back to article Read IBM's note to staff announcing mandatory training and 10% pay cut

IBM has instituted a new, mandatory training program for some US employees whom management claims don't measure up in the skills department – and participants will be required to give up 10 per cent of their salaries for the privilege. The program was announced in a memo issued to the affected staffers, all of whom work in the …

  1. Anonymous Coward
    Anonymous Coward

    SatireWire is back ?

    Yes, that must be it. This wasn't on Onion for sure.

    1. eGeezer

      Re: SatireWire is back ?

      Pay reinstated on April 1, 2015? ........April Fool

  2. ecofeco Silver badge

    Do not get me started

    First, that 10% is most likely their temp contractors. Yeah, IBM contracts temp workers to staff many of their on site client contracts. So a typical client on site team can easily be 10% temp contractors from various temp agencies who will NEVER be asked to join IBM, yet work under the IBM aegis. It's the worst kind of limbo.

    Second, the amount of bureaucratic busy work just for the worker bees is astounding. So much so that it often affects their ability to fulfill the SLA. That's for both IBM and the temp employees.

    In my region, IBM pays BELOW market rates for their worker bees, especially the temps. Pay cuts? The turnover is going to be fun to watch.

    1. Anonymous Coward
      Anonymous Coward

      Re: Do not get me started

      "The turnover is going to be fun to watch."

      And that's exactly what they want. You leave, no redundancy or other pay offs.

      Win / Win for IBM I'm afraid.

  3. dan1980

    Top marks, IBM, top marks . . .

    I wonder how many of the 15,000 cut jobs are expected to be a result of pissed-off 'under-performing' workers walking out?

    I knew a guy once who used a similar strategy to get rid of girlfriends he didn't like - pissed them off until they left. He was not well regarded by those who knew him.

    IBM have a serious problem, which is that they are wedded to their deal with the Wall Street devil, also known as the 2015 Roadmap. They have promised a $20 EPS by 2015 and they must show they are on the right track. This has meant layoffs after layoffs.

    In some (many) ways, 'Wall Street' is to blame. The current situation with high-speed trades based on sometimes torturous algorithms has led to strategies of jumping on any mis-pricings, with stocks being held for mere minutes or changing hands - in some cases - many, many times per second. This type of trading is completely agnostic to long-term growth or any fundamentals of the traded company.

    Even where HFT is not used, this situation has created a culture of NOW profits.

    The end result is that IBM appears to be sacrificing its long-term profitability as a company in order to convince the analysts, whose prognostications are then jumped on by the howling hordes of investors.

    The show goes on. For now.

    1. Anonymous Coward
      Anonymous Coward

      Re: Top marks, IBM, top marks . . .

      This has got nothing to do with HFT and Wall Street and more to do with misguided incentives to the execs and board. After all who do you think is going to benefit from IBM hitting it's 2015 target, it's going to be the execs and board members with all their stock options. As a result Ginni is doing everything she can to hit that target. Once done she can sell up the options, along with all the others and leave the train wreck that she's created meanwhile pocketing a nice wedge of cash.

      1. dan1980

        Re: Top marks, IBM, top marks . . .


        Ahh.... yeah.

        I never claimed that those making these decisions weren't looking to profit from them!


      Re: Top marks, IBM, top marks . . .

      > I wonder how many of the 15,000 cut jobs are expected to be a result of pissed-off 'under-performing' workers walking out?

      You think that IBM is actually that sensible? No. It will not be the under performers that get sacked. This is all about the money. The people that are actually worth having around are considered "expensive". The guys with experience with IBM, experience with the client, and a proven track record will be the ones shown the door.

      I have personally witnessed this myself.

      Also, salary/hour reductions for the outside contractors is nothing new.

  4. Erik4872

    Is this actually warranted?

    I work for a large multinational organization (nowhere near IBM-sized.) Like IBM, we do have a huge "operations" team that, by our estimates in Engineering, is extremely bloated and overstaffed. Our team does pretty good work but never gets extra headcount or budget. Our operations team gets whatever they ask for in terms of people and budget simply because they play the right political connections. And their work product is absolutely horrendous. I just got off another extremely frustrating conference call with some of these folks -- it's amazing how much effort they go through to avoid doing work.

    So here's a question. I know this is most likely IBM trying to quietly fire US workers by making them angry enough to quit. However, having seen something similar to what the memo is describing, I wonder if it's even partially warranted. IBM has been doing some pretty nasty underhanded things to its "expensive" onshore resources lately. But I do see how easy it is for someone to carve themselves out a quiet little niche in a big organization and stay firmly planted there for 20+ years. Maybe they're actually going through and cleaning up that part of the dead wood. That said, it looks like they're trying to "retrain" people to be social media and cloud consultants. I'm not sure that's a good strategy if these people are the scary smart folks who quietly keep zOS or DB2 puttering along.

    Does any IBMer have any insight on this? Are these just people who haven't gotten "outstanding performance" or whatever on their reviews and they wound up on some HR list? Or is there an actual reason beyond rehiring US workers in India?

    1. dan1980

      Re: Is this actually warranted?


      The answer is relatively simple, which is that Rometty has promised $20 EPS in 2015 and anything that does not work to that goal is expendable.

      Her goal is not revenue and she has stated as much fairly plainly and indeed, revenues are in decline.

      Pushing for steadily increasing EPS while revenue steadily declines is simply not sustainable. The way they are making this 'work' is to jettison anything that does not directly add to their EPS for the current quarter. And each quarter that means getting rid of staff.

      Wall Street simply does not care for a profitable and sustainable IBM; they care only about making money from them. If that ends up sinking the company then so be it - there are always more companies to make money from.

      1. LucreLout Silver badge

        Re: Is this actually warranted?

        "Pushing for steadily increasing EPS while revenue steadily declines is simply not sustainable. The way they are making this 'work' is to jettison anything that does not directly add to their EPS for the current quarter. And each quarter that means getting rid of staff."

        The bank at which I work is following the same path. We always had 20/70/10, but now even solid performance isn't a help if you happen to be in part of the bank slated for disposal. It may be no confort to many to understand that the City at least practices what it preaches.

        "Wall Street simply does not care for a profitable and sustainable IBM; they care only about making money from them."

        I apologise in advance, for this will sound harsh, but it is not Wall Streets job to care for IBM. It is only their job to make distributable gains, which require an increasing quarterly dividend or retained earnings. IBM may go to the wall, but ultimately, the people with the skills will still exist and the capital it tied up will find a more productive home. That is a central tennet of capitalism.

        1. dan1980

          Re: Is this actually warranted?


          "I apologise in advance, for this will sound harsh . . ."

          Not at all! I wasn't implying that it was Wall Street's job to care. Wall Street cares about making money and that is that. The problem comes when the WAY that Wall Street makes money becomes utterly divorced from the real, long term viability and profitability of the company they are trading, as is increasingly the case.

          It is no longer about holding good stocks and collecting a dividend, which is the very idea of the shares - the investors share in your success as a company. This is the way it SHOULD work - people support a company by investing their money in it and that money is repaid when the company grows and prospers.

          I appreciate that that notion is almost unimaginably naive but my point is that every step away from that is a step towards Wall Street being not a force for widespread prosperity but instead for concentrated wealth.

          The real problem is that, while unrestrained capitalism may well increase wealth, that wealth becomes concentrated rather than increasing the standard of life of the broader community.

          The most illustrative way to put this is by looking at the many companies that have fired thousands of staff even though the company has made a good profit. This happens regularly and the reason is that, while the company is profitable, it is not as profitable as some cadre of academics have predicted that it should be.

          I wouldn't call it evil but it is the essential problem of the stock market - that employees are laid-off because someone earning an order of magnitude more than them in an office a thousand miles away has, essentially, made the wrong prediction.

          Communism is inhuman (I mean that - it denies our basic human rights and urges) but unrestrained capitalism is every bit as destructive, socially, as it is merely a re-framing of 'survival of the fittest'. where the fittest are the wealthiest and most ruthless. The only answer is a moderated blend of the two and the only way to approach such a blend is to look always and ever to the desired RESULT, rather than allowing a dogmatic concept to run unchecked.

          Most modern countries follow this idea at least partly but we need to make it the foundation of our societies - to seek after the greatest good for the greatest number while never sacrificing theinnate RIGHTS of the individual. And no, making profit is not a 'right'.

          Sorry for all that - I am 50% left, 50% drunk. You'll have to excuse me. (Or not.)

          1. Zed Zee

            Re: Is this actually warranted?

            You sound like you've been watching Michael Moore's "Capitalism: A Love Story" film.

            I do agree with you but I really don't understand why all this 'behaviour' and 'patterns' of capitalism need to be pointed out...not only is it academic but it's inherent.

      2. Anonymous Coward
        Anonymous Coward

        Re: Is this actually warranted?

        In fairness to Rometty, she inherited the $20/share promise from the previous regime.

        The saddest part about all this is that even Wall Street no longer cares about the $20 number, ever since they figured out how IBM would have to achieve it -- many of them would actually be happier if IBM were bold enough to say "the business landscape has changed radically and that goal is no longer appropriate; at this phase of the cycle, reinvestment is more important than EPS".

        Frankly, everybody in IBM, from top to bottom, will be relieved when we are finally rid of the albatross

    2. Ian Michael Gumby

      @Erik Re: Is this actually warranted?

      There are two sides to this coin.

      IBM is kind of in a catch-22.

      Over the past decade IBM has made record profits by cutting to the bone. Buying back shares to help reduce the number of shares on the market to help boost their stock price.

      Now they have a problem.

      No SO customer will buy from IBM if IBM can't provide the skills required. That makes the SO employee dead weight. What good is an employee who knows lotus notes when the market wants someone to support Outlook?

      Or if an Oracle DBA is certified on their regular products but not Exadata?

      Or they don't know 'Big Data'....

      So IBM has to retrain their employees. Those who don't skill up are gone.

      IBM also has to figure out how to subsidize the cost of the training. After all, you can't charge the client if your employee is off training.

      This isn't a good thing for IBM. It says long term, IBM is toast because they can't attract the necessary talent and they don't invest in their people.

      To your point, on US contracts, customers don't want offshore labor onshored. They will beat up IBM on this and reduce IBM's profit margins.

      This is definitely yet another warning sign of IBM's impending doom.

      1. intrigid

        Re: @Erik Is this actually warranted?

        "This isn't a good thing for IBM. It says long term, IBM is toast because they can't attract the necessary talent and they don't invest in their people."

        Sorry, please explain to me how them investing in their people is them not investing in their people.

        Please feel free to scrutinize my math, but as I see it, having to work 20% fewer hours for 10% less pay amounts to an hourly pay raise. And on top of that, receiving free training is another very tangible benefit.

        1. Ian Michael Gumby

          @Re: @Erik Is this actually warranted?

          Wow, are you sure you don't work for IBM?

          Your math is wrong.

          If you are salaried, your salary is based on a 40 hour work week.

          You are now getting paid 90% of your salary while you are supposed to spend 32 hours working on your day job, and then 8 hours working on updating your skills. So you are still working on work related material for 90% of your salary.

          In IBM parlance, you've just changed your PBCs to include those 8 hours a week learning 'X'. You are not working less hours.

          If you want to convince yourself that you're getting a 10% raise... LOL... you deserve working for IBM.

          Of course here's another sad fact. That loss of 8 hours a week... that impacts your bonus because its non-billable to the customer (unless someone does some funny bookkeeping) so it impacts your personal revenue number that helps to determine your bonus and/or your rank.

  5. Alan Denman

    Learn their jobs !

    It does sound more like a clever redundancy program.

    Get someone to learn you job by pretending you are on training.

    Long term it is obvious that so called in-house training hints of the old factory systems where they found ways to charge staff.

    Maybe IBM could charge a mandatory seat fee for non home workers?

    1. Ian Michael Gumby

      Re: Learn their jobs !

      No, its a sincere program.

      Again suppose you have 100 guys on the bench who know Sybase. But Sybase isn't new and the legacy systems at clients are being transitioned out.

      So you need to get them trained up on Oracle.

      Here you provide online training and redbooks so that they can learn the basics and you now have a staff with marketable skills.

      The 90% salary reduction is a way to offset the cost of the training. Especially if these employees are not exempt. (Hourly)

      You are still putting in a 40+ hour work week, yet 32 hours are billable, 8 are non-billable but still company directed .

  6. JDX Gold badge

    Surely if employees haven't kept up to date it's because their employer has not provided adequate training in the first place?

    1. CheesyTheClown


      This was sarcasm wasn't it?

      If you don't constantly improve yourself, you lose value. I wouldn't hire someone who wasn't self motivated to keep their skills above and beyond.

      1. Anonymous Coward
        Anonymous Coward

        Re: Sarcasm?


        So you expect them to take holiday and fork out £1000 so they can make you more money?

        I take it if you roll out a new bit of kit, that you have insisted on, you are like most other corps and expect people to work out to use it in their own time and cost?

        Sounds fair.

      2. JDX Gold badge

        Re: Sarcasm?

        So Cheesy, you expect me to do that in my free time after I slog my guts out working all day? Or should I decide to do it when I could be getting work done - that doesn't sound like a decision I can make lest I get a kicking in my annual review for loss in productivity.

        I may be motivated to keep current but as an employee that motivation manifests as pushing for training. Not spending my personal time and money.

        1. Ian Michael Gumby

          @JDX Re: Sarcasm?

          In corporate America, they love exempt employees.

          You end up putting in more that 40 hours a week, including your own personal skills enhancement.

          What separates a good company from a bad is if they will pay to send you to a course for a week or a conference.

          To your point, I put in 60-80 hours a week doing my day job and then keeping the skills fresh.

          That's why I'm billable at a top rate.

          Am I a work-a-holic? Yup. But the nice thing is that I enjoy my work. So its not a big deal.

          If you're one of those guys who wants a 9-5 job and then goes home to his family... that's your choice and I respect you for that. But some of us... our work is part of our life.

          1. JDX Gold badge

            Re: @JDX Sarcasm?

            9-5 is already rather a big part of your life, considering you wouldn't put that much time into nearly any hobby even if you had the time!

      3. JEDIDIAH

        Re: Sarcasm?

        > If you don't constantly improve yourself, you lose value. I wouldn't hire someone who wasn't self motivated to keep their skills above and beyond.

        ...and exactly how am I going to gain practical useful experience and expertise with something that requires a 6 figure storage array or a multi-million dollar piece of kit? Certs and classes and even self-study is pretty worthless. They're worth about as much as the paper they're printed on.

        You might be able to BS through an interview with rubes but that's about it. Anyone with half a clue will see that you have no real experience.

    2. dan1980


      Or because their employer has decided to refocus its efforts onto other business areas.

  7. Anonymous Coward
    Anonymous Coward

    This is how IBM outsourcing works :

    (1) Win an outsource contract for some legacy system(s). Promise the TUPE staff a long contract etc.

    (2) Reduce the staff on the contract to the bare minimum, putting everyone else on the bench. It helps if any part of the process can be offshored.

    (3) If you are on the bench for too long then you are performance managed out of the business. It is your problem that IBM has no suitable work in your area/pay scale. Note that most re-assignments seem to be based on old-boy networks that the insource employee has little access to. Also worth noting that IBM is also inflexible in terms of travel, e.g. you travel in your own time to get to and from your place of work. an example given to me was a job offer in Glasgow which would mean that I was travelling on Sunday afternoon to be in the office at 9:00am on Monday and travelling Friday night to get home after midnight. It was made clear that you and your skills were 100% the property of IBM to use and abuse as they wanted. What amused me, was that so many so-called smart people were willing to give up all their spare time to help IBM make money, whilst all the time being under fear of being 'put on the bench'.

    (4) Do not invest in the remaining staff, who have 'crucual' legacy experience and are busy making up for all the sstaff lost at (2).

    (5) Expect the remaining staff to give up pay to learn useful market skills.

    (6) if staff at (5) don't do what you want then put hem on the bench see (3).

    (7) goto (1).

    I've been through the IBM TUPE process once, and saw it for exactly what it was. An opportunity for IBM to make a short term profit, sweat the assets and dispose of anybody who wouldn't play by IBMs rules.

    Luckily I managed to manipulate my way into redundancy, but I feel sorry for any IBMers remaining.

  8. Anonymous Coward
    Anonymous Coward

    ahhhh its the old

    "the beatings will continue until moral improves" school of management

    1. tangerine Sedge

      Re: ahhhh its the old

      There seems to be 2 types of IBMer. Those that live and breathe IBM and are willing to give up their entire life to IBM. And those that have been acquired by IBM and are then used and abused to be thrown away.

      The few long term IBMers I knew thought it was perfectly acceptable to spend only 1 night a week at home with their partner and children, and rarely took all their holiday. It seemed to be more important to slowly move up the IBM ladder than actually have a life outside of work. What was laughable was that these long-term IBMers were not even that well paid, and put up with all the shit.

      In my brief stint with them ( I had to do 12 months ), they openly stated that I would be receiving an "under-performing" review not based on my ability to do my existing job, but because I refused to be pushed into taking a job on the other side of the country. One which would have meant me being away from home for 5 nights of the week, and only seeing my wife and children at weekends.

      Well "fuck you" IBM, thanks for the money (it'll pay for my kids to go to university), the summer at home and a new job with a company which cares about it's staff. Incidentally, I'm also now in the position to influence contracts with 3rd parties. Guess which company is not going to win any contracts on my watch :)

      1. Herik

        Re: ahhhh its the old

        Been there, had a breakdown or two about it, dreadful environment.

  9. Anonymous Coward
    Anonymous Coward

    "...restored to full pay ..."

    ... on 1st April? Someone has already mentioned that this news wouldn't look out of place on The Onion. Making promises for April Fools day isn't going to help.

    After years of cutting cost by not replacing essential staff when they leave I cannot say that this news really surprises me.

    Anonymous because, until recently, I was an IBM droid.

    1. Ian Michael Gumby

      Re: "...restored to full pay ..."

      April 1st is the first day of Q2.

      Its no coincidence that they are doing this in Q4 and Q1...

      Many of us have escaped the borg. ;-)

      I escaped almost 10 years ago.

  10. Herik

    Manadatory training, they will still have to meet imposible utilisation targets, and the "training" will just be something they are supposed to make up in order to tick a box on an appraisal form.

    1. Anonymous Coward
      Anonymous Coward

      If it's the usual thing, the targets won't be reduced to account for the mandatory training, so you either do the mandatory training and miss utilisation targets, which gets you a poor review result and redundancy, or meet the utilisation targets by missing the mandatory training and get a poor review result and redundancy.

    2. Ian Michael Gumby

      There is no 'form'.

      At IBM you fill out your PBCs. Its basically goals your manager tells you pretty much what to write. And at the end of the year, the question is if you accomplished them or not.

      And here's the thing.

      Your utilization target should be reduced by those hours spent on training. Or rather those hours should count towards your utilization because they are company mandated. Of course... IBM won't do that...

      Then its up to your manager to rate you as a 1, 2 or 3. If you're rated as a 4, you have 90 days before you're out. And of course there can only be 1 number 1... ;-)

  11. Bucky 2

    Education benefits?

    Many large companies have education benefits.

    The catch is, you often have to walk up to your boss and ask to be sent to class, or a workshop, or whatever. Sometimes you even have to write half a page justifying how the company would benefit from you having an improved skill.

    This is called "initiative."

    What I would guess is that there's a vast tonnage of people at IBM who are lacking in this thing. This is probably a remediation effort to make up for a presumption that having that word on a resume meant the employee had the attribute.

    Those who have been keeping up-to-date feel screwed by shouldering the extra work, but I'd wager they've been being screwed by their skillless coworkers for some time now. It's now simply more obvious.

    1. asdf

      Re: Education benefits?

      I know when I was back in primary school I told the teacher someday I want to have skills in "cloud, analytics, mobile, security, and social," You know the important stuff for a society that no longer manufactures anything but bullshit and financial derivatives.

    2. Anonymous Coward
      Anonymous Coward

      Re: Education benefits?

      Get real.

      Me : I'd like some additional training in agile software development. I think it would really help improve delivery on my projects.

      IBM boss : Well, I can't send you on a training course for that, but I can point you towards online training.

      Me : thanks, I'll take a look.

      sometime later

      IBM boss : Hey your utilisation has gone down, why are you booking so much time to training.

      Me : I'm only booking 3 hours a week to training.

      IBM boss : Well, you're going to have to stop that until your utilisation recovers.

      Me : OK, I'll reduce it and learn in my own time.

      sometime later

      Me : I've leant some new stuff from my online training and I'd like to make the following changes....

      IBM Boss : We can't afford the time to implement those changes. Just continue with what you're doing, oh and by the way we had to let Jo and Bob 'go', so here are 4 more projects for you to manage.

      sometime later in review

      Me : I've been looking around for my next role. All the roles want agile experience, so none of the hiring managers will take me on. I've trained online but no-one seems to want to give me a chance because I have no real experience.

      IBM boss : Never mind that, your utilisation is poor, so I'll have to mark you down. No bonus for you, and if you don't buck up your ideas you'll be getting 'the letter'.

      IBM act just like a pimp. They hire out their employees (keeping a nice juicy cut), slap them around a bit to keep control then drop them as soon as their skills are no longer required. If you are happy to remain in an abusive relationship then good for you, but I've got more respect than that and chose to leave for much happier pastures.

  12. asdf

    for IBM party like its 1989

    Wow after the big comeback story it sounds like IBM is heading for the late 1980s again. Guess the people that learned their lesson back then have retired.

  13. intrigid

    I'm an IBM employee, and I don't find this unreasonable at all. One of the most frustrating things about IT is that we're expected to "stay current" with new skills and training, but with very little guidance on what to learn and where to learn it.

    1 day per week for 6 months adds up to about 200 hours of training. Assuming a salary of $80k, that's about $4k that an employee pays for training minus income taxes, so let's say $3k.

    $3k for 200 hours of real world, useful, hand-on training is a pretty good deal. But to say that it costs the employee $3k is quite disingenuous. That's because an employee is being trained on company time. So here's another way of looking at it: Instead of an employee taking time off work and paying for outside training, and assuming he was earning $40 an hour, he is actually *being paid* $25 an hour for 200 hours of training.

    In my mind that's a $5000 bonus, and now I'm a little jealous.

    1. Anonymous Coward
      Anonymous Coward

      And that's why you're an IBM employee. You eat this shit and believe it's good for you.

  14. The Godfather

    How high?

    Any senior executives get the letter....??

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