Conference 7.286::digital

  Notes:

    o The issue is the US issue of "Newsweek" dated February 26, 1996.

    o I meant to add a note to my table offering additional
      information about some of the CEOs:

        - John McDonnell is the current Chairman and
          former CEO of McDonnell Douglas.

        - Roger Stempell is the former CEO of GM.

        - Ed Brennan is the former CEO of Sears

        - Michael Miles is the former CEO of Philip Morris.

        - Bill Ferguson is the former CEO of NYNEX.


                                   Atlant

    
    I was confused when I read the article the other day. Shouldn't the
    number have been closer to 60,000 jobs cut, rather than the 20,000 men-
    tioned in the article?
    
    Let's take credit where credit is due.
    
    

    I read the entire article and as anything one would digest in the press
    you have to look at the +'s and -'s along with information that is
    missing and what you can glean from between the lines.
    
    For the record, only 2 of the CEO's mentioned consented to be
    interviewed for the story.  One was Allen from AT&T and the other was
    Dunlap from Scott Paper.  Simply put, if I had a choice of working down
    at the local gas station or working for either of these two CEO's the
    choice would be clear.  Bob Allen has to be the most arrogant chief
    executive I have ever seen or heard from.  He treats his people
    as if they are commodities that can be traded like cattle.  I know, I
    have friends that work for AT&T and they think he's a pompous man too. 
    And scroll back one note and gander at his pay.  That's approximately
    $62K per week before taxes.
    
    I was dismayed when I saw Bob's face along with this as you put it
    "rogue's gallary".  Now, Mr. Palmer certainly had to deal with some
    tremendously bad situations.  But look back at the hand he was dealt
    and now examine the hand we are playing with today.  We are winning
    market share in key growth industries (UNIX, VLM, Data Warehousing,
    Internet, PC's and Lan servers, storage, networking and software), we
    have almost quadrupled our stock price ($18-->~$70) during his reign,
    we are respected in the eyes again of our customers, the investment
    community and our competitors.  We are making money from operations,
    doing our best to control costs and expenses (lots of work to do here
    yet) and trying to take 32 years of culture, history and work ethics
    and turn them on a dime.  Was it easy?  NO.  Was it fun all the time? 
    DEFINITELY NOT!.  But we pulled ourselves up from a state where $3
    million was falling off the table every day and we were in a crash dive
    towards not being a company any more.
    
    The article is attempting to point out that the masses of white collar
    workers are scared, fed up with corporate greed and the B.S. on Wall
    Street, and the disparity between executive pay and their pay. 
    According to the Bureau of Labor and Economics, the current multiplier
    in 1995 between average pay of a CEO and the average pay of a factory worker is
    159:1.  I'll be the first to say things are a little out of whack here. 
    
    How can a CEO be valued at almost 160 times the value of the man or
    woman down on the factory floor screwing the products together.  The
    new CEO of Apple was given a salary of $2.4M to take over that mess and
    the guy was on the Board of Directors.  If I was at Apple right now I'd
    really be irritated.  Where the heck was this guy before the slide? 
    And now he get's rewarded to take over the mess.  Somebody was asleep on
    their watch there.
    
    So, Sullivan in the article likes to stir up a lot of controversy.  Big
    deal, that sells a lot of Newsweeks.  They are business remember.  I
    personally agree that the answer to shoring up one's EPS and Balance
    sheet is not wholesale genocide of the workforce.  Their are companies 
    who are feeling the pain of those mistakes (McDonnell Douglas and Boeing
    who don't have enough trained people to build the next generation jets,
    Caterpillar whose middle tier workforce (those in their 30's-50's)
    virtually doesn't exist, Delta who is rehiring service agents and
    ground crews because business has picked up and customer satisifaction
    is at an all time low).
    
    Sure corporate loyalty virtually doesn't exist and we are all doing our
    best to support the enterprise.  But all of us know that first and
    foremost we are going to take care of ourselves, our families and loved 
    ones and probably the company next.  James Ruskin said it best, "People
    exepect to be paid well for good work.  If  you want loyalty, buy a
    puppy."
    
    So, read the article.  Make up you own minds.  And Mr. Palmer, if you
    see this you have my vote that I'm hitting the streets today and the
    only guys I want to blow out of the water are IBM, SUN, HP SGI and
    COMPAQ.  
    
    Regards,
    Bill

    
    
    RE: .3  Quadrupled the stock price?  I don't think so.  When he
    arrived, was it not at around $55?

re .3  Email Newsweek and express your opinion.  It might even get printed

    re: .3
    
    Tell that to the folks that are getting TFSO"d this week and see if
    they agree.

re: -3

when Palmer took over the stock price was $45 and on a down slide not $55

|   <<< Note 4440.3 by MPOS01::BJAMES "I feel the need, the need for SPEED" >>>
|                        -< It's all in how you read it >-
    
|    The article is attempting to point out that the masses of white collar
|    workers are scared, fed up with corporate greed and the B.S. on Wall
|    Street, and the disparity between executive pay and their pay. 
|    According to the Bureau of Labor and Economics, the current multiplier
|    in 1995 between average pay of a CEO and the average pay of a factory worker is
|    159:1.  I'll be the first to say things are a little out of whack here. 
    
|    How can a CEO be valued at almost 160 times the value of the man or
|    woman down on the factory floor screwing the products together.  The
|    new CEO of Apple was given a salary of $2.4M to take over that mess and
|    the guy was on the Board of Directors.  If I was at Apple right now I'd
|    really be irritated.  Where the heck was this guy before the slide? 
|    And now he get's rewarded to take over the mess.  Somebody was asleep on
|    their watch there.
    
    
    As an adherent to the philosophy of objectivism, and a student of
    Austrian economics, I would be the last person to succumb to class envy
    and resent someone  earning a high salary.  
    
    But I really have to question what some top CEOs do to 'earn' that
    salary.  In most VP's of my acquaintance I haven't seen any superior
    leadership, vison, or even management skills. All I've seen is a
    greater willingness to step on a peer to climb the ladder, deal
    dishonestly, and keep key people in the dark so as to limit their
    options and maintain control.
    
    We've come a long way from the days described in "The Pyramid Climbers"
    by Vance Packard. At least then, some superior schooling, competence
    and personal sacrifice was assumed to be the key to executive
    advancement.
    
    
    Publius

> But I really have to question what some top CEOs do to 'earn' that
> salary.  In most VP's of my acquaintance I haven't seen any superior
> leadership, vison, or even management skills. All I've seen is a
> greater willingness to step on a peer to climb the ladder, deal
> dishonestly, and keep key people in the dark so as to limit their
> options and maintain control.

  I'm not a fan of Bob Palmer, but in regards to the Digital
  Vice Presidents that I've known, I think your remarks are way
  off base. While I've known one or two who were visionless, I've
  known far more who actually knew their jobs well. (Evidence of
  this is that many have been succesful once outside Digital.)

  And I've *YET* to meet a Digital Vice President whom I'd call
  outright dishonest. The occasional dissembler, yes. But none
  whom I'd call dishonest.
                                   Atlant

    Re:.-1
    
    We obviously travel in different circles.
    
    
    Publius

    
    	Yes, Digital did have 120K employees and we are at 65K now. We
    didn't layoff 60K, If someone left you didn't replace them. Digital
    offered an early retirement package, etc... When was the first Digital
    layoff? Wasn't it when KO was still CEO? The one where the severance 
    package was 18-24 months of pay? Digital had ~90K when Palmer took over 
    as CEO, we are at about ~65K now. So the 20K in layoffs is just about 
    right, considering you had about another 5K leave on there own. I
    had co-workers get layed off like everybody else. I still feel that if
    we didn't layoff 20K,  you could probably make that number 80K. Since
    there wouldn't be a Digital anymore and 60K would hopefully be working
    for someone else.
    
    Ron

    
    I wouldn't get too defensive just because BP's included in the rogues'
    gallery, even though I wish the author would have done a bit more
    research such as what other "employee goodness" has changed since the
    huge TFSO axes went out, like the 401K match (yeah, it is only a 
    little itsy bitsy bit) and the upcoming CAPP.
    
    However the author has a BIG point which I agree.... just how
    justifiable are some of the massive layoffs such as that of AT&T? Bob
    Allen certainly came off as an uncaring, arrogant, out-of-touch
    monster, and the author pointed out the irony and stupidity of the
    of the new Apple CEO hiring who afterall was on the BOD while the
    Apple titanic is sinking. That hiring in particular struck me as having
    a fox in the hens' house!
    
    I believe as long as big corporations live and die (on a quarterly
    basis) by Wall St punditinis (not necessarily to uphold shareholders'
    benefits or interests), the moral corruption that the article tried
    to highlight will continue.  
    
    The CEOs' compensations are obscene, especially when one compares them
    to their counterparts in Japan and Europe. I wish the article included
    some comparisons. Dare we say that these overpaid US CEO's have 
    outperformed those overseas? I don't think so.
                               

Re .11

Bob Palmer took over at the beginning of Q2 FY93.  According to the
earnings report for Q1, the employee population at the time of the
take over was 108.5K, not ~90K.

I think it's unlikely that in reducing headcount from 108.5K to 61K as
of the end of Q2 FY96, only 20K of the 47.5K reduction was due to layoffs.

-- Andrew

re: 11

remember we sold part of Digital to other corporations and that includede the
employees, Quantum, Oracle, MicroMudule Systems, etc.

    Regarding the people that are receiving pink slips this week,
    welllll... what can one say.  Obviously their business units cost
    structure is out of synch with the revenue it is producing and in order
    to remain competitive in the markeplace in which you compete you must
    be an efficient producer of your goods.  If not you need to GET
    efficient in a hurry or you are history.  It's not a dress rehersal out
    there, it's live business folks so wake up.
    
    Secondly, the salaries that CEO's receive are GROSSLY out of synch.
    with the salary earned by the average worker.  If I say, write some new
    hot applet that gets a new application running lickety split on a
    system and as a result we sell $200 million worth of the new technology
    into the marketplace do I get paid a proportion of my "knowledge
    contribution" relative to the business leveraged?  Of course not.  That
    little ole' blue envelope keeps hitting your door on Thursday.  If you
    want to get rich, work for your self.  Start your own concern down the
    street call it Maverick Computing Inc. if you want and get on with the
    great American capitalist dream.
    
    If you don't want to take that RISK, then you are relegated to sitting
    behind your workstation here knowing that you are generating great code
    for the next wave of products to head out the door to our customer
    base.  Your satisifaction can be directly measured by the shareholder
    value of this enterprise in economic and business terms.  At the
    intestional level, it can be measured by how positive you are feeling
    about being a professional individual contributor in a multi-level 
    global enterprise called Digital.
    
    For the people that are getting TFSO'd, and they are here in my office
    too, I extend my sincere apologies that this is happening.  But...we
    need to keep looking forward because that is the direction we are
    headed in.  I can assure you our peers over at SUN, HP, IBM, and SGI
    are not sitting around today saying, "Gee things are a little tough
    over at the Digital Company today, let's pull the gunsights off them so
    they can catch their breath"  NOT!!
    
    As I James Ruskin said before, "People work for a living, if you want
    loyalty buy a puppy."
    
    Maverick

re: .15

>	If you
>    want to get rich, work for your self.  Start your own concern down the
>    street call it Maverick Computing Inc. if you want and get on with the
>    great American capitalist dream.
    
This is a straw man argument.  Wondering whether the top brass earn their
out-of-sync compensation is not the same as saying "I should be getting
compensated like them!"  Is it healthy for the enterprise in the long run
to create such disparity?  Are all the lay-offs and organizational thrashing
that some on Wall Street deem to be "the solution" really the best way to
get an enterprise back on its feet and in a competitive stance?  Are the
costs of all this thrashing ever clearly accounted for, or do we hide
those and just say how much more "efficient" we've become?

I think the jury is still out on whether the downsizing methodology in
fashion today really contributes to an organization's health, especially
in the longer term.  And even if it does, it's not necessarily the case
that because "this is how we do it" that this is the BEST way to do it.

- paul

    Becareful with the reading of "employees" from the annual report.  I
    thought they are under some rules to count certain types of
    semi-permantent/temporary employees into the number that you and I
    wouldn't consider employees.  Or am I confused?
    
    				-John

> Wondering whether the top brass earn their
> out-of-sync compensation is not the same as saying "I should be getting
> compensated like them!
    
    There is a difference - but precious little - between "I should be
    getting compensated like them!" and "Shouldn't they be getting 
    compensated like me?", don't you think?
    
    Just curious.
    
    -Mark

    Re: Note 4440.16 by ARCANA::CONNELLY
    
�I think the jury is still out on whether the downsizing methodology in
�fashion today really contributes to an organization's health, especially
�in the longer term.  And even if it does, it's not necessarily the case
�that because "this is how we do it" that this is the BEST way to do it.
    
    Yes, but it seems the jury is getting closer to a verdict all the time.
    There are two fairly new books out that I hope someone can fill in the
    titles for. One of them is something like "Corporate Executions"; I
    don't recall the other new one. As I understand it, the point of the
    books (and I'll read them if someone can provide the real titles!) is
    that in the long run, no company ever cut its way to sustained health.
    
    The challenge to management in such a competitive environment is to "do
    more with less". Unfortunately, our society (Wall Street) lately seems
    to be emphasizing the "with less" instead of the "do more".
    
    	BD�

    
    Wall Street must have loved the article...
    

    
    
  - - - - - - - TM                                                  ----------- 
 |d|i|g|i|t|a|l|                 Digital Stock Quote                 LIVE WIRE  
 m- - - - - - -                                                     ----------- 
                                                              ----------------  
   DEC Quote Received on 22-Feb-1996 at 16:45 Eastern Time:  | 74 1/4  +4 1/2 | 
                                                              ----------------  
            Prior                                                   Volume      
            Close      Open      High      Low       Last  Change   (100s)      
           -------   -------   -------   -------   ------- ------  --------     
     DEC    69 3/4    71 3/8    74 3/4    71 1/4    74 1/4 +4 1/2     22471     
                                                                                
    DJIA   5515.97   5516.33   5613.87   5516.33   5608.46 +92.49               
                                                                                
    

    
.15>    Regarding the people that are receiving pink slips this week,
.15>    welllll... what can one say.  Obviously their business units cost
.15>    structure is out of synch with the revenue it is producing...
    
    
    From "Digital Today", 15-Feb-1996:
    
      Page 1: "Leads from MCS employees generate substantial revenue
               opportunities"
    
      Page 5: "MCS Marketing & Sales to play key role in Digital's
               connectivity strategy"
     
      Page 6: "Where the rubber meets the road... MCS solving customers'
               problems"
    
      Page 8: "MCS wins EMC service contract"
    
    And from the front page of life-as-we-knowit:
    
              "Deep cuts in MCS ranks..."
    
    
    
    What am I missing?
    

|  <<< Note 4440.15 by MPOS01::BJAMES "I feel the need, the need for SPEED" >>>
|                            -< C'mon folks wake up >-

    
|    Secondly, the salaries that CEO's receive are GROSSLY out of synch.
|    with the salary earned by the average worker.  If I say, write some new
|    hot applet that gets a new application running lickety split on a
|    system and as a result we sell $200 million worth of the new technology
|    into the marketplace do I get paid a proportion of my "knowledge
|    contribution" relative to the business leveraged?  Of course not.  That
|    little ole' blue envelope keeps hitting your door on Thursday.  If you
|    want to get rich, work for your self.  Start your own concern down the
|    street call it Maverick Computing Inc. if you want and get on with the
|    great American capitalist dream.
    
    
    
    Although the intervening replies made some good points, I just cannot
    let this let these points go unanswered.
    
    The days of bright guys with $50 in their pocket creating an Apple
    computer in their garage are over. A bright idea *today* needs to be out
    on the market *tomorrow*. Next month, next year, will be too late.
    There is just too much work involved for one person to pull it off -
    and that doesn't even beging to address pulling in the resources for
    marketing and sales. To do this requires MONEY, because it often
    involves hiring help, which costs lots of money (FICA, Insurance, etc.)  
    
    Very few bright people working for slave wages have very much of this 
    put away, despite their best efforts.
    
    Thus, you must sell your soul and most of the profits to a Venture
    Capitalist in order to get off the ground. 
    
    And who are the *investors* in venture capital firms, if not over-paid
    CEOs with lots of extra cash hanging around looking for places to
    invest it?
    
    The end result is - no matter how hard you try, in one form or another
    you will be working for someone who clawed their way to the top
    of the corporate ladder - whether you are wearing a DEC, er, Digital
    badge, or not.
    
    Publius

    I personally get tired of the elitist argument of "wake up to the real
    world, if your business unit isn't competitive, move out of the way for
    the rest of us."  Most of the time these statements seem to come from
    some 30ish engineer, code writer or sales rep and usually from people
    with a great deal of marketable talent.  Well the real world also
    is the 55 year old engineer, code writer, sales rep, janitor or security
    guard.  It also consists of a whole lot of people who just weren't born
    with the same amount of talent but who worked just as hard and put just
    as much into their company's success.  When these people move out of
    the way to save their company from doom they move into another real
    world.  There are many who will always be able to sell their talent and
    then again their are too many who won't.
    
    How much talent have companies, and Ditital in particular, lost because
    of layoffs or people moving on because of fear of layoffs?  How much
    has been lost by people spending all their time protecting their jobs
    or slowing down to a crawl because they are so concerened about their
    future that they cannot function?  This is the real world too.
    
    And lastly what are we all going to do when a company that doesn't owe
    their employees anything decides that McDonalds is more profitable than
    computers and decides that is what the share holders want.

    �If you don't want to take that RISK, then you are relegated to sitting
    �behind your workstation here knowing that you are generating great code
    �for the next wave of products to head out the door to our customer
    �base.
    
    How much RISK does a typical CEO (or other top management types) need
    to take?
    
    Isn't the CEO/worker earnings relation in US the highest in the world?
    (I think Japan is among the lowest).

    Ref. note .21 If MCS are making mega bucks, WHY are people getting laid
    off !
    
    Does anyone know the answer to this ??
    
    
    Frank

    
    .25
    
    MCS is not making megabucks, hence the layoffs. MCS hasn't hit their
    revenue goals for a few quarters now, so they must cut expenses to
    get close to their target numbers that they submitted to Bob Palmer.
    
    If they don't improve the numbers soon, I would think that John Rando
    would have some explaining to do to BP.
    
    Mark

    Yesterday's stock jump had nothing to do with the article - Fidelity
    disclosed that even though it is dumping a lot of technology stocks,
    it is maintaining a strong position in Digital and IBM.  Fidelity is
    the market's 800-pound gorilla, and many investors follow what they do.
    
    					Steve

    After spending the past 7+ years with the "sword of Damacles" hanging
    over our collective heads, all the while hoping that some day the
    company would recover and we could all get on with our lives, we
    finally have our answer.  The "sword" is a permanent fixture,
    regardless of the company's financial position.
    
    What amazes me is that there has been no talk of "white collar" unions
    to attempt to gain some degree of level footing against "upper
    management".  I was never a supporter of unions in the past, but given
    the callous disregard with which all workers (regardless of the color
    of their "collar") are treated by the company, I have to admit, if
    someone suggested the possibility, I'd have to listen! 

RE: > MCS Not Meeting Numbers ?

How is it that MCS employees were receiving a profit
sharing payment in last weeks paychecks for meeting
the numbers?

I must be missing something ... 
Please correct me if I am wrong .

RE; .28 "unionization"

This current trend may lead to a resurection(sp) in
that direction ... I remember that unions were originally
formed exactly under these types of conditions...

When corporations started treating employees as valued
resources the power of the unions seemed to have faded away. 
It may not begin to fade back ... but the response will be slow.

Reminds me of the OLD's car commercial a few years back...
"it's not my father's union anymore"

    re .30: One might say it did happen in Europe - a few years ago, it
    would have been extremely unusual for someone in the computer industry
    to be a union member (possibly excluding manufacturing plants). Now,
    it's not uncommon at all (though the percentage is nowhere as high as
    in 'blue collar' areas).

    
    .27
    
    Steve, they also are maintaining a strong position in Microsoft as
    well.

    
    .29
    
    If MCS was doing that well, would they have laid off hundreds of
    U.S. employees this week???

    re: .33
    
    Yes, if they felt it could make the numbers look even better...
    

    re .29:  The MCS SuccessSharing plan for FY96 included a mid-year
             payout of 0.75% if the "gating" criteria were met.  Those
             criteria were 90% of profit goals and better than 75%
             of Customer Satisfaction goals for the fiscal year-to-date.
    
             I don't know just how we stacked up against our goals, but
             we obviously did at least that well since we received the
             payment.  For reference, if we just meet that standard
             for the entire year, our end-of-year payout will be 0.25%.
    
    	     This is a 3% spend plan.  That is, if we meet 100% of our 
             profit goals with 100% of our Customer Sat. goals, we would 
             receive a total of 3% for the year (including the 0.75% we 
             already received).
    
    Rich

    If MCS did not meet its committment to the corporation, how come I am
    not hearing about any _big heads_ being chopped?
    
    - Vikas

Palmer is a hero if you ask me...and I'm one of those 30ish Engineers alluded to earlier in this string.

It's sometimes hard for me to defend the 'life time position at a big company' slant on things
because I really do feel like if my BU goes down I go down with it...and I am young enough not
to have experienced that kind of job security....so the current climate is pretty much my reality...
I devour new technology reports and stay on top of emerging trends as a survival skill...having come up
through the contractor ranks...the prospect of changing jobs and companies is not so frightening...although
the older I get the less that is true...

*but*

I absolutely support BP and what he has done and is doing...and I think it's really unfair for Newsweek
label him this way...the company was bleeding all over the place...I see the layoffs as a difficult
decision, but one that was made with the idea of saving Digital as a company...as opposed to another
fad downsizing trend...

I continue to believe and trust that profitability, accountability, and 'quick time to market' is the new
'law of the jungle' around here...and I for one do not wish this to change...

Complacency is *not* an option, IMO.

-Stephen

    
    
      Is it possible that the 20K people BP talked about in the Newsweek
    article is a reduction of 20K more.  60K people to 40K people ???
    
      Anyone else read into it this way ???
    
                                    
    

    re: .22

    NOT!

    Can you really tell me in all honesty that I don't stand a chance of
    making it in this country if I have the drive, moxy, emotional
    fortitude, vision, hustle, and focus, wrapped around a marketable idea
    to be successful?  Man, if that's the case they must have changed the
    words at the base of the Statue of Liberty this morning.  This is the
    land of opportunity.  Ted Turner had a great line that should be in
    every office, factory and store in America:  

    			"This is America.
    			 You can do anything here!"

    So, pleeeeaaaasssee don't tell me that I don't stand a chance to succeed 
    with my ideas that's just pure balderdash.  Me and my colleagues will
    see you in the end-zone.

    re: 23

    You have to reengineer or die in all facets of your business and that
    includes you skills and education.  Darwins rules of business apply
    here too so if your job future is shaky because you are a 55 year old
    dog that needs to learn some new things what are you doing about it? 
    Are you learning new skills, do you have a personal career training
    plan, are you learning how the Internet works, are you investing in 
    yourself that will either make you valuable to the organization you 
    are in or marketable to the one you want to be in.  
    
    Learn...Learn...and Learn more people or you will wind up on Edsel 
    mountain.

    re: .24

    There is a risk/reward equation for CEO's just like there is for us. 
    CEO's have a little bit of a higher calling on the risk curve because
    they have to answer to Jaba the Hut of Business: the stakeholders, the
    shareholders in the business, their bosses.  And they are truly an ugly
    bunch to deal with at times.  I know, I sit on a Board of Directors of
    a small company myself and if you want to talk about pressure to
    perform, go to a meeting sometime where investment analysts are asking
    you how well you have handled their money in the operations of your
    business.  So, CEO's get to have some higher pay IMO to put up with all
    these nasty shareholders out there who have as much loyalty as Benedict
    Arnold at times.  With the risk go the rewards and as the Sr. Officer
    of the firm they play with bigger chips than Joe average worker does.  This
    does not mean that Joe average worker is any less a person of course, just
    that when you are at the crap table in Vegas you always know who the
    guys and gals are with the black chips.

    re: 28

    Working class unions for professionals.  Hmmmmm interesting idea but I
    don't know at Digital.  We have such a loosely defined culture.  It
    works down at Ford on the assembly line because it's the worker bee all
    for one and one for all screwing cars together.  But lets be real. 
    There is a competitive factor in most professions of people wanting to
    get ahead (we can argue all day long what they are racing up the ladder
    to but for now that is a moot point).  Given that the pyramid structure
    within most companies is still the prevailing hierarchy, then you will
    always have this "Looking out for #1" thought in the base of your skull
    as you navigate through the professional maze.  How are you going to
    level the playing field across multiple disciplines within an
    organization such that you get the 3-Muskateer rallying cry each and
    every day?  Don't think so, there's too much competition out there to
    do well. Again, perform or you are history.

    This all probably sounds fairly brutal, but hey like Pogo says, "We have
    met the enemy....."

    Mav

Following is most of J. Rando's message on Q2 performance. Judge by yourselves.

Nevertheless we had a Change Forum 2 weeks ago, that I couldn't attend, and both 
Rando and Rich Buttler, MCS Finance Manager, informed us that our margins were 
headed south and needed to correct that. I was told the session was very candid and 
the audience (mostly MCS-Stow) was prompted for any other alternatives to handle this 
problem.

O. Diaz
MCS Availability Services
SW Support Offer Manager

======================================================================
FROM: John Rando @OGO                      ( RANDO.JOHN@A1@SALES@AKO )

RE: Q2 FY96 MCS BUSINESS REPORT

MCS started off Q2 with the announcement by Compaq Computer Corporation that we 
had been selected as their Global Service and Support Provider.  This alliance is 
potentially the most significant alliance in the IT service industry from both a strategic 
and financial perspective.  MCS continued a high level of activity in the partner/alliance 
area throughout Q2 with the announcement of new agreements with Lotus, EMC, Novell 
and Apple.  We also announced the creation of the Microsoft Implementation Program 
Office at headquarters and within our territory and country operations.

Customers are recognizing MCS more and more for our creativity, market focus, and 
excellence.  In Q2, MCS won a Users' Choice Award from "Data Communications" 
magazine for our network software service and support.  Also in Q2, our PC Utility 
offering won the customer-nominated Innovation of the Year Award at the International 
Service Expo in the Netherlands.  This award is in addition to the previous one received 
by PC Utility from the North American based "Service News" newspaper.

In late Q2, MCS signed an agreement with Welsh, Carson, Anderson & Stowe (WCAS) for 
the transfer of Digital's Learning Services business.  WCAS has established a new 
training-focused company called Global Knowledge Network (GKN) that will assume 
the assets and retain the current Learning Services employees.  In addition, we have 
entered into a strategic alliance in which Digital will continue to develop courseware on 
its products and GKN will be the preferred provider for Digital training to customers and 
Digital employees.  I would like to take this opportunity to recognize the many 
contributions made over the years to Digital and to our customers by the service 
professionals in Learning Services.

I would also like to recognize our growing partnership with the Accounts Business Unit 
(ABU) and the contribution the ABU is making to MCS growth and success.  Year to date, 
over 48% of MCS revenue has come from ABU accounts with all geographies and 
business segments meeting or exceeding plan.  The ABU has been instrumental with 
MCS in closing some major outsourcing opportunities, including new business at Citicorp 
this quarter.  The ABU is also a key contributor to the success of Network Services with 
52% of Network Services revenue coming from ABU accounts in Q2.

At the division level, MCS revenue performance was strong at 103% of plan.  We are 
demonstrating that our business strategies are accurate and we are seeing that our 
offerings are what the market wants to buy.  However, we missed our profit goal and 
slightly missed our cash flow goal.  We continue to be challenged by our competition to 
maintain competitive profit margins, cost structure and customer satisfaction.  Although 
the Q2 revenue performance is encouraging, the true indicator of our longer term health 
is balanced business performance.  We need to strive to meet all our metrics across all 
business segments and throughout all geographies.  

At the Business Segment level, Network Services demonstrated excellent growth and 
strong performance worldwide with year over year revenue growth of 31%.  Although 
Network Services missed their profit goal, they reached a significant milestone by 
achieving profit for the first time in several quarters.  OMS exceeded their revenue goal 
and showed strong profit growth.  The Network Services and OMS businesses need to 
continue to focus on profitable marketshare growth.  

Availability Services showed good strong revenue performance with a slight profit miss. 
 The multivendor business is demonstrating solid performance and continued strong 
growth with a year over year revenue increase of 31%.  Productivity Services 
demonstrated significant revenue growth with a year over year increase of 95%!  
However, there are many challenges in this business and none of the Q2 metrics were 
met.  Productivity Services is strategically important to our long term growth in the 
marketplace.  We will continue to focus on the development of this new business with 
an emphasis on growth and improved financial and operational performance.

At the Area level, MCS experienced good strong revenue performance in Europe and 
Asia Pacific.  The Americas revenue performance was on budget.  All three Areas 
missed operating profit goals.  This miss reflects the rapidly changing mix in our 
business, the need for continued focus on costs in Availability Services and Network 
Services, and the need for accelerated growth in Productivity Services and Network 
Services.

I am very pleased to report that the Services Quality Review (SQR) Customer Satisfaction 
Index has increased in all three Areas, resulting in a Q2 index of 67.3 against a Q2 goal 
of 67.0.  The focus and actions of many individuals and teams throughout MCS must be 
credited with this important progress.

Our performance in the second half of FY96 is critical to sustaining our momentum in the 
marketplace.  Now, more than ever, we need to apply our collective talent to the 
challenges we face.  Focus, teamwork, and a sense of urgency will continue to be 
essential to our success.  In closing, I would like to extend my appreciation for your 
efforts in Q2 and for your continued contributions to MCS and Digital.

Regards,

John

MULTIVENDOR CUSTOMER SERVICES 1997 ....

	The acclaimed leader in global multivendor customer services where the 
creative genius of all our service professionals is fully engaged and directed toward 
enhancing the success of our customers and stakeholders.

   NOTE:  Attached is the Q2 FY96 MCS Business Report.

Q2 FY96 MCS BUSINESS REPORT

CONTENTS


Q2 FINANCIAL RESULTS BY TERRITORY

TERRITORY SUCCESS STORIES

TRANSFORMATION PROCESS

BUSINESS DEVELOPMENT
	Add-on Incentive Program
	Partner/Alliance News
	Availability Services
	Productivity Services
	Network Services

FUNCTIONAL PROGRAMS
	Information Services
	Service Menu	
	Service Delivery
	Logistics
	Services Quality Review Results

MULTIVENDOR CUSTOMER SERVICES
Q2 FY96 MCS BUSINESS REPORT
TERRITORY FINANCIAL RESULTS AS % OF PLAN



		---Q2FY96---	--Q296 YTD--
		NOR	MARGIN	NOR	MARGIN
		%PLAN	%PLAN	%PLAN	%PLAN


USA		 99%	 92%	 99%	 98%

Canada		105%	 88%	100%	 89%

LAC	 	95%	 85%    	 95%	 85%	

Territory A 	98%	 98%	 99%	 94%

Territory B	 	99%	101%	 98%	 99%

Territory C	106%	 90%	103%	 88%

Territory D		105%	 97%	101%	 99%

Territory E		113%	108%	108%	104%  

Territory F	 	97%	100%	 95%	 96%

Asia		112%	121%	103%	111%

Japan	 	91%	 84%	 92%	 89%

SPT		106%	 84%	103% 	 91%


TOTAL MCS WW	103%	 94%	101%	 99%

     <<< Note 4440.40 by STOWOA::tavo.ogo.dec.com::ODIAZ "Octavio Diaz" >>>
                               -< Q2 MCS Report >-

Following is most of J. Rando's message on Q2 performance. Judge by yourselves.

Nevertheless we had a Change Forum 2 weeks ago, that I couldn't attend, and
both  Rando and Rich Buttler, MCS Finance Manager, informed us that our
margins were  headed south and needed to correct that. I was told the
session was very candid and  the audience (mostly MCS-Stow) was prompted
for any other alternatives to handle this  problem.

O. Diaz MCS Availability Services SW Support Offer Manager

======================================================================
FROM: John Rando @OGO                      ( RANDO.JOHN@A1@SALES@AKO )

RE: Q2 FY96 MCS BUSINESS REPORT

MCS started off Q2 with the announcement by Compaq Computer Corporation
that we  had been selected as their Global Service and Support Provider. 
This alliance is  potentially the most significant alliance in the IT
service industry from both a strategic  and financial perspective.  MCS
continued a high level of activity in the partner/alliance  area throughout
Q2 with the announcement of new agreements with Lotus, EMC, Novell  and
Apple.  We also announced the creation of the Microsoft Implementation
Program  Office at headquarters and within our territory and country
operations.

Customers are recognizing MCS more and more for our creativity, market
focus, and  excellence.  In Q2, MCS won a Users' Choice Award from "Data
Communications"  magazine for our network software service and support. 
Also in Q2, our PC Utility  offering won the customer-nominated Innovation
of the Year Award at the International  Service Expo in the Netherlands. 
This award is in addition to the previous one received  by PC Utility from
the North American based "Service News" newspaper.

In late Q2, MCS signed an agreement with Welsh, Carson, Anderson & Stowe
(WCAS) for  the transfer of Digital's Learning Services business.  WCAS has
established a new  training-focused company called Global Knowledge Network
(GKN) that will assume  the assets and retain the current Learning Services
employees.  In addition, we have  entered into a strategic alliance in
which Digital will continue to develop courseware on  its products and GKN
will be the preferred provider for Digital training to customers and 
Digital employees.  I would like to take this opportunity to recognize the
many  contributions made over the years to Digital and to our customers by
the service  professionals in Learning Services.

I would also like to recognize our growing partnership with the Accounts
Business Unit  (ABU) and the contribution the ABU is making to MCS growth
and success.  Year to date,  over 48% of MCS revenue has come from ABU
accounts with all geographies and  business segments meeting or exceeding
plan.  The ABU has been instrumental with  MCS in closing some major
outsourcing opportunities, including new business at Citicorp  this
quarter.  The ABU is also a key contributor to the success of Network
Services with  52% of Network Services revenue coming from ABU accounts in
Q2.

At the division level, MCS revenue performance was strong at 103% of plan. 
We are  demonstrating that our business strategies are accurate and we are
seeing that our  offerings are what the market wants to buy.  However, we
missed our profit goal and  slightly missed our cash flow goal.  We
continue to be challenged by our competition to  maintain competitive
profit margins, cost structure and customer satisfaction.  Although  the Q2
revenue performance is encouraging, the true indicator of our longer term
health  is balanced business performance.  We need to strive to meet all
our metrics across all  business segments and throughout all geographies.  

At the Business Segment level, Network Services demonstrated excellent
growth and  strong performance worldwide with year over year revenue growth
of 31%.  Although  Network Services missed their profit goal, they reached
a significant milestone by  achieving profit for the first time in several
quarters.  OMS exceeded their revenue goal  and showed strong profit
growth.  The Network Services and OMS businesses need to  continue to focus
on profitable marketshare growth.  

Availability Services showed good strong revenue performance with a slight
profit miss.  The multivendor business is demonstrating solid performance
and continued strong  growth with a year over year revenue increase of 31%. 
Productivity Services  demonstrated significant revenue growth with a year
over year increase of 95%!   However, there are many challenges in this
business and none of the Q2 metrics were  met.  Productivity Services is
strategically important to our long term growth in the  marketplace.  We
will continue to focus on the development of this new business with  an
emphasis on growth and improved financial and operational performance.

At the Area level, MCS experienced good strong revenue performance in
Europe and  Asia Pacific.  The Americas revenue performance was on budget. 
All three Areas  missed operating profit goals.  This miss reflects the
rapidly changing mix in our  business, the need for continued focus on
costs in Availability Services and Network  Services, and the need for
accelerated growth in Productivity Services and Network  Services.

I am very pleased to report that the Services Quality Review (SQR) Customer
Satisfaction  Index has increased in all three Areas, resulting in a Q2
index of 67.3 against a Q2 goal  of 67.0.  The focus and actions of many
individuals and teams throughout MCS must be  credited with this important
progress.

Our performance in the second half of FY96 is critical to sustaining our
momentum in the  marketplace.  Now, more than ever, we need to apply our
collective talent to the  challenges we face.  Focus, teamwork, and a sense
of urgency will continue to be  essential to our success.  In closing, I
would like to extend my appreciation for your  efforts in Q2 and for your
continued contributions to MCS and Digital.

Regards,

John

MULTIVENDOR CUSTOMER SERVICES 1997 ....

The acclaimed leader in global multivendor customer services where the 
creative genius of all our service professionals is fully engaged and
directed toward  enhancing the success of our customers and stakeholders.

   NOTE:  Attached is the Q2 FY96 MCS Business Report.

Q2 FY96 MCS BUSINESS REPORT

CONTENTS


Q2 FINANCIAL RESULTS BY TERRITORY

TERRITORY SUCCESS STORIES

TRANSFORMATION PROCESS

BUSINESS DEVELOPMENT
	Add-on Incentive Program
	Partner/Alliance News
	Availability Services
	Productivity Services
	Network Services

FUNCTIONAL PROGRAMS
	Information Services
	Service Menu	
	Service Delivery
	Logistics
	Services Quality Review Results

MULTIVENDOR CUSTOMER SERVICES
Q2 FY96 MCS BUSINESS REPORT
TERRITORY FINANCIAL RESULTS AS % OF PLAN



		---Q2FY96---	--Q296 YTD--
		NOR	MARGIN	NOR	MARGIN
		%PLAN	%PLAN	%PLAN	%PLAN


USA		 99%	 92%	 99%	 98%

Canada		105%	 88%	100%	 89%

LAC	 	95%	 85%    	 95%	 85%	

Territory A 	98%	 98%	 99%	 94%

Territory B	 	99%	101%	 98%	 99%

Territory C	106%	 90%	103%	 88%

Territory D		105%	 97%	101%	 99%

Territory E		113%	108%	108%	104%  

Territory F	 	97%	100%	 95%	 96%

Asia		112%	121%	103%	111%

Japan	 	91%	 84%	 92%	 89%

SPT		106%	 84%	103% 	 91%


TOTAL MCS WW	103%	 94%	101%	 99%

    
    re .41, MCS missing margin goals.
    
    see 4411.25
    
    
    AW

It sounds from some of the comments in here that everyone in MCS
received some kind of bonus a week or two ago.

Am I the only one who didn't?

Pete

Re .39 (MPOS01::BJAMES)
    
>                     -< Okay and now some rebuttal points >-
    
    Just to add a bit more to the "discussion"...

>    Can you really tell me in all honesty that I don't stand a chance of
>    making it in this country if I have the drive, moxy, emotional
>    fortitude, vision, hustle, and focus, wrapped around a marketable idea
>    to be successful?
    
    I agree that it's still possible to be successful in this country, but
    you left off what I think is the *most* important ingredient to
    success: luck. There are plenty of people with all of the qualities
    you mentioned, but they didn't happen to be in the right place at the
    right time - or they were in the wrong place at the wrong time.
    
>    You have to reengineer or die in all facets of your business and that
>    includes you skills and education.  Darwins rules of business apply
>    here too so if your job future is shaky because you are a 55 year old
>    dog that needs to learn some new things what are you doing about it? 
>    Are you learning new skills, do you have a personal career training
>    plan, are you learning how the Internet works, are you investing in 
>    yourself that will either make you valuable to the organization you 
>    are in or marketable to the one you want to be in.  
>    
>    Learn...Learn...and Learn more people or you will wind up on Edsel 
>    mountain.
    
    Yes, the world is changing very rapidly, and especially in computer-
    related professions. I believe the problem, though, is that too many
    people aren't even given the option to "learn, learn, learn". Ask
    any of the recently departed MCS engineers (or the previously departed
    SI, admin, sales, etc. folks). I suspect that given the choice of
    learning new tricks or standing in the unemployment line, most would
    opt for the former - *given the choice*.
    
    I have degrees in mathematics and computer science, am in the midst of
    an MBA program, and have recently achieved certification as a Microsoft
    Solution Developer. I have taught college courses, have done systems
    analysis, design, spec writing, led teams of people, have tons of
    experience dealing with customers, and have a lot of software
    development experience/education on various platforms. I'm doing my
    best to keep up (actually, to be ahead), and I jump at the chance to
    "learn, learn, learn". Do you think I feel safe? Nope. Why? Because
    despite all my best efforts, I could find myself in the wrong place at
    the wrong time. In a word: luck.


>    There is a risk/reward equation for CEO's just like there is for us. 
>    CEO's have a little bit of a higher calling on the risk curve because
>    they have to answer to Jaba the Hut of Business: the stakeholders, the
>    shareholders in the business, their bosses.
    
    The trouble is that the shareholders aren't the only stakeholders, but
    business today seems to cater almost exclusively to the shareholders.
    And these are a fickle bunch - interested only in what your numbers
    look like *today*. I think that ethics should make us pay more
    attention to all of the stakeholders, including the customers, the
    employees, the local economy, etc.
    
    As for CEOs having bigger risk, I admit to arguing from ignorance
    (never having been a CEO). However, when you're offered $$$,$$$ to sign
    on to a company, given $$$,$$$ in annual salary, receive $$$,$$$ in
    stock options, and promised a $$$,$$$ golden parachute, I don't see
    where the risk is. Good grief, virtually any BOD will give a person a
    year of trying. Even if they totally foul up they're potentially a
    million dollars richer and financially set for life (assuming they can
    manage their own funds better than the company ;-).
    
    No, I think the real measure of a successful management team (not just
    the CEO) goes back to what I mentioned several notes ago: the ability
    to do more with less. The mark of a good management team is to keep the
    company afloat during the inevitable downturns in the business cycle
    without jettisoning the very people that contribute toward the
    company's success during the good times.
    
    	BD�

    BP allegedly succeeded in "turning Digital around" and making
    it profitable again.  Well, yeah...but could somebody else have
    achieved the same result by laying off half as many people?
    How "successful" was BP if, in fact, somebody else could have
    achieved the same result with far fewer layoffs?
    
    If somebody else could have achieved the same result with, say,
    only 5,000 layoffs, I'd say that marks BP as pretty incompetent.
    
    The trouble is, we'll never know.  And Wall Street doesn't measure
    "success" that way, anyhow.

|  <<< Note 4440.39 by MPOS01::BJAMES "I feel the need, the need for SPEED" >>>
|                     -< Okay and now some rebuttal points >-
|
|    re: .22
|
|    NOT!
|
|    Can you really tell me in all honesty that I don't stand a chance of
|    making it in this country if I have the drive, moxy, emotional
|    fortitude, vision, hustle, and focus, wrapped around a marketable idea
|    to be successful?  Man, if that's the case they must have changed the
|    words at the base of the Statue of Liberty this morning.  This is the
|    land of opportunity.  Ted Turner had a great line that should be in
|    every office, factory and store in America:  
|
|    			"This is America.
|    			 You can do anything here!"

    
    I suggest you go back and read .22 again without your rose-colored
    glasses.
    
    I didn't say you couldn't succeed - I said that in today's time
    critical market, you cannot afford to while away the months developing
    a hot new product part time after whoring away 8 hours of your day here
    at DEC, er, Digital, because it will be too late to market. 
    
    Thus you need $$$$$$ for start-up & bringing others into the idea - and
    that usually means venture.
    
|    So, pleeeeaaaasssee don't tell me that I don't stand a chance to succeed 
|    with my ideas that's just pure balderdash.  Me and my colleagues will
|    see you in the end-zone.
    
    Okay. It will be interesting to see where you go with a great idea, 24
    hours per day, 9+ of which are 'owned' by Digital, and we'll see how
    far you get with design, development, testing, packaging, marketing,
    and customer support without mortgaging most of your idea to someone else.
    
    Theory is great. Practice is something different again.
    
    Publius

    Re: .25
    
    	MCS revenue has been pretty flat.  Was projected to be flat this
    year.  The powers that be required a higher margin than last year.  I 
    know that the MCS Capitol District was within .5% of forecast, but 5-7%
    of margin.  So we've been set up to fail, and so give a reason to lop
    heads.  And IMHO, God help you if you make the margin, you'll be truly
    screwed next year.
    	What really bothers me is that the margin increase was probably
    really necessary to support the still bloated non-revenue producing
    people in this company (how many VP's have been annouced since Jan?).
    
    Bryan

I'll try to check out those two books mentioned in .19.  I guess there
are two points to consider: what are the "hidden costs" of downsizing
(as we do it now) in terms of lost productivity/talent/markets, and
is there a more intelligent way to do it?

With regard to the second point, i often wonder:
	1. why do we sporadically talk about "flattening the
		management hierarchy" and seemingly never do it?
	2. what are the consequences to the enterprise of having
		so many managers function as individual contributors
		for THEIR managers rather than being leaders/managers
		to the people that report to them?
	3. have we gone to the line supervisors and workers and
		asked THEM, "Where should we cut?"
	4. if employee measurement and corrective action really
		worked, would we need to downsize in such a
		"coarse tuning" fashion?  (and are "broken goals"
		that are handed down arbitrarily not a form of
		buck-passing for failure of higher level decision
		makers?)
	5. isn't a problem of constant reorganizations that it leaves
		some people who WERE valuable in their old roles in
		places where they no longer contribute effectively?
	6. if (5.) is true, aren't we building up a group of
		potentially valuable contributors who could be
		retrained and redeployed within the enterprise
		where shortages of talent exist?  (i guess they tried
		this with COD but chickened out partway through)

Of course, these are not very original or new questions.  They've been
asked in this forum in different places over the last few years.

re: .24

>    How much RISK does a typical CEO (or other top management types) need
>    to take?

I often have thought that in addition to a "poverty line" figure we need
a "sustainable wealth" figure--i.e., a dollar amount that, if you have it,
should be able to support you without further working, just via reasonably
conservative investment.  At that level (which i'd guess most CEOs are at)
any risk would be purely optional.  Below that, in the current global
economy, risk seems to be mandatory--even trying to stay where you are as
a risk-averse wage-slave now carries a substantial risk in itself! ;^)

- paul

    re: CEOs and risk
    
    It strikes me that a CEO that flubs up and gets fired after a year or
    so could spend about 2 DECADES (+/- a few years) looking for another
    job while maintaining my current standard of living.  If said CEO
    managed another 1 year stint somewhere else, he/she wouldn't need a
    third position, since the pay would cover past retirement age.
    
    While a CEO may have considerable risk w.r.t. maintaining a long
    career, they frequently seem to have minimal risk w.r.t. providing for
    their families.  On the other hand, a worker bee frequently has a
    life-long high risk w.r.t. feeding the family.
    
    I'm not insinuating that a CEO doesn't have ample career risk and
    stress, but a worker bee who places family above career is likely to
    experience a lifetime of risk and stress that cannot be easily
    dismissed.
    
    -- Russ

    re .39
    
    Can you succeed or can't you?  Perhaps.  Perhaps not. 
    
    In the past someone with the drive, ambition and skills that you claim
    you have would probably have stood an excellent chance.  The problem is
    that the big majority of people do not have your traits.  The economy
    used to carry these people along with it, although at a lesser rate than
    someone like you, as long as they made some contribution.
    
    If everyone other than the cream is to be relegated to the unemployment
    line or McDonalds, who is going to buy your great idea?  Just who is
    going to need all your learning learning learning?  You may be able to
    invent some new luxury car or such but the pickings would seem to be
    pretty slim for your children.   

    RE: .51
    
    I am reminded of quotes I saw recently in Inc. magazine:
    
    Henry Ford II was escorting Walter Reuther (sp?), the great union boss,
    through an assembly line at Ford Motor.  He was bragging to Walter
    about all the new robots they had on the line, and said "Pretty soon we
    won't need your union members to build these cars."
    
    Reuther replied, "Who will buy your cars?"
    
    Let's wake up, everyone.  The growing gap between the have a lots, have
    somes, and have nones is not fundamentally good for the economy.  We
    need a vibrant worker class to purchase the tools of industry - the two
    feed off each other.  It is not a one-way street.
    
    Chuck  

    
      Not to mention that the 'have nots'  will continue to eat,
    regardless of whether they need to:
    
    	Work for it
        tax for it.
        steal for it.	
    
      Any of those 3 options has big implications on the future 
    nature and direction of the country...
    
    
    

|  <<< Note 4440.39 by MPOS01::BJAMES "I feel the need, the need for SPEED" >>>
|                     -< Okay and now some rebuttal points >-
    
    
|    bunch to deal with at times.  I know, I sit on a Board of Directors of
|    a small company myself and if you want to talk about pressure to
|    perform, go to a meeting sometime where investment analysts are asking
|    you how well you have handled their money in the operations of your
|    business.  So, CEO's get to have some higher pay IMO to put up with all
|    these nasty shareholders out there who have as much loyalty as Benedict
|    Arnold at times.  With the risk go the rewards and as the Sr. Officer
|    of the firm they play with bigger chips than Joe average worker does.  This
|    does not mean that Joe average worker is any less a person of course, just
|    that when you are at the crap table in Vegas you always know who the
|    guys and gals are with the black chips.
    			^^^^^^^^^^^^^^^^^^^^
    
    I guess that is another thing that strikes me as wrong. 
    
    Sure, CEOS are gambling for big money and playing with big stakes - but
    in most cases - IT IS SOMEONE ELSE'S MONEY. Of course, in the case of a
    founder/CEO who is a founder or majority stockholder in an enterprise
    they created - they deserve to be amply rewarded for the risks they
    take, and cash in big when then gamble 'right'.
    
    But for a CEO who is just hired in, no one asks them to return the
    salary paid them when the gamble fails.  In the words of the brain-dead
    manager character in the Dilbert comic strip:
    
    "There's no Risk!"
    
    Publius 

    
>    BP allegedly succeeded in "turning Digital around" and making
>    it profitable again.  Well, yeah...but could somebody else have
>    achieved the same result by laying off half as many people?
>    How "successful" was BP if, in fact, somebody else could have
>    achieved the same result with far fewer layoffs?
>    
>    If somebody else could have achieved the same result with, say,
>    only 5,000 layoffs, I'd say that marks BP as pretty incompetent.
>    
>    The trouble is, we'll never know.  And Wall Street doesn't measure
>    "success" that way, anyhow.
    
    We will never know but we also do not live in an information vacume.
     
    Benchmarking data from virtually any standpoint showed we had many-many
    more people working to complete the work that benchmark companies were
    able to complete with many fewer workers.  From my experience that
    involved lots of good people trying to compensate for terrible business
    processes while benchmark companies have much cleaner processes and
    hence fewer folks.  It's a pretty tough argument that our headcount and
    revenue were matched well 5 years ago.
    
    Could we have significantly jumped revenue with a different CEO?  I
    don't know.  But I'm sure no one could have almost immediately doubled
    reveneus which is what it would have taken to carry the headcount. (I'm
    assuming we couldn't afford to lose massive amounts of money for 4-5 to
    let the revenue to catch up to the cost structure.)
    
    Given that the headcount expense had to come down or everyone was out
    of a job.  Layoffs, buy-outs, across-the-board pay-cuts, etc ... there
    are lots of way to cut the expense and you certainly can raise a beef
    with BP's layoffs.  Other companies experiences have shown which ever
    method is taken to shrink the headcount has some really terrible
    side-effects.
    
    Has BP been the greatest CEO ever?  I doubt it.  The worst ever? I
    doubt it?  Could anyone have turned Digital around without shedding
    lots of bodies (about the same amount as BP)?  I doubt it.
    
    Greg
        
                                             

    Let's also note that the government massively discourages small
    business startups.
    
    I looked into this after I was TFSOed a few years ago.  The paperwork
    involved is a nightmare;  it makes a complicated tax return look like a
    piece of cake.  Perhaps worst is that there are multiple sources of
    paperwork requirements. scattered around among the fed and state and
    city agencies, so overlooking something is a significant possibility. 
    So, right away a potential small business owner has to fork out big
    bucks to an accountant/lawyer combo.
    

re: .-2

  H/P is an existence proof that Digital could have taken a much
  different direction and achieved much different results. At one
  time, Digital and H/P were comparable companies competing in
  approximately the same computer market segment. (H/P had the
  advantage that they had several non-computer lines of business.)

  Now, H/P is a *VERY* large, growing company with a firm hold on
  several segments of the computer business. Digital is a shrinking
  company, dominant in *NO* area of the computer business.

  I'm not laying the blame entirely at the feet of Bob Palmer, but
  if you asked me today what Digital wanted to be when it grows up,
  I *STILL* couldn't tell you in a few succinct, memorable phrases.
  We once claimed we'd lead through "Silicon, Software, and Systems",
  but that rings hollow today:

    - Silicon?  With what market-leading architecture?

    - Software? With what products or operating systems?

    - Systems?  With what remaining SI folks?

                                   Atlant

    Isn't it
    
    	Con-nec-tiv'i-ty
    ?

If you evaluate Palmer's tenure by our success against HP then 
he is a failure. HP has cleaned our clocks. Most recently in 
the PC arena where they went from nowhere to "top 5 in 95"
I thought I just read HP had about $9 billion in revenue last 
quarter(?). If that is correct they are maybe twice our 
size now. 

If you evaluate Palmer as saving 61,000 jobs, then you 
can't pay him enough.


Reality is somewhere in the middle.  

Lest we forget, HP was laying off big time in the mid-1980's.  They closed
plants, relocated large groups of employees, and the rumour around
Digital was that they were about to exit the computer industry.  Businesses
run in cycles.  We need to think about what the customer will want to 
buy 3-5 years from now and start building it today.  Je me souviens.

MS

    �was that they were about to exit the computer industry.
    
    Maybe we should do that? After all, seems like downsizing and
    management are our core competencies...
    
    ;-)
    

    
    I agree with the cycle statement. If you want another interesting story
    to look at that is still being played out this very moment look no
    further than Novell. Once the "dahling" of the LAN business, a no can
    do wrong company with the "killer" technology.... Today, analysts are
    are predicting its demise. Technologies once deemed necessary to
    compete are being cast off, partners are questioning direction and
    commitment, proven technology is becoming irrelevant as new markets
    unfold and last but not least... huge amounts of losses are taking
    place in people power and monies.
    
    So you see, all companies go through storms. Do they come out stronger?
    Do they come out at all? Do they come out smarter? Does a CEO really
    have that much influence and leadership to make a difference?
    
    -Mike Z.

    
    Fortune magazine survey says "digital most improved" ...take it from
    there. 

    
    re .60
    
    I worked at HP from 1984 to 1987, there were no layoffs at that time. 
    We instead had 5-10% paycuts, with some time off.  There was some
    flexibility, to handle cases of single income families.  When I left HP
    they had under 80,000 employees, DEC had 120,000, and the revenues were
    approximately equal.  So as things got bad for HP (they were
    transitioning to RISC) in the late 80's, they didn't have to layoff
    nearly as much.
    
    

  I don't think Novell's a particularly good example of "cycles".
  Rather, I think they're an example of a company that rode a niche
  from start to finish, and now they're finished.

  Part of this may be biases I have from being an insider in the
  "big computer" industry, but I never understood why Novell and
  Netware existed in the first place. Their product was a highly-
  nonstandard reimplimentation of techniques that were widespread
  in our part of the industry. And now that PCs are finally beginning
  to acquire industry-standard networking, Netware is fading away.
  Look at the disaster that has marked the glacial transition from
  Netware  V3.x to V4.x!

  Companies that are succesful over the long run seem to run in
  cycles because they're constantly catching new waves. H/P jumped
  the wave from instrumentation (and audio oscillators!) to mini-
  computers to printers to PCs, with a few side-trips into medical
  equipment and laboratory instrumentation. Novell *TRIED* to jump
  from Netware to applications and O/Ss, but failed.

  Digital? What wave are we riding now?

                                   Atlant

    
    The point I got from the article was that in the past it was
    and embarassment to a company to lay off people. That it was
    a sign of mismanagement and poor planning.
    
    Today, the CEO gets a bonus (For making the hard decisions)
    and the Stock goes up.
    
    Digital is a poor example of this point though since I believe
    K.O. was probably embarrassed and B.P. inherited the problem
    and didn't create it. (I.M.H.O)
    
    

    did someone say union....
    
    sign me up,
    
    rj

    .65
    
    The Microsoft Support Co. Wave?
    

RE .62

>    So you see, all companies go through storms. Do they come out stronger?
>    Do they come out at all? Do they come out smarter? Does a CEO really
>    have that much influence and leadership to make a difference?

Old saying from the fly-boys:  Any landing that you can walk away from is
a good one.  

Are we smarter now?  Only if we remember what got us into that mess in the 
first place.  

Does the CEO have that much influence to make a difference?  Sure, by 
attracting or retaining the right strategy people. By enforcing the "This is 
a business, make a profit or get out of the way" rule.  

There was never anything wrong with the engineering we were doing.  It was the
product set, the market timing, the increased competition in the market,
and the revenue v. expenses that were the problem.  None of these things 
go out of kilter over night.  Keep an eye on them and we'll do ok.

MS

Unions?  You can't be serious.  Go talk to any NYNEX or ATT
worker and see how far their unions are working for them.
Ask half the autoworkers that are never going back to work.
The only union that will never fail you is the International
Brotherhood of Me, Myself, and I. If you don't watch out for
Number 1, no one else will, count on it.

    When I posted the original note regarding unions, I was talking about
    something very different from the unions that exist today.  I'm talking
    about unions comprised of people that previously wouldn't have even
    considered joining one - the "middle management" that union members
    used to hate.  People still clinging to the"personal-success-at-all-costs"
    mentality of the '80's may find this concept unpalatable, but I
    believe that it may catch on.  
    
    Lets take an extreme example.  All financial professionals in Digital
    become unionized.  Since no non-Digit finance professional could walk
    in and figure out our systems overnight, a well-timed labor action on
    their part could literally prevent the company from announcing their
    results to Wall Street.  If you think the Investors have been tough in 
    the past, watch the stock drop then.  The same could hold for other
    groups of professionals, engineers, etc.
    
    RE .70 - I suggest that you take a good, honest look at your career
    thus far, and figure out who REALLY made the decisions that most
    influenced it.  If you are like most people, I think you'll find that
    most of the decisions were, at least in part, out of your control. 
    Thus, you cannot always expect to control your own destiny without some
    help from others.
    
    Just my $.02
    
    Rich
    
    

>    I'm talking
>    about unions comprised of people that previously wouldn't have even
>    considered joining one - the "middle management" that union members
>    used to hate.  

Unions end up creating an artificial demand for labor.  Union members love
this right up to the moment the company they work for goes bankrupt or 
downsizes.  This applies to any trade or profession.   Unions, btw would
love to get their hands on "middle management" union dues, pension,
and health insurance money, etc, etc...

>	People still clinging to the"personal-success-at-all-costs"

I have worked in two unions for a total of 9 years, have you ever?
I would call it more "personal-survival" rather than "personal-success"

>    Lets take an extreme example.  All financial professionals in Digital

That is extreme, that would be terrible for any company.  If it is that
bad, shouldn't the financial pros just leave the company for another 
job?  I don't see how this would be postitive for either side. 
    
>    RE .70 - I suggest that you take a good, honest look at your career
>    thus far, and figure out who REALLY made the decisions that most
>    influenced it.  If you are like most people, I think you'll find that
>   most of the decisions were, at least in part, out of your control. 

I can accurately tell you, I made the decisions that most influenced my 
career.  When I was in a dead end, I changed jobs, and retrained myself.
If I had a bad boss, I changed jobs.  I choose to do what I do.  I choose
not to be involved in professions that are not self controled.  I suggest
that you decide to do the same, then the urge to unionize will not be there.

Good luck in your career!
Brad.    
    

Concluding that all unions are bad because your experience in one was
unsatisfactory is the equivalent of concluding that all hamburgers are
bad because one that you had was bad.

An assumption that all unions are bad is as accurate as an assumption
that all managers are good.

I've been in a bad (inneffectual; expensive; crooked) union, and I've
been in a good (an eloquent and effective collective representation of
all members of a profession being affected by inept, disjointed and
sometimes scurrilous management) union.

Art

    RE:72
    
    Brad,
    
    My feeling today is that many large companies have artificially
    SUPRESSED the demand for labor, by increasing (to an unreasonable level)
    the workload of current employees.  I don't disagree that SOME Unions,
    in the past, have had the opposite effect.  What we need is some sort
    of happy medium.
    
    As for myself, I have never been a member of a union.  However, my wife 
    was a member of a professional union (nursing) for years, and found
    much good and some bad about the experience.  In fact, in the past, I
    have been extremely anti-union.  However, given the current state of
    affairs in Digital and elsewhere, I would be inclined to listen if the
    opportunity of Unionization was presented.
    
    One of my wife's experiences may relate to one of your own.  She, 
    like you, had an incompetent/unethical supervisor at one point.  
    However, rather than change jobs, she was able to successfully seek 
    disciplinary action against this manager through the union.  The 
    supervisor was disciplined and, as a result, left her position.  
    Therefore, in this case, her union allowed her to have control over 
    her destiny that she would otherwise have lacked.
    
    
    Rich
    

re.57:

>  Digital is a shrinking company, dominant in *NO* area of the computer
>  business.

How about the market for 64 bit computing?

Dave.

According to Dataquest, we are the #1 Fortran vendor.

				Steve

    I wonder if there is any correlation between the base note and note
    4453.
    

Those who consider HP to be "kinder and gentler" should talk to some 
ex-Apollo folks.

--PSW