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Massive Layoff Underway At IBM
Tekla Perry writes: Project Chrome, a massive layoff that IBM is pretending is not a massive layoff, is underway. At more than 100,000 people, it is projected to be the largest mass layoff by any U.S. corporation in at least 20 years. Alliance@IBM, the IBM employees' union, says it has so far collected reports of 5000 jobs eliminated, but those are just numbers of those getting official layoff notices. According to anecdotal reports, IBM appears to be abusing the performance appraisal system to cut additional employees without officially laying them off.
Somehow, I don't think the blog post quoted in the Forbes article is the official stance of IBM corporate PR:
Response from IBM (via its Hong Kong office’s blog):
IBM does not comment on rumors or speculation. However, we’ll make an exception when the speculation is stupid. That’s the case here, where an industry gadfly is trying to make noise about how IBM is about to lay off 26 percent of its workforce. That’s over 100,000 people, which is totally ludicrous.
Despite claiming to be an "official" IBM blog, I don't believe a corporate PR person would say that speculation is stupid or refer to an industry gadfly making noise.
We just can't find enough tech workers here in the USA! Honest!
Love sees no species.
Layoff is the most disingenuous patronizing goddamned thing these rich assholes could say. Call it what it is. You don't want to give up a yacht this year, so you're firing a city the size of boulder Colorado. Call me cynical, but the ship is officially sinking.
Good people go to bed earlier.
It is disgusting really, and it's all about satisfying Wall Street. Read Cringely for more info, he's being blogging about this IBM situation for a couple of years. :-/
~~~Please pass the salt, I hate unsalted MD5s
Meanwhile Lenovo, the PC business they sold off that moved into tablets and smartphones is doing really well. All of the same chinese factories and technologies are available to IBM that were available to Lenovo, only the management was different. One decided it couldn't make money on making actual computer stuff, the other went ahead and made actual computer stuff.
One went a route of selling vague data mining services at high prices, a bit of patent trolling, and slow expensive lock-in mainframes. The other made stuff people want without the hard selling to dumb middle managers.
Dear Cynical,
Please refrain from discussion on a personal level regarding my recent purchase of another yacht. I would not ask you to give back the single dollar menu hamburger you are feeding your three children, that just wouldn't be ethical on my part. So I ask you please give the same respect back to your 1% overlords.
Thank you for your time in this matter,
Make it a great day!
The speculation is that IBM is trying to push the dividend to a record level. In the process they may very well destroy the company. Because the only way to get the dividend to that level is to basically wipe out long term profits for a short term boost.
That's probably the goal, the new MBA generation from the baby boomers is taking the point of view of taking every dime out of the company and giving it to the insiders even if it guts a major American corporation and hundreds of thousands of jobs will be lost to China.
It's funny but the CEO from the Movie Dick and Jane reminds me so much of these CEO's that are only out for themselves, yet he was supposed to be fictional.
This isn't the first time that IBM has done mass layoffs and it won't be the last. This is to be expected, to be surprised by it is to not learn from IBM's own history(Sure you can keep your job, but we need you to move to Southeast Asia and we're going to pay you Southeast Asian wages. Oh, you don't want that? Here's your severance package.).
Nobody will abuse a time off policy where there are no vacation days and time is taken as needed. If it is abused it can be addressed by the performance review process.
I always understood how that will stop employees from abusing the "as needed" vacation policy.
I never understood what will stop the employer from abusing it. Until now.
I'm sure many Slashdot readers will be directly affected by this, either being laid off themselves, surviving the layoffs only to go work in turmoil every day, or have their spouse or other loved one laid off. That's hard to deal with. Times will get better, of course, but it sure may not seem like it right now. Our hearts go out to you.
Where is this 100,000 number coming from? The linked article says 5,000 are documented, and then asserts without proof that the full number is/will be 100,000.
Until there's more evidence, I don't believe the 100,000 number.
What ever happened to skepticism (in the original, benign sense of the word) or critical thinking skills?
(This is NOT an assertion that there will be substantially less than 100,000 layoffs. So please, no one claim I'm saying that.)
I know a company has to be profitable to keep people employed...
IBM's net profit in FY2014 was $15.75B (down from $16.48B in FY2013).
IBM is just leveraging growth opportunities in the cloud to core competencies and strategic initiatives. They are executing a bold plan that will address urgent customer needs through CAMSS (Cloud, Analytics, Mobile, Social and Security). It is an exciting and prescient vision and a great time to be at IBM!
It must have been something you assimilated. . . .
If you have a 401(k) or any kind of mutual fund investment, you are part of Wall Street. That's how the system works, it's not spinning in a vacuum. That 6% return you got last year did not fall from the sky, it ended up in your pockets because institutional shareholders put pressure on companies like IBM to help the stock price and/or pay more dividends.
lucm, indeed.
Sometimes some management forgets that employees are stakeholders just like the people who have invested their savings are. In this case, IBM has had 11 consecutive quarters (three years) of falling sales. If they don't take decisive action to turn things around, the company will be gone and everyone will be out of a job. They haven't been able to keep brining in the money selling the old products and services, cloud services are keeping them alive for now but Amazon, Microsoft, and Apple dominate cloud, so there is no guarantee that IBM will be able to exist on cloud revenue five years from now. It sucks, but the truth is, IBM hasn't kept their customers happy, and with the customers leaving there isn't money to pay workers. On the other hand, Apple is opening a huge new data center where some ex-IBM staff might work, and several companies are expanding operations in Texas.
“I was included in the resource action in spite of consistently high performance numbers. I am the only woman in the work group and one of only a handful in the whole region. The male partners that were retained have crucial chummy drinking buddy relationships with their customers. The treatment and support of professional women, in spite of the window dressing at the top layers is appalling.”
if the drinking buddy relationship is crucial and you haven't maintained said relationships, then don't you think that's why you're being fired? If you are unwilling to maintain this crucial customer relationship, why should you be retained? Is there some reason why women can't be good drinking buddies too?
Yep, same cat.
He basically says that since IBM is going downhill and losing market share, they should just continue to do what they are doing now, with the same people.
I bought absolutely nothing from IBM in the last 10 years. I plan to buy nothing from them in the next 10 years. I use none of their services. So it makes sense to me for them to become a smaller company.
They didn't need to do this to stay profitable.
Companies exist to produce profits, not to provide employment. If an employee is not providing net value, then it is better for the company, and the overall economy, for that employee to go somewhere else. In the long run, it is better for the employee as well.
Is this another case of vitality curve management? GE's Jack Welch was the quintessential example of this policy and is considered one of the most effective company leaders ever.
Unless you worked at GE and were condemned to watch the layoffs year after year until you were finally canned due to being part of the bottom 10% -- or watching the dysfunctional games people played because of the policy
After the last layoffs/firings/whatever, I'm surprised that there's anyone left at IBM. I'm guessing that in this round, a whole bunch of lifers would be gone, and w/ them, any knowledge of legacy systems that only IBM knows & does.
They didn't need to do this to stay profitable.
Companies exist to produce profits, not to provide employment. If an employee is not providing net value, then it is better for the company, and the overall economy, for that employee to go somewhere else. In the long run, it is better for the employee as well.
You do know that layoffs lead to your most experienced productive staff leaving, because it's easy for them to get employment elsewhere right? So while a big corp thinks layoffs are a way of losing the chaff, it's more effective at losing the wheat. Slowly hiring if you want to grow and slowly losing staff through attrition if you want to get smaller is the right way. If your business sucks, get your staff to start new ones internally. If they're competent, they'll have plenty of ideas.
I should use this sig to advertise my book ISBN-13 : 978-1501515132.
Now we know what happens to IBM employees when people stop buying IBM equipment.
These cocksuckers are actually Democrats who gave Obama almost a million dollars to help him get reelected.
http://influenceexplorer.com/o...
How has six or seven years of Obama worked out for the workers at IBM?
Right, but if you are the top 10% performance rating and you see layoffs, you start looking. Regardless of how much profit they are making, you see that they are going to grow their profit by downsizing and that says a lot right there to someone with a long career ahead of them: 1) it may one day be you, 2) They're probably going to "core competancy" themselves into stagnation, your skills will degrade and you will get bored, 3) If you were upwardly mobile, your chances of promotion are going to shrink, 4) New projects, new development, etc. are all going to be shelved in place of band-aids for what exists, not good for you personally, 5) They'll use this as an excuse to reduce bonuses and give fewer RSUs/stock options, you probably can get a better deal elsewhere.
In a nutshell there's never a good reason to stay around a company that is laying off like this. The only reason is comfort.
No. IBM is not asking for volunteers. They are cutting their under-performers. Employees usually know which of their coworkers are deadwood, and if done right, some pruning can lead to a morale boost. The big risk is if you don't cut deep enough and have to come back for another round.
This certainly was false in my area during the last big round of layoffs. (No word yet on whether we'll be seeing layoffs this time round or not.) High performers were cut as well as low performers. You're right that we know who falls into which category -- and it is very obvious that they're not just cutting underperformers.
In addition, whenever there are ill-conceived layoffs in process, there are always some employees that decide that they have had enough of taking on extra work while waiting for the axe to fall on themselves, and jump ship of their own accord. We've seen a couple of those already, and they tend to be high performers themselves -- since they're the ones who are confident of being able to find another job.
How can we continue to believe in a just universe and freedom to eat crackers if we have no ale?
If IBM is so full of deadwood that they need to get rid of them, then that means there is probably deadwood everywhere. And if anything, there's one thing we know for certain: deadwood is very apt at keeping only deadwood around (read: nepotism, drinking buddies, you-are-one-of-us, etc).
...and yet the CEO just got a big raise after profits and revenue turned down for the 11th consecutive quarter. Go figure.
"hell even their server division!"
just their x86 "commodity" server division. They still make IBM big boxes which I program on (and have a smaller one at home - an iseries 520).
"They are cutting their under-performers"
They are cutting top performers who are in their 50's and 60's and closing in on the longevity needed for certain insurance and pension benefits.
And being top performers they are relatively well paid.
Has nothing to do with under performance, although IBM instructed their management to give an underperformance review along with the termination date so they could cut the severance in half to 13 weeks or nothing when they put them on "performance improvement needed in 30 days" plan.
Looks to me from the outside like they choose the least costly way based on management's take on need from each "resource" for transition help.
That may be true, but they're being very underhanded in the way that they're conducting these layoffs. Apparently some employees took a deal in the past couple of years that protected them from layoffs, in return for early retirement after a few years of reduced hours. The only exception was if they got the lowest score on their evaluation. Suddenly competent employees are being found incompetent, so that they can be fired.
That's one example. I don't work for IBM, never did, and after they pull this, they'll have trouble convincing anyone who has another option to work for them. They've screwed themselves for years, any agreement they make is clearly not worth the paper it's written on.
I think IBM's management must know the company is in its death throes, they're just slowly shedding people to minimize chaos.
The right to protest the State is more sacred than the State.
That said; IBM has made itself largely irrelevant now for at least the past 5 years, if not longer - especially after they sold their desktop and laptop business to Lenovo. They gambled on a core part of their business that was already dead, and sold off their best assets.
Part of this was that. They didn't catch the wave of mobile computing.
The other part of this is that; believe it or not, this economy is headed for a steep nose-dive. Again. I know most of us have felt that it never came out of the last recession. But the past two years, we've seen parts of the economy doing like gangbusters, and other parts just falling on it's face. And just in the last 4 months, we saw the bottom drop out of the oil market due to weak demand. That's a signal. Not that there's a massive oil-production conspiracy (I'm not saying there isn't) - but that demand is falling because the economy is failing. We're seeing it in the 9% drop in CS grad starting salaries. We're seeing it in the mass layoff at IBM. I'm seeing it in my company. (last year's results were shitty: we basically made no money at all for the year.) Virtually nobody I know is doing well, money-wise, or job wise. It actually feels worse than 2008.
These are my friends, See how they glisten. See this one shine, how he smiles in the light.
Having worked for IBM as a contractor in the past - this.
The way they treat contractors is crap: forced time off at very short notice (so they can hit the numbers they "need" to hit); forced rate reductions at contract renewal time (take it or leave it); maximum hours per week (but I'm on call, but I'm not allowed to take time off during business hours); ...
Short version: if somebody were to offer me another contract at IBM, I would consider it. I would take it, if and only if the rate on offer was at "if they're fool enough to pay it, I'm fool enough to take it" levels. Somewhere around $5,000 an hour would probably be sufficiently enticing on a twelve month contract. It would be a similar story for a permanent full time position.
Companies exist to produce profits
Nope. Companies exist for the benefit of society. There is no natural limit of liability and there is no natural corporate personhood. These are all artifices of law because it is believed that it is to the benefit of the country with those laws that such things exist.
That and only that is why companies exist.
SJW n. One who posts facts.
That's the biggest impact. Even if they do successfully cut the bottom 10% and none of the good people, the whole approach destroys corporate culture and drives negative behaviours - particularly from the people lacking the skills/confidence to get a job elsewhere.
This will cause the great people to be rather more receptive to the approaches they'll already be receiving from competitors, and even if IBM don't ask any top performers to leave, they're going to lose many.
The less effective they are at identifying those bottom 10%, the worse that'll become, so basically they're fucked.
If you want to reduce your workforce, take out an entire division or department, make it clear that's what you're doing, and do your best to find new roles for the people you want to keep. The rest of the company will understand that far better, and be impacted by it far less.
I'm pretty sure there are more than 4 or 5 IBM shareholders, if the stock price goes up (or doesn't go down as much) because of these layoffs, many more than 100,000 people will become richer.
But many more than 100,000 people will become poorer, too. Layoffs affect not just the laid off and their dependents but also anyone else who has to foot the bill to pay for their costs of living. And that's going to be all of us. So the IBM shareholders get richer, and everyone in America gets poorer. Doesn't sound like a good deal.
"You're right," Fisheye says. "I should have set it on 'whip' or 'chop.'"
And just in the last 4 months, we saw the bottom drop out of the oil market due to weak demand. That's a signal. Not that there's a massive oil-production conspiracy (I'm not saying there isn't) - but that demand is falling because the economy is failing.
You understand, of course, that there is literally a massive oil-production conspiracy? It's called OPEC, and they have a history of manipulating the market. In this case, it seems that they're looking to make oil unprofitable for us until the small players have to go belly up.
We're seeing it in the 9% drop in CS grad starting salaries.
We're also seeing the industry start to mature as well as competitive pressure from abroad and through the H1B program. Programming is not as sexy as it was in 1998.
We're seeing it in the mass layoff at IBM.
You may have something here, but indirectly. IBM has been on a collision course with failure ever since they started chasing imaginary dividend numbers in order to appease shareholders. They've mortgaged their future in the name of short-term profit and the chickens are coming home to roost. The root cause, of course, would appear to be shareholders' intolerance for companies engaging in long term investment and actual research. They would appear to be happier to gut companies and distribute their value to insiders. This is the strategy that is dooming our competitiveness in the long term and killing our middle class.
Last time I worked at IBM, there appeared to be no rhyme or reason as to why someone was picked to depart. It appeared to be a game of duck duck goose. I was sitting at my desk and someone I didn't recognize (not our manager) came in and told the guy across from me he was to be out by Wednesday. Much of our group was outsourced to India and I was given an opportunity to move from being a Unix admin to being a Web site programmer, a data center builder, or another Unix admin contract working on different systems. I spent my own money to take a relevant class and moved to the new contract. On the new contract, the admin who was our interface to the customer was let go with 3 days warning so we had to scramble to get the information she had on the customer.
Since it seemed random to me and others, we started looking and moved on. If there's no apparent way of showing your value, that you are just a cog in a big machine, then why stay?
[John]
Shit better not happen!
Yea, I had to take a 3 week furlough about 8 months after I started contracting for them. And it took 6 months before I could log in to the servers due to security checks.
[John]
Shit better not happen!
The question of "why they exist" changes depending on perspective. From the perspective of a company or perhaps it's owner, their primary motivation is profit, and without this, they simply can't exist. People typically start businesses so they can earn a living, not to improve society, despite what their PR departments say.
From a societal or government's perspective, it's generally acknowledged that productive companies are also generally beneficial to society, as they produce goods, provide employment, and generate taxes. Thus, they are both protected and well-regulated by law.
From all perspectives, it's really only charities that exist exclusively for the benefit of society, and thus are given special advantages that normal companies do not have.
Irony: Agile development has too much intertia to be abandoned now.
> you observe that IBM's problem is that their existing business is not generating new revenue. OK, but how does firing your employees help? It seems to me that by firing their work force, IBM is closing any doors for new revenue opportunities.
The revenue from those units have been falling for quite some time, and there's no reason to think that trend will reverse. To pick a random example, one division of IBM is Global Services, which has two arms, one called IBM Global Business Services (GBS), which provides management consulting and other services. So they have a bunch of management consultants on staff. If customers aren't buying management consulting services from IBM*, they have to lay off the management consultants. If they keep people around getting paid, but not producing any revenue, they'll go out of business.
That said, what they probably haven't done a good job of is moving staff that can be moved. For example, that consulting section probably has some accountants who could move to their cloud division. That may be a poor management decision to do layoffs by division rather than by job role. Maybe there's a reason people aren't asking IBM for management advice very much anymore. :)
* I don't know how their consulting division has been doing long term, I just chose one part of the company at random to use as an example.
I understand what you're saying, and honestly they have legal (and other) responsibilities to each group. For example, the #1 legal responsibility they have to employees is to pay them. Shareholders don't have to get paid. The primary responsibility to shareholders is that executives may not enrich themselves at the expense of shareholders, such as by making a sweetheart deal with their brother to be a supplier, or just simply taking corporate (investor) money and spending it on themselves. (Salaries and benefits approved by the board are of course the exception, execs can and do get paid, obviously).
There are thousands of pages of laws and regulations covering the company's responsibilities to it's customers. Just yesterday, I think it was, we had a story on Slashdot about the New York Attorney General going after some companies who didn't fulfill their responsibility of fair dealing with their customers.
Outside of legally enforced responsibilities, there are others too. A company has a responsibility to treat employees with dignity and respect. A tech company which fails to treat employees with dignity and respect will lose their good employees and suffer by it. Several specific types of "treat employees with dignity and respect" are of course legal requirements too, such as sexual harassment and all the stuff the EEOC deals with. Companies that don't have sound policies in place in this regard find themselves on the wrong end of wrongful termination law suits and such as well.
They are cutting top performers who are in their 50's and 60's and closing in on the longevity needed for certain insurance and pension benefits.
IBM eliminated their pension plans 20 years ago. Older employees may be more expensive because they've gotten lots of raises throughout their careers, but pensions aren't an issue; IBM's retirement plans are all 401K-based now. IBM actually did what you describe about 10 years ago. The used it to get rid of the people who had been grandfathered into the old pension plan. My former manager got nailed by that as did several other middle managers and execs I knew. I was in the transitional group. They dumped our pensions and instead gave us a one-time payout into a 401K (I got like $80K), plus set up a reasonably-generous 401K matching program, which they later made less generous (though still not bad, honestly).
I suppose older workers may use medical insurance more heavily (like most big companies, IBM is self-insured), but I'd think by their 60's that's actually declining since their kids are no longer on the insurance.
Note to ACs: I usually delete AC replies without reading them. If you want to talk to me, log in.
If corporations want to be people, then corporations are sociopaths.
Corporations take from the environment - did IBM pay for the roads that lead to their businesses? How much of their gear is connected to the Internet, which is a US government/government sponsored university invention. But we're always told "corporations need to take take take only never give".
That is one kind of capitalism, not the only kind. The Japanese practice stakeholder capitalism, which means you think about everyone involved. You might say "hey look at their economy", but they shot themselves in the foot with bad fiscal policy and they have horrible demographics. Stakeholder capitalism is not doing them in.
Nobody *owes* you a job, but if you read into what's happening, in some ways IBM did owe certain employees protection against downsizing just prior to retirement. So apparently what they did is deliberately give good employees bad (false) performance reviews, in order to make them fireable.
So there's a difference between "owed a job" and "negotiated in good faith and then shafted by lying bastards"
Companies exist to produce profits
That's idiotic. Companies most certainly DO NOT exist "to produce profits".
Companies exist to make products or provide services. Profits are a side-effect that act as an incentive for people to form companies to provide products or services. The raison d'etre of a company is to PRODUCE something - the profits from efficient overproduction are just encouragement for those with the means to produce something of value to the rest of us.
The fact that there are people like you who have lost sight of the real reason why companies exist - to provide products or services - and think they exist solely to line the pockets of the rich - is the major travesty of modern capitalism. It's the rot at the core.
If you work at a large tech or services company, rest assured that your top execs are scrambling right now to figure out how to emulate IBM's exploitation of the loophole that lets them lay off employees with the performance management system without technically laying them off.
This is bad news for all US salaried job holders, but especially those in large enterprises with a lot of low-profit business. Even if the job you work is profitable in essence, these companies would gladly dump you in exchange for an H1-B or just replace you with higher-margin work. Even profitable, high-performance employees are on the chopping block nowadays in the quest for ever-increasing profits.
Nope nope.
Corporations exist only at the pleasure of the society: they require laws to exist. Without which they would not exist. There are also corporation types which do not turn a profit. the only thing in common is the incorporation.
As for benefit: it is assumed that allowing people to pursue profit reasonably safely is of benefit to the society, since it creates wealth etc etc. Thus, it is believed that the existence of companies is itself of benefit ot the society.
That is why they exist.
SJW n. One who posts facts.