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IBM fires small-town workers

theguardian.com

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Re: IBM fires small-town workers

#11

Post by pcurve »

fennecfoxen wrote: post #5

As opposed to doing what? Keeping these workers on board as an act of charity? IBM operates for the benefit of its shareholders, not its employees; also, water is wet.

Layoff is a blunt instrument that swings in one direction, and cannot be undone. It's easy, but it results in too much unnecessary casualties.

When you've been with a company for 10, 15 years, you accumulate wealth of business knowledge that can always be re-deployed in other areas through careful planning.

That takes more skill than just swinging hammer. But with the absurd money we're paying the executives, shouldn't we expect a little more than just a hammer in their toolbox?

Re: IBM fires small-town workers

#12

Post by fhars »

drpgq wrote: post #8

"Employees in the US, and in those small towns, also say they’re unhappy that IBM is shrinking in America while outsourcing to countries like India." Aren't they laying off in India now too?

You are probably thinking of Lenovo laying off the employees in the server division they bought from IBM.

Re: IBM fires small-town workers

#13

Post by dalke »

mseebach wrote: post #6

This sucks for the people concerned. But IBM's core responsibility can't be to maintain comfortable jobs that aren't sufficiently profitable. The world has changed dramatically and IBM hasn't changed with it. The longer you go without shedding the dead weight, the more painful it gets, but you still have to do it. The article suggests that shedding jobs equals not investing in the future, while also mentioning severa…

Without knowing the breakdown of which units are being laid off, how do you or the shareholders have the information to know if management is indeed "shedding the dead weight" or is instead tweaking the numbers to meet Wall Street expectations?

You don't. Increased opacity makes it harder to make any judgements. For example, IBM is quoted as saying they have "more than 3,000 job openings", but those could be pro forma openings which aren't expected to be filled, and exist mostly to promote the idea that IBM is hiring. The real test would be the number of people hired, but IBM does not publish that information.

The article does not say, as you believe, that IBM is "investing billions in new business areas". It says IBM "committed $1bn to its new Watson unit and $2.2bn to expand its cloud offerings". Those appear to be an expansion of existing business areas, and not an investment in new ones.

It also says IBM has "investments in areas such as nanotechnology which will bring hundreds of new jobs to New York State." IBM has been in nanotechnology for over 20 years, so you can't conclude from this article that this is a new business area.

Re: IBM fires small-town workers

#14

Post by mpyne »

mseebach wrote: post #7
pcurve wrote: post #3

When your compensation consists of $500,000 fixed salary with bonus of $2 mil - $5 million, naturally you're going obsess over Wall Street numbers. I think executives should be penalized for layoffs, because with proper resource management, layoffs can be greatly minimized. In fact, EPS increase through asset sales, layoffs, stock buyback should all count against their bonus figures.

> with proper resource management, layoffs can be greatly minimized. This is a pretty bold assertion. We're not talking about a few jobs at the margin, eg. one report speaks of 25% of the hardware business.

Still though... some way of tying the effects of management actions that harm workers to the compensation of management themselves would at least reduce the inherent moral hazard here.

But I'm not even sure the most "fair" way to do that... what if you bring in a new CEO right as the mismanagement of the last CEO finally blows up the balance sheet? Wouldn't seem fair to the new guy to make him pay for it.

Re: IBM fires small-town workers

#15

Post by BU_student »

It's sad to see IBM gut its workforce in the very place it was founded, just to increase its EPS.

I go to a college that is right next to the village Endicott. The population of the nearby city of Binghamton, a member of the Rust Belt, saw its population decline from a peak of 85,000 to its current total of about 47,000 when the manufacturing jobs left. The decline has taken it's toll on the city. Binghamton is now one of the fattest, most depressed cities in America.

http://www.syracuse.com/news/index.ssf/2012/03/america_fatte...

http://www.businessinsider.com/most-depressing-cities-in-ame...

Re: IBM fires small-town workers

#16

Post by mattdlondon »

I was previously an IBMer (not US based) until I left a couple of years ago, and I know someone very close to me who has just been offered redundancy from IBM (also not US based).

I appreciate the company's responsibilities are to the shareholders, but their approach seems to be short-sighted.

The culture in IBM seems to be if you are a sales person or a project manager you are the well-treated elite, and anyone else (i.e. the researchers, the developers, designers, consultants - basically anyone who actually makes anything that IBM sells) can go fuck themselves and are treated as dispensable/replaceable assets.

They're painting themselves into a corner - there are only a limited number of times you can get rid of the people on the ground actually doing anything before it really starts to hurt.

I think they've realised this and that is why they are now just buying companies rather than creating their own offerings.

Is it too late? Probably - they are only just getting their act together with cloud offerings whilst a bookshop has become a market leader. I dont think they can catch up.

Re: IBM fires small-town workers

#17

Post by kev009 »

yeukhon wrote: post #4

To me, IBM is a dead company, no matter how cool Watson is. My perception of IBM is a consultant company. While IBM research still makes tons of awesome progress in AI and security, IBM looks like GE and Bell Lab to me. I don't know who is the legacy now... I wonder how IBM employees feel about their job.

Reports of IBM's death are greatly exaggerated. People have been saying this for four decades when minicomputers rose, when the PC rose, when the server rose, when Linux rose.

IBM is a market maker and there is no other company quite like it. It always feels unintuitive when they shift, but I expect them to keep on chugging along and continuing to innovate.

Re: IBM fires small-town workers

#18

Post by gaius »

mseebach wrote: post #7
pcurve wrote: post #3

When your compensation consists of $500,000 fixed salary with bonus of $2 mil - $5 million, naturally you're going obsess over Wall Street numbers. I think executives should be penalized for layoffs, because with proper resource management, layoffs can be greatly minimized. In fact, EPS increase through asset sales, layoffs, stock buyback should all count against their bonus figures.

> with proper resource management, layoffs can be greatly minimized. This is a pretty bold assertion. We're not talking about a few jobs at the margin, eg. one report speaks of 25% of the hardware business.

No company hires just because. They have a plan and need people to execute it. If those people do their jobs well and still the company fails, then logically, you would keep the workers and replace the management. But it never seems to work like that.

Re: IBM fires small-town workers

#19

Post by linuxhansl »

Typical scenario: - layoffs for short term EPS - current pipeline continues momentum for a bit - CEO gets credited with great success... and moves on to the next company - then the "oh shit" moment, when the lack of personnel becomes apparent

Some CEOs are like locusts. Moving from company to company for a short term frenzy, then moving on to the next.

I hope this is not happening here.

Personally I do not quite follow the current mentality of only thinking about the "shareholder value". If a company is just break even, it still pays earning the livelihoods of its employees. That should count for something - but of course is doesn't because investors can make more money elsewhere.

Re: IBM fires small-town workers

#20

Post by vyrotek »

fhars wrote: post #12
drpgq wrote: post #8

"Employees in the US, and in those small towns, also say they’re unhappy that IBM is shrinking in America while outsourcing to countries like India." Aren't they laying off in India now too?

You are probably thinking of Lenovo laying off the employees in the server division they bought from IBM.

drpgq might have been thinking of this (Seems to match you described as well):

IBM layoffs strike first in India; workers describe as 'slaughter' and 'massive' - https://news.ycombinator.com/item?id=7223582

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