back to article Guess what's heading to trial? IBM and its tactic of yoinking promised commissions after sales reps seal the deal

IBM's practice of promising its sales reps commission rates it can lower at any time, particularly after a sale is finally inked, may soon face a jury. In November 2018, Jerome Beard, an IBM sales executive since 2002, sued his employer, claiming violations of California's labor laws, racial discrimination, and fraud, because …

  1. Gene Cash Silver badge

    Torch 'em

    I don't care much for salespeople, but I hope the bloke somehow ends up with 3x what he was originally owed.

    IBM needs to be beaten like a red-headed stepchild.Or maybe Ike Turner's wife.

    1. Sandtitz Silver badge

      Re: Torch 'em

      "I don't care much for salespeople"

      I don't care much for other companies' salespeople but I have appreciation for our salespeople if it means continuous employment for me and my colleagues.

      I don't care much for IBM.

    2. Anonymous Coward
      Anonymous Coward

      Re: Torch 'em

      I don't care much for salespeople

      Originally I didn't either, but I have had the pleasure of working with some good ones (translated: they negotiated properly, didn't try to stiff the client and didn't promise something we had no hope in hell of delivering) and it reset my appreciation as well as my requirements for salespeople: it is a job for professionals.

      That said, we do fairly specialised things. It appears that especially when it's about volume all those principles get thrown to the wind by default..

    3. Steve Davies 3 Silver badge

      Re: I don't care much for salespeople

      who are commission based.

      Those who are salaried tend in my experience to want to get the right deal for both sides rather than the one that gets them the highest $$$$ in income.

      Naturally, YMMV.

      In this case, IBM (like Oracle does even better) can't have their cake and eat it without giving their salesdroids what they promised in their employment contracts.

    4. BebopWeBop Silver badge

      Re: Torch 'em

      What do you have against red heads or Tina Turner?

    5. PassingStrange

      Re: Torch 'em

      If he ends up with more than what IBM claims he's owed, we'll never hear of it. IBM doesn't let these things go to court once it knows it's likely to lose.

      1. Pascal Monett Silver badge

        And it will be able to continue stiffing its salespeople that are not under contract, but are definitely under contract to respect California law.

        Frankly, this is one case where, if I were judge, I would forbid a settlement. It it is a contract une law, then its terms are binding. That should be the goal of the judge, and allowing a company to settle just keeps those waters muddied.

        That is not acceptable.

    6. Jason Bloomberg Silver badge

      Re: Torch 'em

      I don't care much for salespeople

      I've experienced both kinds. The honest and decent who sell what they have to offer, won't dress it up, nor pretend they could or will deliver more than they can, will be completely open and transparent about everything. They are a credit to themselves, the companies they work for, and appreciated by the customers they sell to.

      Then there's the lying scum.

      And then there are those companies who are happy to have such lying scum working for them.

  2. A-nonCoward

    Up the Organization!

    That was a fabulous book by a one Robert Townsend, 1970s or so.

    I wish I ever had had a boss like him... Sigh.

    Anyway, quoting from memory of something read 30+ years ago, "Should you cap sales commission? if you ever have a salesman who is making a fortune, the idiots from accounting (Simon would call those beancounters will try to convince you to reduce that guy's take-home percentage. Don't. If he's making a fortune on commissions, that means he's making several times that fortune for you, bubbele. Nothing will hurt morale among those making an effort for you as much as twisting the rules against your best performers"

    Actually, knowing what I now about corporations and bosses, Up The Organization! should be in the fiction section of a library.

    1. don't you hate it when you lose your account Bronze badge

      In a previous life

      I worked in sales. One company capped commission once you hit 125% of target. Made no sense to me but it did mean I worked plenty of 2 week months and then just tossed it off for the rest.

      1. Chris G Silver badge

        Re: In a previous life

        A few decades back I worked for a well known copier company, if a new client had more than three sites for installations under one contract the sale was considered to be under the national sales department, but they were supposed to pay you a percentage of the whole.

        What they wiould do if you hooked a large multi site contract was to break it down into two site contracts or some other trick to make sure the best you would get was an envelope with a couple of Debenhams vouchers in it.

        The beancounters would try to find a way to reduce commission on every sale anyway.

        Shit company and shit job! I quit and got a degree in robotics instead.

        1. Shooter

          Re: In a previous life

          I now work industrial service rather than IT. For a few months I was sat at the Spare Parts sales desk while I was on light duty status (recovering from an injury). When I was told that I had a budget to meet, my first thought was "How can that be? I have no control over how many parts a customer might need and no say regarding the prices". And my job didn't involve calling up customers and flogging parts; I was essentially just an order clerk.

          Whatever. Not like I was going to make a career out of parts sales...

          So about a month into that role, I get a Request For Quote from one of our biggest customers for a huge number of various widgets. I do the research, find the appropriate part numbers, pricing, shipping, etc.; and get the order. It took most of a week to get it all sorted, but blew away my budget for the month.

          I proudly went to my temporary boss with the good news that I had exceeded my budget.

          "That's not Spare Parts," quoth he. "That's Components".

          "Huh? How can that be? I sold the same stuff last week (in much smaller quantities, to different customers), and it was Spare Parts then!"

          "Once you exceed X number of dollars, the sale moves from the Spare Parts budget to the Components budget, regardless of what parts they are".

          I asked "Well then, who's the Components salesperson? Next time this happens I'll let him spend *his* time on figuring this all out".

          He just smiled and said, "Me. Thanks for helping out my bonus".

          That's when I discovered that "bonus" is spelled "bone us" at that company!

          1. Anonymous Coward
            Anonymous Coward

            Re: In a previous life

            and people wonder why assault in the workplace is rising.

    2. Tim Worstal

      Re: Up the Organization!

      Up the Organisation is indeed a superb book. One of the three management books anyone trying to run anything must - simply must - read.

      The other two are The Peter Principle and Parkinson's Law.

      1. Robert Grant Silver badge

        Re: Up the Organization!

        Agree on Up The Organization! and The Peter Principle. Sounds as though I should get the 3rd one.

      2. Anonymous Coward
        Anonymous Coward

        Re: Up the Organization!

        Of a more recent vintage, I highly recommend Bullshit Jobs. It will explain the continued existence of the pen-pushers, box tickers, flunkies, and other useless warm bodies who contribute nothing of value while subtracting from your productivity.

      3. A.P. Veening Silver badge

        Re: Up the Organization!

        There is a fourth, Go Rin No Sho, aka The Book Of Five Rings by Mijamoto Mushashi. Japanese managers swear by it.

        1. Richocet

          Re: Up the Organization!

          I read the shorter version "No Sho" - I do not recommend it to help with career progression.

      4. A-nonCoward
        Pint

        Re: Up the Organization!

        @Tim,

        I indeed cut my teeth on those three books, my teens, learning English by reading (I have a terrible and most peculiar pronunciation that no one can place - obvious, I made it up as I learned new words...)

        A big plus when visiting my future mother-in-law for the first time was noticing she also had all these three books in her library, this was my kind of people!

        Reading those books when way too young and innocent gave me a twisted view of the world. Things make sense, in those books (add to those the Whole Earth Catalog, I can quote Tongue Fu stories also without having seen them again the last 30 years). Neither was really clear about the Facts Of LIfe that I read about, over and over from fellow commentards. Sigh. Good memories. And early pint for y'all.

  3. Anonymous Coward
    Anonymous Coward

    Nothing new here.

    I was under one of those 'sales' contracts. Or rather it was a commission plan where you were paid a base salary that was a portion of your compensation. If you hit 100% of your target, you hit your salary. For every percentage point of your commission you hit over your plan you were paid 4X. So if you hit w 125% of your commission, you would double your salary. Commission paid out every qtr the following qtr.

    And of course they added a note that they had the right to adjust your commission.

    They are notorious for screwing w your commissions.

    IBM seems to have a bit of their bean counter tricks coming back to bite them in the ass.

    This and their 'restructuring' to fire their older workers.

    1. Anonymous Coward
      Anonymous Coward

      Re: Nothing new here.

      It's weird, screwing with commission and sales targets seems to be the default for companies.

      Can't fault sales people for them trying to get creative - loyalty goes both ways.

  4. Gil Grissum

    I hope IBM has to pay and pay, here, and elsewhere. They deserve it. They kept on paying Ginny Rommetty, while losing money. WTF??

    1. Anonymous Coward
      Anonymous Coward

      IBM is not losing money. Revenue and profits may be less than in the past, but IBM is still making $$$.

  5. Yes Me Silver badge
    FAIL

    The good old days

    Up to and including the Gerstner regime, IBM played fair with its employees, even when forced by circumstances to send some of them away. Since Gerstner left, not so much. The revenue numbers and the share price graph show the results.

    As everywhere, the rot set in when Personnel was renamed Human Resources.

    I hope Arvind Krishna understands this; otherwise the company is doomed.

    1. BebopWeBop Silver badge

      Re: The good old days

      The same with many companies - HP, pre and post the arrival of Fiorina was the same.

      1. wheelbearing

        Re: The good old days

        Totally agree - was in the sales division of a blue chip tech co in the 90's/2000's, the overachieving sales guys regularly got stiffed for their expected bonuses after all the numbers had come in at year end.

        Noticable that the further up the ladder you were, the less likely you were to get stiffed. You hardly ever see main board directors and upward in any big corp getting stiffed for their bonus - regardless of how badly they've screwed up the business.

        .

    2. Lord Elpuss Silver badge

      Re: The good old days

      ^This.

      I worked at IBM in the Gerstner years; it was a fabulous company. Even when it hit rock bottom in the early 90s, everybody (employees, managers and clients) wanted them to get back up on their feet.

      Palmisano continued the journey to a pure bottom-line driven business, and Ginni rammed the final nails into the client service coffin.

  6. Anonymous Coward
    Anonymous Coward

    Just SOP

    I used to work a for a manufacturer of dictation equipment. I was a service guy. It seems like every time a salesperson got a large contract. They were gone in a month and never got their bonus.

    1. Anonymous Coward
      Anonymous Coward

      Re: Just SOP

      In a previous job, office rumour was a salesman managed to shift an entire warehouse of obsolete kit for enough £millions to keep the company alive for a few years. When they decided not to pay the agreed commission the salesman walked and 'mysteriously' the sale got cancelled. The company didn't last long after that.

      Pissing off people pulling you out of the mire is epic mismanagement.

  7. Anonymous Coward
    Anonymous Coward

    IBM is shooting themselves in the foot and are too stupid to understand that.

    Sales people, with the manufacturing, create every cent of the revenue company makes, while beancounters and HR *are nothing but expenses*. Worth zero. That's why they actively try to sabotage every other department in almost any company.

    Mucking with sales people commissions (i.e. stealing them) means they leave and then you don't have sales people. IBM being IBM can sell something without them, but not much.

    Also this 'non-contract contract' is blatant asshattery and a jury will not only say so, but punish IBM for that. Not only for this person but *everybody* with similar "contract".

    1. Richard 12 Silver badge

      IBM will desperately try to settle

      Because if it gets to court, not only will they lose but the precedent will be seriously expensive.

      I really hope the plaintiff has the guts and the resources to take it all the way.

      Sadly, as it's the USA I doubt it. Best justice money can buy...

      1. Mark192 Bronze badge

        Re: IBM will desperately try to settle

        He's set for life if he settles, bankrupt if he loses. He'll settle.

        1. iGNgnorr

          Re: IBM will desperately try to settle

          "bankrupt if he loses"

          Not necessarily. He may be on a no win, no fee deal with his lawyers. Given how IBM tends to win cases, that would normally tend to suggest it is unlikely, however, in this case, IBM have lawyered themselves in a bind: they are in trouble either way, so I'd say there's a good chance he (personally) has nothing to lose.

          1. Palebushman
            Holmes

            Re: IBM will desperately try to settle

            The 'No Win No Fee' is a two edged sword that has a sharper blade on one side that the other. Similar to the vein of this thread, just make sure you have a 'Signed Contract' with your 'No Win No Fee' lawyers 'Firm' as to what percentage they will take of your winnings. Chances are you will go shopping for a less greedy firm.

    2. John Brown (no body) Silver badge

      "IBM is shooting themselves in the foot and are too stupid to understand that."

      They have probably calculated an acceptable level of collateral damage. Constantly shooting the either or both feet isn't an issue. They are gambling that most of the time they'll miss or just graze and it won't hurt too much.

      If they end up settling out of court, they'll be enforcing NDAs and repeating the gamble again and again.

      1. A.P. Veening Silver badge

        Somebody should file to have those NDAs declared unlawful. Something like that already happened here in the Netherlands with NDAs hospitals forced victims (or their heirs) of medical mistakes to sign. All those NDAs are now null and void and so the settlements are public knowledge as well as all mistakes and cover ups.

        1. Hull

          Hospital malpractice NDAs unlawful?

          Great idea, we need that here.

          Since Dutch is sadly not among my languages, I have trouble finding info about that declaration. Could you kindly provide some links?

  8. Mike 140

    Once upon a time ...

    Way back in the mists of time, when IBM sold typewriters and big computing things, the salespeople were lionised. If they made a fortune on commission, that meant that IBM made n x a fortune on those sales. Praise and adulation followed.

  9. IGotOut Silver badge

    Ah sales....

    ...the only job you get paid extra for doing the work your paid to do.

    <Edit>

    Went on rant about how sales get the bonuses and everyone else carrying them got fuck all, but you all know this anyway.

    1. ToddRundgrensUtopia

      Re: Ah sales....

      You can always change your contract to a performance one, that means you have a chance of losing your job if you have a poor quarter? Nah thought not

  10. ExampleOne

    > His portion of the revenue, it's claimed, was about $12.6m, for which he was to receive about $1.4m. Instead, IBM decided the applicable commissionable revenue was only $2m, for which Beard was to receive about $230,000, roughly 15 per cent of the expected amount.

    So the disagreement here is not about them trying to change the commission rates, it is about how much of the sale revenue is in scope for commission?

    1. Insert sadsack pun here

      Well, that and the fact that the two white guys mysteriously got paid in full.

      1. ExampleOne

        On “similar” deals. Without more details on all three details, who was involved, and how the revenue was assigned, it is hard to comment.

        Note: I am not saying IBM are squeaky clean here, just that the dispute appears to hinge less on “varying the contract” and more on what revenue is in scope for the commission: IBM are not actually trying to change the percentage involved.

        For example, if the commission is on hardware sales, and a large part of the deal is actually support or software, does it count as a hardware sale?

  11. Anonymous Coward
    Anonymous Coward

    No commission sales in a small/big order situation.

    Anonymously due still living persons. One major engineering company I worked for in sales, tried this 'we have right to adjust commissions ploy'. I refused all commission and set a salary for them to meet or reject. They met it. Reason: clients orders were either low thousands of currency (majority of orders) and a few were big millions of currency. If a big order appearing to be in the future, most sales persons stopped serving the small order companies and drove rapidly to being an "I only attend to this big order culture". The small orders kept the company alive, not the few big bucks ones. After much argument with the 'accountants/personnel' department folk I presented my case to a director (who had been the senior commercial manager for a much larger company). He agreed, all sales folk became salaried with no commission or bonuses, except for stock we wanted to clear from warehouse, when commission was a fixed percentage of amount paid by customer, and sales person had authority to take order at any level above scrap value. Sales persons mostly worked in harmony with customers, even in a few cases refusing orders as our competitors had better technical solutions for the clients for some cases, that almost welded the buyers to our company. It was a good approach to keeping the company in business, with my edict "the ONLY job of sales persons is to keep other persons in work, both in our company and the client's company".

    1. Sam not the Viking

      Re: No commission sales in a small/big order situation.

      We used to have 'Technical Sales' salesmen; jobs might take years to come to fruition. So salesmen were salaried and we office-based technical guys supporting sales were happy to assist and visit customers, consultants, suppliers etc. to support the sale.

      Change of management, new sales crew, commission-based, who were 'go-getting' but knew nothing about the product. We had hundreds of enquiries for products we didn't make and zero for the long-term, difficult (but high-margin) contracts. And a set of pissed-off designers who resented being asked to help out.

      A 'them and us' situation where all lost out.

      Masterstroke. I left.

  12. adam payne Silver badge

    IBM will continue to fight these baseless claims in court.

    If they were baseless they would have been thrown out already, wouldn't they?!?

  13. This post has been deleted by its author

  14. a_yank_lurker Silver badge

    I've Been Mangled

    Somehow claiming something is both a contract and not a contract is a shysterly way abusing staff. Hopefully the court will hammer I've Been Mangled as it is either a contract or not one at all times.

    1. Paul Shirley

      Re: I've Been Mangled

      Maybe their quantum computer research finally paid off and their sales team is in a quantum superposition of contract/no contract?

      1. Anonymous Coward
        Anonymous Coward

        Re: I've Been Mangled

        Schrödinger's cat is dead.

        1. Michael H.F. Wilkinson Silver badge
          Happy

          Re: I've Been Mangled

          Schrödinger's cat is dead? Maybe, maybe not, but Schrödinger's contract might be headed for the chopping block

  15. amanfromMars 1 Silver badge

    IS Extreme Fundamentalism ....... Exploring and Imploring Ethereal Existentialism

    Is IBM now just as the Archetypical Mythical Mystical Unicorn? A Tried and Tested and Trusted Established Source of Surprisingly Progressive Feeds.

    Does anyone have a handle on any of their distant future plans? What they wanna be, and why, and where, and with whom and what assisting in the how for Virtually Live Operations in the Here and Now . Or are they as Imperial Secrets Securely Shared and Safely Stored, although as surely all know, nothing is ever safe from security breaches/information leaches/intelligence overloads. ...... pure plain common sense. Secrets cause conflicts and create division, competition and opposition with the toxic peddling/pumping and dumping of incomplete pictures missing all the really good valuable bits. The result is lucky to be CHAOS with Clouds Hosting Advanced Operating Systems whenever IT can easily also Trend Towards AIMADness ..... Advanced IntelAIgent Mutually Assured Destructions.

    Hence both the incredible value and inherent danger in having secrets reliably insecurely stored. I was promised they be safely secured is the absolute best that any client can claim a belief in ...... whenever all is gone and lost.

    1. Cliff Thorburn

      Re: IS Extreme Fundamentalism ....... Exploring and Imploring Ethereal Existentialism

      All very well and good amFM, but what does all that have to do with I.B.M? ...

      Unless of course, I.B.M is an acronym for ‘They Be M ......’

    2. Anonymous Coward
      Anonymous Coward

      Re: IS Extreme Fundamentalism ....... Exploring and Imploring Ethereal Existentialism

      "Do any of them have any controls to command?", possibly rhetorically asks amanfromMars @ https://amanfrommars.blogspot.com/2020/04/200412.html and getting the possibly rhetorical and semianonymous response (-: at https://forums.theregister.co.uk/forum/1/2020/04/10/ibm_practice_of_capping_sales:

      Live version, because: age, sex, race, occupation and planet may be different from filmed in amusic video:

      https://youtu.be/43S3lq1pmjQ

  16. trevorde

    Money, money, money!

    One of our friends ran a very successful company. She used to agonise about how much she could *increase* her salesman/woman's commissions. She knew the more money they got, the more money she got. Everyone wanted to work for her.

  17. Anonymous Coward
    Anonymous Coward

    I wonder if IBM's lawyers are H1B hires?

    ...something tells me "no".

    IBM used to be the largest single employer of legal counsel worldwide, back in its mainframe heyday.

    Then again, they used to earn something like 60% of all revenue in IT for decades.

    How far the mighty have fallen.

  18. Canadian Guy

    There is no I in Team

    But there is in Commission!

  19. Anonymous Coward
    Anonymous Coward

    There's always something hidious buried in the T's and C's!

    A previous employer had a link to T's and C's that would vary so frequently it was impossible to keep up, but essentially it came down to "hey, we're gonna tell you you'll make loads and then stiff you on the commission, if one deal is worth more than 50pc of your commission we don't have to pay and as soon as you get over 100pc we don't have to pay". Funnily enough the average tenure of sales staff there is about long enough to do a sales cycle and not get paid commission... meanwhile they heammorage customers becuase the sales teams are forced to sell things that positively impact the ebitda rather than solve a business problem...

    So the behaviour this encouraged was for canny sales to dicount the heck out of a deal to ensure it was worth less than 50pc of your commission, make sure you got a massive kick back from the channel, then when you got to 100pc just take the rest of the year off but make up random pipeline to make snr leadership think there were deals to be worked on whilst taking your mates (or the channel you got a kickback from) out to multi-thousand dollar dinners on expenses pretending its the CXOs of whichever company the boss isn't connected to on LinkedIn (probably costing the company more than just paying fair commission!).

    "Compensation plan drives behaviour".

  20. Anonymous Coward
    Anonymous Coward

    So yet again, IBM stiffs the staff that do the work so they can put more in the managements pockets - business as usual for Instant Bl**dy Muddle then

  21. low_resolution_foxxes Bronze badge

    Hmm, it's a tough call.

    Many sales staff are.. garbage. Pathological liars, ignorant of reality, causing immense problems for the tech teams wherever they go. Ignorant of the product and/or theory. Refusing to document leads, contacts and knowledge (their info makes them more valuable). You may as well send the cleaning lady.

    Then again, I've worked with many sales staff who are methodical, technical and honest, even to the point where they trained me up to understand and take over in their absence. Working 12 hour days, with 20 years experience at the same company. Actually irreplaceable.

  22. Reg Reader 1

    IBM has nothing to worry about. They'll get it to the Supreme Court as fast as they can and if IBM have been "generous" to the Drumpf's the case will settle strongly in IBM's favour.

  23. Mike 137 Silver badge

    "... with regard to Section 2751, it has a contract, but no contract for any other purpose"

    Similar to "employment for tax purposes but not for employment rights purposes".

    I wonder who advised HMRC on IR35.

    I once consulted with a company that had a restrictive policy that stated "this policy is binding on you but not on us". I pointed out that this would be indefensible in an employment tribunal, but they were not amused.

  24. fredesmite Bronze badge
    Mushroom

    Did he join the law suit for being pink slipped ?

    https://www.theregister.co.uk/2019/09/23/ginni_rometty_ibm_email_age_discrimination/

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