Business

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

Posted September 16, 2010 6:55 p.m. EDT
Updated September 16, 2010 6:57 p.m. EDT

— 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 WRAL.com 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 WRAL.com.

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.