IBM to phase out 'extra pay' for late-shift workers

Posted September 16, 2010

— IBM (NYSE: IBM) is ending what it calls “extra pay” or “premiums” for U.S. employees who work late shifts and what the company calls “alternative schedules.”

The change takes effect in January, and affected workers will receive a “bridge” in compensation for a year as the change is implemented.

A source familiar with the situation said the extra pay amounts to less than $100 to $200 a week. Most of the workers involved belong to IBM’s various services units, not manufacturing.

IBM confirmed to Local Tech Wire and late Thursday that employees across the company were told about the move earlier this week.

“We briefed employees this week about phasing out extra pay - pay that is over and above base salary,” Doug Shelton, director of IBM’s Corporate Media Relations, said. “The change takes effect January 2011.

“Importantly, these changes include a salary increase for some employees and a 12 month transition allowance for all others to provide a bridge to the change,” he added.

Alliance@IBM, the union seeking to represent IBM workers, attacked the move as one that would “drives the standard of living down for IBM employees.”

“It just shows that without a union contract or a voice inside IBM, workers are at the mercy of any unilateral change IBM wants to make,” said Lee Conrad, the national coordinator for Alliance@IBM and a retired IBMer.

“It is one more instance where corporate management drives the standard of living down for employees,” he said.

Shelton defended the global information company’s move as a necessary one based on costs and the practices of competitors.

“This decision is about maintaining our competitiveness within our industry,” Shelton said.

“This change better aligns our pay practices with competitors that have long abandoned, or never paid, over and above base salary in the first place,” Shelton explained.

“Our pay practices are based on the principles of paying competitively, paying for performance, and differentiating pay based on outcomes. Even with these changes, IBM continues to have an overall competitive compensation package, and offers significant growth opportunities for employees.”

IBM is also not trying to drive workers out of the company, the source with knowledge of IBM’s thinking explained. Disaffected employees would simply “go to work for a competitor.”

Contractors were not affected by the decision since IBM doesn’t control their pay.

“This update to IBM’s policy affects employees and managers across most business units that work 2nd, 3rd or alternating shifts,” Shelton said

Alternative schedules include employees who don’t work a consistent daily shift or an eight-hour work day.

Some compensation, such as holiday, emergency, on-call and in some cases weekend pay, is not affected.

The decision affects only IBM workers based in the U.S. However, IBM periodically assesses how its competitors operate in other countries, the source told LTW and

IBM employs some 100,000 people in the U.S., including around 10,000 people at its RTP campus. The company no longer discloses how many workers it has in any location or campus, citing competitive reasons.


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  • Leonardo Sep 16, 2010

    "IBM is also not trying to drive workers out of the company, the source with knowledge of IBM’s thinking explained. Disaffected employees would simply “go to work for a competitor.”"

    Uh...what? Isn't that one sentence contradictory?

    IBM absolutely DOES want to force out as many U.S. employees as possible and replace them with Chinese and Indian workers making 10% as their U.S. counterparts. These 2nd and 3rd shift positions are perfect for overseas labor.

    The truth is, IBM is an absolute HORRIBLE place to work nowadays. Waves and waves of layoffs, even though profits are through the roof and the stock is flirting with record highs. Completely dysfunctional at all levels. Everyone horribly overworked and not provided basic resources to do their work. But it's all part of the new IBM business eliminate as many U.S. employees as possible, then use the profits to purchase other U.S. companies, then squeeze them dry too, then repeat the process ad infinitum.

  • russpiet Sep 16, 2010

    So Alliance said that without a union...the workers are at the mercy of mean IBM can control what they pay and how they pay their employees...what a different concept. In other words..if Alliance dont like it...than let them buy IBM and they can call the shots. extension of Obama.

  • EverythingTicksMeOff Sep 16, 2010

    What a crock. Let's see. They want competitive pay. So they do that by lowering it. Ok.... And they don't control contractor's pay? Oh yeah? 2 years ago, they mandated a 10% cut in contractor's pay across the board. This is just another example of IBM dumbing down. 30 years ago, they strived to be the best. Now they try not to be any worse than the average. I would never encourage any young persons to work for IBM. It used to be special, but now it's getting to be more and more like a sweat shop. And all this comes when IBM is doing just fine, far better than the industry. It makes you want to puke.

  • Wenchmaid Sep 16, 2010

    I don't work at IBM, but I do work night shift at a company and a huge part of the reason for that is the shift differential. Why would I turn my life upside down without getting paid more to do it? Sintax is right, IBM is taking advantage of employees who can't afford to quit with the lack of jobs right now. How shameful!

  • daisy18 Sep 16, 2010

    That is a lot of money when you add it up for the month. Too many companies are taking advantage of the economy to hurt families even more.

  • sintax Sep 16, 2010

    So, no extra incentive to work 3rd shift? Good luck with that.

    I guess they figure that now is a good time to put the squeeze on the workers, since nobody can afford to quit.

  • trianglerelic Sep 16, 2010

    $200 a week is $800 a month or a Mortgage payment. Also if a person get's AWS pay and works nights, that $800 a month turns into $1600 a month less. This is a huge cut, and only those with very specialized skills will be considered for the "salary increase for some employees". It may be true that competitors do not pay premiums, but many of the people that chose to join IBM over those competitors did so because of the benefits that are now being taken away.

  • Harvey Sep 16, 2010

    I'm sure it will be a huge hit.