begged my three tech savvy 20-something year old children to choose work elsewhere. They did. They are happy. And I am a proud papa. In the meantime, IBM management will churn itself into a hole and drag all the good people who work there down with it. Very sad.
Ginni gets a bonus! IBM is trying to be more tone deaf than AIG was during the Great Recession! https://www.yahoo.com/tech/s/ibm-boss-gets-bonus-despite-companys-lackluster-233447451.html
And..here is LA Times’ Michael Hiltzik tonight
https://www.latimes.com/business/hiltzik/la-fi-mh-ibm-redefines-20150202-column.html
Hiltzik says IBM Board Compensation Commy is other CEOs implying they take care of their own…
Any feedback Mr. Cringely—or a Part Two Sir?
The un-named company I work for has an IBM contract for prof. Services. In the last week most of our good resources,with system acces, site knowledge and experience have been replaced by less experienced resources.
.
The remainder are busily sending their resumes to all our sundry, including us, in an effort to bail out.
.
Needless to say the risk to our project is not good. And we’re just one of many.
C’mon, Bob – when are you going to rip her a new one for the compensation package? America needs to know just how much they kick us when we’re down…
OK, one fifth of the month gone already. I’m seeing a number of actions to reduce employees.
Is it a quarter of the company?
Hi MikeN. Thanks for your attention to precision.
There is a new term, “getting chromed”— as in Project Chrome.
As a commenter mentioned an SEC filing *may* have been needed if 26% (100 000 humans) were to be “layed-off”. Emphasis on the term lay-off.
But many anecdotal reports emanating from IBM are that ‘de-hiring’ and ‘RA-s’ are occurring outside the scope of “lay-off”. Many PEOPLE are tossed overboard via sudden arbitrary ‘performance 3’ that IBM uses as an alternate sneaky method for discarding older long service employees. Even persons already on the ‘bridge-to-retirement.’
So, I am not focused on the body count–to use a Vietnam term.
It may well be that the 100k number is a quota to be met by years-end–worldwide–including employees & contractors by any means possible.
Being arbitrary, literally any method, random lottery or monkey (trained or untrained) or Octopus, any method could meet the numbers set by CFO.
It would be like losing weight, and the liposuction “doctor” removes, 1 kidney, 1 liver, belly fat, right arm—hey its all weight right?
What IBMers are shouting out is that there is no reason or logic.
If I had to reduce Seattle SeaHawks payroll by 25% my cuts would be literally random—and no worse than IBM Board of Directors is watching unfold. Would my cuts make Seattle a winner next year?
http://spectrum.ieee.org/view-from-the-valley/at-work/tech-careers/massive-worldwide-layoff-underway-at-ibm
But the body count and his specification of the timing (by February 28, 2015) was exactly what made this article stand out.
That IBM was going to have layoffs is *NOT NEWS*. They’ve been doing periodic layoffs for the past 20 years!
What made this article different and quotable was the 26% number by February 28. If his “body count” isn’t an integral part of the story then this is just another garden variety article about a predictable IBM event, about as exciting as the million or so articles about Radio Shack’s all-to-predictable demise.
IBM had a bad year, employees will be losing jobs. Not a surprise.
Does it suck? Yes. All of this not news.
>100,000 employees losing their jobs within 2 weeks from now? That’s amazing and if it’s not true, Mark should own up to it.
Yes, as Bob said in the current article: “What really matters is not the terminology but how many people IBM will be paying come March 1st.” But if it takes until March 8th, will Bob’s credibility be lost? A potential employee of any company would still be wise to heed any warning Bob may have made about such company.
RA’s take 60 days in CA and a few other states. The rest are completed in 30. RAtirements typically 6 months or a year depending on the state laws. Unless there is a concerted effort by all affected to get their number added to the total, we will never know the true number. The alliance web site is interested in tracking this, so let them know if you are on one of the lists. (RA, RAtirement or PBC 3).
These new Rometty millions are spread around various buckets.
Salary, bonus, incentive pay for ‘performance’; awards at (potential) discount of Stock/Stock options.
https://www.theregister.co.uk/2015/02/02/ibm_ceo_rakes_in_the_dollars_in_2014/
Another term they used a Nortel was “retention bonus” —you know—we have to pay these quality people to stay—they could be poached, right?
Somebody research what IBM platform(s) Ginni worked as a IBM Chicago SE beginning in the 1980s.
Somebody post that for us please.
On CNBC recently she referred to x86 as “industry standard” chips, referring of course to Intel—primarily associated with Windows (i.e. Wintel).
That was before paying someone to take Global Foundries.
Much of the IBM “services” income derived from corporations that out-sourced the support of their corporate Wintel server farms is essentially today’s analog of 1960s “radio-dispatched” television repair man.
The mantra then was “one hour” service. And that no doubt was lucrative gravy train money until the Japanese came along and made TVs that didn’t break down. They just worked.
The TV repairman and his truck became extinct.
Maybe a Google or a start-up will disrupt that Wintel “services” IBM income stream by innovating automation. Heck they might buy an IBM Watson and use that Watson to automate the labor-intensive Wintel configuration and patch management.
So please, somebody do a bio on Ginni as an SE.
Was she an x86’er who got in on the ground floor, an AS/400 and its successors, a S/370 big iron person, or something I missed.
Just found this fascinating comment from another commenter with nome de web “KommiFornia”.
S/he found this Jeff M analysis of the 2013 IBM numbers. But the ghist of it is the CFO fixation of “presentation” over ingredients (to use a restaurant analogy) is concealing internal dis-function.
The Jeff M piece also spotlights how IBM CFO focusses exclusively on Shareholders but not mentioning Customers whereas purportedly Amazon speaks to and of their Customers.
Though-provoking.
==> http://jeffmatthewsisnotmakingthisup.blogspot.ca/2014/01/ibm-ive-been-manipulated.html
If Jeff is mistaken then I would love for someone to help educate me/us on where his analysis is faulty.
Maybe Warren Buffett will read and comment to confirm or rebut. After all he is a long-haul genius investor but who avoided the dot com bubble because, he said, he did not understand the business model (c1999).
So–either Warren understands how IBM is “presenting” finance numbers and concurs with “their methods”, OR Mr. Buffett will be happy he read “gadfly” Cringely et al.
“I think IBM is dissembling, fixating on the term 110,000 layoffs, which by the way I never used.”
Except the third word in the referenced Cringely blog post was “layoff”, as in “IBM’s big layoff-cum-reorganization called Project Chrome kicks-off next week…”
The dude stirred up the Endicott Alliance crowd with his non-nonsensical overblown prediction and is attempting to wipe the egg off his face by doing what he claims IBM is doing – dissembling.
IBM is far from perfect and does have many troubling flaws. People with an axe to grind against IBM will continue to hang on this guy’s every word but let’s face it, he has no better information about what is happening in the company than my neighbor who was a mid-level manager there and retired 15 years ago.
Re: “he has no better information about what is happening in the company than my neighbor who was a mid-level manager there and retired 15 years ago.” What Bob is saying has been confirmed by numerous current and former IBM employees who have posted comments on Bob’s IBM articles throughout the past several years, especially since 2013.
Comparing how many people IBM has on the payroll after March to what was on the payroll at the beginning of the year will not tell you anything. Already reports are coming in of “Landed Resources” being brought in to replace those fired/layed off. (Landed Resource = foreign worker via H1B visa – you know, since there is “such a shortage” of capable hi-tech people in the US). Also they are replacing many people with college hires. You fools such as Gustav that want to quibble about trivial semantics, whether the 26% number is accurate, or whether those being fired are truly “under performers” can argue and fool yourselves with your delusions all you want, but the bottom line, plain and simple, is this: IBM is getting rid of higher paid US people, regardless of performance, to simply replace them with offshore/cheaper resources. Period. Take it from one who ACTUALLY KNOWS what he’s talking about…..
They started cutting 50,000 in India last November. That alone is a large chunk of that 26% company-wide.
Check out some current India news of the massive layoffs across the entire IT industry over there currently happening.
http://wraltechwire.com/as-ibm-reportedly-cuts-50-000-india-jobs-ceo-replaces-global-services-leader/14146112/
All the naysayers can speak harshly about Bob, criticize the 26% number and downplay the significance of this or how the numbers are calculated, but to me it recalls the time when visiting the very first MacWorld in Moscone Center. Setting there eating a sandwich watching thousands of seemingly frantic people stream by, rushing to see all that they could see, my Atari using friend said “Mac? This many people can’t be wrong”. We both vowed to go buy Apple stock the next day, but never did, one of the biggest mistakes made. However you count this, whomever you choose to believe, what number you decide is correct, just remember that quote. “This many people can’t be wrong”.
On zEnterpriseMan’s comment: Heck they might buy an IBM Watson and use that Watson to automate the labor-intensive Wintel configuration and patch management.
That is well underway in the SO Delivery organization, just not with a Watson. One piece of that uses IPcenter/IPsoft, and another uses IBM Endpoint Manager (formerly Tivoli Endpoint Manager, and BigFix before that). Overall project name is “Dynamic Automation”, with those respective pieces named Model A and Model A’ (Prime).
I have to wonder if an IPcenter acquisition (or equity interest) is in the works, but in any event the ultimate objective is to replace the traditional wintel/unix system administrator (SA) roles with AI.
And now, it’s happening: http://spectrum.ieee.org/view-from-the-valley/at-work/tech-careers/massive-worldwide-layoff-underway-at-ibm
https://www.endicottalliance.org/jobcutsreports.php
Looks like the IBM denial was denial, just of reality.
The first link is simply referencing Cringely’s original blog post on this topic!!!
In the second link it takes a whole lot of hard poking around to actually find a few posts with anectdotal information on actual layoffs.
There are only 150 comments here, fewer than 150 unique commenters. That is not a very big number.
Hi Gustav,
“union-oriented” Alliance IBM site has anecdotal reports from current, former, and soon-to-be former IBMers
==> https://www.endicottalliance.org/jobcutsreports.php
Yes, Gustav, you’re absolutely correct. EVERY single IBM employee that has gotten laid off reads and has posted here on this article. I can name quite a few who have never even HEARD of Cringely. Geesh…..
reflecting on what a commenter posted…
CFO Hypothesis: CFO of IBM and head “Transformer”, can cut cost of humans by X percent by replacing current humans with replacements that are new grads, recently on-shored H1, off-shore sub-contractors AND the customers that pay IBM revenue won’t notice or care. Then CFO will collect bigger remuneration.
In other words, if I understand what a commenter implied, getting Chromed is not random nor poor selection criteria but one spreadsheet column: COST (the tangible dollar cost that their data collection for spreadsheet mentality “sees”)
CFO algorithm is: COST is the sole metric driving IBM.
My opinion is that the CFO hypothesis will *not* be proved true. The CFO hypothesis will be false because Customers WILL notice and WILL care.
* * *
Analogy
If the New York Yankees GM with a $209M payroll cut costs to the level of Minnesota Twins $86M then customers would notice the downward slope of results and paying customers would care. Merchandizing and advertising revenue would fall.
If I was NYY GM and I cut Yankees payroll by 25% using the IBM CFO “cost” metric algorithm I would have the Bosox payroll and their poorer results in the standings.
Einstein said make it as simple as possible–but NOT simpler.
zEnterpriseMan, its already happened over and over. Customers DO notice and the DO care – at least some of them. And, even for those that do…. eventually along comes some new hotshot upstart in management, or an older entrenched one looking for one last big golden parachute before they retire, and the whole process starts over again. No matter how many times they see someone put their hand on the hot stove and get burned…. its always “maybe this time its not hot anymore”. Even though the surface light warning them it is still hot is glaring red in plain site. For upper IBM management (as well as many other companies), $$$ talks, everything else walks.
https://www.computerworld.com/article/2879083/southern-california-edison-it-workers-beyond-furious-over-h-1b-replacements.html
Ironic that SoCalEd is a big IBM shop. Wonder where they got this idea? Thanks for posting the link.
Hilarious in the article where they think the Secretary of Labor should investigate. Newsflash, Indians vote about 80% for Obama. Plus the displaced workers are almost all male.
Good luck on that investigation.
http://spectrum.ieee.org/view-from-the-valley/at-work/tech-careers/which-ibm-layoff-numbers-add-up
I believe the purpose of Project Chrome is to reduce the *cost* of their workforce. The actual net reduction in the *number* of people in their workforce over a certain time period is meaningless.
.
Let’s look at a hypothetical work group of 500 high cost U.S. workers. If they are required to train 500 low cost foreign workers to replace them and are subsequently fired (for whatever made up reason), what has been the result? IBM will say there has been no reduction in the workforce for that group, so nothing has happened. However, any reasonable person will say that 500 workers have been fired to save money for IBM.
You can see the contempt IBM has for their workforce in their “Resource Action” terminology. Cripes, they don’t even regard their workforce as human beings. They are just resources, like a piece of furniture, to be treated with no more consideration than one would show to a broken down desk chair. “It’s the scrap heap for you, buddy boy.”
Mark backpedaling and changing his story to say, “I mean 26% in the US” is about the biggest rationalization of a lie I have ever seen. Mark, if you MEANT US only, you would have SAID US only in your original story. The only reason you would have to leave that tidbit out would be to sensationalize the story to indicate some >100,000 workers.
You. were. wrong.
Admit it and move on.
This doesn’t dismiss IBM’s slimy moves, but it doesn’t help when you try to “support” the workers using such obvious clickbait posted under a pseudonym.
Buffett adds to his IBM stake. Dare I saw, “Wow”.
https://www.bloomberg.com/news/articles/2015-02-17/buffett-adds-to-ibm-stake-as-rometty-shifts-big-blue-to-cloud
Hey Bob, is “The Decline and Fall of IBM” ebook being updated to reflect the current events?
Why? It’s still declining and falling?
nothing like back peddling!!! Cringely your original statement is still out there to be referenced.
I suspected you’ve taken a financial position against IBM hence your ramblings? There is no logical reason why one person would spend the amount of energy bashing one organisation. Either way there are laws against your lies, so be careful that shareholders might actually bring a class act against you.
I suspect Bob’s financial position is limited to his book “The Decline and Fall of IBM”. IBM could easily prove him wrong by publishing, openly, the workforce numbers to which Bob has been privy to through his sources. They can’t sue him without revealing the truth, which is what Bob and the rest of us want. If you read the comments on this and the previous articles, you’d see the overwhelming number of employees (former and present) confirming that the situation at IBM is at least as bad as Bob described.