A Voice of Reason: Sane Views for a Crazy World

May 9, 2007

“Lean” – IBM’s Plan to Screw its US Workers

A fantastic post about the unethical business practices that an American Icon, IBM, is inflicting upon its employees, and the plan to fire over 100,000 employees and replace “some” of these employess with “workers” from Communist China and India. I guess they will work with Beijing to make sure that enough prisoners are available before this plan is put into operation.

IBM is about to go through the biggest restructuring in its operations since the Gerstner days, but this time for all the wrong reasons.

At least Lou Gerstner was trying to SAVE a dying company, while the current leadership seems to be planning another ENRON manuver.

The IBM project is called LEAN and the first manifestation of LEAN was this week’s 1,300 layoffs at Global Services, which generated almost no press. Thirteen hundred layoffs from a company with more than 350,000 workers is nothing, so the yawning press reaction is not unexpected. But this week’s “job action,” as they refer to it inside IBM management, was as much as anything a rehearsal for what I understand are another 100,000+ layoffs to follow, each dribbled out until some reporter (that would be me) notices the growing trend, then dumped en masse when the jig is up, but no later than the end of this year.

LEAN is about offshoring and outsourcing at a rate never seen before at IBM. For two years Big Blue has been ramping up its operations in India and China with what I have been told is the ultimate goal of laying off at least one American worker for every overseas hire. The BIG PLAN is to continue until at least half of Global Services, or about 150,000 workers, have been cut from the U.S. division. Last week’s LEAN meetings were quite specifically to find and identify common and repetitive work now being done that could be automated or moved offshore, and to find work Global Services is doing that it should not be doing at all. This latter part is with the idea that once extraneous work is eliminated, it will be easier to move the rest offshore.

India had been used, but the workers there were not predictable. I know this for a fact, that they were also having the unmitigated gall of demanding a salary of $3000 per year. Which would be a lucrative salary in that country. The instability, the riots over the death of a movie star or Richard Gere puckering up and laying a wet one on an Indian actress did nothing to make IBM feel like India was a new home. Enter Red China. Prisoners tend not to bitch about their salaries, and knowing about movie stars is not high on the priority. So good when IBM teams up with that model of enlightenment portrayed by Beijing.

All this is supposed to happen by the end of 2007, by the way, at which point IBM will also freeze its U.S. pension plan.

All of this is well under way. My wife is a “LEAN” manager, as well as filling the managerial shoes of six other positions, which have been eliminated. No longer are people being fired for incompetence and replaced, they are simply fired for made up reasons of incompetence, and not replaced. This has been IBM standard procedure for the last ten years, but the firings are wratching up.

The point of this has nothing to do with the work itself and everything to do with the price of IBM shares. Remove at least 100,000 heads, eliminate the long-term drag of a defined-benefit pension plan, and the price of IBM shares will soar. This is exactly the kind of story Wall Street loves to hear. Palmisano and his lieutenants will retire rich. And not long after that IBM’s business will crash for reasons I explain below.

This also seems to be part of the plan, to gut and strip the company while making the stock prices boom, and then bail out.

I am told there is a broad expectation at all levels of IBM familiar with the LEAN plan that it will cause huge problems for the company. Even the executives who support this campaign most strongly expect it to go down poorly with employees and customers, alike. But in the end they don’t care, which shows that only the reaction of Wall Street matters anymore.

So we can expect round after round of layoffs, muted a bit — as they were back in the Gerstner days — by some of those same people being hired back as consultants at 75 percent of their former pay (50 percent of their former cost to the company since they won’t be getting benefits). Throw in some overtime and it won’t look bad on paper for the people, but it is also very temporary.

I am married to a “manager” at IBM and can offer firsthand effects to the practices that “Big Blue” has been employing as the first step towards this “Lean and Mean” policy.

On her account she has sixteen agents, who cover a 24 hour period. When she started managing this account she had 22 agents for a project that required, and for which the client had been promised 32 full time agents. Needless to say the client has not been overly impressed with the performance of IBM in this account.

When my wife was an agent, she typically worked a regular 40 hour week, which on occassion would have some paid overtime sprinkled in. Of course when she went into management, there was an increase in her “desk” time as well as numerous occassions where she would have to go into the field to meet with the client, but typically she worked a 55 to 60 hour week for the few months. However, since IBM has started this “Lean and Mean” policy, her responsibilities are no longer to simply manage this account. She has also taken on five other administrative positions, which have been folded into this simple “Low level manager’s account”. Typically her work week is about 70 to 75 hours per week, and 90 hour work weeks are not at all uncommon, but come about once a month. She has not worked under 70 hours a week for the past year.
She has received for all of this extra work a raise of 4% as a PBC1 – which raised her total salary slightly over 42,000/yr, which is the highest rate available for an IBM low level manager. I have been alternately infuriated and dismayed as I have watched the shabby treatment that this once proud company dispenses upon its management, particularly those that they consider the most valued.
I have also candidly stated to her she should start looking elsewhere for employment, as this behavior by her company is nothing short of exploitation, and in reality is little more than white collar indentured servitude. Now that I learn the plans of IBM to do away with jobs, even though last year their corporation turned in profits that were rather significant, but did not meet the artificially inflated projection that had been set for them, I am torn between feelings of rage and impotence.

While I fully understand the purpose of a corporation is to make a profit for itself, and its shareholders, it is disheartening when a company of IBM’s stature and tradition treats its employees as vassals, while it plans upon making fewer employees do signficantly more as they shift American jobs to Communist China.

At some point one has to ask if the benefits that a company reaps from basing its business on the strength of the United States Economy, and the benefits it reaps from the infrastructure of these United States bestows upon it an inherent responsibility to act within ethical principals.

I am all for free markets. However the idea of these corporate entities sucking at the American tit of OUR tax dollars in tax breaks and other goodies, then giving the shaft to US workers, so they can outsource jobs to nations, which are our economic rivals, sort of sets me off. How about you?

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