Conference 7.286::digital

I didn't hear it first-hand, but supposedly in Harry Copperman's DVN he said
that we should look for details in the future on how Digital's employees would
"share in our success".  What that means is anyone's guess.

Salary increases are really quite dependent on which organization you're in
and what their budget is.

				Steve

    
    
    	--- probably some sort of profit sharing, which would be 
            DELIGHTFUL!!! See, C&P Div. already has it in place
    	    since it has been profitable. Hopefully CSD will follow
    	    soon.

    There is a communications package in place around the profit sharing
    plan. Check with your managers and ask for details.
    
                                             JJD

    Digital Semiconductor has received final approval to implement a Group
Incentive Plan for FY96.  Specifics are to be communicated at our next quarterly
business review on Feb. 6.

       "Many remote sites will have the opportunity to view this meeting
        via Digital's Argo videoconferencing software.  Watch for notices
        at your site."

    RE: .2
    
    C&P has been pretty much dismantled into individual businesses. The one
    that I'm in has been told that the C&P plan--which never paid out to my
    knowledge, having not been profitable since the plan was implemented--is 
    no longer in effect.

    C&P DID pay out! At least in NPB.

RE: .3

We did ask our management.  They are just as much in the dark as the rest of
us.  Any idea when this new plan will trickle down?

Irene

> C&P DID pay out! At least in NPB.

  What's NPB? I don't think we shared any success in E&RT.

  Personally, I consider it goodness that Larry Cabrinety
  apparently didn't share his "success" reward with us.

                                   Atlant

    There used to C&P but there is still Components Division.  NPB (Network
    Product B?) has been part of Components Division. It was never under C&P
    umbrella.
    
    - Vikas

  Must be "Networks Products Business". I dunno if that was ever
  under Cabrinety and C&P.

                                   Atlant

    
    Network Products Business paid out 7% this past year.
    
    Storage paid out 12% this past year.
    
    PCBU lost money, they paid out 5% two years ago, I believe.
    
    Alpha Personal System group has announced profit sharing for this year.
    
    Don't know about the "rest" of the company, though I believe sometime
    this year all Business Units will announce a profit sharing based on
    revenues over a certain upper management decided upon number.
    What do they have to lose, except maybe keeping some talented people 
    in this company, if we don't hit our numbers, they don't pay out, if
    we do hit our numbers or go beyone them it's all gravy.
    
    Makes sense to me.
    
    /art

My organization (up to our cost-center manager) has heard nothing about
this.

			Steve

    There has been information out in the Field around the upcoming plans -
    I believe it was even discussed in Digital Today.  For those of you who
    are not in the Sales area, though, understand there is both a positive
    and negative connotation to this.  During good times you can, in fact,
    be paid more, but Digital's plan will also have the reverse effect when
    times are bad.  I personally thrive under such an environment - not
    everyone does, though, so be careful what you ask for.
    
    Remember, your salary will be reduced during negative times for the
    company.  For those of you who have never had a salary reduction due to
    being on commissions or whatever, that could be quite a shock.
    
    Chuck

    
    
    PCBU paid out only 2 percent two years ago, not 5 percent stated a few
    notes back.  It was not based on profitability, but meeting our
    forcasted numbers.  We then went two years without any salary actions.
    No profit sharing was distributed to the grunts last August is correct.
    We keep plugging away. 
    
    gb
    
    
    

    re .11
    
    Storage paid out 10%, because that was the maximum.  The numbers may
    have been even better than what was required to get 10%, but most of us
    workers don't know either way.
    
    I heard that MVCS got 4% this past year.
    
    As for the reply about salaries going down in bad times; that isn't the
    case with these plans.  These are profit sharing plans, not commission
    plans.  Sales and maybe marketing may have commission based plans, but
    the rest of us (engineering, manufacturing, finance, etc) have a
    straight profit sharing plan.
    
    Rich

    Flame this if you want, but...
    
    9 months ago, when the last BIG wave of layoffs hit, all you could read
    in this conference was how lousy this company was,...Ken wouldn't do
    that, etc....All honest emotions.
    
    With the prospect of pay raises coming back, how many REAL DEC/Digital
    employees would consider throwing some of that soon to be realized cash
    into a fund to help those who got shot, and are in hard times now?
    
    (Putting my flak vest and helmet on)
    
    gc

    There was a lengthy Digital Today article on the over-all approach.
    
    My take on it was that these incentive/profit sharing plans are
    being pushed in place of regular salary actions. So I would not
    expect a sudden cut in base pay for most of us, rather that base
    pay won't "keep up" but will be offset by these bonuses (as long
    as the business/group/etc you are in has a good year).
    
    Dave

    In MCS, in the UK at least, we have been told that the days of regular
    and even irregular, payrises have gone for good. The only way to get a
    payrise is to get a promotion and I guess even that may not be
    guaranteed. 
    
    To offset this, MCS has the Opportunity Channel, Merit Awards and the
    Variable Compensation Plan which is basically a annual bonus based on
    how well you, your group, function etc meet their goals. Your basic pay
    and hence pensionable salary will not change.
    
    MCS UK has plans to increase service revenue from $400m+ to over $1B
    over the next four years. However, as this is 'low margin' business,
    the financial incentives will remain unchanged.
    
    Frank

    Well here in Germany we get the raises as negotiated by IG Metall
    (world's largest union).
    

 
    rep .14
    
    I did say "PCBU lost money, they paid out 5% two years ago, I believe".
    I thought this was correct, sorry sorry.
    
    2% was still better than the 0% Alpha Personal Systems has paid out to 
    date.
    
    rep .15
    
    I was told it was 12%, that must have been the actual if it didn't have
    a max limit.  Thanks for updating.
    
    
    rep .16
    
       "Flame this if you want, but...
    
    9 months ago, when the last BIG wave of layoffs hit, all you could
    read in this conference was how lousy this company was,...Ken wouldn't
    do that, etc....All honest emotions.
    With the prospect of pay raises coming back, how many REAL
    DEC/Digital employees would consider throwing some of that soon to be realized
    cash into a fund to help those who got shot, and are in hard times now?
    
    (Putting my flak vest and helmet on)"
    
    As for putting the money I get compensated for into a fund.
    
    How come nobody that was "hit" early on, with say 104 weeks paid, put 
    say 10% into a fund for us "non-layed off" employees who stuck it out
    and watched the "package" shrink and shrink and shrink.
    
    In 1996 it's every grunt for him/her self. Get used to it, that's the
    way it is, nobody has ever dived on their sword for me.  Much less
    kicked in some money.
    
    During the first couple of layoffs, seeing as I would have gotten about
    30 weeks paid, and I was only 30, I did ask management to "hit" me.
    They declined saying you couldn't volunteer to go, it had to be their
    decision.  I would have had a job in two weeks, or less, and I would
    have had 20K in my pocket.  As for the workers still unemployeed, I'd 
    say lots of them are in the "over 50 crowd".  Age discrimination is
    wrong, and somehow someone, should stop this, I hate to say government,
    but this policy of getting rid of someone because they are over 50, 
    and in some instances over 40, and/or making over 70K is wrong, PERIOD. 
    This should stop.  The company typically makes lots of money off us when
    we are young, and not compensated very highly, the company must have
    loyalty to us when we start getting older.  We are the company,
    companies cannot exist without us.  I don't like unions, but it seems 
    (Seems Madam nay it is, I know not seems) like they may be a necessary 
    evil as the 21 Century approaches.
    
    If you want to give some of your money away, have at it.
    
    As for salesmen/women losing if sales go below some pre-set limit,
    that is fine, if you have a good product to sell, then the onus is
    on the salesman, meaning it's probably his/her fault if sales go down,
    not shaking the trees, etc.  
    
    But if you're trying to sell a space heater in the desert, ah well, 
    you're not going to make much/any money. 
    
    And upper managements salary should definately be tied to revenue,
    revenues go up, yes you do get the $380,000 bonus, and 300,000 options,
    salaries go down, your base pay goes down, bonus, ah not, options, not.
    
    But life is not fair, no way around it.  The little guy will probably 
    continue to get squeazed.

    Couldn't agree more with .24 on his observations about those who got
    the early out packages.  In many cases these were underperforming
    individuals whose excessive packages caused a further short-term drain on
    company earnings.  You mentioned that it is every man for him/herself
    in 1996, though I wish it were true.  Paying a real tax burden of
    approximately 50% (counting income, property, sales, etc taxes), and
    knowing what a large proportion of it is for social programs, I already
    do many times over my fair share.  If someone thinks that is cavalier,
    I want to know if you are paying extra to the government to help even
    further those who are "in need", such as by checking the appropriate
    box on your 1040 form.  If not, get out of my face, and do not take 50%
    of my earnings and then say I don't do enough.
    
    Sorry, a little off the mark, but I get p***** off when individuals
    suggest we do more for any group of "unfortunates", ex-DEC employees or
    whomever.  Who will be there to help us after we have given our all?
    
    Chuck  

    I never called them unfortunates...
    
    The tenor of this conference was that they were unfortunate, and wasn't
    this a terrible company to lay these hard working people off.
    
    Now the company isn't so terrible, and to h*** with them... they were
    lucky underperformers.
    
    This is all merely an ironic observation.
    
    gc

In my going-on-18 years with Digital, there have been many times when 
management told us that things were difficult and that we'd have to tighten
our belts.  Salary actions were stretched out, reduced and for many,
eliminated.  The first such time I can remember was back in 1979!  I cannot
recall a single occasion that Digital said "ok, we're doing better now, we'll
do something to let you share in our success".  Instead, we were told that
the continued sacrifice was necessary to keep the company healthy.  Many
talented employees bailed out for other companies which, in many cases, paid
a lot more than Digital.

It would be refreshing if there really was a change of attitude at the top,
so that employees were no longer viewed as "assets" (to be disposed of when
no longer desireable).  The recent general announcement suggests that this
might be happening, but even our HR rep knows nothing about it other than
hearing what Copperman said in his DVN broadcast.

I don't think Digital "owes" anything to employees who managed to stick it
out and who did the work of several people to help the company turn around.
But wouldn't it be nice if Bob Palmer thought it did?

				Steve

    
    Re .last - Steve,
    
    Well, there was the 50% match of the 401K plan last year. Not a lot,
    but not trivial either.
    
    					Ed
    
    

    
    50%?  I was only offered a maximum of 33% at a 6% contribution rate.  
    
    You must be a VP.
    
    J-

    i don't know about bonus in place of salary... i would agree that some
    kind of hybrid plan is nice.. but i find it a bit difficult attempting
    to do any sort of serious financial planning based soley on a bonus
    system as the only means of increased compensation..

	In Hudson (HLO) we are getting a coupon for an ice cream
	this week along with our regular paycheck.

re: -1  Did you have to tell??  Now everyone's gonna want a bonus!!

    
    
    profit/success sharing is nice IF you also have decision making/goal
    setting sharing. 
    
    If you have no input or power on how to resolve problems, then how can
    you be accountable for missing the profit goal?
    
    The good thing about salary is it's YOURS. It is SUPPOSED to be tied to
    your personal accomplishments. With the limited power most of us
    'worker bees' have, that is the only thing we have any control over.
    
    Just as an example, if Joe next to me doesn't work a lick, the only
    person who can resolve that issue is my manager and personnel. They
    might (MIGHT) ask for my input, but I am pretty helpless to change
    Joe's contributions (or even his negative impact) on the group or on
    our product.  I AM however, penalized when it comes to the success
    share payout. 
    
    If our only source of financial reward in the future is going to come
    in the form of a 'group' reward, then give me some power over the
    group. If not, then look at what *I* have accomplished and reward me
    based on that.  If Digital is making money again, then I'd like to see
    some of it trickel back down to the folks who are making it happen!
    
    cpitt
     

    
    rep -1
    
    The trickle down theory is exactly that, a theory.  No basis in fact, 
    in fact it doesn't happen.  Reaganomics, or whatever his name was, I
    forget, proves this.  If you put it in at the top, it stays at the top.
    
    /art

	And if you put it in at the bottom and the middle, there's a 
	groundswell that goes to the top. Some senior people in 
	major corporations forget this. (With the exception of the
	owner of the Malden Mills)

							mike

>> It would be refreshing if there really was a change of attitude at the top,
>> so that employees were no longer viewed as "assets" (to be disposed of when
>> no longer desireable).  The recent general announcement suggests that this
>> might be happening, but even our HR rep knows nothing about it other than
>> hearing what Copperman said in his DVN broadcast.
    
    I agree, Steve, it would be nice to see this change of attitude but I
    wouldn't hold my breath on it.  My view of the article in Digital Today
    describing the shift to variable pay, is that it is nothing more than
    attempt to shift salaries, to whatever extent is feasible, from fixed
    to variable expenditures.
    
    The "target" is not to give out more in salaries but, over the long
    run, the same.  The difference is in the way they are doled out, more
    when the times are good but less when things aren't so good.  This is
    in contrast with a true bonus, which is something you get when times
    are good but don't give back when times aren't.
    
    While this has some real advantages, both for Digital and the
    employees, there is a real potential for abuse.  As has been pointed
    out, some people have direct control over the performance indicators
    that affect their pay.  For them, variable pay may not only be a fair
    deal but a motivation as well.  At the same time, others have zero
    control over these same numbers and can only do the best they can and
    hope someone else comes through on their behalf.
    
    Another problem is in the way these things get implemented.  Look at
    what's happened to many sales folks.  They get cut 10-20% then told
    they can "earn" it back with a 100%+ budget increase that they had no
    input on.  I know several that just packed up and left.  I'm not say
    this *will* happen (maybe we've learned something) but it can and does
    happen.
    
    Other companiees have abused this by keeping salaries unliveably low
    and then making up the difference in bonus money.  Even though the
    person may end up taking home a fat paycheck for years, often
    retirement, disability, and other benefits are calcuated on base pay
    and exclude these bonues.
    
    Back in the early 1980's, when we were scared silly by the Japanese and
    into TQM, employee involvement, flatter organizations, and other themes
    of the day, I think there was a real effort, however brief, to value
    employees as something other than "resources".  But this is the
    mid-90's and the current view is that employees are nothing more than
    assets, possibly excess and certainly disposible.  The gap between the
    "haves" and "have nots" hasn't narrowed, its increased.  Digital didn't
    start this but its swept up with the flow and probably can do little
    on its own to change things.
    
    I guess I'm really feeling cynical today but unless and until I hear
    something more concrete on this issue, I will continue to be skeptical.
    
    Larry
    
    

    

    Re .30:
    
    Art,
    	Hate do disagree with you, but IMO Reaganomics was a great success.
    Before Regan, I made about $6 or less an for about a 7 year span in
    COMPUTER SERVICE.  Things were getting worse.  Inflation was up near
    10% and interest was averaging around 15% in the late 70's.  Regan came
    along and in a few years my pay was in the mid teens.  Fuel cost was
    down to about a buck a gallon instead of $1.50/gallon.  Interest
    dropped to about 10% and even went lower at times.  Inflation almost
    came to a stand still.  Higher paying jobs became more prevalent. 
    After Regan, came Bush who undid a lot of what Regan did, and pay
    slowed down, business started having more difficult times, cost of
    housing went up, inflation went up.  Then came Clinton, and pay raises
    slowed way down, and in some cases stopped.  More and more business
    were getting in trouble, and downsized (note my politically correct
    word).  From my point of view, give me back Regan and Reganomics, you
    can keep Clinton and his liberal policies.  I want to be recognized for
    my work or lack thereof, and compensated accordingly, not punished for
    my accomplishments...
    
    Jim Morton
    
    

RE: .33

	You forgot to mention the trillion dollar debt that Reagan
	left us with. Oh, but that's ok, he forgot too.

							mike

    Mike,
    	From basic CIVICS.  Congress makes the law, and consequently
    controls the budget.  Something you forgot to mention.  I hold no
    budget problems against any president, other than just going along with
    increases.  Regan only went along with increases of taxes with a
    promise from congress to cut back government growth.  Congress
    renigged.
    
    Jim Morton

    Jumping over current rathole to stay on the topic track...
    
    The MCS Success Sharing program for FY95 (last fiscal) was aimed at
    non-sales (i.e., non-variable-comp) personnel.  Since my position spans
    two service districts, I am considered regional personnel, as opposed
    to local/district.  Therefore, in order to receive a success sharing
    payout, my whole region had to meet or exceed both revenue and margin
    goals.  I have some effect on that, but minimal, to say the least.  The
    payouts were done in for Q3 and Q4, and were *1%* of annual salary. 
    Not to be sneezed at, but not a fair replacement for even the
    (admittedly small) raises Digital has periodically given over the last
    few years.  
    
    I would certainly *not* be pleased to find that the success sharing
    program or something of its ilk was slated to replace a periodic pay
    raise based on merit.  That would most likely put me on the job market,
    and I think many of us non-variable-comp types would feel the same way.
    
    MHO, YMMV.
    
    M.
    
    

    
    rep .33
    
    You can disagree with me, no problem, that's what keeps it interesting.
    
    In my opinion, Reagan was out of touch.  He deregulated the banking 
    industry, dumped over 5,000 mentally ill patients into the streets, if
    I remember correctly.  He did break the Patco union, what an
    accomplishment.  He did send our Marines to Lebanon with no bullets in
    their guns, and 200+ were murdered.  But he avenged them by invading 
    Grenada to save a hundred or so "Medical" students who couldn't get
    admitted to a med school in the US, Yahoo!  He appointed James Watt to
    head the Interior Department, talk about giving the hen house to the 
    wolves!
    
    Just how did Reagan get your pay in the mid teens, did he train you,
    just how did he help you?  Are you sure that you just didn't learn and
    grow on your own?
    
    As for Bush undoing what Reagan did, when they were in office I
    couldn't tell which one was the magician and which one was the dummy,
    but seeing as George B. was the head of the CIA and R.R. was guvner of
    CA, I think George was the magician, and probably held the reigns of
    power, ah well then there is the Nancy factor, and the fact that she
    fired his chief of staff if I remember correctly, ah maybe it was their
    chief of staff then.
    
    It takes 3-5 years for an incumbants policies to really take effect, so
    some of the stuff in the Reagan years was probably caused by the Carter
    (19% interest rates, Burt Lance is my friend) administration, and
    Bush's policies have probably had an effect on the Clinton years.
    
    Business's have downsized because they were in most cases fat, really
    fat, and very slow to respond to any kind of impetus.
    
    More and more Americans are realizing that we are thinkers, inventors,
    doers.  With the downsizing or rightsizing depending on your
    perspective comes lots of opportunities to succeed, and also to fail.
    
    Look at all the new business's that Americans have created in the last
    4 years, most because they've had too, neccesity being the mother of 
    invention and all that.
    
    It's a free country, we are free to pursue our happiness, career, etc.
    
    /art

    Art,
    	I should have said this in the first place.  TAKE IT TO SOAP BOX.
    I responded to your misinformation because I thought your were just
    honestly mistaken.  From .37 I can see you want to spread your
    political propaganda.  All my arguments won't persuade anyone with your
    attitude, so please, if you want to spread propaganda take it to
    SOAPBOX, so I don't go off the note and others don't either trying to
    defend our position from what we believe is false information.
    
    Sorry Folks for my getting off the topic:
    
    Now Back to our regularly scheduled topic:
      I doubt we will get larger increases.  I never heard management say
    that they would make up for the lack of increases, only speculation
    from the general public trying to rationalize that we would profit when
    the company profits.  Keep in mind, Management doesn't always see
    things the way we (the grunts) see it.  More likely we will see
    incentives, which also benefit management.  I also hate being rated as
    a group when the members of the group have no power to change or affect
    the actions of our co-workers.
      The one sure thing is that everything (including people) takes the
    path of least resistance toward what the goal is.  When the goal is
    easier to attain elsewhere, that's where people will go.  Keep in mind
    that the goal isn't always money.
    
    Just my Ramblings:
    
    Jim Morton
    

    
    
    Not to mention the democratic congres.....

    re: .36
>    I would certainly *not* be pleased to find that the success sharing
>    program or something of its ilk was slated to replace a periodic pay
>    raise based on merit.  That would most likely put me on the job market,
>    and I think many of us non-variable-comp types would feel the same way.
    
    If you haven't done so, I'd advise reading the Digital Today article.
    
    Dave

		
	I found out what's going to happen.  DEC is going to resume the
	Christmas Turkey Program...  Gobble-Gobble

    
    
    since I don't have access to that article, can you summarize it for us?
    Basically, tell us how we're going to get screwed THIS time.....
    
    thanks
    

    
    Re .25
    
    Right you are....just the same 1/3 match is better than nothing.
    
    					Ed
    
    

It seems that our existing "variable compensation plan" in the form of ESPP
has been doing quite well over the last few days. DEC stock has jumped from 
59 to 73, and my small piece of that action is contributing to my ability to 
purchace an automobile that is actually legal to drive on the streets of 
New Hampshire!

Thanks to all of you hard working grunts (and execs) who made this possible.

Rick, stockholder, grunt.


P.S.

I sure wish we had variable compensation when I was working on the Nautilus
project. As I recall, we leveraged something like $9 billion in revenue. Of 
course I never learned to count that high in dollar units, so I may be mistaken.

I'm intrigued by the idea of variable compensation. I'm certainly not getting 
much richer with this salary thing. Equity is a very cool idea. Ask the guys
at Netscape.

    
    Jim,
    
    As I said in .37 
    
    "You can disagree with me, no problem, that's what keeps it
    interesting."
    
    
    You entered .33 with how great Reagan was, and why...
    
    I only entered my opinion, which is no better nor no worse than yours,
    everybody has one, and can express it, without being told to
    TAKE IT TO SOAP BOX. 
    
    As for "propaganda", why is it propaganda, because I disagreed with
    you.  So if I look up "Always correct Homo-Sapien" in the dictionary,
    I'll see a picture of you right, okay.
    
    I told you you could disagree with me, but I can't disagree, or discuss 
    with you, okay, so don't respond to my notes, whether or not you agree
    with them, I don't have a problem with that!
    
    Thank you very much,
    
    /art   (never shy about expressing my opinion, no matter how unpopular)

    Re: .41 (Turkeys)
    
    Does that mean ... \nasser is comming back ?
    
    Bill
    

    
    	This is all very fascinating (last 20+ notes) but the facts are
    this:
    
    	When management can't raise margins (for whatever reasons *you*
    wish to attribute), they *must* lower expenses.
    
    	When managers' individual compensation goals are based on targets
    *they* did not have input into, said managers focus on achieving said
    targets; nothing more, *nothing less*.
    
    	If you are in the middle, welcome to the crowd...
    
    	If you want more control over your life, then do it. Anyway you
    have to... If you don't care, and can "go with the flow", do that.
    Whatever, remember one thing, it is your life, and you make of it what
    *you* can. Not RP, not Harry the Smooth, nobody calls *your* shots.
    Life *is* politics - with your parents, your partner, your kids, your
    boss, your peers, your subordinates. 
    
    	The beauty is - it is YOURS.
    
    	That is why I love golf so much. You have to play it where it
    lays.
    
    	Digital is doing fine, and so are most of us. Period. End of story.
    
    
    		the Greyhawk
    
    	

re: .39
    
>    Not to mention the democratic congres.....

Before allowing this to die in SOAPBOX where it belongs, i should
comment that it's impossible to talk about a Democratic (or Republican)
congress because most of the southern Democrats voted with the
Republicans half the time, and a few of the northern Republicans
voted with the Democrats at least some of the time.  And personal
relationships between congresscritters factor in too, along with
their nominal ideology (e.g., Kennedy and Quayle and Hatch being
famous buddies "outside" of work).

Business has more to say about its own fate than government, since
it has the financial leverage to push government in the direction it
wants to go in.  Since the early '80s that direction has been to
maximize short-term profits at the expense of long-term survival,
and to reward executive officers extravagantly while treating
worker bees as throwaway temporary resources.  The jury is still
out as to whether companies can succeed with this kind of policy.
The older model of investing in employees as long-term partners
seemed to work well for a time--whether the new model is a beneficial
mutation or a cancer on the economy has yet to be seen.

- paul

    Re .45:
    Art,
    	You can disagree all you want with me, I really don't give a
    cracker.  You went way off the subj with political statements that are
    not only factually incorrect, but also offend some peoples point of
    view.  My initial response should have been to take your propoganda to
    Soapbox, but instead (feeling like getting into it) I then refuted what
    you said.  Your comments totally off the subject about Reaganomics had
    nothing to do with the topic.  I shouldn't have even responded, but I
    get very tired of people spreading their political point of view
    without being asked, so like a fool I responded.
    	I don't care how bad you hate the Republicans, or Regan or
    Reaganomics.  Your political and my political points of view don't
    belong here.
    	I also don't like the personal reference that my picture would be
    beside a phrase in the Dictionary.  Personal attacks don't become a
    professional.  That is a personal attack, the other things discussed
    were personal opinions, and I accept them as such.
    	As for me.  I've had enough notes deleted because I responded to
    attacks about things I believe are true.  My request that you take it
    to SOAPBOX is an attempt to keep this topic open and not have yours and
    my notes deleted, not an attempt to say you and I can't disagree.  So
    any further notes to try and gain a response from me about our
    disagreement will not be answered.  Personal insults and attacks on the
    other hand will be handled...
    
    Jim Morton
    

    
    
    would you guys just DROP the side note discussion or take it someplace
    else....
    
    geesh. You're worse then my two kids seeing who can get in the last
    word!! FORGET IT, OK?????????
    
    As for the SALARY increases, I've invested alot of energy into this
    company, as have alot of other people. I've invested ALOT of my own
    time as was necessary to get the job done to keep things going when
    they were at their lowest. I don't think it's too much to ask that when
    the ship is riding high on the tide again, that we can spread around
    some of the fruit of that labor. I'm not asking for a 20% pay raise,
    or even to be paid on the same scale as folks in alot of other
    companies are. I'm just asking if there are any plans in place to
    revisit the salary planning as it is today. I think alot of folks
    thought that if they rode out the storm, there would be some kind of
    rainbow at the end.....if there is to be NO change, then people oughta
    be told so they can make plans and stop WAITING for it to come.....

    Cathy,
    	I don't think you're going to get the answer you seek.  It's to
    managements advantage to keep bad news to themselves, and I don't feel
    that the answer will be positive, so ...
    	Now for My Opinion:  I think we at least deserve an answer as to
    how our compensation will be handled at a corporate level, and at a
    local level.
    
    Jim Morton

    
    
    re .51  ..  that' ok Dear.....
    
    Ditto your sentiment exactly......I think we at least DESERVE an answer
    
    
    ..fade to Jack Nicholson Palmer with gritted teeth....
    
    "An ANSWER??? You can't HANDLE an answer.............."
    

    Cathy,
       You crack me up.  Perfect statement.  Took me a while to wipe the
    tears from my eyes.
    
    Jim Morton

    
    Well I guess I'm one of those two kids, so I'll stop now, no more 
    social commentaries, political views, etc.  
    
    /art

    The coupons were passed, the freezers filled, the rush began,
    and then it was 



    			ALL GONE!!!

    
    	I think we are all in a agreement that how Digital compensates
    people could change. I've had talented co-workers leave for other
    companies and get 40+% raises. Management would have liked to keep
    some of the them, but it wasn't in the budget. So we actually get
    approval to hire someone to fill there position. So the new person
    gets hired for the 40% more they couldn't give the old employee. Why?
    You can pay new hires practically anything, while current employees
    raises come out of a budget. Bottom line is the same position ended
    up costing the company money. They could have given the old employee
    30% made them happey and saved 10%. There has to be a better way to
    work something out. It can get frustrating when new people come in
    and they make 30% more, yet you end up training them. In the end
    your both doing the same job. Yet, because they were a fairly recent
    new hire there salary is substantially more in some cases.
    
    Ron

    re .55
    
    and then the freezers were refilled and it started all over again...
    the cafe is full of people eating free ice cream now (whihc, in spite
    of all the jokes, has nothing to do with DS's new "incentive" plan)
    
    					da ve

re.18:

>In MCS, in the UK at least, we have been told that the days of regular
>and even irregular, payrises have gone for good. The only way to get a
>payrise is to get a promotion and I guess even that may not be
>guaranteed. 

I asked a well placed friend of mine in UK MCS about this and they said this is
not strictly true. 

I know someone who has had a pay rise without promotion in UK MCS.

If you want to know the exact situation ask Phil Addington. It would be
interesting to hear what the "policy" is.

Dave.

        Re: .56, keeping the old employee, if money would do it

    Additionally, you would keep what is in the "old" employee's
    head, and not have the additional cost of a 2-6 month ramp to
    train/meld in, the new employee that is earning 40% more than
    the one that you couldn't give a raise to.

    re: .56, .59
    
    ... Not to mention recruiter fees, relocation expenses (if applicable),
    cost to the organization in the form of interview time, disruption of
    personal and project schedules due to ramp-up time and training, etc.. 
    It's good to have a little turn-over (new blood and all that), but I've
    seen too many excellent folks leave our organization in the last two or
    three years, and the pain is being felt.  To be fair, there are at
    least a few managers who understand this problem and are pushing to
    change these counterproductive accounting practices.
    
    	Steve

    
    i am lost ....  what's the point..
    
    bob c
    

    re .59
    
    Morning of the Living Dead, part III
    
    The scene opens at the North Guard Desk. J.Q. Digit is turning
    in his badge. From out of the Guard station come several delapidated
    specimens of homo erectus, in their hands the shredded remnants of
    what appear to be silk dress ties and TMS print outs. They lumber
    towards the terrified J.Q. hissing
    
    
    		BRRAYNZZZZZZZZZZZ!
    
    

		NEW STRATEGY LINKS PAY TO PROFITS
		Digital Today, Dec 15 1995

Digital is changing its strategy for compensating employees. The new strategy
will be implimented gradually, over the next several years. Not all employees
will be affected immediately, but eventually all will.

Sarah Sumner is the newly appointed vice president of Compensation, reporting
to Worldwide Human Resources Vice President Sid Ferrales. She is responsible
for Digital's compensation strategy and development worldwide.

DT: What's the essence of the change in compensation strategy?

Sumner: In the past, Digital paid empolyess a base salary, and performance was
rewarded by annual salary increases. These salary increases were built into
base pay and paid in future years regardless of current individual performance.
These increases were not necessarily linked to business performance.
  In today's business envirnment, we need to compensate employees differantly.
We need to maintain the link between financial rewards and individual
performance, and at the same time, create a strong link between these
financial rewards and business performance. This is what the new compensation
strategy does.
  At the core of teh strategy is an industry-competitive base salary to which
we add a variable component, which then adds up to a person's target pay. The
variable component is a portion of total pay that can vary greatly, depending
on the performance of not only the individual, but of the group, the business
unit, and perhaps even the company. This component is not automatically paid
each year. It is dependant upon performance.
  The economic argument for this type of system is that when business is down,
payroll costs are lower, and when business is good, payroll costs are higher.
So this variable component aligns with the company's ability to pay its
employees. A very business-realistic arrangement.
  It's also a system that is being used more frequently in industry, but it is
relatively new to Digital.

DT: How does this system compare with pay at other companies?

Sumner: It compares favorably in many ways. As I explained about the alignment
with the company's ability to pay, the variable component will also mean that
Digital's average total pay will be greater than the market - that is, our
competitors - when our performance is better than our competitors', and our
average pay total pay will be less than the market when our performance is
worse than our competitors'.
  Our system also reflects the relationship of total pay for individual Digital
jobs versus similar jobs in the market. Typically, in many countries, sales
positions and higher level management jobs in the market have a higher variable
pay portion of their total pay, versus engineers, accountants, administrators,
etc.
  Our system will also reflect these differances country by country, which is
important for people to understand. Although jobs will have differant amounts
of variable pay, Digital's philosophy is to keep our average total pay equal to
the market's average pay, unless, as I said, Digital's performance is better
then average and we will pay more, etc.

DT: When will the change start? And when will it be complete?

Sumner: It began several years ago when the sales force went from base salary
to an incentive plan. In the meantime, many countries such as Canada, the U.K.
and Australia have been implimenting variable compensation programs for several
years.
  Asia Pacific was one of the first to impliment a variable pay strategy for
all of its countries and its success has helped us a lot in developing a global
strategy for teh company. Europe has also had experience in several countries
for a number of years, and we have learned from that area's experience as well.
  The strategy was approved by the Operations Committe in October 1994, and
since then, we have developed a variable compensation "platform", which is a
set of rules and standards that countries and businesses will follow in the
development of their programs for FY'96.
  In some countries and businesses, the strategy described has already been
implimented and programs are in place.
  Other countries and functions will impliment at differant times and at a pace
that makes the best business sense for them.
  The change will be gradual, but we expect that within the next two years, all
DIgital organizations will be working within the new strategy.

DT: Are there organizations in the U.S. that are familiar with variable
programs?

Sumner: The Storage and Networks Products Business Units had variable programs
in FY'95. The PC Business Unit had variable programs in FY'94 and FY'95.

DT: What makes an employee eligible for variable pay?

Sumner: All employees, over time, will be eligible for variable pay. The
"platform" defines the types of variable programs, along with eligibility of
differant emp[loyee catagories. Countries and businesses will be developing
specific programs, using the platforms, and after approval they will
communicate these programs and eligibility to their employees.
  What is very important to the sucess of the strategy is having clear goals,
eiher at a company, business unit, group, or individual level, that are
ccommunicated and understaood. However, we have to be very careful that company
and business goals are communicated in a way that let employees understand
them, but not our competitors. Therefore not all company and business goals
will be communicated, because of this disclosure sensitivity.
  Once employees understand their eligibility, it then becomes important for
them to understand their program, how it works, and their individual goals.
It's going to be important that employees think hard about ways they can
contribute to meeting not only their own goals, but the goals of their business
units or functions and the company as a whole.

DT: How do you expect employees will relate to the transition?

Sumner: This change is going to take a little while, and not every organization
is changing at the same time or pace. So there will be some of us living
differantly, compensation-wise, from others for a time.
  Whatever, the fundamental reality is this: The whole industry - including
Digital - must pay excellant compensation for excellant performance, and vice
versa. The scaled sown companies of the '90s must use their compensation
systems as a tool to drive excellence and reward for that acheivement.

DT: Do you expect that some employees could interpret this as, "Hey, I'm
already working very hard, does this mean I've got to work twice as hard to
earn the same?"

Sumner: I imagine that some people may ask that. However, just working hard
doesn't necessarily man the person is working the right way, nor does it
guarentee sucess. But the assumption should be that if you are meeting or
exceeding your goals and your business is doing the same, then you should
expect to earn greater rewards.
  This new strategy gives all of us an opportunity to be rewarded for excellent
perfromance, and that excellent performance will drive the company in the same
fashion, which then loops back to more rewards, and so on. It's an upward
spiral.

DT: Closing comments?

Sumner: Employee compensation is a huge expense line that's critical to the
company's profit and growth, to shareholder return, and to the quality of life
and well being of employees. We're evolving compensation at Digital through
it's next logical step, one based upon business and individual performance, and
encourages excellence.
  If we pull together to bring Digital back to its place of leadership in the
industry, our compensation strategy and programs will provide the rewards to
all employees who've made it happen.
    

I intend to keep an open mind about the discussion of variable
compensation. Sure, there are lots of ways that it might be screwed up,
but I'll be optimistic until I see it played out in a few businesses.

There have been a few TV programs on PBS about Lincoln Electric company. They 
make arc-welding equipment. This is a rather low-tech industrial product, that 
almost anybody in the world could make, and probably make cheaper than a U.S. 
company. Yet, Lincoln still dominates. They pay a high percentage to their 
employee's in the form of variable pay. It was not uncommon for a blue-collar
factory  worker to be making $60k a year, when bonuses and incentives were 
considered. They were a very motivated workforce producing highly competative
product.

I also believe that Ben and Jerry's have a similar high percentage of 
variable pay. (Interesting that they also limit compensation to executives to
come multiplier of the lowest paid worker.)

This Lincoln story is a few years old. Perhaps sombody has some more recent 
information about Lincoln. 

I own a Lincoln arc welder myself. A good product at a reasonable price.

Rick 

RE: .64

>company. Yet, Lincoln still dominates. They pay a high percentage to their 
>employee's in the form of variable pay. It was not uncommon for a blue-collar
>factory  worker to be making $60k a year, when bonuses and incentives were 
>considered. They were a very motivated workforce producing highly competative
>product.

"variable pay" sounds like a euphemism for "piece work", which is not a 
new concept. My father worked piece work for years, and as I recall, even
though he made good money when he retired his pension was something like 
$37/month because the "variable pay" didn't count toward what the  company
put into the pension fund for him.

And I must say, I loved the paragraph that basically said "we will compensate
you based on how well you met goals, but we might not tell you what those
goals are that you will have to meet.

Finally, that article raised many questions in my mind.

1. Will the amount that the company contributes to your pension be based
   on your "base" salary, your "target salary", or what you actually make
   (base + variable).

2. If/When you get your "variable part", will you be able to apply a
   percentage of it into a 401K? And if so, how do they determine "highly
   compensated" for plan purposes. (This is important not only for tax
   purposes but also for retirement planning.) 

3. Will the base and target salaries be reviewed every year to make sure
   that they remain "competitive" (I sure hope that they don't get stuck
   at the same place for 10 years like our reasonable and customary amounts
   for dental).
 
Did the article have an address you could contact to address any questions
to?

Deb

    I think the model works fine when the product is some easily
    quantifiable thing.  In other words, when there is little
    differentiation between competing products - and when the demand for
    the product is largely a given.
    
    I can't say that this is what you have when it comes to software -
    where the product is largely a work of art, and where marketing can
    have a large impact on final sales.
    
    How many times in this company have good products been developed only
    to "die" due to lack of marketing/follow on resources.  Of course,
    another problem I see here, is that innovation very rarely comes from
    the top (if ever).
    
    There are far too many variables in this equation for my liking.
    

    How does this work - on implementation, does your paycheck go down to
    the "base" salary, and the "variable" part arrive in a lump-sum at the
    end of they year/quarter/whatever?  

    
    .65 good questions.
    
    I have an uneasy feeling about this. I suspect, and based on the
    complex explanations given in that press release, that this program
    in probably over-engineered, without any discernable comprehension
    at any level.
    
    The new VP is quite mistaken in her assumption that Digital employees
    are getting a yearly raise, independent of merit. Certainly we the
    "middle-class" population of Digital has NOT gotten yearly raises, even
    if we outperformed specs.
    
    I do keep an open mind, but these are not good signs. If an
    organization is a 100% cost-recovery business unit (not a pure
    profit center) how would variable pay work?
    
    It seems to me instead of making a wholesale transformation in an
    area rather alien to Digital, perhaps it should take little baby
    steps, like instituting profit-sharing across the corporation. For
    example take n% of NET profit, divide that by #of employees, and
    that is what you get. That would track the actual performance of the
    company, right? Frankly I do worry that all these grand schemes are
    not analysed situationally and therefore invites plenty of unintented,
    but potentially counterproductive consequences.

        If this was piece work, I wouldn't be so concerned.  Piece work means
    you get paid for the pieces of work you do.  You do a lot and do it
    good you get paid good, else you get less according to your output.
    This compensation is for what everyone does.  This doesn't make me feel
    very comfortable.  I expect to get paid for what I do, not to have
    someone else get rewarded for my work, or I take the fall for someone
    elses bad performance.  If I were a manager and responsible for a group
    then I would expect that my compensation be a reflection of my groups
    performance, but not someone elses, unless I had control enough to make
    changes.  To be honest, I don't know how much more I can take. 
    Communism is what this is, and I'm not liking it too much.  I'll wait
    and see and hope for the best.

    Jim Morton

  
    re: Note 4374.69 by CSC32::MORTON
        "Compensation based on the group is communism"
    
    Actually this is not true; communism is "each according to his needs"
    or something to that effect. In reality, rewarding a group based on
    the group's goals is called the team concept.
    
    One of the less-attractive aspects of Digital has been the dearth of
    teamwork, both at the individual and the organizational levels. In
    Digital, a "team" is simply a notation on an org chart, usually only
    to facilitate the evasion of responsibility when somethings blows up.
    We have lots of rugged individualists, who feel that their technical
    contribution to the company is enough to merit rewards, and that they
    have little responsibility for the end results or the bottom line.
    
    Lord knows that Digital as a corporation has done little to engender
    the feelings of trust and empowerment that are required to make the
    team concept really work. With brutal layoffs, constant management
    waffling, and inter-group squabbles over cross-charges, it's a real
    challenge to trust anyone other than yourself enough to take some
    responsibility for a team metric. On the other hand, I think that
    the current competitive climate requires the level of productivity
    and responsiveness that only an integrated team can provide.
    
    What can Digital do?  The historical "pay-for-performance" method has
    been a joke for years. Right now it's "job-retention-for-performance".
    So the new system can't be too much worse than the old one. It may
    be a little premature, especially if management can't even communicate
    what all the metrics will be. I don't think that there are many people
    left in Digital who are willing to take "trust me, you didn't do as
    well as we expected on the *secret* metrics" as a reason for their
    pay being reduced.
    
    Finally, the comments about "competitive" pay are interesting. I've
    seen a number of people hired lately, almost all of them ex-Digits.
    I have yet to see us attract anyone from our primary competitors.
    So how can our pay be "competitive"? Maybe they have a different
    definition of the term up at the HR HQ ...
    
    Geoff 
    

    G'day,
    
    Whilst not contemplating a change in home just now, the size of base
    pay can affect your borrowing power for mortgages.. 
    
    A regular $$ amount gross *3.5 is the guide here in Australia (as a rule
    of thumb) ie earn $50k, one can borrow 175k. A bonus of 15k adds(I
    believe) nothing to the loan figure a salary 0f 65k gross (and regular)
    gets a loan of 227.5k and a much better house...
    
    So while a bonus is nice to have....when it comes, IMHO, I'd rather be
    paid in a meritocracy.. do well get paid well.. beside if we all do
    well, then the company makes a profit and can afford it. Don't do well,
    don't get a rise, company has less expense..(to go withthe less profit)
    
    my 2�
    
    derek
    
    

    Somehow I have the impression they have (again) forgotten about
    Europe...
    
    In quite a few (if not most) European countries a change in the
    compensation system won't be possible without union and/or works
    council involvement.
    
    And .71 makes a valid point.

    They may have forgotten Europe in the mail but in the Uk we have been
    running a "variable compensation" scheme for several years now, started
    by a previous MD, Chris Conway. What it meant in the UK was that after
    years of NO pay rises for most people, their base salary was to all
    intents and purposes 'frozen' and the 'variable compensation' took the
    form of an annual bonus based on several levels of goals, i.e.
    personal, team, group and UK goals being met gave 2.5% each  giving a
    max of 10% of base salary (but only if personal goals were me!)
    
    The bonus is not used for pension calculations etc!
    
    Variable compensation is not popular with the workers! and no
    consultation was necessary in the UK for the management to make this
    change.
    
    Jim

>            <<< Note 4374.64 by SPEZKO::RYEN "Rick Ryen MK01-2 " >>>
>                         -< It can work quite well... >-
>....
>I also believe that Ben and Jerry's have a similar high percentage of 
>variable pay. (Interesting that they also limit compensation to executives to
>come multiplier of the lowest paid worker.)

Ben and Jerry's multiplier was, I recall, seven for the range from
lowest paid to highest paid person in the company.
However, when they "went public" with their search for a new CEO (replacing
Jerry, I think, who asked to be kicked upstairs as the company entered a more
competitive national market and presence) they had to abandon this metric 
to attract sufficiently qualified talent.

- tom]

    
    
    Maybe now would be a good time to exercise the 'open door policy'
    and send one or two mail messages to our new VP in charge of
    Compensation offering our support in her efforts to improve the salary 
    plans, and our suggestions for possible modifications to the current
    plan on the table...
    
    
    [email protected]
    
    Also, she reports to Sid Ferrales who is the Worldwide Human Resources
    VP (geez, I thought that the Human Resources office was closed down years
    ago..)
    
    [email protected]
    
    I'm sure that Sid would appreciate any input you have to share as well
    in this matter. 
     
    
    

    
    re. Lincoln Electric
    
    As I remember from B-school Lincoln Electric's system is *not* piece
    work.  It is a combimation of profit sharing and gain sharing
    (productivity improvements).  Which implies team goals which I like -
    and the profit sharing is short term focussed which I don't like.
    
    Greg
    
                                             

    
    Well, my mail to [email protected] failed. 
    If anyone can come up with the email address, please post it here. 
    
    thanks. 

    How about [email protected] ?
    	
    	Yaacov

    Early on in this particular note stream I alluded to the Digital Today
    article, which a recent noter put in.  At that time I stated that
    everything would not be a bed of roses, but rather there would be
    positive and negative connotations (i.e. one could do better or worse
    than one's salary, depending upon your performance against personal and
    company goals.)  I was pushed aside by others who felt that I was wrong,
    and it would be more like a profit sharing situation, wherein you never,
    ever go below your salary, and in fact, could go higher.  Now that you
    have read otherwise, let me give you some perspective from one in Sales
    who has lived the variable compensation system for years, both within
    and without Digital.
    
    Digital has done a reasonably good job of insuring for the past few
    years that most salespeople would not be hurt dramatically by this new
    compensation system.  Through a variety of goals set for each
    individual (e.g. performance against budget, payment for specific
    classes of sales regardless of budget performance, etc.) you can come
    close, or even exceed your salary, even if you did not make your
    budget.  This insured that reps were not dramatically impacted as you
    run into an almost inevitable downturn in any one given year.  On the
    other hand, while Digital pays greater than salary for overperformance,
    it probably does not represent a "competitive compensation", since most
    reps for other companies would make dramatically more if they were
    hitting the same sorts of overperformance.  Don't get me wrong - it can
    be very lucrative to overperform at Digital, perhaps just not as
    lucrative as you may find in many other corporate situations.  All in
    all, both myself and many others in Sales have found the variable
    compensation system to be quite rewarding since its inception, and not
    something to be feared.
    
    As to previous questions around the impact on benefits, I have some
    responses:
    
    1. No, variable compensation does not get factored into pensions and so
    forth.  But realistically, we all need to take care of that area
    ourselves anyways, through 401(K)s and IRAs.  Consider pensions a bonus
    of sorts, if they even exist when you retire.
    
    2. Yes, 401(K) and stock withholdings are taken out of variable
    compensation payments, helping to reduce the tax bite (and lessen your
    need for pensions) on these sometimes large payments.
    
    Summary points:
    
    -During good times you can do much, much better than your salary under
    a well managed variable comp program.
    
    -Sales, with its well-established (if sometimes readjusted) goals, may
    lend itself more to a variable comp plan, but it can certainly be used
    for a whole company and whole company goals, also.
    
    -Before you criticize and even worse, be afraid of a variable comp
    plan, see what it entails.  Read the fine print, and then decide for
    yourself if it is your cup of tea.  If yes, stay and try to prosper
    under it.  If nay, vote with your feet.  After all, this is America,
    and not some Communist/Formerly Communist/Maybe Swinging Back to
    Communism country.
    
    Chuck

A problem I see with this scheme, which others have also referred to, is that
while variable pay can make sense in jobs where you have a direct influence
on measurable performance (how many X did I make (or sell)?), how this would
apply to engineering, administration and support groups is murky.  No matter
what effort I put in towards developing a Fortran compiler, it's not going to
have much external effect on how many Fortran compilers we sell, as this
tends to be a fixed percentage of system sales.  So my salary is at the whim
of how many VAX or Alpha systems we sell?  And who sets the goals?

I would be curious to know if upper management will also be put on a variable
pay basis with a reduced base pay.

					Steve

just a word of warning for those who may soon be subjected to variable 
compensation... be *very* careful to check over the wording of your goals for 
any inconsistencies or ambiguity, otherwise you may not receive any payment.  
That happened to our team, we thought we'd acheived our goals, but when it 
came to payout time, an auditor came along and said `yes, but, here's *my* 
interpretation of your goals, and you didn't meet them.  Tough luck, daddio.'
After kicking up a stink, we did get some of the money several weeks later, 
but it's not something I'd care to go through again.

Chris.

    
    
    I like profit sharing.  That way, we make it or don't make it as a
    corporation.  In the good times, we are all rewarded, when times are
    lean, we ALL tighten our belts.
    
    
    
    Mike

    profit sharing is good! profit sharing in lieu of salary for most is
    not so good (unless you are in a sales position).. if ones salary is
    fixed at say $50,000 and the bonus incentive plan
    is fixed at some percentage of that... then one could theoretically 
    earn less money year to year (depending on business goals).. in order 
    to earn more under this plan the fixed component would have to increase
    periodically (10% of 60,000 > 10% of 50,000).... another option to make
    this a bit more palatable would be to have the variable component tied
    to a percentage of something other than a fixed value that isn't likely
    to change over time...  
    
    not to mention as stated previously that for most who are not in a
    sales position the ability to control the outcome is fairly widely
    distributed... 
    
    profit sharing is a good idea in tandem with a reasonable salary
    plan...but not at the expense of the other...

    
    
    One of the reasons I favor the profit sharing is because it should
    eliminate all the infighting that occurs around credit received which
    would result in doing the right thing for the customer and for the
    corporation.  I've seen and heard of meetings where different areas of
    Digital were in competition as to who was going to be able to after a
    specific opportunity to add to their numbers instead of trying to
    figure out who could handle the business in a way which would be most
    efficient and most effective to the customer and Digital.  Also, when
    the profit sharing money came in, the employee would be able to earmark
    a percentage of that money for their own retirement plan if they so
    chose.  
    
    Mike 

    Seems to me key questions are:
    
    	Does this change preclude periodic 'base' salary adjustments
    	to account for inflation/cost-of-living increases?
    
    	How does this change account for salary adjustments in those
    	cases where the market/benchmark 'base' salary increases?
    
    Dave

    I'm with Steve and the few others in here who acknowledge that
    evaluation schemes for those of us in the "information" sector are not
    objective. I was going to limit my comments to those of us in the
    field, but Steve's note reminds me that even folks in engineering
    suffer from a similar fate. My position is that since we cannot be 
    objectively measured, then a variable compensation scheme would
    DEmotivate us and result in poor performance - the exact opposite
    behavior of what is presumably intended.

    In the field I very rarely see my boss. Translated: he can't have a
    very good idea of how well I'm doing. (I'm assuming that "quality of
    work" is a decent metric to use in evaluating someone.) Even if he did
    see my work, if he were not a technical person he would still not be
    able to accurately assess its quality. So, quality of work is going to
    be virtually impossible to measure for those of us who do software.

    Another metric could be customer feedback. This depends on the
    customer. Some customers want nothing to do with administrivia - they
    just want a consultant there to do a job. If the consultant messes up
    then the customer will squawk, but otherwise no news is good news. How
    to measure that? Yes, we have (or used to?) the famous annual
    questionnaires. I've seen said questionnaire go to someone at the
    customer site who didn't have a clue what we did. I've seen said
    questionnaire go to someone who had an axe to grind with some piece of
    Digital (not us consultants) so they took out their frustrations by
    giving low scores everywhere. Seems that customer feedback isn't a very
    reliable metric either.

    We could go to billable hours. Yes, the company is a for-profit
    enterprise, so billable hours are important. We in the field, though,
    are rarely able to have much impact on billable hours. Sure, I can not
    get sick for a year or not take vacation (gonna be tough now that we
    can only bank 200 hours) or not go to training, but this hurts all of
    us in the long run. (Details available upon request.) What's worse,
    even if I did do these things, those hours represent a drop in the
    bucket compared to what my real job is.

    I rarely have the opportunity to sell myself to someone. Sales is to
    land the job; I am to keep the job. The typical consultant does not
    have the training - and most of us don't have the skills even if we
    were trained - to be successful sales people. If we were good at
    selling we'd be sales people. We're good at analysis, design,
    development, testing, planning, customer interaction, etc. It's a rare
    individual who can excel in both a technical position as well as a
    selling position. Besides, even for those rare individuals, how are
    they supposed to be out landing the next job while they are currently
    concentrating on fulfilling the current customer's requirements?

    Well I could develop this theme further, but I'll summarize by
    reiterating what I said at the outset. Many of us cannot be objectively
    measured. As a result, a variable compensation scheme would be seen as
    unfair, taken as the company's way of back-handedly reducing our
    salaries, and ultimately produce even worse morale than we had during
    the worst layoff years. If you want to kick a few extra $$ into our
    checks during outstanding quarters instead of watching them all flow to
    the top and/or the shareholders I would be pleased. Regardless, I would
    like to be able to count on a stable income for the consistent work I
    deliver.

    	BD�

    	With regards to base salary, .63 uses the key phrase
    "industry competitive base salary".  That may or may not result
    in annual raises.  I would guess that in general this would
    cause base salaries to continue to rise regularly, especially
    where they were deemed to not be "competitive".  It might also
    freeze some salaries which were deemed to be too high.
    
    	In the (far) past I have seen adjustments to salary based solely
    upon our salaries becoming non-competitive.  However, those were very
    good years...  I do have some faith that as we return to health
    financially, we may be able to (continue to) offer competitive
    salaries.  Not necessarily superb salaries, but COMPETITIVE
    salaries.  Profit sharing then clearly becomes a plus.
    
    Cheers!
    Dave Eklund
    

    Obviously the metrics for different professions would require a great
    deal of documentation (measurement criteria etc). This could create a
    whole new level of management...and after all, we must watch out for
    our core competencies now mustn't we?!?
    
    8^)
    
    Rob Wall
    
    

    IMHO the problem with variable compensation is that your compensation
    is not adjusted for inflation.  For instance, let's say you are a
    software engineer.  For the sake of picking an objective metric, let's
    say that this year you wrote 1 million lines of code and your salary
    was $50K.  Next year if you write another 1 million lines of code, I
    would expect your salary to increase by at least the rate of
    inflation...i.e. $50K + .05($50K). Like every other business, your cost
    of producing that code went up due to inflation.  Your utilities, food,
    insurance, etc. all increased because of inflation.

    Now under variable compensation, your raise is typically tied to a
    professional goal.  My experience has been that your goal would
    probably be to write at least 1.25 million lines of code.  After all,
    your business unit wants to grow by at least 25% next year.  Now if you
    don't meet your goal, no bonus :-(.  If you do meet your goal, then
    maybe you get a 5% bonus.  OK, so now you have to produce 25% more code
    for 5% more pay.  The next year you have the same situtation.  Just
    like compound interest, pretty soon you are providing twice the amount
    of code for substantially less than twice the pay.  Great for
    productivity, not so good for your mental health or personal finances!

    You are a resource like any other resource that the Company needs for
    producing a product.  Now let's say that you went to every power supply
    vendor and told them that next year we expect you to provide 25% more
    power supplies to us for 5% more money.  And, by the way, we will only
    give you the extra 5% if we do well as a company.  How many power
    supply vendors would be lining up at our door?

    Profit sharing, on the other hand, works better because you get that
    annual correction for inflation (salary increase).  When the company
    does well, you get additional money through profit sharing.  When the
    company does poorly, you get zip and often no correction for inflation
    (salary increase).

    Someone from sales might have to correct me on this one, but the reason
    variable compensation works OK for direct sales is that the price of
    product goes up due to inflation.  Let's say you work on a flat 3%
    commision.  As the price of widgets goes up due to inflation, you sell
    the same number of widgets for more money.  Your 3% commision on the
    larger amount makes up for inflation.  Someone from sales would have to
    comment on the merits of the actual variable compensation plan for
    sales.  In any case, your job of writing software does not have a built
    in adjustment for inflation.

    I think that for non sales employees, a variable compensation plan
    tends to be a very lopsided arrangement that does not favor the
    employee. I will try and keep an open mind about variable compensation,
    but I would encourage everyone to analyze this plan VERY carefully.  On
    the surface it looks like another way to reduce payroll expense at the 
    expense of the employee.  Factor in the effect on your pension, your
    borrowing power, etc. and this could have some serious consequences to
    your personal finances.

    Also remember that your compensation depends on the overall profit of
    the company.  There can be a lot of creative accounting between the
    work that you produced and the profit shown on the books, which could
    deny you your "piece of the pie."

    And that's all I have to say about that. :-)
    (sorry about the length)
    
    Paul Brooks

    .-1 triggerred a few additional thoughts...
    
    What other benefits are tied to base pay?
    
    	Life Insurance, Disability, ... ?
    
    Dave

Re: .89

Our salaries have never, officially, had anything to do with the rate of
inflation.

				Steve

    Re: 91
    
    Sorry, didn't mean to imply that our salaries were officially tied to
    inflation.
    
    I do think that is the way most of us view annual salary increases
    though.  You look at your salary increase and you know roughly what
    the inflation rate was for the last year.  If your increase is greater
    than the inflation rate, good.  If not, you know you are actually
    getting paid less than last year.
    
    Too many increases less than that rate of inflation tell me to look
    for a new job.  My point is that you should get a salary increase
    every year for the SAME performance.  Otherwise, due to inflation,
    you will be getting paid less for the same job and performance.
    Although I am sure you are right and there is no attempt in the
    salary planning system to adjust for inflation, an annual raise
    has that effect.  My question is, "will the variable compensation
    system have a similar effect?"
    
    Of course, if your performance is much better than last year you
    should be rewarded.
    
    JMHO
    
    Paul Brooks
                                  

    RE: .89
    
    Your points are valid except for your own (admittedly a guess)
    observations of how it may work for sales.  The fallacy of your
    arguments are:
    
    1. In the computer field we are always working in a decreasing price
    environment.  As the costs of h/w and s/w decrease, you have to sell
    more and more just to stay in place, much as you alluded to in your s/w
    code analogy.  I wish I was selling widgets that increase in price each
    year, that the customer is willing to pay for.
    
    2. Your goals are tied, on a year to year basis, to a budget.  Your
    budget increases each year, just like you alluded to in your example of
    increasing the line of code an engineer needs to put out each year. 
    Again, you have to run faster and faster to stay in place.
    
    Now put both #1 and #2 together, which is what has been occurring each
    and every year, and you will see how difficult it can become for the
    salespeople in the company.  We may be more comfortable with variable
    compensation schemes than those who have not been under them yet, but
    it doesn't mean we necessarily prosper all the time under them.
    
    Chuck
                                                  

    RE: .93
    
    Thanks for the insight into sales compensation.  I was hoping someone
    from sales would chime in.  This confirms my suspicions about variable
    compensation.  As you said,
    
    	"Again, you have to run faster and faster to stay in place."
    
    I guess what I find frustrating is that corporate America wants more
    and more from the employee for less, but as consumers the price of
    everything we buy keeps creeping up.
    
    I don't know about you, but I am feeling |\\\\\\\]squeezed[\\\\\\\|

    
    re .78
    
    [email protected]  is the correct mailing address. Sarah is
    currently in Singapore but will be in next week. 
    
    cpitt
    

    
    rep .89
    
    
    Does writing 1 million lines of code one year and then 1.25 the next
    really guarantee that you were productive.
    
    What if another software engineer could have achieved the same results
    with only 750,000 lines of code and only 3/4 of the time.
    
    Software has always had me kinda baffled anyhow.  It's very hard to 
    measure whether or not the code is optimized, in software 3 lefts 
    may equal a right, but it takes two extra steps to get there.
    
    Being a hardware type, I've always been amused or bemused that at
    design review, etc, if the bug is in the hardware, we have to present
    the fix, the theory behind the fix, and implementation plan, and a
    qualification plan.  With software, it seems to be, I found X in Y and
    it's fix, go!  I know it's not as simple as that, but it has always 
    seemed to be.  
    
    /art

    stick to hardware, Art!  I'm sure that there are folks that have made
    changes in their software to accomodate a hardware "feature".
    
    Mark

>With software, it seems to be, I found X in Y and
>it's fix, go!  I know it's not as simple as that, but it has always 
>seemed to be.  
    
not really, there're change requests, problem reports, testing, field testing, 
roll-out procedures, follow ups, etc, etc.  And, since one of our customers is 
the Inland Revenue, the required bureaucracy can be produced at the drop of a 
hat!  And my experience is just with smaller applications and system services.
Aargh, etc.

Chris.

    
    	As a "token" salesperson, I'll put it this way. When I got my last
    raise, in 1992, I had a budget of roughly $1.5-million in "new
    business" (that would be above the previous year's numbers and
    represented an average increase across the US).
    
    	This year my increase was approximately $2.5-million in "new
    busines" from last years numbers. Salary is the same as 1992 except
    the 30% "at risk" to make the numbers in the first place. Not
    complaining, because I like BIG upside potential.
    
    	I just don't think variable compensation works for "team" jobs,
    like software engineering, hardware reengineering (;-)), finance types,
    etc. A profit sharing plan might work, might not...
    
    	What I would suggest is a Cost Center Target series of goals that
    would reward everyone for goal achievement. ie, cutting 15% of the cost
    out of manufacturing a 2100 by the CCs associated with Alpha 2100s.
    Then each individual would share in a bonus pool created by a
    percentage of the savings.
    
    	Code generators would be CC'd by product type, time to market and
    net revenue growth would be the targets, again percentage of pool
    distributed across all CC employees.
    
    	It would really work, and work well; but then good ideas are...
    well, you know, its the bureaucracy, man...
    
    		the Greyhawk
    

>    	What I would suggest is a Cost Center Target series of goals that
>    would reward everyone for goal achievement. ie, cutting 15% of the cost
>    out of manufacturing a 2100 by the CCs associated with Alpha 2100s.
>    Then each individual would share in a bonus pool created by a
>    percentage of the savings.
    
just to maintain my reputation as an eternal cynic :) that will work only if 
there's no `massaging the figures' taking place.  Amazing how a business unit 
can miss its figures by less than 1% repeatedly...

Chris.

    
    rep .98
    
    I know software engineers have had to change their code because of
    a hardware "feature", this is true.
    
    What I basically said, was that it seemed to me that we had to go 
    through a more stringent process of fixing and verifying a bug fix.
    This is what I basically said, this is what I basically meant.
    No slams were directed, implied, or offered against software types.
    Read into the note what you want Mark.
    
    As for "sticking to hardware", thanks for the free advice, as Steve L.
    says, "It's worth every penny".  I think I will.  :>)
    
    /art

    
    rep -1 
    
    should read .97, not .98
    
    And I did say I know it's not that simple.
    
    /art

    re: .89
    
    the only thing I see wrong with this thinking is it is the same
    as wall street analysis use all the time, 
    
    re: expected earnings for microsoft is 987 million
        last year they did 523 million
    
        microsoft comes in making 853 milliom
    
    stock drops because they didn't produce according to some
    analysis predictions....
    
    

re.73:

There is no general variable compensation scheme in the UK SBU this year. I 
assume SBU sales will have variable compensation. I'd also like to state 
that salaries are not frozen in UK SBU and never have been. 

Dave.

    re: .105
    
    Dave,
    
    No salary freeze in the SBU? Not even when Chris Conway imposed the
    salary freeze on everybody?
    
    Jim
    (Not in the SBU, I'm in OMS which is now part of MCS)

In an article subtitled "PAY-FOR-PERFORMANCE STANDARDS ARE A JACKPOT THIS YEAR
FOR EXECUTIVES, BUT NOT FOR WORKERS", Time magazine this week discusses how
the fruits of success are divvied up as profits and stock prices soar in the
U.S.

http://pathfinder.com/@@u3G8z1AdNgEAQNCH/time/magazine/domestic/1996/960205/executive.html

    re .107
    
    An interesting article. Seems to imply that it's the 'investors'
    driving this "outcome based compensation" BECAUSE CEOs have been so
    greedy. Interesting concept.....
    
    Hundreds of Thousands of Dollars in bonus's to some while those at the
    bottom of the heap (also known as WORKERS) saw a 2.7% increase in
    wages (reported in the article as the lowest in decades)....
    this in a year of "wild profits"......
    
    An interesting aside, it also notes that CEOs on average make 185 to 1
    the salary of the WORKERS.....
    
    
    

    
    rep -1
    
    Doing some math.  If we have 60,000 workers, and 150 VPs, then
    
    60,000 / 150 = 400
    
    So they are underpaid by this formula.
    
    /art

    re: .109
    
    .108 wasn't talking about employees/VP.
    
    Bob

    re. rep 109
    
    A little amendment
    Digital has 60,100 employees (re Q2 report) and ....... 190 VPs !!!!
    
    Frans

    wow.. sure does wonders for my morale...:) i feel better already...

    From the Boston Globe
    
    
    			Quote for the Day
    
    	" I wish to become rich, so that I can instruct the 
        people and glorify honest poverty a little, like those 
              kind-hearted, fat, benevolent people do. "
    
    
    						Mark Twain

re.106:

>    No salary freeze in the SBU? Not even when Chris Conway imposed the
>    salary freeze on everybody?

The SBU is only just in it's 2nd year in the UK. The last UK salary freeze 
pre-dates the current BU based organisation.

Dave.

    Yeah, and many people's wage rises in the UK pre-date the last two
    re-organisations too.

    G'day,
    
     re the minor rathole (mousehole) re hardware vs s/w..
    
    now shall I use an RC oscillator, or a chip? 2 skins, 1 cat
    
    it's just that the physical hardware constraints etc have stylised
    solutions to a greater extent, over a longer time is it not? Now if
    objects could be re-used more effectively, then we could use a 's/w
    chip' in the same way as a hardware chip...
    
    
    (and yes I come from a s/w background...)
    
    
    
    back to earth...
    
    profit share would work... but why should a high up get 5% (say) of
    $$$$$ compared to a worker bee's 5% of $$? all should get same $$
    
    ... and now, working happily onwards reaping the bonus, and scraping
    thru on a low base wage is not my idea of fun.. and if I have to save
    the bonus and eke it out over teh next year, then it is not a bonus -
    which I reckon should be EXTRA money in the pocket.
    
    
    and should one dare to compare base salary with another when perhaps
    trying to get a job elsewhere (heaven forbid) then it is hard to get a
    significant rise to parity of base + bonus "is that all they paid
    you... how can you justify such a big step up?"
    
    
    and how will JP&R work.. what about the being on ~50%percentile after 2
    years against a 3 rating.... how in the current climate does one get
    back to scale parity... scales are based on average pay at the average
    competent person doing an average job for the industry. With 3% pa pay
    rises (if lucky) how does one climb from 10th percentile toward parity
    even with reviews of 1?????(if you are that lucky)
    
    
    derek
    
    
    
    
    

	A recent Times article stated IBM was going to issue bounus and 
merit pay increases this year averaging 8% for their remaining 110,000 
employees. Factors sited where a 50% increase in the IBM stock price and 
38% increase in profits.  

    I guess a 50% increase in stock price is more relative to fat raises,
    etc., when your stock is +100 a share.  Of course, I just read that
    they are planning large layoffs again, too, so they aren't much better
    off than we, and perhaps the 8% raises are a rumor.
    
    M.