Layoff Underway at IBM
spectrum.ieee.org
spectrum.ieee.org
Keep in mind IBM is an east coast company, not a more laid back west coast company. That might have something to do with it (or I'm just very biased).
> If you want me to do things only for ROI reasons, you should get out of this stock
http://www.theguardian.com/environment/2014/mar/03/tim-cook-...
Do you mean "IBM has a finite amount of money and can therefore is subject to the realities of business"?
I mean, what do you expect? Even if IBM was the most altruistic company in the entire world, they would still have to make concessions to the fact that it costs money to employ people.
This sounds like middle management is scrambling to meet budget objectives and they're throwing people out based on financial burden rather than actual performance issues.
Yeah I get that people looking to retire and collect benefits are a significant cost centre, but in that case the company should just make it official policy that minimal benefits are offered (or no benefits at all) instead of pretending they're actually offering an attractive place to work.
http://www.reuters.com/article/2014/10/28/us-ibm-buyback-idU...
And here they are now!
I recognize that sometimes companies have to fire people to stay afloat.
You've read way too much into what I've been saying. I'm simply saying the IBM execute leadership is not the ones making concessions despite being largely responsible for the mess.
I mean, we can call this "not playing a traditional ownership role" but I can't shake the feeling there's something deeply wrong with that. We're buildings piles of layers of abstraction and the most important people are the ones who are most separated from you, don't know or care about you at all, and yet they "own" you and can tell you what to do. How on Earth one is supposed to run a company like that? Also, didn't similar abstraction cause the housing market collapse in 2008?
> This is why the well run companies tend to be those where the founding family still holds a large block of shares -- they tend to think long term.
Yes, I've observed that too. That's why I tend to believe, say, Google when they talk about pro-bono plans much more than any other IT corp. That's why I believe Musk can and will pull off things he says while his competitors will lag behind - because he both has a vision and holds SpaceX in iron grip. He doesn't have to follow the market if he choses not to.
Technically yes. It's actually 22 seconds:
http://www.telegraph.co.uk/finance/personalfinance/investing...
However, it is usually the case that management only does layoffs when really necessary, and in that case the stock should respond positively to much needed reform.
"Increasing shareholder value" could conceivably mean long term growth and doing everything right for a win-win-win situation. It makes sense, in a way.
But really it's much more nihilistic than that. There could be one majority shareholder that smashes the company and fucks over minority stake holders, causes a bad outcome for everyone except him/herself, and finds a legal way to execute the plan. That is a real thing that happens, and can be done as legally and with as much validity as treating everyone well to encourage long term growth.
The shareholders own the company, and it's theirs to do what they want with, even if that means picking up their toys and going home.
However, good luck when the shareholders sue you to try to recover their loses. That's the real meaning of that threat.
http://www.washingtonpost.com/opinions/harold-meyerson-the-m...
Until they are ready to cash out, which might be as soon as a year away. It needs to be redesigned with long-term incentives in mind.
Because it seems that generally isn't correct as viewed by the law (i'm not a lawyer blah blah...).
[0] - I mean "greedy" in CS terms, without attaching moral baggage to the word.
You may say this is a broken system, and for many B2C companies it can be. This is why I think that the benefit corporations are quite possibly one of the single best things to happen to corporate business in almost a century.
It allows a company to focus on a mission statement, and protects it from shareholders who only want to focus on profits.
EDIT:
TL;DR from Wikipedia for the lazier of us:
In the United States, a benefit corporation or B-corporation is a type of for-profit corporate entity, legislated in 28 U.S. states, that includes positive impact on society and the environment in addition to profit as its legally defined goals. B corps differ from traditional corporations in purpose, accountability, and transparency, but not in taxation.
* Etsy https://www.etsy.com/about/
* Patagonia http://www.patagonia.com/us/patagonia.go?assetid=68413
* Seventh Generation http://www.seventhgeneration.com/responsibility/certificatio...
* Warby Parker https://www.warbyparker.com/culture
By the way, they have a lovely FAQ:
"How did Etsy get its name?
The true origin of the word “Etsy” is a mystery known only to our founders. If someone asks you where the name came from, just make something up. That’s what we do."
The real point is that shareholders can't force the company out of general compliance. Meanwhile, managers retain considerable latitude in determining how they will remain in compliance as the company grows and evolves.
As long as founders and managers run a profitable company within these parameters, they - and their investors - will be fine. Indeed, they can, in theory, pursue the kinds of opportunities that companies totally beholden to growing their quarterly returns have to pass up. What they don't have to deal with is some short-term "investors" who want to extract a large hit of quick cash before leaving the smouldering ruin of a once-decent brand in their wake.
I don't have any real data on this but I've got a hypothesis that once a firm misses earnings a few times they "get serious", lay people off, and get rid of parts of the culture that made the firm great in an effort to expand margins for shareholders and say, "Look! See? We're getting better!". This really creates a toxic culture that causes a negative feedback loop and makes it even harder to be an innovative firm that grows like shareholders want.
This is probably a huge challenge for firms that do have excess employees, or need to change their employees to pivot strategies, and it would seem to be hard to do this without inducing the aforementioned effects.
Beyond a certain social level failure no longer counts against you. But income certainly counts for you.
So there's a small but unrealistically influential group who can hop from consultancy to executive job to consultancy. They're never held to account in the same way that employees of lower social status are.
Shareholders have no incentive to support a company either. They can sell up at the first sniff of a difficult quarter and look for higher returns elsewhere.
>Long-term growth is secondary to this goal.
Not always, but CEOs need to inspire investors with confidence and charisma to keep them from selling up.
Sometimes this works, but it's rarely related to the actual commercial value of a strategy.
Basically it's all about perceived status and social signalling, not about objective ability.
That disconnect is the big failure. It means the wrong things get rewarded for the wrong reasons, collective and strategic intelligence happens by exception, not by design, and the economy as a whole suffers badly.
A company can choose to be focused on creating long-term value, and many don't get punished for that either - see: Tesla, Amazon.
The most successful examples are of long-term value creation, not short-term. The best returns to shareholders come from long-term value creation and focus.
I'm sceptical this will ever happen with Amazon.
I dread the day Amazon will start running significant profits...
The exact opposite is the case. Shareholders are being extraordinarily patient with Amazon, and Amazon is being rewarded for their long-term thinking with an immense valuation.
Too often I see people lump shareholders into one group, as though they're all the same.
You can focus on long-term shareholders, or you can focus on short-term shareholders - IBM chose the latter, and as usual they're paying the price for it in expectations (and those shareholders will be nowhere to be found if the stock erodes later).
Berkshire Hathaway, as an example, chose the former. Buffett carefully cultivated very long term shareholders.
To say that Buffett is concerned with creating shareholder value (he is), means something different than to say that IBM is focused on creating shareholder value (they are) - because they have different types of shareholders, and go about it differently.
Jeff Bezos has talked about this concept a few times in relation to Amazon. He'd rather short-term shareholders just move along to the next stock.
If you care about your employees, you don't let random people have a say in how your company is run for their own profit.
I guess I better start buying Charmin. The $0.37 of savings totally isn't worth that! I mean, who could possibly have a clear conscience about leaving thousands of people in the lurch over a little bit of money?
EDIT: yes, I used the wrong pronoun originally. The reaction... wow. No disrespect was intended, and I'd think that leeway would be given here on HN. Oh, well.
She'll do the dirty work, get paid VERY WELL for it, so the firm itself can save face. She'll leave next year with a few mill in her pocket. AND IBM will blame their woes on "her" plan.
“The current study relies on a unique dataset of all CEO transitions in Fortune 500 companies over a 15-year period. We find that occupational minorities are more likely than white men to be promoted CEO of weakly performing firms; and when firm performance declines during their tenure, occupational minority CEOs are likely to be replaced by white men, a phenomenon we term the ‘savior effect.’”
http://onlinelibrary.wiley.com/doi/10.1002/smj.2161/abstract
Full copy: http://big.assets.huffingtonpost.com/glassceiling.pdf
Their evidence consists of:
1. A claim that the mean return on equity of the previous CEO of -0.68 in the "savior" case (white CEO following a minority CEO) is significantly different from a value of 0.11 in the control case (white CEO following a white CEO). This can't be true because the low number of samples implies standard errors of 0.66 and 0.05 for the means. I'm computing a z-score of 1.18, corresponding to a two-sided p-value of 0.24, far above the claimed p<0.01.
2. A claim that the mean return on equity of the previous CEO is correlated with a binary variable describing whether we are in the savior case. While their measured correlation coefficient of -0.13 would indeed be statistically significant if it were measuring a correlation of normally distributed data, the use of a binary variable describing unbalanced classes means that 95% of the variance is concentrated on just 5% of the data (28 samples). Bootstrapping based on the published mean and deviation of each class shows a 0.11 standard deviation of the correlation coefficient, and more importantly a p-value of 0.12 which is once again non-significant.
An interesting feature is that the standard deviation of the return on equity differs a lot between classes. I assume that this is because the returns on equity are far from being normally distributed, and indeed data from another class with just 4 samples shows an abnormally low standard deviation, letting us reject the normal distribution hypothesis with p<0.001. Most returns are very close to zero, so necessarily some are much greater than the standard deviation. A few or even just one large-magnitude return in the 28 "savior" samples would suffice to create a spurious correlation.
I would contact the authors about it, but I would like someone here to confirm if my analysis makes any sense.
"The company has posted lower revenue for 11 quarters in a row."
She gets a raise for successfully shrinking the company?
If I could reduce and organisation to zarg-jelly by resigning I would extract similar geld I guess..
To fix its business problems and speed up its “transformation,” next week about 26 percent of IBM’s employees will be getting phone calls from their managers. A few hours later a package will appear on their doorsteps with all the paperwork. Project Chrome will hit many of the worldwide services operations. The USA will be hit hard, but so will other locations. IBM’s contractors can expect regular furloughs in 2015. One in four IBMers reading this column will probably start looking for a new job next week. Those employees will all be gone by the end of February.
Now he's trying to spin that he never said "layoffs". Not sure why the IEEE is still trusting him.
Cringely claims 100k people
IBM claims low thousands (at a cost of $0.6B, which seems quite high) [1]
ieee says Alliance@IBM, an ibm union, claims they know of 5k jobs eliminated; they further say they're seeing a flood of backdoor layoffs, ie sudden bad reviews
My guess is in 6 months, Cringely was more right than wrong. Or at least we see an employment reduction of tens of thousands.
[1] http://mobile.reuters.com/article/idUSKBN0KZ1WF20150126?irpc...
If you pay 6 months severance, it adds up quickly. A million dollars covers only 20 $100k employees.
Is the reason only lawsuits and good will?
> Alliance@IBM/CWA Local 1701 is an IBM employee organization that is dedicated to preserving and improving our rights and benefits at IBM. We also strive towards restoring management's respect for the individual and the value we bring to the company as employees. Our mission is to make our voice heard with IBM management, shareholders, government and the media. While our ultimate goal is collective bargaining rights with IBM, we will build our union now and challenge IBM on the many issues facing employees from off-shoring and job security to working conditions and company policy.
There is WARN to consider, which is why they can't just do mass layoffs without lots of notice.
Apparently a tactic used by companies acquiring other companies is to re-negotiate severance policies with employees. As in zero out time in the old company. This is difficult for average employees to detect in the dense legalese, and it is an extremely convenient way to rid the new owners of employees that fall on the wrong side of the most desired age bracket.
The person this happened to was with the original company for a little over 20 years, the new merged company for three, and only got credit for two years (one year "probationary" period before severance starts counting) when the axe fell last month (not IBM).
see, eg, http://www.cookbrown.com/docuserfiles/file/Spring%20Newslett...
The catch was they had to maintain a yearly review rating that was better than 3. Once they get that bad review it appears all that goes out the window, no job, no severance, no retirement benefits.
If this is all true, and is consistent for thousands of people, then IBM may have a class action lawsuit against them for wrongful termination.
Except as an employer.
They made a deal with Microsoft for DOS, but didn't make the deal exclusive so Microsoft sold their own version of DOS to the PC Cloners.
IBM made the PS/2 series with Microchannel as Clone Killers. VGA was a better video, and Creative Labs had the Sound Blaster for better audio. IBM's Microchannel flopped because people wanted to still use their ISA cards. IBM had OS/2 and Microsoft had their own version of OS/2 and Windows, and Microsoft took their OS/2 NT 3.0 and made Windows NT 3.1 out of it and stabbed IBM in the back for a second time.
IBM sold their printer line to Lexmark, and their PC X86/X64 line to Lenovo, IBM didn't know how to turn a profit on them.
When IBM couldn't supply the PowerPC chips to Apple for their Macintosh line, because IBM was making PowerPC chips for video game consoles as a priority, Apple switched to Intel chips. Then later video game consoles switched to Intel or AMD chips. IBM open sourced their PowerPC chips eventually.
IBM bought out Lotus and basically ran it into the ground and let Excel replace Lotus 123, and Lotus Smartsuite was never updated to compete with Microsoft Office and for modern Windows systems so it fell away and IBM forked OpenOffice.Org to make Lotus Symphony. That also went nowhere.
IBM still earns money from mainframes and contract support. I think IBM got into Linux and Java contracting as well.
But IBM has changed over the decades and it is not the same company it once was. It fell into a trap of maximizing shareholder values rather than making the customer experience a better one like Apple did. Microsoft also suffers from the same sort of thing that IBM does which explains why Microsoft Surface sales tanked.
IBM needs a big reboot, and to focus on making the customer experience better. Mobile apps is an area they could focus on, make the IBM Cloud and then make IBM Lotus Symphony for iOS and Android and store the documents on the IBM Cloud and offer subscriptions for more storage. They should also make Lotus Domino and Lotus Notes for mobile devices, and make a set of developer tools to make Android and iOS apps easier to program.
It ain't just technology, boss. Welcome to the reason for all those "seniority" rules that everybody on here rails against.
Walk into the office of an accounting firm, engineering firm, bank, architects office, whatever. Count the number of employees that you see with gray hair. Now walk around your (software company's) office and do the same. Chances are (_particularly_ on the west coast in my experience), there is a big discrepancy.
There are several possible explanations. Maybe the old people get fired. Maybe old people get the hell out of the industry on their own terms. Maybe young people are just hired at an absurd rate, which is suppressing the proportions of old people.
Some people suggest that it is because this industry is young, but it isn't that young. Your standard 20-something dev might think he is entering an exciting new industry, but the reality is that the industry is several decades old already; more than enough time to accumulate lots of gray-headed programmers.
Honestly, I think this accounts for most of the ageism in tech.
Way more people are entering the field now than in the 1970s, so even if there's absolutely no ageism at play you'd still expect the majority of all developers at a company to have graduated in the last decade.
Indeed, the industry is several decades old. It's just that it's also rather dramatically larger than it used to be. That growth hasn't been manifesting as freshly trained gray-headed programmers.
Um.
> Alliance@IBM, the IBM employees’ union, says it has so far collected reports of 5000 jobs eliminated...
CAMSS&W (1 x 'M', 2 x 'S')
honestly, I don't know what 400,000 IBMers work on. Every company of a certain size and age does layoffs. You could ask the same question of Apple or Microsoft and at some point Google too.
A lot of comments I've read around the Net from RA'd IBM'ers alluded to an enormous executive management push last year to get employees retrained into the CAMS (Cloud, Analytics, Mobile, Security and Social) areas, but that didn't seem to really have much uptake. So I wonder if this RA is a doubling down by the executive team on the focus into CAMS, with the intent that the focus will turn out to be similar to the tectonic turnaround shift Gerstner made to embrace services (the attendant employment losses at the time were bitterly criticized).
I see this with our US had office too; they let people go when a project ends and then rehire them two weeks later in another department. Whereas in the UK office staff are shifted around to fill needs.
http://www.columbiatribune.com/news/local/ibm-layoffs-hit-co...
http://www.columbiatribune.com/news/local/department-of-econ...
https://news.ycombinator.com/item?id=8948778
One hypothesis... some of the IBM managers who were commenting on that story now realize Cringely was at least partly right?
This is a test to see what they can get away with before class action lawsuits start flying. If they dumped all 100,000 at once, they'd get smashed with lawsuits.
So,they're going to try to pull it off with 10,000 and see how many lawyers appear.
People have been predicting the imminent death of IBM, with detailed litanies of the myriad of ways it's unrecoverable failures, pretty much every day of the 30 years I've been in IT. The thing about predicting the end of the world, is that if you do it long enough and lack the humility to be ashamed of all the times you were wrong, you'll eventually get to be right.
But what a contrast between Apple and IBM!!!
Which is to say, the shifts are likely not unrelated, though Apple doesn't directly compete significantly in business.