I struck a chord with my recent column on H-1B visa abuse, so I’ll be following later today with an enormous post that tries to explain the underlying issues. But before then here’s something I came across that doesn’t quite fit that theme but was too interesting to let pass unnoticed — how companies like IBM intimidate employees and discourage them from speaking up.
A few years ago there was a class action lawsuit against IBM. Thirty-two thousand server administrators were being forced to work overtime without extra pay. IBM lost the suit and paid a $65 million settlement. That’s just over $2000 per affected employee before the lawyers took their share. Then IBM gave all those workers a 15 percent pay cut with the justification they’d get it back in their overtime pay. Next IBM restricted the workers to 40 hour weeks so there would be no overtime.
VP approval was required each time someone was needed to work overtime. The net result was all the server admins worked exactly 40 hours a week and for 15 percent less pay. I’m told by some of those IBMers involved that they were then put at the top of the layoff list. At the end of their severance pay period after being laid off many were rehired as contractors — for less money and no benefits. At that point they were at 50-60 percent of their original pay. Eventually most of those jobs were shipped overseas.
One could argue, of course, that nobody was forcing IBM server administrators to stay with a company that would treat them that way, and I think that’s strong argument. But I’m a guy who was fired from every job I ever held and so may not be the right person to judge proper employee or employer behavior.
Guess this is the future of American business practices…”we’re too big for your lawsuits and laws to affect us, and when we are caught and fined, we shrug and get rid of the problem permanently.”
Let me count the number of bankers sent to jail for the 2008 financial melt down – 0.
And this is why I am losing faith in America.
You wanted to say: “in humanity”, right?
Well, look at the bright side.
Here you lose your job to overseas.
In Russia they arrest you for singing protest songs in church put you in jail and throw away the key. If you write about it you can just end up dead.
No, america. Most other countries in the world are more civilized. For ex. in Europe, workers still have some rights left. But of course, america is showing Europe the way to the bottom. Unfortunately Europe seems to be falling for the seduction of materialism and money-worship – tearing down hundreds of years of progress towards higher civilization and the rights of man. Thanks america.
You mean ‘Banksters’.
“One could argue, of course, that nobody was forcing IBM server administrators to stay with a company that would treat them that way, and I think that’s strong argument”
What nonsense! Bad behavior in society needs to be punished regardless of the circumstances of the victims, or you just get more of it. Bob. Do not tolerate the intolerable.
Is capitalism to blame? That’s a loaded accusation, but hopefully stories like this will be widely disseminated, and the current and future generations of competent server admins will think twice before applying to work for IBM. Staying with a company who screws you is like staying with a significant other who screws around on you. Once it happens, you have to expect it will happen again, and start planning accordingly.
The purpose of Capitalism is to make a profit. Not the betterment of society etc etc. It is a very effective strategy at resource allocation, it is not a model for ethics or a blueprint for government. Therefore, it should be monitored and regulated so it doesn’t have delusions of grandeur and try to think it needs to be in charge. If IBM has resorted to unethical relationships with its staff then perhaps there is a law that can mitigate the damage and remind IBM, with a big stick, not to be vindictive. They can sack and hire who they like but there should be some requirements for a certain degree of fairness.
Regulations are required to prevent monopolistic practices or to regulate government-sanctioned monopolies. However, we must be careful not to regulate a business out of existence, especially when the competition is global.
I see this as a power asymmetry pure and simple. When these kind of practices happened in the 19th century, workers formed trade unions — which the governmental authorities opposed and suppressed.
We are living in a similar time. Without unions large operations will always be looking to cut costs at the worker’s expense and that is what you just described.
I’m all for competition in the marketplace for labor, but you have to draw a line at some point and be willing to make a stand. Unfortunately high tech workers haven’t realized this yet.
I don’t think its a matter of whether they realize it or not.
But, its hard to get any leverage when scabs live 10,000
miles away and will work for ten cents on the dollar.
There’s your problem!
Well, every sort of market is distorted and made less efficient by the presence of overly-large, dominant participants, and that includes the labour market. This distortion is never a good thing, and sometimes has very serious negative consequences.
Perhaps, with the deleterious effects of “too-large-to-fail” banks still looming large in the public consciousness, we might have a (transient) opportunity to promote the restriction of the size and influence of organizations & market participants:- both private and public.
This is a position on which both the left and the right can agree. Big companies and Big government have something in common – their size; and it is this inhuman scale and concentration of power that discomforts us, as well as being the source of the distortions, inefficiencies and abuses of power that appall us.
If the cause is systematic, why not the solution?
There’s always been a problem where technology enables companies to move jobs away from developed countries to less developed places where people will work for less money. It was natural resources and then manufacturing, and each time it crushed the industry in the old country. Now telecommunications and computers have allowed a host of professional jobs to be done over the wire and it’s smashing sectors of the job market that were important to our middle class. What’s scary is that the cost of these networks is now so low that employers can cost-justify moving McDonald’s drive-thru and customer service jobs to India.
What’s even scarier than that is there’s really nothing to be done about it. In the past we had to let entire towns that made shoes or cloth or cars just fail and melt away. We couldn’t save them because we couldn’t justify the higher cost of labor and we couldn’t always find anything better for these folks to do. They usually ended up heading into the city to find jobs, and that trend towards concentration and economy of scale is a large part of how we are in the current situation. When the successful organizations are the ones who can exploit these economies then it can’t be much of a surprise when they spot an even cheaper labor pool and move to it.
There’s nothing to indicate the near future is any different. We’re going to lose the jobs where the work doesn’t need to be done in person. A huge amount of IT work has already left and many other service industries are in the cross hairs. So your personal physician will probably be here, but your xrays will be read in India or Russia. Your primary attorney and litigator will be here, but brief writing and paralegal work will be done overseas. I already get sales calls from Canada. Is there any reason much of your real estate paperwork is done locally? How about marketing? Sure, why not. Just about anything that can be done over the phone or video conference will be, and that’s a ton.
The slide can only end when the costs are wrung out of the US and have built up in China, Russia, India and the rest. Manufacturing that left the US for Japan in the 60s and 70s has moved on to Taiwan and then China (and other places.) Vietnam and Russia are already displacing India for IT work. The increase in China’s middle class is good for the US and Europe because it raises the bar on what wages those people are willing to accept. As that gap closes we’ll find the new point where jobs are worth keeping in this country, but it’s going to be as painful for much of the white-collar middle class as it was for those who used to do manufacturing in some parts of the country.
One other thing: this isn’t universal. Why hasn’t Germany, for example, been squeezed this same way? The rules are not absolute so there’s still room to spot the differences and mitigate some of this. I’m really not as gloomy as I may have sounded above.
Bob,
Here is a possible way to reduce the white-collar crime practiced by the big corporations.
1. Set limits on the number, length, and time period of political advertisements that political parties, candidates, and special interest groups can sponsor.
2. Require large companies (radio, television, cable, satellite, and internet) that regularly provide political news or political advertising to allocate a substantial amount of free advertising time to political parties and candidates.
3. Prohibit individuals, corporations, and other entities from making large campaign donations (bribes) to members of congress and other government officials.
4. Establish and enforce strict penalties for corporations that penalize employees that sue corporations for corrupt or unlawful activities.
5. Punish corporate unlawful activities by treating the actions as committed by those high-ranking individuals in the corporation who have motive, means, and opportunity.
I hate your list. . . it sucks. You know why? Because everyone of the items you list USED to be law/regulation.
Labor unions used to be a driving force in business. Yes DRIVING. That is, union employees forced corporations to account for the workforce factor as part of doing business. Today it’s just “If they don’t get in line, we’ll dump the lot of them and get other workers” because it’s an employers market. Wal-Mart is the flag-ship example of a company where workers NEED to be unionized.
If IBM had tried this shit in the 80s, workers wouldn’t have class-action sued, they’d have a work stoppage, and the Dept of Labor would have fined the shit out of them. IBM would have come to the table real quick.
But Mr. Reagan busting on the air traffic controllers signaled the end of the effectiveness of labor unions. And here’s where we are.
Chip, you are 100% correct. I’ve always been ambivalent about unions, even though I’ve been a member of one for twenty years, but the reality has dawned on me that it is open season on all employees. Whether it is the way Wal-Mart treats its employees or the openly hostile tactics of those like Scott Walker.
Regards,
Joe Dokes
I think that employees in general will put up with a lot in the interest of continued employment. People have families and financial obligations that prevent them from walking out the door, even when they should.
What I would think is that while the economy, etc. might prevent just quitting, such business practices would make it just about impossible for a company like IBM to hire qualified workers. Stories like this create a reputation that makes the best workers – those who can pick and choose from available jobs – not want any part of IBM.
I also think that the growing list of stories about IBM’s business practices might inspire potential customers to consider other options. I know that when I decide between vendors, I definitely consider happy employees and low turnover as positive selling features. I want to do business with people who respect their employers and feel proud to work for them, rather than those who think they work for dirtbags and can’t wait to get out of there.
I very strongly consider my personal business relationships in terms of “here.” given a choice between US made and supported, or stuff that got swept up off the docks, I buy domestic every time.
sixth!
What a sour company! So sad to read along with the other damning reports. What a I did like though, was your last sentence Bob! Not being particularly young and open to over-exaggeration I was still tempted to say: “Epic!” but will stick to a more grown-up and deeply felt: “Respect!”
This is what happens when you stop referring to an employee as an employee – instead they are a resource. Once you stop thinking about your people, you can discard them just as you would toss a newspaper into the trash. It is people who will ultimately save the company bacon when the chips are down. They are often the first thing to get cut when trouble hits and that is the DUMBEST thing a company can do.
Making enemies of your employees wins you no favors either.
But then we sit and take it. No one will stand up for fear of losing what they have. Everyone complains but no one acts. If everyone in the US did what they do in France (ie have a work stoppage) it might finally get the big boy’s attention. If that is a good thing or not, who knows. I do see it as better than what we have now.
IBM considers its employees a cost.
Trouble is that when everyone stops working and starts taking industrial action, eventually it screws up the economy, especially if the unions start calling the shots over the government. Manufacturing was reduced to rubble in Britain by exactly this strategy by the unions. Meanwhile the government had to go cap in hand to the IMF to keep the country on its feet. France could easily go the same way.
The unions put a stop to inward investment too by fighting over who would then represent the new workers. They are, unfortunately, working against those they claim to prepresent, while being very well paid and provided for themselves!
But part of the problem in the UK was that during the 70s too much money was spent supporting dead industries. Early 80s this changed, but a lot of the high value industry we could have had then was set in other European countries.
90s we seen a lot of inward investment from technology companies, but during the last Labour government (Late 90s, most 00s) they all left! The Labour party is funded and supported by the unions, but they’ve done nothing to help manufacturering and those they claim to represent. The did court all the bankers, but we all know how that ended up!
In the UK we need political policies that support industry at the cost of everything else. We need industry to create jobs; Labour only created public sector jobs which are a millstone on society. We’d be doing well if we had the problems of IBM to deal with – we just don’t have jobs of any type!
I would only disagree with you on one point, that we need policies that support industry at the cost of everything else. Yes, we need savagely to cut the bloated public sector, but in my view we should devote massive new resources to education. The question is how to do it beyond the poisonous influence of the teaching unions, their bone idle militant memberships or their friends in the Labour Party.
Before teaching can be transformed into anything resembling a profession, means must be found rigorously to measure the performance of teachers so that the bad ones can be sacked (SATS were supposed to do this). A new mindset needs to be fostered whereby it is the maximisation of everybody’s potential that counts rather than the dreamy egalitarianism which has led to the pursuit of a universal standard of mediocrity. Grade inflation has been allowed to rampage unchecked for decades, right under the noses of successive governments and powerless parents. Countless numbers of pupils have been cynically deceived by this, and the teaching establishment has colluded in it. It will be a brave administration that tackles this grave problem.
I have to agree with you again.
At the end of my PhD I helped my supervisor with some of his classes at a certain Scottish University. It was the third year of a computer networking course, I was an electronics engineering student. What I knew of networking was enough to help teach the 3rd year Computer Networks tutorials. But that’s not the point.
We had students who couldn’t convert V= IR in to I = V/R. They claimed they’d never seen such. Third year engineering students who’d come in from FE Colleges with HNDs. Students who must have gone through some form of secondary education too. My lecturer stated to the University that they were committing fraud with these degrees, but it seems to the university bums on seats was more important. It wasn’t the fault of the lecturers, some of them who were exceptional, but rather the standard of education the students received before.
These students didn’t need more education, it had already failed them. They need better education.
Bob, something happened a while back and your articles stopped being picked up by the safari “reader”. I hope you can find out what new publishing change broke that and can go back to supporting it again.
The reader button on my Safari works fine….
Version 6.0.1 (7536.26.14)
Wow! you are much better than I am; I have only been fired from a few
re IBM: and to think that they used to act like (be) technologists. sigh…
speaking of tech, how would I find out about your ‘little additive manufacturing company’? Can’t find an email for you.
and, how about writing about additive manufacturing again?
Cheers
This situation is certainly disturbing on many levels, but to any long-time IBM employee it should not be a surprise.
I worked in division 07 (strategic outsourcing) at the time all this was happening. The fact of the matter was that as far as management was concerned, the employees cost too much. They cost too much when compared to foreign labor, and they proved themselves (via the lawsuit) to be a legal liability as well.
IBM management was determined to limit both the financial and legal exposure, and so they did it…end of story.
Ugly? Yes, but not as ugly as it might have been. Disrespectful? Ethically questionable? I would say yes on both counts.
Let it be a cautionary tale to anyone who might consider working for the company. The paychecks don’t bounce (for now), but don’t expect it to be easy or long-lasting. Don’t make any commitments to them, because they sure as hell aren’t going to make any commitments to you.
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all you had to do is get a union started, and the war would continue. now you are just running ducks
More job types were involved, including the many IT Specialists and desk side support. My IBM group did protect us and we were not adversely affected, so kudos to our management. Surprisingly, managers knew the names of everyone who participated in the lawsuit – the IBM Alliance and CWA and legal communications had led us to believe we’d be anonymous to IBM – or at least did not tell us we were at risk – and our names were know, which permitted IBM to take revenge. If I’d known that, I’d probably be intimidated from participating in the lawsuit knowing a company would take revenge. Companies hate union activity and lawsuits, and workers will be punished. The intimidation is real. But in this case the lawyers for us reaped huge money I think at our expense, misleading us on being identified and for which so many paid a very heavy price.
And a similar legal case. I received a letter a while back for a class action lawsuit against website classmates.com I think you had to opt out to not be included. I am sure the attorneys pushed this and I am also sure the attorneys made many millions. I just received my settlement check for $3.62. The attorneys don’t do this to help you, nor do they care about your cause. Follow the money. They are nothing more than ambulance chasers. As I recall, the IBMers in their lawsuit got relatively little. The larger awards – $1000 or more – were for lower rank, lower pay workers. As one of those of higher rank and pay, we got little – a few hundred. Not worth the punishment that IBM gave most.
http://www.theregister.co.uk/2012/10/22/ibm_cut_contractor_rates/
IBM slices UK GTS contractor rates
Posted in Business, 22nd October 2012 09:52 GMT
IT contractors working for IBM Global Technology Services (GTS) in the UK are
being hit with a 10 per cent rate cut from this week.
Recruitment firm Hays confirmed that contractors were getting their pay chopped,
but wouldn’t give any further details.
“Some contractors are being notified of proposals to change their daily rates,”
a spokesperson said. “Those individuals affected by the changes are being
contacted directly.”
According to IT Jobs Watch, IT contractors at IBM GTS in the UK make an average
daily rate of £425 and an average hourly rate of £24.95.
GTS, which takes care of stuff like hardware outsourcing and product
maintenance, had essentially flat sales in the third quarter, after a small
increase in Q2.
IBM declined to comment on the rate cut.
Blah, blah, blah IBM blah, blah, blah.
Why the infatuation with IBM, still? They are barely a technology company anymore. More service oriented and I hate their, “I’m an IBM’er” commercials. The voice-overs are so obvious that they are difficult to watch and full of actors, not real “IBM’ers.” Painful.
Do. Not. Care.
Just a note from an IBMer, the people in the adverts are all real IBMers.
I went to work for IBM directly after graduating college in 2001. I was there for 11 years, and I left voluntarily in January 2012 to go work for another organization. In my 11 years at IBM, I experienced firsthand the rot and decay of that company’s work environment and culture. I was a high-performing employee there who received high performance reviews and was highly compensated, but it got to the point where I could not stomach the thought of another day of my life wasted working for that company. It’s a company that no longer has a soul.
The last 10 months at my new employer have been, by far, the best months of my career and my life.
My plea is for everyone to stop buying IBM products until such time that they start treating their employees like real human beings.
Nobody has mentioned the people that were too afraid to sign up for the lawsuit settlement money; they feared retribution. Even though they were entitled to some of the lawsuit payout, they forfeited it, and ended up losing their jobs anyway.
Out of all the comments, there’s just one that assessed the situation correctly (all others focus pointlessly on IBM, while ignoring the inexorable underlying trend). When you have people that are both wiling to take and whose living expenses allow accepting a fraction of compensation for the same level of work (and, let’s face it — if not now, then not too long from now), then there must occur a balancing of living standards — meaning, those whose standards are higher invariably end up on the losing side. This is basic economic reality. Globalization is the real culprit here; and, as much as I am on the receiving end (much like others here), I can’t help but point out that trying to fight it is like trying to fight gravity. Even if you manage to eke out a comfortable existence in your life span (vis a vis protectionist laws), the cost wil merely be borne by future generations (i.e. your children).
Since this trend cannot, in the grand scheme, be deemed good or bad (what you and I lose, someone else gains), I wouldn’t be too quick to bet on nationalistic fervor/nepotism to come and save the day. Instead, the path to winning (or even just breaking even) is via creating an environment of minimal overhead. That is to say, set up (or rather, eliminate) rules, so the path of least (governmental) resistance exists here, not elsewhere. Do away with EOE laws. Negate all incentives — as well as all overhead that, at the end of the day, shows up as a company expense. In such a situation, corporations will naturally gravitate toward the most cost competitive market. Don’t like it? Think such concepts are taboo even to consider? Then suffer the consequences of reality doing as it does whenever obstacles such as wishful thinking come in its way.
Yes, it does seem like resisting globalization is futile. It looks to me like IBM is just living up to its name: “International Business Machines”.
Firstly american companies found out that exploiting poor countries by milking till the last drop of their resources (oil and natural goods) was once a good thing to do. Americans were OK since they have more products to buy.
Then they found out that razing the local economy ecosystem by implanting their mega ultra big companies in those countries, which took the local companies to bankruptcy since they couldn’t compete (tech and economically), making local workers works for them by any miserable paycheck to give all the profit back to US a good thing. Americans were OK since they have more and cheaper products to buy.
Now those american companies found out that importing those workers for that same miserable paycheck (now in US$) is also a good thing to increase the profit, since they sell to the whole world. I think you guys should get used to it.
I once had a summer job working in an IBM factory in Holland. A group of about 10 of us were paid by the hour to unload typewriters off American-shaped palettes onto European-shaped palettes.
It was the easiest 3 months of work I ever had. The massive automated system that was supposed to deliver typewriters to us to re-package was not working for 90% of the time. We used to spend most of each day playing cards or sleeping under some desks.
We got really good breakfast and lunch (I think it was free). Sometimes we wandered round the rest of the huge plant in Amstelveen. Most of the workers were not working. They all said it was a job for life.
When typewriters occasionally arrived, and the machinery was working for an hour or two, we did some work. But if we worked too fast (remember, it was the easiest job I ever had), the actual IBM employees used to say to us “rustig, rustig” (“rest, go slowly”).
Considering they could have sent us home every day when there was no work, it was unbelievable that we were just employed to sleep. I ended up going out every night and making the most of Amsterdam nightlife. I knew I could catch up on sleep at work and get paid for it.
Having watched IBM destroy OS/2, and then destroy most of Lotus, finally to destroy Lotus Notes, I don’t think that my experience that summer in Holland was atypical of IBM.
It seems that IBM is so fundamentally mis-managed that the only way it can be profitable is by employing people in the 3rd world to offer services to people in the 1st world.
Whatever happened to “respect for the individual”? I worked for IBM Australia from 1989 to 1994, and the rot was already starting then.
As bad as it is at IBM, it was worse at HP (I left voluntarily) only because HP was a follower, cutting costs (layoffs by walking around) as fast as they could. Mark Hurd blindly followed the downsizing trends that IBM pioneered, and as sad as it is, I think IBM is quite innovative in this respect. Now HP is disintegrating before our eyes and many good people are left out in the cold. Both companies can go to hell!
I worked for IBM and fully support this practice of IBM to discipline consultants. These black magicians from snake charming slum poverty stricken lands should suck it up, live in India and Pakistan, from countries they came here. When they put their foot in here, they must understand to behave with our rules and laws.
With help of my loyal team,I personally, rape careers and minds of each these consultants from outsourcing countries so they either live in fear under my toe as bugs or leave VMware in totally depressed shocked state that they could not be able to work anywhere else.
I have huge support from my vFabric Gemstone managers for this. Also my employer VMware has huge money pile to own lawyer mob to protect me and my managers.
Even I can safely deny writing this message and my company’s legal department will hunt the whistle blower and nobody can do anything about it.
Oracle did the same thing, was sued in California state court and lost. They converted many positions over to hourly positions, with OT for travel, meetings, etc. Then they bullied and cheated those who were supposed to get overtime into not claiming those hours they worked, cheated them out of many dollars, and laid off those who refused to play that game, and would accurately keep track of their hours. It’s no different for any large company, its all about screwing the small guy so the execs can get their perks and m ulti million in pay and stock options. One day this will all catch up with them…
Keep in mind that the concept of “hours” worked is often subjective when it comes to productivity. It makes sense when it comes to a minimum wage job like operating a cash register in a store, but makes less sense when it comes to jobs that require experience, education, and creativity. Hence, for many professional jobs, the employee is judged by actual productivity rather than hours worked and knowing this, less talented workers like myself, need to spend more time to achieve a desired level of productivity. Yes, the system can be abused, but it’s human nature to want to “try harder” rather than stop working because some union boss said to.
IBM loves it’s contractors. The Boulder CO location is largely staffed by contractors. However, some of its GBS Federal locations require that employees be IBMers in order for them to count toward the required head count. IBMs solution to that is LTS or long term supplemental employees. This allows IBM to save money by reducing the benefits that an LTS is entitled to. Keep them in very low “bands” and you have a perfect cheap employee that meets the feds requirements.
The former Bligh government feared suing IBM: Have a look at this, Bob:
http://www.smh.com.au/it-pro/government-it/secret-health-payroll-legal-advice-revealed-20121031-28jpz.html
Hard to believe that a company that happily collaborated with the Nazi’s to murder millions of people would behave unethically.
http://www.11points.com/News-Politics/11_Companies_That_Surprisingly_Collaborated_With_the_Nazis
RT xBieberSwagBR: One Time, Justin Biebers e As Long As You Love Me nos TTS de uma vez sxf3;. QUEM Sxc3;O MESMO AS MELHORES Fxc3;S DO MUNDO??? SIM, Sxc3;O AS BELIEBERS.
Hi
I work for IBM india got dumped after couple of years. Trust me i am more skilled than some of my colleagues sent to US on H1B.
I am not sure why you guys keep blaming India. We are at the receiving end too & we arent used to such American culture of Hire & Fire (we dont have a social security from state to fall back on).
Trust me if these kind of hire & fire stuff starts to hurt us we will send back all these companies along with your jobs back to U.S
“with the justification they’d get it back in their overtime pay. Next IBM restricted the workers to 40 hour weeks so there would be no overtime.”
Sounds to me like that’s ground for a breach-of-promise suit right there.
As someone who works at IBM, and gets consistently top ratings from the company they contract me to,
only to be consistently rated as an underperformer with no bonus each year by IBM, I can vouch that the most accurate and true statements in all these comments are those that paint IBM with the worst
possible picture. And even then they might be looking at IBM optimistically. They are nothing but
pure evil, and the fact that IBM stands for “Idiots Become Managers” is confirmed to me daily.
I only hope that IBM management gets the karma they deserve.