What IBM's Doing with Pay

Posted by: Steve Hamm on February 26

There’s a pretty interesting contrast between IBM and HP on pay strategy. I wrote about HP in a blog posting a couple of days ago. Mark Hurd announced across-the-board base pay cuts last week after the company reported a bad quarter. I had IBM HR chief Randy McDonald on the phone yesterday on another matter, but asked him about pay. He says IBM isn’t doing anything very radical or innovative when it comes to dealing with the recession. People are concerned about their careers, so the company is focused on that. On the compensation front, the 5,000 top executives won’t be getting pay raises this year, but the best-performing of the other 395,000 employees will. This year’s performance bonus pool will be the same size as last year’s. “This isn’t the time to do new and different stuff. This is not the time to experiment. You focus on the basics,” McDonald told me.

TrackBack URL for this entry: http://blogs.businessweek.com/mt/mt-tb.cgi/

Reader Comments

Eric

March 2, 2009 01:05 PM

This is what should be done in the most US coporations, most of executives are not worth to be paid higher than sales person or technical people. In an already established coporation, these executives are just doing routine taskes, no creativities, not really leadership, they are not deserved to be paid much higher than average employees, Japan's executives are not paid as good as US, actaully they are paid much less than US executives, but their companies are not doing as bad as US ones.

Anonymous

March 10, 2009 04:58 PM

“This isn’t the time to do new and different stuff. This is not the time to experiment. You focus on the basics,”

McDonald's comment is nothing but pure hubris. We're in a global recession that's impacting all businesses, including IBM's. I don't recall hearing any executives commenting on IBM's massive layoffs in the early 90's by saying “This isn’t the time to do new and different stuff. This is not the time to experiment. You focus on the basics,”. Or maybe offshoring expensive US labor is part of IBM's "basics"?

Moreover, reducing pay in lieu of layoffs is nothing new, particularly at HP, which invented the "nine day fortnight" back in the 70's.

Thank you for your interest. This blog is no longer active.

About

Innovation is happening everywhere these days. Companies operate without borders to find the best talent and the best ideas wherever they may be. Meanwhile, new business models are arising that just might make it possible to turn large swaths of this contentious world into something approximating a true global village. Tune in for Senior Writer Steve Hamm's dispatches from the intersection of globalization, innovation, and leadership.

The Race for Perfect is available at Barnes&Noble, Amazon, and Borders. Selected chapters are available online. bangalore tiger book