IBM Layoffs 2015: Here’s What You Need To Know
Layoffs at IBM are already happening — mainly in the U.S. and Australia. Not sure how Big Blue is handling "Resource Action (RA)"? Follow these articles for more information.
The VAR Guy reported last week that IBM’s massive layoffs would begin this week — and this seems to be the case. Word surfaced last weekend that IBM is prepping to lay off up to 26 percent of its global workforce, or some 100,000 workers. Many of these layoffs come on the heels of Lance Crosby’s resignation. Crosby, the founder of SoftLayer, a company IBM acquired for around $2 billion in July 2013, said in...
The “poor performance”
The “poor performance” reviews were manufactured by management to justify a job cut. Most were not deserving. IBM is firing the very people it needs to fix the company.
The people who got a 3 rating
The people who got a 3 rating are not considered as layoffs to IBM. Those are terminations for poor performance. The 2 ratings are the ones who are considered as being laid off. That is how IBM is misleading the employees, the investors and the government regulators on this mass RIF. IBM is in major trouble, and cannot compete in this newer world. The only way they can grow their cloud business is to buy companies that are already using cloud. They are pinning their entire hopes for the future on cloud business and Watson, but without the right people in place to support those businesses, IBM is doomed to fail.
Rebecca:
Thanks for reading
Rebecca:
Thanks for reading and sharing your insight. Do you know the how IBM places employees in their ranking system? What does a 3 rating mean? What kind of standards are set?
Thanks, Rebecca.
—CJ
IBM uses a “1” rating for top
IBM uses a “1” rating for top performers. “2+”,”2″ and then “3” going down a scale. They used to use 1,2,3,4 but then Big Blew decided to “give” more people a “2” rating by redefining 3 to be a 2 and a 2 to be a 2+. Idiots
Anonymous:
Thanks for sharing
Anonymous:
Thanks for sharing your insight. Are you familiar with the performance review process at IBM? Any input on how it’s done traditionally compared to how it’s being done now?
—CJ
My wife got a 2 rating and
My wife got a 2 rating and got layed off yesterday. Job performance doesn’t matter. These jobs are being shift to Costa Rica, India, and anybody who does the job cheaper, not necessarily better. The company’s that hire IBM are getting screwed. IBM doesn’t care about its employees or the company’s that hire them. Ask target, BHP Billiton, Nisource, and so on.
That’s HP’s MO, fire American
That’s HP’s MO, fire American workers and replace with Indians, Maylasians, Indonesians, etc. Quality and skill set is not relevant, only the dollars per employee. In fact one of the goals of most in the company is: “replace on-shore FTEs with off-shore FTEs”. What a crappy goal to give the SME worker bees.
Different anon. It is being
Different anon. It is being run the same way, 1, 2+, 2, or 3, but according to management they are getting ‘downward pressure’. People are getting 3’s without documentation as to why after a history of high ratings.
Anon #2:
Thanks for the
Anon #2:
Thanks for the clarification. Do you know what the requirements are for each level?
—CJ
There’s no real
There’s no real documentation. They will usually give you a percentage, something like ‘top 1% performers get a 1’, but how it’s defined is not written down anywhere. It’s basically a bunch of managers sitting in a room, forcing their reviews to meet their quotas. Whoever has the most political clout gets the best reviews for their team. I’ve been told bluntly that if you got a 1 in a previous year, you won’t get another one for at least a year because ‘you’ve had your turn’. If you get a promotion or other big incentive, you’re likely to get a 2 since you got a pat on the back already. My manager even said in my review that he couldn’t explain my rating this year because he disagreed with it. I’ve been on both sides of the equation, and it’s rough. Having an entire team of over achievers is actually a curse, because someone will be short changed just due to quotas.
Bingo – it was that way in
Bingo – it was that way in 2001 and it looks like that holds true today. A meeting of managers championing the folks they want to give high ratings to. Your rating is very dependent on the clout of your manager. Much more than that of your own performance. Plus, don’t forget how the bonus pool works – managers are in the same “pool” as the people they manage.
Another “trick” is to create artifical layers when ranking people. So if you have a small group, you are still held to the same constraints of a manager with a large group. I’ve seen a manager with a staff of 5 strong performers forced to layoff someone because she had to let someone go. While a manager with a larger but poorer performing group was able to save some of his under-performers by hiding them in the numbers.
IBM employee here, and also a
IBM employee here, and also a manager…. the number ratings are done via opinion of your direct manager, usually off the top of their heads. There is no formal process, checklist, or parameters. The rating is completely arbitrary, but managers are required to have a certain number of 1’s, 2’s, and 3’s, so people can get a 3 even if not warranted, simply because the ‘3’ bucket must be filled. It is an ancient, ineffective system that most other companies have left by the wayside years ago.
While IBM management will
While IBM management will deny the existence of a “skew” (with a wink), there is talk that the PBC ranking of 3 went from 5% to 30% in some areas. To have to rank your people to meet numbers like this is very hard for many 1st line and 2nd line managers.
That is true…after 15 years
That is true…after 15 years of getting 2 and 2+, this year they gave me a 3, and at the same time, I was getting praised by my clients for doing an “excellent” job. I was laid off yesterday!
In Columbia, even those that
In Columbia, even those that are high performers with a rating of 1 years prior, getting a 2+ for 2014 are getting fired by June 30th. They seem to be cutting those with higher salaries. The center is suppose to have 800 jobs to meet quota. More people are starting to work from home and they have cut several people. The center is really bare now even before this last cut that came. Many of these jobs are going to India and we have had KT sessions to help train. We were told before the KT sessions that India would be taking on much of the work and we would go to greener pastures. Its all so random but Im sure there needed to be a head count reduction and if there is two people with say L3 status, they will keep one. Strange that they would let go of the high performers that worked to get a promotion and keep those that can do the L3 job but didnt get the promotion? I think not. Its all about the money. Not to mention many not getting a raise for years or 1%. IBM in Columbia is about 25-50% under market value for most jobs, yet still we get “paid to much” to keep, even though we are suppose to bring more workers in. All the Columbia Center is really a place that takes American jobs from other Americans for a lesser rate, then lift and shift these jobs to India. Nearly every account is doing this, customer doesn’t mind since they are getting a better deal by going to IBM. Most India people are good workers but many are new to the field with only a handful that have the same experience as US counterparts. Its really sad to see so many of my co-workers getting RAed. It didn’t matter that some have worked more tickets than others, truly seems that its just a numbers game. Those that have 1’s or 2+ their whole career and then get a 3 all of a sudden, is not because they are poor performers, its probably because they make too much. As an L2, 75% of my work is considered L3 work.. They let go of the L3 but kept the L2(me), why? Why not, if we can get the same out of both for a lesser amount, no brainer for Watson to figure out. The real number rumor is more like 1/6 of the workforce, this probably is the 1st round in 2015 after those with 2/28 and 6/30 release dates clear and they can onboard India to these accounts before most leave. Why they used 6/30 for many is because of the time it takes to onboard to accounts with background checks, network and AD permissions. The PBC is well BS to help justify that the reason to let someone go that has performed their job years on end to not have to pay them that much. I mean people working 20 years are being let go, even if they had one bad year (which is unlikely they just give them a 3 to justify, and disputing will not change that number, you are on a list thats it) they just don’t want to pay them that much anymore when they can get someone cheaper in to take that place for a lesser amount. Grow your career at IBM, but not too much and you will be safe – for awhile…
Good corporate governance
Good corporate governance means, at a minimum, separation of powers between CEO and Chairman of the Board. IBM still has one human wearing both hats—the top manager of the pyramid in charge of formulating strategy—and the Chairman of the Board (of Directors) tasked with representing shareholders and ASSESSing the CEO. The Chair can greatly influence what gets on the Agenda, which Directors get on what committees etc
One human wearing both hats has too much power and opportunity for gaming the system.
Anonymous:
Thanks for sharing
Anonymous:
Thanks for sharing your input and insight.
What about Salesforce.com? Marc Benioff is both CEO and chairman of the company. They ranked number two on our top CSP list.
—CJ
Thanks for your compliment. I
Thanks for your compliment. I am ignorant of Salesforce. But I believe he is the founder, that it is newer/smaller versus [email protected]
My background is tech, not finance nor management, but my understanding is that many of the larger corporations– in Canada at least– have accepted the wisdom of splitting–at a minimum– Chair and CEO.
IBM Ginni also holds the
IBM Ginni also holds the title of President. To my understanding that is an older term, compared to COO–Chief Operating Officer. To my understanding the terms President and COO are co-equal.
Regardless of the title, the President in my view is responsible for executing the strategy that the CEO formulated.
To use Apple as a great example, Steve Jobs was CEO, visionary formulator of Strategy and Tim Cook was the COO, diligent and vigilant executor of factory operations, supply chain logistics etc. It was Tim Cook COO who creatively implemented the requirement to ensure off-shore factories had the necessary inputs and it was Cook who locked up DHL (I believe) for the Christmas rush so that Apple could physically ship product to market (and perhaps Competitors could not–haha).
One of IBM’s chronic problems is internal governance whereby one human (Ginni for now) is both formulator of strategy, executor of strategy, and judge assessing management (self assessment?!).
It would be like POTUS also holding titles of Majority Senate Leader, and Chief Justice of SCOTUS too.
And I haven’t even spoken of the CFO and his Financial Engineering yet.
Here is a Harvard Business
Here is a Harvard Business Review article on COO:
https://hbr.org/2006/05/second-in-command-the-misunderstood-role-of-the-chief-operating-officer
I am surprised the hallowed Financial press and its analysts/pundits/”experts” are not calling for separation of powers.
One person wearing 3 hats (CoB,CEO,President or COO) is too much work in a huge corporation in a very challenging situation, ripe for gaming the systems of governance and controls, delays decision-making due to over-reliance on Ginni authority, and impairs succession planning.
And the politicians (Both
And the politicians (Both Parties) say there is a shortage of IT workers in the states or did I imagine this?
India’s economic times
India’s economic times reported that IBM’s total head count in india is expected to shrink down to 100,000 by the end of march from 165,000 in 2011.
The PBC (personal business
The PBC (personal business contribution) ranking is quota driven – heavily masked by very senior mgt to be a committee & ground up appraisal & comparative ranking. What happens is a PBC quota for 1, 2+ is set from USA & then AP Hq for Australia. This is done in October then refined in November months before any employee or 1st line manager interaction. The quota is 1 (5%) and 2+ (20%) Then the rest of the 75% staff them have to ‘fit’ into what was the remaining 2 (60%) and 3 (15%) quota ranking. A person that is 2 is able to claim to be made redundant. A 3 is basically getting readied to be sacked for non performance and save IBM money.
In the 2 last year IBM reduced the quota of 2 from 50% to 35% and increased the 3 from 15% to 30%. To save money on redundancies. Basically it’s set up so nearly one third of staff can be fired without compensation or cost to IBM. The PBC process is like something out of a monty python movie. The PBC Quota is imposed top down. The manager already has submitted their rankings to the top down quota edict long before the employee even submits their view on performance. The PBC discussions are a sham cover and then the first line manager (and second line & third line etc) are told to assign PBC rankings to the top down Quota edict.
This is the best and most
This is the best and most succinct explanation I have seen of what I know to be exactly the case. I was going to try to articulate this but this is all you need to know. The PBC game is rigged; shocking I know.
I am all for handsome
I am all for handsome executive compensation and bonus programs. But, bonuses need to be earned. Eleven straight quarters of declining revenue at IBM tells me that no one within the organization deserves a bonus, especially the CEO. Additionally, I believe it’s extremely bad form for a leader to take a bonus while the organization is terminating a large number of employees. IBM is going through transition and a great deal of pain, the CEO needs to feel that pain as well, not profit from it. If you want people to follow you and believe in you, you need to lead by example. These layoffs may be the right move for the company, I am not close enough to cast judgment on that decision. But I do know that I could not respect a leader that takes a bonus or salary increase in the face of this type of organizational disruption. Right now, IBM = Poor leadership.
I agree, that does not show
I agree, that does not show good leadership to take a bonus in light of layoffs. I was part of the layoffs in 2009, As a tech person, I spent 17 months looking for work. My advice to anyone caught in this most recent round of layoffs – find a new company that truly cares about their employees. It’s clear that IBM does not.
Cassandra:
Thanks for
Cassandra:
Thanks for responding. Could you send me an email at [email protected]?
Thanks, Cassandra.
—CJ
Jim:
As always, thanks for
Jim:
As always, thanks for your input. What have to heard from channel partners regarding these layoffs? Any concerned IBM partners?
—CJ
CJ – Generally, I am not
CJ – Generally, I am not hearing much of anything from the service provider community that I with, because many of them don’t have a relationship with IBM. That said, I think many providers are watching the story at IBM unfold because they have been a constant in the technology market for such a long time. But, again, this is a lesson to any company or industry. If you’re not looking ahead and making the right decisions for the future, you can be disrupted, regardless of your size.
I believe that IBM is being
I believe that IBM is being run like the government, and has fully complicated it’s function. The strategy of IBM should be restructured to aim at the path of the current technology, and not stay stuck on the fact that they are still in the last century regarding organizational structure. Time to grow up big blue!
GP:
Thanks for reading and
GP:
Thanks for reading and providing additional insight on the structure of IBM. Where is Big Blue failing in its structure? Mainly the C-suite?
—CJ
Could IBM employees launch a
Could IBM employees launch a class action against IBM for this deceitful & misleading business conduct ? (Below).
“The PBC (personal business contribution) ranking is quota driven – heavily masked by very senior mgt to be a committee & ground up appraisal & comparative ranking.
What happens is a PBC quota for 1, 2+ is set from USA & then AP Hq for Australia.
This is done in October then refined in November months before any employee or 1st line manager interaction.
The quota is 1 (5%) and 2+ (20%) Then the rest of the 75% staff them have to ‘fit’ into what was the remaining 2 (60%) and 3 (15%) quota ranking.
A person that is 2 is able to claim to be made redundant.
A 3 is basically getting readied to be sacked for non performance and save IBM money.
In the 2 last year IBM reduced the quota of 2 from 50% to 35% and increased the 3 from 15% to 30%. To save money on redundancies.
Basically it’s set up so nearly one third of staff can be fired without compensation or cost to IBM.
The PBC process is like something out of a monty python movie.
The PBC Quota is imposed top down.
The manager already has submitted their rankings to the top down quota edict long before the employee even submits their view on performance.
The PBC discussions are a sham cover and then the first line manager (and second line & third line etc) are told to assign PBC rankings to the top down Quota edict.”
Though my wife performed well
Though my wife performed well during 2014, still she is given rating 3 and terminated giving 60 days time. she works from home after her maternity leave. Yes, this is a planned lay off for her, to terminate her, she was rated 3.one more point though PBC discussion was done in december , her rating was announced/communicated to her after one month, rediculous this is
Anonymous:
Thanks for
Anonymous:
Thanks for sharing. Are you able to disclose the reasoning Big Blue gave her? I’ve never seen a copy of what a PBC report looks like.
—CJ