back to article What legacy is IBM really shooting for? Cheating its own salespeople out of millions? Here we go again, allegedly

Yet another IBM salesperson has sued the venerable computing biz for allegedly capping their sales commissions after agreeing not to do that. A lawsuit, filed Wednesday in a US federal district court in San Francisco by security client executive Bruce Reingold, claims Big Blue has committed fraud and violated California law by …

  1. ecofeco Silver badge

    Fuck IBM

    Hard.

    1. Blackjack Silver badge

      Re: Fuck IBM

      It has got to the point that people who work for IBM should film and record any conversation with their bosses.

      1. EveryTime

        Re: Fuck IBM

        Film and record conversations?

        That doesn't trump a paper contract. Which they had.

        IBM claimed that was only a contract when it came to satisfying employment laws, not when it came to being paid. That they got a lawyer to make that argument, albeit in disconnected cases, shows that IBM cares cares more about per-quarter financials than long term business and reputation.

        1. Blackjack Silver badge

          Re: Fuck IBM

          Maybe; but it proves they are a lying liar that lies and so it ends making them have zero trust.

      2. Anonymous Coward
        Anonymous Coward

        Re: Fuck IBM

        Trust me - we are and your right!

  2. Aseries

    Corporate Arrogance

    This is exactly the sort of corporate arrogance that is epidemic in the USA and I believe to be encouraged by the Trump administration if not by policy then by example.

    1. Why Not?

      Re: Corporate Arrogance

      Unfortunately for your point the alleged misbehaviour started way back in the Obama Presidency 2013 - 2015. So the orange one however foul cannot carry the blame for this kind of skullduggery.

      You devalue your point when you incorrectly drag your political opinions into it.

      Indeed it seems attempts to stop it were put in place in 2018 under Trump. Frankly the Dunce probably has nothing to do with it, just the accountants & manager trying to make their bonuses bigger by ripping off other staff. Similar was happening in the 80s, it was part of the American dream.

      IBM and their peers seem to have a history of this sort of mistreatment of their staff and customers, you would think they would have gone bust but they are just too big, for the minute.

      We can but hope the next time these big organisations get "rightsized" the Accountants & managers get let go. Fat chance.

      1. Bob Vistakin
        Facepalm

        Re: Corporate Arrogance

        IBM has a history of being evil?

        https://en.wikipedia.org/wiki/IBM_and_the_Holocaust

        1. IGotOut Silver badge

          Re: Corporate Arrogance

          "IBM has a history of being evil?'

          As were many US, German, Japanese Italian and even British companies.

        2. Anonymous Coward
          Anonymous Coward

          Re: Corporate Arrogance

          They should have been nationalized for that.

      2. Anonymous Coward
        Anonymous Coward

        @WhyNot Re: Corporate Arrogance

        Amen!

        Unfortunately here if you defend Trump, you run the risk of down voting even if you're actually citing factual evidence.

        But I digress.

        The commission letter is in fact a contract. However, they do stipulate that they can alter the terms at any time. So if you're crushing your sales quota, you can end up getting a new letter raising your quota.

        I've been in the situation where one deal was pulled from me and credited to another person. Nothing I could do because I sold his team's services and I was already over 125% of quota. Back then it was called the eagle plan where you got 100% of your base if you hit 100% of your quota. Then for every percentage point over quota, you got 4x multiplier. So you could double your salary at 125%.

        With respect to IBM's legal eagles... they aint. I talked to one about some contracts we had to sign. He said take it or leave it. No striking unenforceable language. They leave it in for the rubes who can't pick up a Blacks Law Dictionary or google relevant legal clauses. Its when they make you sign a second contract which has certain clauses that you have to worry about.

        I still have friends within IBM. They still make Billions, but the are slowly rotting out.

    2. Something Anything

      Re: Corporate Arrogance

      How is this Trumps fault?

      1. Lorribot Silver badge

        Re: Corporate Arrogance

        It is not Trumps fault but he is the embodiment of the arrogance and greed of these companies and the way US comapnies have evolved to satisfy investors rather than any higher ideals they may start with..

        They care little for staff or customers as they know it can be hard to move away, especially with software, but ultimately the market will see the less nimble die, IBM is stuck in rut and has been papering over the cracks for years, selling its organs to pay for its investors habits, its just taking a long time for it to die.

        US is littered with these sorts of companies Oracle, Google, Appple, Adobe etc. All start of with good intentions but fall to the corporate money men once they dominate. Some fall back, change direction only to rise and start the cycle again such as Microsoft, others fail and are are bought or merge like the US car industry, DEC, Compaq.

        1. Anonymous Coward
          Anonymous Coward

          Re: Corporate Arrogance

          Your TDS is showing.

          This stuff has been going on for decades.

          Note: They don't claw back on all of the deals.

          Just some.

          Part of the problem... you get a large customer who asks for discount on top of J level discounts.

          Some of them get it too. (Depends on the quarter and how big of an IBM customer you are...)

          So now you do a big deal... but margins are razor thin. Adding in your commissions, the deal is done at a loss. (Not just your commissions but the entire team's commissions)

          So what is IBM supposed to do. Honor the commission letter?

          The truth is that IBM blows. But if they were smart, they would include a calculator on margins so that even if the deal gets approved, you don't get your commissions. That said, they would then have to reward you some other way like lowing your quota and not counting this deal as part of the revenue.

    3. a_yank_lurker Silver badge

      Re: Corporate Arrogance

      The politicians on both sides have been 'bought' by the major corporations because they run in the same circles and know each other. How well they know each other individually varies. So there is little interest by the pols to go after their drinking buddies unless someone's antics brings too much attention to all (think Epstein and all those whose names have come up in the saga). The upper managelment of Itsy Bitsy Morons is in this group. So as along as the mistreatment stays generally on the back pages of the various rags, if it is mentioned at all, there will be little pressure for the manglement to be ethical.

  3. Anonymous Coward
    Anonymous Coward

    IBM is the only company that used to make salespeople sacrifice 20% of their base salary when you move into a sales plan to artificially inflate the incentive pool...half the sales people dont know how their incentive work

    1. Anonymous Coward
      Anonymous Coward

      My heart bleeds pumpkin custard...

      Never having worked in Sales, I don't have a problem with the idea of a proportion of their salary being dependent on their actually doing any work. Given some of the horror stories on El Reg concerning sales droids promising deliveries of products that haven't even been put together when the sale is made, my sympathy for the group is somewhat lacking - especially when they are being paid more in one year for schmoozing clients than many of the people producing the actual product the droids are pushing will see in their career.

      Now what we need is a way to incentivise beancounters to find ways bring money in for their employers rather than increasing the profit margin simply by cutting costs, which seems to be the only thing some of them seem able to do.

      1. Woodnag Silver badge

        Never having worked in Sales?

        You've not worked much with good sales people either, I suspect. For every commercial (maximum profit oriented) outfit, it's the key to success. Good sales people win business for mediocre products by relationship. Good marketing/business people work with sales to ensure that the market leading products aren't under-priced.

  4. pavel.petrman

    Savings

    It looks to me that when one works for IBM one should save up for a lawyer instead of pension. Does the USA tax system contain a provision to deduce this from your tax?

    1. Doctor Syntax Silver badge

      Re: Savings

      "It looks to me that when one works for IBM one should save up for a lawyer instead of pension."

      It looks to me that when one works in sales at IBM once one reckons that the entirely non-existent cap on commissions has been reached the best thing to do is go on holiday for the rest of the period or take on a side-hustle and concentrate on that.

    2. Anonymous Coward
      Boffin

      Re: Savings

      I know you were being sarcastic... but no, legal expenses are not pre-tax dollars.

      You can sue someone over a contract dispute, lets say $50,000.00 USD.

      You end up spending $45K to win the case. You net $5K and can't take the $45K loss.

      This is why you see a lot of people getting screwed by jerks for 10-15K because they know that it will end up costing you more to win and its cheaper to walk away.

      1. Anonymous Coward
        Anonymous Coward

        Re: Savings

        That's actually not true. Legal expenses frequently ARE tax deductible.

        https://www.nerdwallet.com/blog/taxes/can-you-deduct-legal-expenses-on-your-taxes/

  5. Ozan

    Thomas J. Watson probably spinning in his grave.

    1. spold

      ...you know that is what powers IBM cloud datacentres right?

  6. trevorde Silver badge

    Truly uncapped commissions

    One of our friends owned a company and used to fret about how to give her sales people *more* commission. She knew the more they made, the more she made. Sales people from across the industry were lining up to work for her.

    1. Anonymous Coward
      Anonymous Coward

      Re: Truly uncapped commissions

      Is it still successful ?

    2. IGotOut Silver badge

      Re: Truly uncapped commissions

      The problem with that is you then can get dodgy dealings.

      PPI ring a bell? Double Glazing salesmen? Car Dealers? Solar Panel Installers?

  7. Anonymous Coward
    Anonymous Coward

    No commission sales

    I worked for and was then a customer of a computer company who decided to stop awarding commission on maintenance contracts as 'the customer has to have them so there's no need to reward sale staff.

    Account managers stopped talking about maintenance during sales negotiations just pushing the initial warranty period and stopped getting maintenance contracts signed. This caused me a problem a couple of years later when I was working for an end user site and had a very rare disk failure. When I put the call in it turned out there was no maintenance on the disks. I got the repair performed and negotiated a maintenance agreement for that year but refused to pay maintenance for earlier years, partly because it was not my responsibility and partly because I didn't have the budget. I'm sure most tech support managers made the same deal. It must have cost the company millions of pounds in lost income which would have been pure profit as the had been no maintenance calls for these devices (the maintenance contract / warranty status was checked when you logged a fault)

    1. Why Not?

      Re: No commission sales

      Sensible manufacturing companies see maintenance as the sale, the goods are a commodity all their competitors will offer those at their best price and many will win because they have no support infrastructure. Spares prices are set by the seller so maintenance mark ups are much larger.

  8. GreyWolf
    Big Brother

    IBM's Legal Policy

    IBM has always since the 1960s had a huge and brutal Legal Department, one of the most important in the company, with one of the biggest budgets. Even the US gov thought twice before suing IBM. The rest of the company got used to never having to fight a lawsuit, so of course they started thinking they could do exactly what they wanted.

    So it's good that they are now having to fight to cover their asses. Maybe the leadership will start adding up the cost of all these lawsuits and seeing also what the cost is in lost business. [Hey, I can dream, can't I?]

  9. Alan Brown Silver badge

    The same IBM

    That sold tabulating equipment to the Nazis - DURING WW2 - in order to facilitate the holocaust

    Yeah, nothing would surprise me.....

    1. IGotOut Silver badge

      Re: The same IBM

      As I alluded earlier..

      Barclays Bank, Ford, GM, Coca Cola, Porche for a examples

      Or how about BASF, Bayer, & Agfa formally know as IG, the makers of Zyklon B?

      1. jason_derp Silver badge

        Re: The same IBM

        "...Ford, GM, Coca Cola, Porche... "

        The way the world is now, if i was Ford or Coke I'd be more worried about being associated with IBM than with Nazis.

      2. James Anderson

        Re: The same IBM

        Not to mention ex President George Bush's dad who ran a bank dedicated to managing the National Socialists funds in the U.S.A

        1. Yet Another Anonymous coward Silver badge

          Re: The same IBM

          The irony now being that I ride a BMW bike, a company that literally ran concentration camps, but I assume anyone riding a Harley is a Nazi

  10. Robert Grant Silver badge

    No-one got fired for selling IBM

    Until now.

  11. Big_Boomer Silver badge

    Work elsewhere!

    IBM seem to be determined to deter the best sales people from working for them. Short sighted greedy morons probably to blame, as usual.

    The best sales commission system I have worked with (I'm not in sales myself) had unlimited commission on all new sales and repeat sales, but the commission on support contracts was a fixed percentage and could not be discounted. Because of that Support was well funded and staffed and generated a small cash profit as well as many happy customers which in turn resulted in repeat and additional sales both with the same customer and by word of mouth. Prior to that the sales people often discounted support contracts resulting in us being told that support was a cost centre.

  12. Anonymous Coward
    Anonymous Coward

    Commission should be paid on success not initial sale.

    In my experience, almost every major IT solution I worked on failed. Not because of technical issues, or bad customer service, but because the money grabbing whores in sales do whatever they can to get the sale and their commission, before moving on to the next job. They then leave the actual people delivering the solution to work 70 hour weeks to try and meet the agreed solution. When time runs out and too many corners cut, the customer bails.

  13. GlasshalfHull

    Good sales governance prevents sales people closing deals that won't deliver. Also, paying commission based on billed margin rather than solely on revenue at the time the contract is signed. Make sure there is a comprehensive contract and that it meets a well publicised clean order process; preferably one that doesn't keep changing on a whim. Also, sales people are employed to win business and not to deliver it, so don't keep going back to them with questions that are already andwered in the project docs or sales pack because your team "don't speak to customers", or ideally, read all the paperwork.

    1. Doctor Syntax Silver badge

      OTOH they need to be able to answer questions before the contract's signed so read all the paperwork and decide on questions before then. There have been times when I was at least as familiar with the details on the quote as the salesman, maybe more so.

  14. Runningonempty

    Running into the ground

    And people wonder why the top line has been going down for some time ; since Sam essentially !

    This must make great sense to the accountants .... substitute withheld commissions for profits .

    This IS "working as designed" .

    I expect a re-run of when IBM came a few weeks from not being able to pay salaries .

  15. DaGriff

    Meet the new Boss, same as the old Boss

    I have seen this type of behaviour in all sizes of corporations in the USA for over thirty years. It is a lack of common-sense and leadership. If a salesman/person/droid makes an unexpected, or huge sale, they cap and then in some cases also increase the quota for next fiscal even if said sale only happens because of an equipment renewal which happens every five years.

    Sensible leaders would say: "You've made a huge sale, here is a huge check/cheque. Please do it again and I will give you another huge check/cheque." If they did that - who loses?

    1. Chris G Silver badge

      Re: Meet the new Boss, same as the old Boss

      I worked for a US copier company in London many years ago, I walked into the office of a potential customer and their head office people happened to be there.

      The upshot was they wanted an initial ten machines with the potential for more, overnight the National Sales threshold was changed from a dozen machines down to ten so I lost the chance of making anything more than a £10 gift voucher for passing on a lead .

      I went back to the customer and told them what my bosses had done and recommended a mate who worked for a different company as he could supply them with comparable kit at a better price and maintenance deal.

      I left the company and split the commission with my mate.

      If my company had recognised my work and didn't try to fob me off with ten quid, I may have gone with it but treating me like a pleb lost them the sale which ultimately turned out to be dozens of machines with a nation wide company.

  16. Lorribot Silver badge

    US mega corps have forgotten about their customers

    IBM is a wanning star. they have rediculous licencing requirements and software that is just awful to even install let alone use, their support is woeful and their engineers are at a bear minimum in competance. They have sold off all teh bits of teh business that they could and now are left with services that are run on a shoestring budget to maximise returns to investors. They rely on long term support contracts for over expensive products that have no new sales.It treats its staff and customers with a disdain bordering on the arogant expectation that they should be greatful they have a device with IBM on it.

    Any business thinking of buying IBM should just walk away to anywhere else (except Oracle).

    IBM will likely crash and die in the next 5-10 years and the IP will bought by Oracle or Huwawi. Oracle will keep going but is spiralling down the same rabbit hole of oblivion.

    1. GreyWolf
      Big Brother

      Re: US mega corps have forgotten about their customers

      "Oracle will keep going but is spiralling down the same rabbit hole of oblivion."

      We all wish.

      But unfortunately, Oracle has been spinning down the rabbit hole for decades now, yet is still with us.

      I'm thinking that Oracle must be a cockroach.

  17. Henry Wertz 1 Gold badge

    That's crazy

    That's crazy, I just can't imagine presenting commissions as being uncapped then capping them. After all, the person making what are (presumably in their view) excess commissions is making the company that much more in contracts they may not have gotten otherwise. Sounds greasy to me.

    1. Yet Another Anonymous coward Silver badge

      Re: That's crazy

      > the person making ... excess commissions is making the company that much more in contracts

      But those sales are next quarter, the commission is paid out this quarter - your job as an executive is to make as mush as possible this quarter, even if it destroys the company next quarter.

      That's the point of capitalism apparently - longer term planning is communist

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