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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.
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!
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.
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
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.
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?
...and yet the CEO just got a big raise after profits and revenue turned down for the 11th consecutive quarter. Go figure.
"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.
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.
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.
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