Conference 7.286::digital

    
    no money left for bonuses; we spent it on the share buy back.
    
    

    Enrico got it...

    Going to the press is stupid.

    
    which country do you live in ?

    Going to the press was stupid, but predictable. I was surprised by the
    level of detail in the Globe article, but not by the article's
    existence. This response to what Robert Ringer would describe as an
    attempt "to cut your hand off at the wrist" should have been expected
    by the all the principals involved, and if it wasn't, only underscores
    how out of touch they are. Decisions have effects, and in this case,
    repercussions. If they didn't expect widespread resentment, they are
    terrifyingly naive. This is the 90's, people. The days of "shut up and
    take it" are over. You screw someone, you'd better expect them to
    squawk, because that's what happens. Cause and effect. If our
    management isn't able to predict this sort of result from that sort of
    action, one has to wonder just how deeply they thought prior to making
    this decision. Did they expect us to not realize that they spent
    upwards of $300 million on the stock buyback? How, then, can they
    expect us to respond to cries of poormouth? Math is hard, but not that
    hard. Do they really think we're that stupid? One has to wonder.
    
     The Doctah

    
    
   > expect us to respond to cries of poormouth? Math is hard, but not that
   > hard. Do they really think we're that stupid? One has to wonder.
    
    
    	No need to wonder. Its not that they think we're stupid. THEY don't
    think things through before speaking. Look at the change in vacation
    accrual fiasco. Look at the biweekly pay. One week its one course of
    action and the next is another. They're hoping that one day they get it
    correct.
    
    ed

>    Did they expect us to not realize that they spent
>    upwards of $300 million on the stock buyback? 
    
    What does the "stock buyback" have to do with it?  Digital traded cash
    for an asset, the stock. Until the value of the stock changes Digital 
    the company has the same net value.
    
    -Bruce

    Digital hasn't traded anything yet (so far as we know) with the
    buyback. The option to do so is available and announced and funded.
    There's a difference between what people say and what people do.

    Hmmmm....interesting,
    
    1) Corporation takes $492 million charge for restructuring.
    
    2) Corporation reports loss because of charge for restructuring.
    
    3) "Success Sharing" is reduced because of reported loss.
    
    Inevitably someone is going to be in the situation where they have
    paid for part of their own layoff, from their Success Sharing.  :-(
    
    
    This reminds me of something we used to say about the Air Force....
    
    	Ready, Fire, Aim! :-)
    
    IMHO, this latest restructuring announcement has created many more
    problems than the potential benefit.
    
    
    paul

|    What does the "stock buyback" have to do with it?  Digital traded cash
|    for an asset, the stock. Until the value of the stock changes Digital 
|    the company has the same net value.

If the ultimate goal is to reward the share-holders of this company, one
could certainly question the rationale for swapping $300M in cash for volatile
stocks. In particular when the key reason for its price is what we could do
in the future, as opposed to what we have done in the past.

It is not improbable that if they invested $250M of those $300M into
cash deposits and then spent the remaining $50M on employee bonuses that after
three years the price of the stock would be higher ...

>Per

    
    If we had enough cash to fund the buy-back, then I  remain unconvinced
    we needed to make an explicit provision to dump 7000 people. All this
    has done is piss off many (long standing) customers, and made it even
    tougher on New Business sales. I am told that air-fares from Logan are
    quite low right now. Will the Donkeys in GMA who wish to understand
    what effect this crazy behaviour has on potential punters has, just
    drop me a mail (as per notes address, if you are struggling)....
    
    
    stupid, stupid, stupid.
    
    
    
    
    but buy back those shares.
    
    
    :-(
    
    
    
    
    AW
    
      
    
    SLT. 
    
    
    

We have announced our intention to buy UP TO 10,000,000 
shares.

We will not purchase anything close to that number in all 
likelihood.

This is one of those cheap tricks you use to give investors 
some glimmer of hope when nothing else you are doing does.

We certainly have not already spent $300M on this buy back
and I predict we never will.

    The rationale given by Charlie Christ for doing the stock buyback is
    pretty straight forward...
    
    They want to keep the number of shares outstanding constant so as to
    not dilute the "mumble" per share numbers that Wall Street cares so
    much about.
    
    By purchasing shares to later hand out as ESPP shares rather than
    printing new ones, they avoid diluting the existing shares.
    
    The buyback is not instantaneous.  I'm guessing that it will be spread
    over time to minimize the market impact, preserve cash flow, and ensure
    they have adequate shares on the appropriate ESPP buy dates.
    
    Charlie was asked the question "Why are you buying stock instead of
    paying bonuses?" but somewhat ducked by answering only the first part.

    Re: .7 and the last few -
    
    Digital, at an appropriate time, has the "right" to buy back up to
    $300M of stock at market.  Unless they are doing so in small lots, I
    have seen little evidence that they have done this.  I believe when the
    stock does return to the Corporation, it does so as "Treasury Stock" at
    a par value of $1, with no relationship to either what was paid for it,
    or what it might be worth on the current market.  It can then be
    re-distributed, either through the ESOP or the RSOP, or held, or sold
    in a later public offering.
    
    Also, the statements attributed Charlie Christ are probably correct -
    this is probably being done to avoid dilution.  It becomes important
    that one avoid dilution when a company's stock is under downward market 
    pressure.  Digital has done this a number of times in the past .
    
    I think what bothers everyone is the timing.
    
    	Bill
    

    
    
    isn't it commonly called a 'breach of contract' if someone says they
    will give you NN for doing X and then after you have done X they say
    they won't give you NN?? Just wondering........
    
    

    re: -.1
    
    You have to read the fine print in any contract!  (see 4719.232)
    
    Rich

    re: -.2
    
    Treasury stock is held on the balance sheet at the value paid. When the
    stock is (re)issued there will be a taxable transaction due to the
    difference between the purchase price and the fair market price at the
    time of reissue.

    
    rep .17
    
    
    Here's the contract in it's entirety, no fine print, no "But only
    if the corporation as a whole is profitable!"
    
    It smacks of a "Bait and Switch".
    
    But it also smacks of a LEGAL contract between Management and NPB 
    employees.
    
    I only want what I earned, and that is 9.6% of my gross pay for FY-96,
    no more, no less.  I earned it, I earned it, I earned it. 
    
    And I will accept no less than what I've earned.  
    
    __________________________________________________________________________
                                         
    
    - ---------------------------+tm
    |   |   |   |   |   |   |   |
    | d | i | g | i | t | a | l |                   INTEROFFICE MEMORANDUM
    |   |   |   |   |   |   |   |
    +---------------------------+
    
    TO:     NPB Staff                               DATE:  26 January 1996
                                                    FROM:  Laurence G.
    Walker
                                                    DEPT:  Network Product
    Business
                                                    DTN:   226-7871
                                                    LOC:   LKG1-3/D19
                                                    ENET:  delni::walker
    
    SUBJECT:  FY96 Group Incentives
    
    
    
    SUBJECT:  Announcing FY96 U.S. Group Incentives (Success Sharing)
    
    
    Last year, the Network Product Business was very successful and
    exceeded its financial goals.   We acknowledge that our employees helped
    to make it happen, and because of our FY95 Success Sharing Plan, our 
    employees were able to participate in the success of the Network Product
    Business.  We made a commitment to you to return with a success sharing 
    plan within the Network Product Business for FY96.
    
    As we experienced with FY95 Success Sharing, when success is achieved,
    and a goal is met, there is a tangible means to recognize and reward the
    achievements of the group.  Through the FY96 Group Incentive Plan,
    previously called success sharing, we will be able to share the profitable 
    success of the business unit with its employees.  We know that this cash
    compensation tool works well because we have experienced it.
    
    In FY95, payout of the plans was based solely on over achievement of
    business goals.  This year the plan begins to pay out 2% of pay for 100%
    achievement of the Profit After Tax goal.   For over achievement, an 
    employee can earn up to an additional 10%.
    
    Last year, we were one of the few businesses with a group incentive
    plan inplace.  This year, group incentives are a major thrust for the
    entire Corporation, however not all Business Units will have group 
    incentives in place for FY96.  Because this will be a Corporate-wide
    program for FY96, some of the criteria for plan participation and payouts 
    have changed since last year.  These changes will enable all employees 
    within the plan to be treated equally throughout the U.S.  You will 
    receive additional communication that outlines eligibility, participation
    and payout of awards.
    
    Please keep in mind that the success of the Network Product Business
    strongly depends on each employee's commitment to deliver his or her
    best to our customers and business partners.  I encourage you once again 
    to work together towards the achievement of our business goals.  We now
    know from experience that by working together, individual effort 
    translates into a win for the business unit, the division, the corporation,
    and for everyone involved.
                                                          
    FY96 Group Incentive Plan Rules -- U.S.
    
    
    Who Participates:
    - ----------------
    All worldwide BU employees who do not participate in another type of
    incentive plan are eligible to participate in the Group Incentive Plan 
    unless they have a review rating that is less than satisfactory at the
    time of payout. Those not eligible include employees on Sales Incentive 
    Programs as well as those on Executive and Business Unit Management 
    Incentive Programs.
    
    What is criteria for Individual Payout:
    - --------------------------------------
    An employee will receive the entire payout if the following conditions are
    met.  However if conditions are not met, a payout not will be received.
    There are two exceptions which are stated below.
    
    Conditions for Payout:
    - ---------------------
    - - You must be a Regular employee at time of payout (not  terminated
    or retired).  In the unfortunate circumstances of employee death,
    employee's estate will receive payout if all other conditions are met.
    - - You must have been Active within the company for 6 months of the
    fiscal year in order to receive payout (not on Leave of Absence, 
    Disability, or Workers Comp for more than 6  months).
    - - If you transfer in to the Network Product Business from another
    Business Unit you must be with NPB for a least a quarter and be here
    at time of payout in order to participate in our group incentive.  If
    you are here for less than a quarter, you will participate in your former
    Business Unit's Group Incentive Plan.
    
    Exception:
    - ---------
    - - Part-time Employees - If employee works 30 hours or greater, award
    will be calculated based on annual salary, not hours worked.  If less than
    30 hours, award will be prorated based on hours worked.
    - - New hires must be employed by Digital for at least 6 months of the
    fiscal year in order to receive entire payout.  Employees hired into
    NPB during Q3 will receive a prorated payout.
                                                             
    Other Criteria affecting final award:
    - ------------------------------------
    - - Overtime Hours - If you are a non-exempt employee, your payout will
    be calculated to include overtime hours worked.  Because this is not a
    calendar year program, your actual earnings from overtime are calculated 
    using a formula derived by Payroll.
    - - Base Salary - final payout is based on employee's base salary at
    time of payment.
    
    Payroll Processing:
    - ------------------
    - - When will Payment Happen?
    Payout will occur by the end of AUGUST 1996, after fiscal year end
    results are announced, and individual payouts have been audited.
    
    - - How will I receive payment?
    Each employee will receive payment in a separate check or notice of
    deposit.
    Payment will be distributed on Thursday along with regular paychecks.
    
    - - What deductions are taken out?
    Standard SAVE and Stock deductions are taken out.  The amount of taxes
    taken out will be based on a flat rate of 28%.
    <FF>
    
    Other questions and answers on FY96 Group Incentives
    
    
    Q.  What is the Group Incentive Plan and how is it different from last
        year's Success Sharing Program?
    A.  Group Incentives is a cash compensation plan that rewards employees
        based on the success of the business unit.  It works exactly the same
        as last year's success sharing program. In order to provide continuity
        across business units within the Corporation, we are calling it Group
        Incentives.
    
    Q   What is the basis of our program?
    A.  Our program rewards the achievement and over-achievement of FY96
        business goals.
    
    Q.  What are the specific Group Incentive goals and metrics, and how
        are they determined?
    A.  Profit After Taxes (PAT) is the only goal governing the payout of
        Group Incentives.  The business unit goals and metrics are determined
        by Senior Management within the BU and Components Division and
        approved by Corporate Finance.  The goals represent an aggressive 
        effort to make our company more competitive and profitable.
    
    Q.  What can I earn?
    A.  Our Group Incentive plans provides the opportunity to earn up to a
        cap of 12% of your base salary.  Your actual award is based on the
        level of achievement or over-achievement of business goals.  At 100%
        of goal you can receive 2% which is approximately two week's pay.
    
    Q.  Under the Group Incentive Plan, are awards differentiated based on
        individual performance?
    A.  No, awards are not differentiated based on individual performance. 
        The purpose of this plan is to maximize team effort in order to achieve
        positive business results. Since everyone is treated as an equal
        member of the team, everyone receives the same payout percentage.
    
    Q.  Can I participate in more than one incentive program?
    A.  No, you are only allowed to participate in one program within the
        Components Division.
    
    Q.  Why are the rules for participation different from last year?
    A.  Because Group Incentives are being introduced throughout Digital,
        standards have been put in place for everyone to adhere.
    
    Q.  Will there be a program after FY96?
    A.  It is our expectation that we will have an FY97 Group Incentive
        plan.  After FY96 we will evaluate the program to determine future
        business goals and plan future programs as appropriate.
    
    Q.  Will there be different Business Unit Plans within the countries?
    A.  There will be country specific plans which reflect the market
        practice within the country with BU goals incorporated into these 
        country plans.
    
    
    ------- End of Forwarded Message

I'm not in New England anymore (just fired up my new home office in Hudson, 
Ohio this morning), so I don't get the Globe anymore.

When Digital tries to weasle out of this story in the next Globe or so, 
could someone type in the weasle?  I could use a good laugh.

thanks - john

    
    re: -.1
    
    If that is considered the official plan document, then you are right,
    I don't see any disclaimer about corporate profit.  But, I don't think
    this is the official plan document.  The "Plan Rules" section doesn't
    even contain the payout schedule (the only mention of amount is in the
    Q & A section).  I suggest you ask your management for a copy of the
    plan policy & procedures statement (that's what it was called in the
    MCS packet).
    
    I'm not arguing that you don't deserve the bonus, or that you shouldn't
    get it.  Just interpreting what I see.
    
    Rich

    
    The catch here is the plan says bonuses will be paid based on PAT.
    Profit after taxes. Are restructuring charges applied before or after
    taxes?
    
    ed

> You will 
>    receive additional communication that outlines eligibility, participation
>    and payout of awards.

This looks like fine print to me...

What are the $492M restructuring charges?  Where does the money go?

(Serious question here.)

I'd assumed it was money for packages.  With 7,000 people to layoff, that
works out to $70,000 per person?  I guess not.

What's the money for, anyway?

    Some of the restructuring charge is for employee packages and some is
    for plant closure/moving...
    
    ed

In the past the restructuring charges have gone for severance packages, 
facilities closings and reconsolidations, equipment write-offs and 
inventory write-offs.  I would expect these restructing charges to be 
similar.

Jim

    Acording to accounting practices (or at least acording to one of the
    the finance types on Rennick's staff), you can't just invent a number
    for a restructuring charge.  At the time you take it you have to have a
    plan.
    
    Money can be used for things like:
    
    layoff costs
    building closing costs (write off assets, get out early from leases ...)
    combine plants (write off loss from selling excess assets)
    scrap obsolete equipment (write off residual value)
    
    Steveg

>   Money can be used for things like:
>   
>   layoff costs
>   building closing costs (write off assets, get out early from leases ...)
>   combine plants (write off loss from selling excess assets)
>   scrap obsolete equipment (write off residual value)
    
    selected management changes

    re: .21-.23
    
    In Digital Semiconductor's 1996 Group Incentive Plan (GIP) package,
    there is the following fine print, located on the bottom of the page
    that defines the Payment Schedule:
    
          * "The Overachievement provisions of all plans are subject to
             Company affordability as determined in a year-end financial
             review."
    
    I take this as their "legal out".
    
    
    JAW
        

    
    
    the old "affordability" out.....yup yup yup....
    looks like an out to me....at least a legal one, not necessarily a
    moral one. But expecting Digital to do the moral thing anymore is like
    waiting for a pig to fly... 8-}
    

Didn't we create an office of business ethics some time back? This would be
an ideal chance for them to prove their added value.

>Per

    We have no more ethics, they have been outsourced.
    
    The new agency is:
    
    Society of Creative Responsible Ethics Workers 
    
    (S.C.R.E.W)
    
    

    Re: .31
    
    	Win Hindale retired, methinks it seems to have vaporized with
    Win and the ETHICS notes conference discussion.
    

    Why couldn't we use some of our much-vaunted cash to pay those bonuses?
    I mean, I know cash is king, but....
    
    Naively yours,
    Kate
    (who wasn't expecting to get a bonus anyway :^)

	re: .29

	It is true that the plan here in DS has a "legal" (read sleazy)
	"out".

	Now I am eagerly awaiting the official word from DS upper management 
        as to the fate our bonus plan. Last week I began to get that uneasy
        feeling when our year-end financial review was postponed by 1 week.
        My assumption was that they were trying to buy time for the spin
        doctors to work their magic. If they trash the payout after the sell
        job that has been going on around here I would suspect that many
        individuals will create "outs" of their own.

	This is sad because because I have stuck it out 8 years in this
        organization and haven't seen morale this high in at least 5 years.
        All day the place was abuzz with gripes about "there goes the bonus".

	The company would have accomplished more by never offering the plan
        in the first place.

	-Dave-

RE: .31

>> Didn't we create an office of business ethics some time back? This would be
>> an ideal chance for them to prove their added value.

Victor Pompa works in the Ethics Program Office according to ELF.  Not sure
how much help he would be but it might be worth a try.  According to his
business card, he receives e-mail at [email protected] and ELF
says:  POWDML::POMPA.

    When the SLT has brought the Company back to fiscal profitability and
    they're ready to get a bonus for doing so, do you think they'll vote to
    honor this bonus program before awarding their own bonuses?
    
    	Regards,

    It's an interesting side trip to go back and re-read Note 4658 and
    all of its replies, and then to consider that those goings-on were
    less than two months ago.  A lot has happened since then...
    
    Chris

    The letter mentioned in .19 can also be found on the NPB Intranet
    at http://npb2.hpn.lkg.dec.com:80/hr/success.html
    
    Steveg

Didn't the SLT get stock bonuses this year?  Maybe around December/January?
I recall them getting some handsome stock bonuses based on Digital's turnaround
and profitability.  Anyone remember the dates?

Jim

Our stock crashed since January.  So restricted-stock bonuses have been cut
in half, which is appropriate w.r.t. the halving of bonuses in Network Bus.

>    It's an interesting side trip to go back and re-read Note 4658 and
>    all of its replies, and then to consider that those goings-on were
>    less than two months ago.  A lot has happened since then...

At least it lasted 2 months....

    Re .31:
    
    > Didn't we create an office of business ethics some time back?
    
    The ethics office:
    
    	exists,
    
    	accomplishes the purpose of giving Digital a legal defense
    	against claims it neglected ethics,
    
    	promotes a naive rule-based description of ethics of the sort
    	that is taught out of a textbook to business majors who do not
    	have sufficiently developed ethical systems of their own,
    
    	deleted the ethics conference without warning after learning
    	that employees could actually speak back and describe real
    	ethics instead of the textbook stuff,
    
    	later printed a false statement about the proceedings of the
    	conference in Forefront, and
    
    	have failed to respond to a request to retract and apologize for
    	the false statement.                               
    
    As far as I am able to ascertain, the ethics office has the purpose of
    letting Digital say "See, we are concerned about ethics" and not any
    purpose of actually promoting or enforcing true ethics.
    
    
    				-- edp
    
    
Public key fingerprint:  8e ad 63 61 ba 0c 26 86  32 0a 7d 28 db e7 6f 75
To find PGP, read note 2688.4 in Humane::IBMPC_Shareware.

    
    One of the goals of the new 'employee partnership', according to the memo 
    in note 4658 was to:
    
    o   define the company's relationship with employees worldwide
    
    I'd say they've done a bangup job with that one 8-}

	edp.... why do I get the impression you have had 1st hand knowledge in
each thing you described? :)

RE: .41

	Doesn't much matter whether the stock bonus was cut in half by
	Wall St. It only matters that they recieved something and we
	didn't. (Assuming they did get a bonus. I don't have anything
	in front of me to verify)

							mike

	I wonder if Bob will step in and try to let us know what is going on
with all this. He is probably the one who could clear the majority of this up.
My hope is he does this soon, as from what I have seen in this, and other
conferences, people aren't going to be sticking around too much longer. Maybe
this is the plan, but it would be nice if Bob would clue us in on all this.



Glen

    
    	I have heard it said that we as a company are very quick to
    	dispell false rumors.
    
    	And that's all I have to say about that.
    

    Is the basenote really true? Can any NPB folks confirm it? I am in NPB
    and its news to me.
    
    Thanks.

    I am a stockholder in addition to being an employee.  While I may be
    accused of "wearing two hats", my stockholder hat tells me that if a
    business unit like Network Products is overachieving and there is a
    program in place to award that, then a short-term financial "hit" is
    warranted to (1) encourage continued overachievement in that business
    unit and (2) to hold that unit up as an example of what the other
    business units could achieve.
    
    That this agress with what my employee hat tells me is purely
    coincidental, other than that it simply MAKES SENSE FOR A WELL-RUN
    BUSINESS TO DO (shouting intentional).
    
    Disheartened,
    
    Pat Campbell
    Program Manager, NSIS

        ...sure it's true.  I was there.  Although I seldom think the
    Boston Globe articles about Digital are correct, in this case it is
    accurate.
    
    MDL

>    I am a stockholder in addition to being an employee.  While I may be
>    accused of "wearing two hats", my stockholder hat tells me that if a
>    business unit like Network Products is overachieving and there is a
>    program in place to award that, then a short-term financial "hit" is
>    warranted to (1) encourage continued overachievement in that business
>    unit and (2) to hold that unit up as an example of what the other
>    business units could achieve.

This makes too much sense. The SLT will probably do the same as we do with
all well run profitable business. (ie. They sell them 1/2 :<). )

Joe

>================================================================================
>Note 4760.30                     Bonus Concerns                         30 of 47
>CSC32::PITT                                           7 lines   5-AUG-1996 15:53
>--------------------------------------------------------------------------------
>
>    waiting for a pig to fly... 8-}

I can make a pig fly for a short period of time by transitioning it from the
Royal Gorge Bridge.  The problem is that, after the flight, I end up with SPAM.

BobW

    waiting for someone from POND:: to tune in...
    
    hello ??
    
    I presume your Porsche payments are not tied in to any bonus payments
    you planned for. Unless, of course, your bonus promise won't be
    affected by this current nonsense.
    
    Nice paint job on your car though (saw it some weeks back. Nice car. I
    can't afford one).
    
    I think the technical term is 'balls-up'. Well done chaps....
    
    
    
    
    
    
    
    
    
    

    re: -.1
    
    Well I haven't seen any articles in the Globe stating that any Porsche
    dealer has had to TSFO any of their employees.
    
    Jerry

    
    
    I see it clearly now.  There was and is a bonus program.
    
    bonus  =  BONE US
    
    I don't know how I missed it!
    
    
    /art

Seen on a bumper sticker:

I'm tired of searching for the truch,
Now I'm trying to find a good fantasy

    Perhaps if somebody knew what a truch was, there may have been some
    hope of finding it.

    Opps, I guess, I was a bit tired when I wrote it.
    
    How about:
    
    I'm tired of searching for the truth,
    Now I'm trying to find a good fantasy
    

	The consequences of the current bonus policy would seem to be obvious
	and predictable. While the amount of money the company actually saves by
	slashing bonuses is inconsequential, compared with with +400M
	restructuring costs, the effects on employee morale are massive.

	I would therefore assume that morale and loyalty of the employees in
	NPB is not issue. This would lead me to believe that rather than
	spinning off Networks into a wholely owned subsidary we will instead
	be sold outright.

	Networks have always been a strength of Digital as well as an extremely
	profitable area. I have always taken pride in our company's reputation
	as a leader in the industry and have worked hard to maintain that
	position. It disappoints and saddens me that despite the best efforts
	put forward by our employees we are now deemed expendable.
	
	One can only hope that when the company has completed 'restructuring'
	enough remains that it is a viable entity for those hardy few who
	remain. I am afraid I will not be counted in their number.
                                            

    re: .60
    
    Didn't you know that the global plan is to continue to either layoff
    or sell off until there is nothing left? Slow and methodical as it is
    I haven't seen anything to convince me otherwise. Who knows, perhaps
    where I land could be on the street, with EDS, Anderson, etc? Who
    knows. I do know that I truely enjoy what I do, my manager and those
    I work with. That is enough at this time for me to keep on keep'n on.
    
    Now, if I had been screwed by this bonus debacle it might make me 
    reconsider.
    
    Jim C.
    
      

    re: .60/.61
    
    I really believe NPB will be the next to be sold, it's making money. I
    trully believe the powers to be have aligned the company so it can be
    sold off easily. What's next MCS or pieces of it until there is nothing
    left.
    
    

    Humor for the day:
    
    I always thought about working for a small company - I just thought I'd
    have to leave Digital to do it.

    One possibility:
    
    Digital is now being managed "by the numbers."  Profit and loss
    are what matter.  Since it's impossible to assign a precise
    numerical accounting value to "morale," morale and things that 
    affect it simply never enter into the decision making.  There
    is not necessarily any malicious intent...just a woefully simplistic
    view of what it takes to manage a company whose main asset is
    the intellectual talent of its employees.
    
    

    
    rep .64
    
    You're too kind!
    
    

	RE: The last few

	The following is my opinion only. I have no inside information nor
	know any of principals involved in upper management decisions
	personally.

	Cutting bonuses would be keeping within the current policy change
	model. That is, announce a rather extreme change then moderate the
	position when protest reached a critcal level. It also fits the
	'numbers' management model. I would put more stock the later if the
	money saved meant we turned a profit for a quarter or the year.

	In my mind I can find only two feasible rational behind the decision.

		1) This is a corporation wide message. 'We mean it when we
		say you have to watch the bottom line. If we're willing to
		do this to a very profitable unit guess how far we're willing
		to go with one that doesn't make money.'

		2) Longterm consequences do not apply.

	If Digital is willing to get out of networking, major *IF*, the
	ultimate core of the corporation must be much narrower than I
	had imagined.

    Ahah !
    
    if you e-mail  POWDML::ETHICSOFFICE, they will send you a whole bunch
    of stuff (including over 60 flash cards...  oooHH!), on what to do in a
    given 'ethics related' situation. [got this from VTX Livewire].
    
    This is where i was going wrong. I though ethics was a county to the
    eathst of London, England. Now, I know its a bunch of flashcards, like
    I show to my 3 year old. [" no, that's a Porsche, not just a 'car'"..
    "no, that's a 4100, not an abacus"... "No, that's not a bonus, that's a
    fairytale". hey, why are you crying? .. If you don't stop crying, then
    I'll downsize your milk allowance, and re-focus your play activity...
    Why have you run away ?.."]
    
    
    
    

    re: Note 4760.64 by HELIX::WELLCOME
    
    I thought we've been operating in a 'short-term bottom line' mode 
    for the last 4 years or so.
    
    Ken....
    

    
    re .64 - a perfect example of the aphorism "don't attribute to malice
    what may be no more than incompetence".
    
    len.
    

Here is the livewire text .67 mentioned! Rather funny consider what is going
on.


)0 Worldwide News                                 LIVE WIRE
 qqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqq
qqq
 Ethics education package poses dilemmas, ...                Date:
07-Aug-1996
 qqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqq
qqq
Page   1 of 1  
          Ethics education package poses dilemmas, answers questions 
   
         You're under tremendous pressure to make your numbers.  But what 
   if your success depended upon promising a customer something that you'd 
   have to be extremely lucky to deliver?  Or if you needed to report 
   bookings that a customer had not quite committed to?
         These are the types of dilemmas that are explored in "A Question 
   of Ethics," an education package designed for group learning about 
   Digital's ethics standards.  Copies have already been sent to Digital's 
   top managers and their support staffs.  The kit is in stock now for all 
   other managers to order.
         "We're trying to help managers continue to build customer, 
   partner and employee trust through fair and consistent business 
   practices and also help them meet their business controls 
   responsibilities," said John Buckley, head of the Corporate Ethics 
   Office.  "This package allows managers to lead ethics discussions as 
   part of monthly staff meetings.  They can concentrate on business 
   conduct issues their team is most likely to encounter in day to day 
   activities."
         The kit's 65 situation cards are based on common problems, but 
   they do not describe any single event in Digital.  The answers were 
   reviewed extensively by senior managers.  
         "The MCS Change Forum team really helped initiate this kit.  I 
   worked with them to develop a challenging set of questions for their 
   business-specific ethics discussions," said Victor Pompa, Ethics 
   Education and Communications manager.  "After seeing how successful 
   their sessions were, I modified the format to make it usable without an 
   outside facilitator and expanded the scope to include new topics for 
   other business units."
         Managers can order a copy of "A Question of Ethics" through VTX 
   LOS (part number EF-A6848-50).  For more information, call DTN 223-INFO 
   (4636) or send E-mail to ETHICS OFFICE @MSO or POWDML::ETHICSOFFICE.

 

    re: .60
    
    > The consequences of the current bonus policy would seem to be obvious
    > and predictable.
    
    ... and announced, too.  Remember the 7000-to-be-downsized?  Maybe this
    is just their way of empowering *us* to decide who those 7000 will be
    -- and without the TFSO expense, too.  :-)
    
    -md

    Just got off the phone with the latest of a series of recruiters who
    are positively GLEEFUL at this turn of events. You see, they are in
    need of networking professionals in a big way. I'm beginning to wonder
    if Mullarkey et al are being paid a bounty on every DEC engineer that
    they can turn into talent for a competitor...

Probably - the SLT [sic] considers employees "expenses", nothing more.  The
more that leave, the lower the expenses, and they're happy. 

				Steve

    Anybody got any cheese?

    Must be like the IRS. The IRS equates being in a 28% tax bracket
    to a 72% tax expense for the government. A.K.A. the government
    owns 100% of your pay and lets you keep 72%, thus its a 72% expense
    to the government. 

    re. last several
    
    Look at 1664.125
    
    cheers,
    
    	fred deady

	If someone wants to leave the company before they actually hand out the
bonuses, will they receive one?

Re: .77

No.

	Steve

    
    	Why not?
    
    	Weren't they employees of the company during the time that
    	performance was being evaluated?
    

    re: -1....shawn..don't you know by now that logic has little to do with
    this entire situation........./k
    

    re: .79
    
    The original documents indicated you must be an employee at the time of
    the payout to get anything.
    
    This is typical of most bonus plans.  They are intended to reward good
    performance and thus encourage a repeat next year.  There is no
    advantage to the company in rewarding non-employees.
    
    The crux of the difference appears to be that the NPB documents didn't
    include the "corporate out" that other groups plans described.
    
    I wouldn't feel as upset if they had spelled it out in advance. I'd
    still be annoyed, somewhat upset and angry, but at least I'd be angry
    at folks that didn't manage their business properly rather than feeling
    betrayed by folks that appear to have lied to me.

RE .72 - Yep, the headhunters are on their hunting expeditions. I got a call
Monday morning at my desk from one looking for ASIC engineers (not my cuppa
tea). Wonder if he was dialing down a group phone list until he got someone who
was an ASIC person...

      Criteria for participation:
    
      1. You must be employed by Digital at the time of payout.
      2. You must have a recent performance rating of 3 or better.
      3. You must be in Digital Semiconductor for at least 3 months at the
         end of the year.*
    
      * not sure about other business units.
    

RE: .83

	You forgot:

	4. You must be a VP

							mike

    re: .81
    
    >> ... They are intended to reward good
    >> performance and thus encourage a repeat next year. ...
    
    That aspect of the program is quite soundly in the toilet, thank you.

    I'm sure once each of you recieves the payout from the Group Incentive
    Plan, you'll stand proudly and say,
    
    	"I got GIPed!"

RE .85

Another interesting item in the question and answer section:

"What can I earn?

... At 100% of target you can receive 2% which is approximately
two week's pay."

One week's pay = 1/52 * (annual pay) 

1/52=.01923 = 1.923%

Two week's pay = 2/52 * (annual pay)

2/52 = .03846 = 3.846%

Must be new math...  key word "approximately"

    This is not meant to rub salt in anyone's open wallet, I mean wound.
    Heaven knows we are not talking about much salt here.


    Another funny situation regarding bonus's. Several people received a
    modest bonus for accomplishing their MCSE certification in a very short
    time frame. (And I do mean modest). Our completion of the project on
    time allowed digital to collect about 15 million of the
    MICROSOFT/DIGITAL agreement. 

    	Well, according to the official memo, Payroll's system had a virus
    and we were over paid. Along with this notification came a request to
    send in said overpayment in the form of a personal check payable to
    DIGITAL. The details regarding taxes are still to be worked out.
	
    	The bonus we received was unexpected and was a very nice gesture
    on the part of Digital. The thought was tarnished, however, buy the
    goof up.

    	"If you get a bonus, stuff it in the bank. You may have to pay it
    back." :^)

many smiley faces....
    jimbo
    

    	

    re: -.1
    
    Why am I not surprised? 
    
    Jerry

    A "virus" ? Now I have heard it all!

    Does anyone remember the movie, "Christmas Vacation"?

    Clark (Chevey Chase) expecting a large Christmas bonus announces to his
    family the purchase of a new swimming pool.  He later finds out that
    the bonus has been reduced to a subscription to "Jelly of the Month
    Club".  Hick relative kidnaps CEO in his underwear and presents him to
    Clark.  CEO eventually realizes that although bonus cuts looked good on
    paper, they have a much more profound impact from a personal view.  CEO
    re-instates full bonus plan and they all lived happily ever after.... 

    ...and this was only a fairy tale...


    							-Paul

	No Paul, that was a movie.. The bonus plan is a fairy tale. :)

							mike

    
    FYI - Update on SBU bonus plan...
    
    Look in kacie::sbu note 14.4 posted Friday.
    

    Latest -- NPBU is going to restore the full bonus!
    
    

    Re: -1
    
    now you don't have to worry about the Repo man coming to take back
    that nice playground set ;)

    
    
    	Now maybe those of us in the SBU will hear something concrete.
    
    	Not that mine will amount to much, but it would be nice to
    	hear what we *are* going to get (if anything).
    
    	JJ
    

    Perhaps the SLT does have a clue ?!

    Employees of the Storage Business Unit have also received confirmation
    that we'll be getting the full bonus we were promised (12%).
    
    I'm actually a little disappointed; by this point I was actually kinda 
    looking forward to filing a class action lawsuit against DEC :-)

Anybody heard about MCS? Not that it was much but still...liesl

    What about the old ABU employees?  Some of us didn't transfer over to
    the SBU -- but into NSIS.  Any hope for us?
    

    regarding MCS:, We've heard that our $4 bonus would be "lumped" so we
    could go out for a brew after work one night.
    
    .mike.

    Well it is certainly to be hoped that the bonuses will be paid as
    promised and on time.  It was a really bad decision to renege on it,
    enough to make people want to have that sort of thing backed up with a
    legally binding agreement with a union :-)
    
    Maybe the message is getting through that we expect the management of
    this company to watch and notice what is going wrong and to fix it.
    
    Now I don't suppose there is any chance of fixing that nonsense with
    internal PAKs is there? Hey, we might even get this show on the road
    this year...
    
    Kevin

I'd still like to see some accountability here!  If management holds me 
accountable for my decisions, I expect the same of accountability of management.
I'm not saying someone needs to be fired -- but at a minimum they should
stand up and be acknowledged -- and stop hiding behind the nameless and
faceless "the Corporation has decided".

Anyway, if "the Corporation" can make such an obviously bad decision as this, 
it really makes one question their ability to make any solid and reasonable
decisions.

Dan

I would also like to hear about the ABU FY96 performance.  We also
had a bonus plan presented to us in Q2 but there was never any communication
afterwards.  

It is not an incentive plan unless you clearly define the goals, metrics and
results.

Gary

> I'd still like to see some accountability here!  If management holds me 
> accountable for my decisions, I expect the same of accountability of
> management. I'm not saying someone needs to be fired -- but at a
> minimum they should stand up and be acknowledged -- and stop hiding
> behind the nameless and faceless "the Corporation has decided".

  Oh, that one's easy!

  Ultimately, all authority is traceable to the CEO and the Board
  of Directors.

  So you know who to write to.

                                   Atlant

    
    re MCS. I have heard NOTHING. The silence is deafening... 8-{
    

    >            -< Can we all live happily ever after now????? >-
    
     The short answer is "not really." While this is the best outcome that
    could have been hoped for, it is still not as good an outcome as it
    would have been if there had been no attempt to cut our hands off at
    the wrist (to steal a line from Robert Ringer). Real damage has been
    caused in that the general attitude of the workers has been soured.
    Call it an awakening. We were led down the primrose path, told that
    everything would be fine so long as we performed and were profitable.
    Now we've been shown that such is not the case. Being profitable is no
    shield against poor treatment by management. That's a scary thought,
    especially considering the fact that we are not seeing the sorts of
    revenues we'd like for Q1, and it doesn't look like Q2 is going to be
    much better.
    
    Prior to this debacle, we may not have been sailing full speed ahead,
    but at least we were a team and everybody was looking ahead. By taking
    the wind out of our sails the way they did, the SLT is responsible for
    the luffing. We've lost momentum, and it's going to take time for us to
    get it back. Getting the team spirit we'd finally developed restored is
    going to be an uphill battle. It's a much bigger problem than
    management realizes, even now.
    
    The Doctah

    
    re: request for MCS info
    
    According to a memo that John Rando sent out last week, MCS hit
    99% of its revenue goal, did well in its customer satisfaction
    goal (no number), but only hit 86% of its profit goal.  The
    MCS SuccessSharing document says we had to make 90% or our
    profit goal to get the smallest bonus :-(.  So no bonuses for
    MCS employees at the corporate level.
    
    These numbers were the conglomerates, each territory's numbers
    are different.  The % of profit goal ranged from 83% (Canada)
    to 114% (Asia).  So employees in some of the territories should
    be getting bonuses.
    
    Rich
    

    
    rep .109
    
    
    If the decision to reinstate the bonus was strictly a legal one, then
    the SLT doesn't care what damage has been done to morale.
    
    If the decision to reinstate was because they wanted "to do the right 
    thing", then they do care about us afterall.
    
    Which scenerio is the true one, I don't think we'll ever really know.
    But I could offer an enlightened, educated, guess to what the 
    "real story" is!   But I'd prefer not too.
    
    Paul Harvey, page 2.
    
    /art
    
    
    
     
    

re .111:

There's a third possibility.  They realized that reneging on the bonus would
cause the brain drain to increase to the point the Networks would fall apart.

    rep .112
    
    I discussed the third possibility with several of my NPB coworkers and
    a few managers, but the consensus was:
    
    "Wouldn't they have thought about the "brain drain" before making such
    a decision!?
    
    Wouldn't you have thought about this decision??
    
    /art

	RE .105 ABU FY96 Performance

	I work for CSS which was a part of the ABU during FY96. We 
Exceeded our GOAL by a large amount but were told we would not 
receive any bonus because the ABU did NOT meet its goals.

	\Bob Lail

    And round and round we go and where she stops nobody will know.
    
    Man I miss the Greyhawk in discussions like this.  Mr. Mod. Can we get an
    exemption to have him comment on this string for old times sake?
    
    Mav

I guess y'all learned that promises are kept as long has half the company
throws a big enough hissy fit.

- Just a contractor.

    
    
    	Hissy fit or not, I'm keeping my 6%. ;*)
    
    

See 4719.224 - it's nice to predict something right for once, even if it
was a prediction based on cynicism! ;-)

- paul

    How many I quit notices did it take for them to restore the bonus?
    
    it is still in poor taste. Glad it was reinstateded however!

re: .113

<<    I discussed the third possibility with several of my NPB coworkers and
<<    a few managers, but the consensus was:
<<    
<<    "Wouldn't they have thought about the "brain drain" before making such
<<    a decision!?
<<    
<<    Wouldn't you have thought about this decision??

The bean counters don't think about this at all.  That's why we continue 
to cut our way to profitability.

If Mr. Palmer continues to let Mr. Mullarkey run the company, it's all over.

- Scott

    They flew the kite to see if it worked.  When the level of complaint
    and number of resignations (real or threatened) crossed a threshold
    they decided that the decision had to be changed.
    
    Now they only have to deal with the consequent depression of morale -
    but as employee morale is of minimal interest to shareholders don't
    expect too much activity to retrieve the situation.

    Not meaning to rain on anyone's parade, but what about KACIE::SBU's
    note makes everyone so celebratory? Here is the note that was referred
    to:

vvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvv

             <<< KACIE::SYS$SYSDEVICE:[NOTES$LIBRARY]SBU.NOTE;1 >>>
                         -< SBU Communications Forum >-
================================================================================
Note 14.4                         Known Metrics                           4 of 8
KACIE::COPPERMAN                                     13 lines   9-AUG-1996 10:57
                            -< Known Metrics reply >-
--------------------------------------------------------------------------------
Jon

As an update, last Thursday and Friday (8/1 & 8/2) Harry and I met with 
Bob Palmer and Vin Mullarkey to discuss the SBU's performance for FY96.  
We wanted to be sure all confusion concerning our performance was eliminated.
Although we did not leave with a final decision, the meeting was optimistic
and we felt we would be treated fairly by Bob and Vin.  We are expecting
to hear from them within the week.

As soon as we hear, we will communicate their message.

Marian
 
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

    How did everyone come to the conclusion that the reinstatement of the
    bonus was a done deal? Marian specifically says that "we did not leave
    with a final decision".
    
    	BD�

They're not celebrating the SBU info.

Networks announced full 10% bonus.

/john

    Storage management understood the terrible effect on the organization
    from the first minute.  They reacted fast (for restoration of the
    bonus).  
    
    I think this was Mr. Mullarkey's deal.  He may be good at
    manipulating the numbers, but doesn't seem to respect employees very
    much.  Or trust them. (e.g. recepts for tunpike tolls, TMS, N-levels
    of approvals, continual spending freezes ( how can we have freeze after
    freeze without a thaw?)).  He appears to believe that only he can be
    trusted with a buck.  Mutual respect and mutual trust are the basis for
    leadership.  The bonus debacle is a classic example of managing the
    numbers vs. leading the company.  
    
    I think we'd see an amazing resurgence if authority and 
    accountability were delegated to the front line.         

    Bringing in the Boston Globe this morning, before heading to work, I
    glanced at the Business section.
    
    One of the headlines read:
    
    	From Digital, with love
    
    I didn't get a chance to read the article, but I got the impression
    that it was about the bonus reversal.
    
    Anybody read the article?
    
    kjg
    

     Digital backtracks, restores bonuses to Network
     workers: Analyst: Company feared losing staff

     By Hiawatha Bray, Globe Staff, 08/14/96

     Faced with sharp criticism from its employees,
     Digital Equipment Corp. has retreated from a plan
     to reduce bonuses for workers in its Network
     Products Business unit.

     A Digital official who asked not to be identified,
     said workers in the business unit would receive
     bonuses of around 10 percent of their salaries.
     That's the amount they were promised a year ago by
     Laurence G. Walker, then general manager of the
     unit. Walker later resigned and was replaced by
     Robert Rennick. In early August, Rennick said the
     bonus for Network Products workers would be
     substantially lower than what Walker had said.

     The announcement sparked outrage among the
     workers, whose business unit has prospered, even
     as Maynard-based Digital has racked up big losses
     in other divisions. In the fiscal year ended in
     June, Digital as a whole lost $111.8 million, but
     Network Products turned a $94.6 million profit.

     The Digital official said the workers' negative
     reaction played a part in the company's decision
     to restore bonuses to previously announced levels.

     Terry Shannon, who publishes a newsletter that
     tracks Digital, believes the firm's executives
     were afraid the bonus cuts were alienating some of
     their best workers.

     ``The networking business is highly competitive,
     Digital has some very talented people, and
     companies like Cisco Systems [a leading computer
     networking company] would be delighted to snap
     them up,'' said Shannon.

     This story ran on page f2 of the Boston Globe on
     08/14/96.

Why the delay in SBU? The only way this situation could be made worse is to fail
to reinstate *all* group bonus plans to their promised levels. I cannot believe
senior management would be so irretrievably stupid as to only reinstate bonuses
to some groups. To do so would indicate total cluelessness about managing people.

I suppose that depends on whether or not management thinks enough SBU
employees would quit if they didn't give the full bonus promised.  Or whether
or not they care.  I'm not sure they do.

				Steve

I need some help here.  I've been looking and I cannot find anything that stated
what the % was for the SBU, or even what the metrics were.  Just out of
curiosity, does anyone know?

--Scott

    The way I read what's been reported here is that the SBU base numbers
    are not solid yet.
    
    NPB's base numbers were known and, since there were no big reorgs in
    NPB this year, it was relatively easy to figure things out.  Ditto for
    Storage and lots of other groups.  (note I said relatively easy, in
    this company, nothing financial seems to be easy).
    
    The reversed decision was about how to translate base profit numbers
    into bonus percentages.  Once they know the SBU numbers, I expect the
    original algorithm would be used there as well.  Given the flap about
    this whole area, a small delay to make sure you can justify the numbers
    seems prudent (especially if the numbers are a surprise to the worker
    bees).
    
    Note that they have delayed NPB payout by approx 2 weeks (originally
    was Aug 29, not it's mid September).  This might be so they could give
    everybody the money at the same time (and avoid any appearance of
    preference). The delay could also be due to mechanical reasons (i.e.
    Payroll has to redo stuff and it will take longer) or morale reasons
    (longer cooling off period since departing employees will stick around
    till payout).
    
    Steveg
    
    P.S. not being in SBU, I could easily be all wet.  The base numbers
    could be well known and the delay be for some other reason.  I just
    don't think it's time for conspiracy theories yet.

    it's not exactly clear to me how much of this fiasco can be fixed at
    one particular person here. It would seem to me that if one is to soley
    place blame Vin Mullarkey then this is a bit short sighted in my
    opinion. Senior management (christ/rando etc..) has to take even more
    of the blame for not appearing to have fought this silly decision(s) in 
    the first place. 

    I think the metrics for the SBU are a DPMO of .005 a PPM defect rate of
    2 and 100% delivery performance and no inventory.

    If we meet all of these goals, we each get 1 digestive cookie and a cup
    we can write our names on.

    hth

re: .131
<<
<<    it's not exactly clear to me how much of this fiasco can be fixed at
<<    one particular person here. It would seem to me that if one is to soley
<<    place blame Vin Mullarkey then this is a bit short sighted in my
<<    opinion. Senior management (christ/rando etc..) has to take even more
<<    of the blame for not appearing to have fought this silly decision(s) in 
<<    the first place. 

I don't know if you were referring to my note, .120.  I didn't blame 
Mullarkey; rather, I pointed out that Palmer seems to have abdicated 
power to him.  I guess you and I are in agreement.

- Scott

    How does BU calculate profit after taxes (PAT) ?  I did not think BU
    pays any taxes.  We have never been given the financial disclosure
    broken down by BU in the annual report.  That information is not public.
    
    My BU made tonnes of money but we were told that internal business
    pricess (IBP) of the last FY screwed us our numbers.  
    
    Here is an extract from our VP
    
    "The only blemish on the record was that our internal pricing transfers
    exceeded budget, which caused us to miss our internally measured
    operating profit.  However, those excessive transfers out were
    excessive transfers in for other business units --- zero sum for the
    Company. Where it really counts, in external fiscal results for the
    Company, you more than delivered.  We brought in more margin dollars to
    cover the Company's costs than we were asked to, and we spent less
    money than planned to do so.  Well done!"
    
    Reading between the lines, it tells me that at least some BU's claimed
    profit came at the expense of another BU's loss.  Zero sum game for
    Digital but NOT for some of the Digital employees :-(
    
    I guess I need to chat with my VP.
    
    - Vikas
    profit 
     

    Im interested in the accounting of this. I assume the bonus is part of
    the cost for that years business. Those books are presumably closed,
    since the fiscal year is ended and the report made to stock holders.
    
    If the money for the bonus was counted in the year end numbers, how would
    they have taken it back?

    
    looks like the Globe is reporting on this decision reversal:
    
    "Digital backtracks, restores bonuses to Network workers:Analyst:
    Company feared losing staff"
    
    page 2, 8/14/96.

RE: .136

	Read back 10 notes to .126. The Globe article is there.

							mike

    
    -1 oops, i got lazy.

    
    It was also in the Herald yesterday.

    
    wonder what it will be next week.
    
    when is this company going to stop killing itself?
    
    
    
    

    I just attended the taping of the DVN in Greenbelt, MD.  No one asked
    questions about bonuses here (I suppose that's because most of the folks 
    attending were out of the ABU which didn't do magnificently last year).
    
    But, at the end of the taping, Bob himself raised the issue.  He said
    that this whole matter bothers him deeply and that he is trying to do
    what is needed for both the employees and the stockholders.  He is
    supposed to attend to a meeting next week to discuss the matter of
    the incentive pay for both FY96 and FY97.  He said he has some proposal
    to deal with the matter, but he still isn't satisfied that it is the
    best solution to the matter.  He did not elaborate on the proposal.
    He asked that the employees try to appreciate the difficulty of
    balancing the interests of the employees and stockholders, given the
    fact that so many unforeseen problems arose this past year.
    
    He said he didn't know if his comments would make it onto the DVN, as
    they were made at the very end of the meeting time period.  Hopefully,
    his comments will be included, since I'm not at all certain that I've
    done them justice here.
    
    -- Russ

    That's a little raw.  Do we really need to go that far in our sarcasm?
    
    The cash position is supposed to be relatively good right now, isn't
    it?
    
    Part of the whole scramble is an effort to make sure this never
    happens.
    
    FJP

    It is my guess the reason they decided to give the bonuses after all
    to the Network Group is because those people are hard to replace. In 
    groups like the SBU, it will be interesting to see what they do.

    I haven't seen it in here yet but Semiconductor was told last Friday
    that they're getting 6% bonuses. I've also heard that Storage's bonus
    was to be left unscathed.
    

    
    re.4760
    
    raw?
    I don't think that person's comment was raw.
    Raw is not getting something that was part of an agreement made 
    between parties. A breach, a reneg' and it's a shame.
    
    Scrambles...that's a good name for Digital.
    
    

    
    >He asked that the employees try to appreciate the difficulty of
    >balancing the interests of the employees and stockholders, given the
    >fact that so many unforeseen problems arose this past year.
    
    
    	HE JUST DOESN"T GET IT!. We understand the difficulty of balancing
    so many interests. Does he think we are stupid?!?!
    
    	What we don't understand is mouthing off without thinking.
    
    
    ed

RE: .147

	Oh, I think Bob gets it quite clearly. He's just asking for some
	time to clean up what became a very messy situation. I can
	appreciate that. At least something is being done and something
	is being communicated. (Now, if we don't get regular weekly
	updates to this, I'd be dissappointed)

	What would you have rather he said??

							mike

    My recollection from a ZKO meeting is that Copperman said, while the
    SBU bonus targets were not defined (a few months back), he was being
    measured by the same targets as the rest of us.  If he gets a bonus and
    his people don't, something's fishy.
    
    (Of course, it could be my memory.  I can't find anything "written
    down", of course.  And it may have been Harbert who said it (about
    Copperman), not Harry himself.)
    
    -Mark
    
    P.S. Glad to be such an impeachable witness.  :-)
    

I would rather have him, and the SLT as a whole, realize that employees are not 
liabilities they are assets and that the interests of the employees are 
DIRECTLY RELATED TO THE INTERESTS OF THE STOCKHOLDERS!!!!  Without satisfying
one you are not going to satisfy the other.

George

    
    re .148
    
    	I'd like him to say this kind of thing will not be tolerated in the
    future. I would like him to admit that they didn't think this thing
    through. 
    
    	If they had thought this through and it was a good decision then
    they should have stuck to it. 
    
    	Maybe Bob didn't make the call, but then the person that did should
    be held accountable for it. 
    
    ed

RE: .151

	Those are very reasonable questions. I'd like to see answers to
	them also.

							mike

What bothers me about the response is that it felt very "soft" to me.
The whole bit about how hard it is to balance the interests of stockholders
against the interests of the employees certainly didn't leave me feeling
sure the decision won't go the other way next time...

Just how is it in any way in the stockholders' interest to make a move that
so enrages the workforce that a significant portion of the talent walks?
Just what would they have a stake in then???

That was anything BUT clear, crisp, accountable management in my opinion.

Kevin Farlee

 My remembrance from the same ZKO meeting was that Harry said there
 was a metric, said metric is closely held since it involves company
 confidential type stuff, he couldn't share metric, AND it was tied to
 
              "overall company profitability".

 What I believe about the SBU program is that they had the out built
 in and it was "Company Profitability". Since there was no profit in '96
 there is no bonus for '96.

 I'll be corrected if I'm wrong when I receive my bonus check, but at 
 the moment I don't think the SBU employee's will get anything. 

 Regards,

    What we haven't seen nor can we account for is the inertia started by
    this bonus fiasco to cause attrition.
    
    Insane budgets
    
    Lack of Success even when completing the mission mgmt calls for us
    
    Waffling on goals and bonus programs
    
    We will not see the full effect of the Bonus and Reorg until Q3 or 
    Q4..when many of our best and brightest are selling against us from
    our competition.
    
    I don't call the missions... Please don't shoot or tax me when the 
    mission succeeds and we fail... That's a management problem...
    
    -----------Warning Incoming Excuses------------------------------
    
    Wasn't in the right buckets, Software number wasn't high enough, 
    didn't make product number, you need to be billable, you need to 
    sell software, we're a hardware company, you belong to Service, you 
    are a Sales resource, you need to find sales leads, you need to work 
    sales leads, you need to deliver, you need to help channels, you need 
    to work only with direct customers, company didn't make it's fizzle-frap 
    number,  The planet's aren't aligned, we've reorganized(again), we'll get 
    this fixed next year, just one more vernier adjustment, check is in
    the mail, we love you, you're beautiful, don't change, just kidding,
    you have to learn to manage change better, just keep doing what you're
    doing now...
    
    ------Warning You have been deluged by standard Excuse file------
    --Please be sure to wash your hands well after this text stream--
    
    JMHO 
    
    John W.
    
    

RE .154 - So the deal was, "You will be measured against a goal, but I won't
tell you what it is. I'll let you know if you meet it." Nudge-nudge, 
wink-wink ;)

One thing I really appreciated about Larry Walker was that he made a real effort
to keep us informed. He seemed to feel that an informed workforce was a better
workforce. He gave us the good, the bad, and the ugly (I believe that's a quote
from one of his quarterly communication meetings). Heaven forbid, he even gave
us detailed financial information about unit performance, company confidential
and all. That kind of thing helped to build a productive team spirit, as opposed
to the mushroom method of management.

    Nobody seems to answer the simple question of how a BU's PAT is
    calculated?  A BU does not file tax returns, only Digital does.
    
    - Vikas

    
>    Nobody seems to answer the simple question of how a BU's PAT is
>    calculated?  A BU does not file tax returns, only Digital does.
>    
>    - Vikas

    Well, the IRS and the SEC does not require any reporting of this type
    so each company can define this any way they want (like any other
    internal cost accounting system).  I'd guess that the cross business
    rules were defined and documented.  I have no idea where they are or if
    they are available to employees without a "need-to-know" and
    I'd also bet all sorts of ambiguities were discovered in FY96, year 1
    of the approach; problems I would expect to get much better in FY97.
              
    Greg
                         

As I understand it, Larry believed that you should treat NPB as if
it were an independent business and the concept of PAT was easily
understandable as what it would be if we were.

With over half the sales from NPB directly through third parties
(I forget the exact percentage - but he did share it), it's very
difficult to say that the books were artificial or that the internal
prices were out of line.

Peter

    Similarly NPB didn't do much of this "internal transfer" stuff which
    Vikas referred to earlier. So the numbers are much harder to
    "misinterpret". Bet ya can't say that about CSS...
    
    regards
    john

    Hey!
    
    I see my SOAPBOX buddies (some of the "let the private sector do it"
    persuasion) are here. That must mean more of the usually write-only's
    in the 'box are read-only's now!
    
    Hi y'all!!
    
    ;`)

re transfer prices between divisions or parts of a firm:

in B school, decades ago, the transfer price was almost always a fiction
to further a goal other than accuracy of accounting.  government rules
against removing profits from a country were a major factor.
transfer prices determine where the money is made, and it just happens
to usually be the country, state, provence with the lowest tax rate.
since most governments have a progressive tax rate, it is actually
an allocation problem.  what leeway is left after taxes are dodged as
well as possible is used for internal politics. 

there is a limit, but there is a lot of leeway before the auditors
or IRS come after you.  if i remember correctly a factor of 2 either
way was very safe.  can someone that has done this more recently
confirm, deny, or adjust it?  

In the UK we have had so called "variable compensation" for some years now. 
We were told that salary raises for anything other than promotions and job 
changes were a thing of the past. Our earnings would depend on performance!
There were and still are a lot of concerns about pensions because they are 
based on final salary and not the variable part of your compensation.
 
In the first year they screwed it up so badly they paid a bonus outside the
rules. What happened was that everyone's bonus was based on the 
(UK) company making a profit goal (which was secret). It didn't. This became
known as the zero multiplier because the bonus percentage would depend on a
profitability multiplier.

This was corrected in subsequent implementations by introducing 
individual, group, and company goals. Your company bonus depended on 
achieving profit and the group goal, the group bonus was dependent on you 
achieving your group goal and your individual goal. The individual goal 
was purely dependent on your own performance. So, if all was well you'd
get three levels of bonus. Very complicated, many managers screwed it up.

This last year it was as if we had no experience of ever running a scheme.
The SBU scheme was "announced" (a statement was made at a group meeting in 
response to questions) in the third quarter with scant detail and the
understanding that we'd already missed it! 

Dave.

    Well said .150 ! It is certainly in the stockholders interests that the
    employees are satisfied. To quote the German entrepreneur Robert Bosch:
    
    I do not pay my employees good salaries because I am rich. I am rich
    because I pay my employees good salaries.
    
    The stockholders wealth is created by our work.
    
    It is a disaster that these arguments have to be carried on in public
    via the Globe. 
    
    On the question of bonus being related to overall profits: there are
    two snags with this. Firstly it means that a group who do well have to
    pay for those who do badly, which is not much incentive, is it?
    Secondly, in this case, the company abitrarily wiped out the profit by
    taking a controversial restructuring charge. The stockholders have
    decided to dump some of their assets in the hope of making the
    remainder more profitable, and they can charge this against taxable
    profits. This is moving the goalposts after the game kicks off, and it
    causes rows.
    
    So I'll say it again, pay up with a smile please Bob, and let's get
    this show on the road.
    
    Kevin 

    
    depends which bit of the UK you're in. In SI in the UK - which was
    part of the ABU at this time last year - we were given, and asked to
    sign, clearly defined goalsheets.  Our manager and presumaby the other
    managers in SI too had obviously put a lot of effort into refining
    these goals so that they were fair, but not out of reach and of course
    furthered our Business aims too.
    
    These goal sheets were signed off before the end of Q1 FY96.
    
    sometime towards the end of Q3 FY96, it became known that these
    Goalsheets hadn't been ratified by Europe, other 'goals' were set which
    we could had no influence on and already couldn't be met, effectively
    removing any chance of receiving a bonus. 
    
    Why did it take until Q3 to decide not to ratify our goals ? or had
    they made the decision earlier but didn't dare to make it known ? 
    What's the point in having goalsheets ? why not just send out an
    announcement in Q3 each year explaining why there'll be no bonus paid ?
    at least that way we wouldn't have all this pretence.
    
    This Company throws words and terms like 'Do the right thing', 'whatever
    it takes', 'professional', 'Best in class', etc, etc.. around like
    confetti, it's a pity none seem to apply to the people making these
    decisions.
    
    Graham      
                                     

RE: -.1

UK MCS is the same. We signed agreed goalsheets, then in Q3 we were 
told that they were null and void - since then a deathly silence.

Impressive isn't it.

- John.

    
>> Impressive isn't it.
    
    not a word I would choose to describe it....
    
    G.

    
    >> Impressive isn't it.
    
    just reverse the order of the last two words.

    only slightly off on a tangent..
    
    August Edition of 'Wired' magazine (read it with sunglasses on, else it
    hurts), has an interesting article in it, interviewing Peter Drucker,
    ".. the most astute observer of modern corporate society. Maybe society
    period.."[Wired's words]
    
    Peter, the well known socialist (not!), has some scathing comments on
    the corporate anorexia approach to downsizing, and the fact that senior
    execs actually get rewarded more just for being cruel (not for being
    good managers, entrepreneurs, or anything that creates value).
    
    ".. what is absolutely unforgivable is the financial benefit top
    management people get for laying off people. There is no excuse for it.
    No justification. No explanation. This is morally and socially
    unforgivable, and we'll pay a very nasty price.." [This in the context
    of present day corporate mindset generally of course, not specific to a
    once proud company such as ours].
    
    Well worth a read. The SLT should all read it. 

.164>    It is a disaster that these arguments have to be carried on in public
.164>    via the Globe. 
    
Yup.  AND a disgrace.  It's getting harder and harder to hold my head up and
say that I work for DEC.

Dan

    The two do not equate. Hold your head up - if you are doing your job
    well, there is no reason to be ashamed  to work for this company.
    
    

	To illustrate the tangent in .169:

 Applied Materials - To cut work force 7% (830 jobs).  Profit jumps 21%
        {The Wall Street Journal, 14-Aug-1996, p. B4}

   The biggest maker of machines used in making semiconductors said it was
 laying off 7% of its work force amid new signs of deteriorating conditions in
 the market.  New orders fell 7% to $931 million in the 3rd quarter, off more
 than 20% from what the company expected at the beginning of the quarter.

One of the lessons from this is that we should treat bonuses as wind-fall,
not anything we can bank on. And as far as goal sheets are concerned, next
time you prepare one, set goals that will further enhance your marketvalue
and your overall satisfaction at work. Any artifical goals you set for yourself
to earn a bonus are just not worth the agony.

>Per

    
    I didn't prepare my own goals, I just agreed to them.
    
    G.

    
    
    	I'm still waiting (along with many others) to hear *something*
    	from the powers that be in the SBU.  The silence is deafening.
    

There seems to be real inconsistency in the way bonus programs
are being implemented, the goals, the amounts, etc.

For example, I have heard that the PCBU has been given fairly 
strict targets that they need to meet for both Q1 and Q2.  If
they meet them they will receive a bonus (for each quarter).

Who knows, they may even receive a bonus for last year.

Why in the world would you give a bonus to the loss leader of 
the company for mismanaging their business and then bringing it 
back to break even?

A bonus of further employment might be appropriate, but not 
more than that.

Hudson gets a 6% bonus, yet their sales are primarily to the SBU
who subsidizes Hudson through inflated chip prices, enabling them 
to claim "profitability".  SBU at most could make 2% - and when 
all is said and done won't get anywhere close to that.

Networks - they did extremely well as did storage and deserve a 
bonus.

Am I too cynical?

    <---- I'll spit my digestive cookie with you over a cup of lukewarm
    water and we can talk about cynical.

    
    Gosh.  I'm in VMS.  We generate the profits that the rest of the
    company squanders while happily squeezing the life out of it.
    We've *never* gotten a bonus.  Nobody here really believed them
    when they said we would get one.  I doubt we'll even get the
    paultry 2% low-end number.
    
    Wanna talk cynical?  Cynical is my belief that we get punished
    for exceeding goals, because the *last* thing the strategists
    want is for them to deal with a VMS that isn't dying on schedule
    (not too fast, not too slow, juuust right).
    
    
    

    re: .176
    
    Hudson's bonus isn't based on profitability - it isn't scheduled to be
    profitable for another year or so (have to pay off that new fab) so
    their numbers are based on revenue - both internal and external. The
    external sales numbers have been increasing (read: real dollars) and
    the overall revenue is increasing - ahead of schedule I believe. The
    external sales are things like StrongArm chips and they recently picked
    up a nice big order for them. I worked in Semiconductor for 4.5 years
    and every quarter, Ed Caldwell holds an informational meeting so all
    the DS employees can hear what's going on, what the numbers look like
    and what the goals are. I have to admit, I've never seen this kind of
    information from any other organization here in my 16+ years. And Ed's
    a good speaker, too, with a good sense of humor.
    
    Just to give a little background on where DS is coming from on this.

    It would be nice if Hudson picked up the $40million in interest
    that burdens on the rest of the company for a mostly empty FAB6
    ($40m = annual interest of the $450million preferred stock used
    to build it in the first place).  It would be a great incentive
    for Ed to go get a partner and use the thing to capacity if he,
    instead of the whole company, was saddled with the payments on
    the debt.  Betcha it'd happen pretty quick if his bonus was
    affected.
    .02 Kratz

    Re: .181
    
    I know that DS pays interest to the corporation, although I don't know
    the details of exactly what principal is involved.
    

    After witnessing the bonus debacle here in NPB(just as i thought things were
    actually getting better) it would appear that if a business unit
    threatens to become successful then punishment is in order. Not only do
    we cut your bonus but we thrash your budget to prevent you from
    attempting to become successful next time! None of this of course makes
    a great deal of sense which leads one to believe that perhaps this is all
    very deliberate for reasons that escape me.

    re: 141 (sorry it's so far back - but it was only yesterday!) it would
    seem to me that Bob is really missing a _BIG_ opportunity here if he
    doesn't address this pathetic debacle in his DVN.  In fact - if it's
    not too late, Bob, why don't you edit a little clarity into the 
    situation.  Like:
     - what were you _really_ thinking (or not) when you did this?
     - explain how the business metrics can be so vague, conflicting,
        and ambiguous from group to group? 
     - describe what you intend to do to fix this - so it won't happen
        again (the confusion, not the bonuses).
    
    My take is that it's haste to prevent the double- and triple-
    dipping in the accounting (which was Ken's ultimate downfall),
    Digital lost sight of its overall strength in having a complete 
    product/integration/service set.  It has degenerated to internal
    infighting and selfish business practices.  I believe Bob has been
    searching for the happy medium where individual groups are truthfully
    profitable, but also leverage and assist the other groups to take
    advantage of our competative strength as a full service shop.  
    Unfortunatly, he's focused so much on the first side, he's lost a
    lot of turf on the latter point.
    
    This is a management issue, and Bob is not leading effectively if
    he isn't guiding all his teams in a clear (and forward) direction.
    The bonus measurements are the clearest and most effective way to
    define and quantify this direction.  This is the root of much that
    is wrong with Digital and is the key to correcting those wrongs.
    This DVN is Bob's moment of truth, and I'm really dissapointed that
    he is squandering it by his continued silence.
    
    regards, mark

    
    
    	re: .184
    
    	Rumor I heard was the Bob *didn't* do this..... he didn't know
    	about it till the uproar started....
    
    	Believe it or not.........

Re: .-~ 30 (SI in UK only told of goals in Q3)

Well we can beat that!
We were sent a mail message on May 21 from our manager which
(on the positive side)
	+ explained how the bonus program would work for SI
	+ said we'd be told later what our goals were
but then
	- said we weren't going to make it!

I think we were later told what our goals were, but after the above
communication, who cares?

At least we got the communication in the correct financial year :-(

    re .185                                          0
    
    >>> Rumor I heard was the Bob *didn't* do this..... he didn't know
            about it till the uproar started....
    
    Well, if it is a decision on this scale which he knows nothing about,
    then his information system needs an overhaul. And once he found out
    about it, he should be able to make a phone call to Sid Ferrales and
    have him fix it.  Are we getting a new deal or aren't we?
    
    I've said it before, "didn't know about it" is not an excuse, it is a
    statement of weakness. This I find a pity as the present CEO has done a
    lot to put us on the right road, given the mess he inherited from the
    likes of Pier Carlo Falotti...The Alpha strategy is making a lot of
    progress, and as more and more applications come along which need 64
    bit and which the market wants, the pressure will come on the
    competition. But we must stop shooting ourselves in the foot with
    bad management and chain-saw style restructuring.
    
    Kevin

>        Rumor I heard was the Bob *didn't* do this..... he didn't know
>        about it till the uproar started....

If that's true, then he should at least *fire* the VP(s) who made that 
decision (and fix his information system as .187 said). If he doesn't , 
it means he's not in charge, so what's he paid for ?

	Vincent

	Hudson's (more correctly, Digital Semiconductor's, presumably
	including those of us in Austin, Palo Alto, and Jerusalem)
	incentive plan revolved around meeting or exceeding the
	goal for Profit After Tax (PAT). Although it's true that it's
	not (yet) a Profit, but a Loss, the loss is less than the amount
	that was presented to the Board, and that is perceived as a 
	success. No one around here calls it "Profit sharing"; they call
	it "success sharing". We're not trying to fool ourselves that
	we're profitable.
	
	The payout will be 6.36% of annualized salary, as a result of
	meeting 129.x% of the PAT goal for FY 96.
	
	Sam

    At the risk of not making any freinds here, I just have to make a
    comment about the "bonus" program.
    
    	o Management has a right to not be happy with idea of paying
    	  the bonus.  After all, it didn't have the effect of increasing
    	  company profits.  And it's stupid to pay any kind of profit
    	  sharing bonus when you don't make a profit.
    
    	o Employees have every right to be upset about *not* getting
    	  the bonus - because they played by the rules that management
    	  made up - as misguided as they were.  And no matter how bad
    	  the results were, you can't change the rules at the end just
    	   because you didn't get what you *really* wanted.
    
    Not that I know my ass-from-my-elbow any better than the next guy, but
    to me, the problem is that instead of implementing a comprehensive,
    performance based, variable compensation program - we implemented a
    locally optimized, ill defined, "bonus" that rewarded the wrong people,
    for things they had little control over as individuals - like profits
    to the corporation.
    
    In my opinion, variable compensation plans need to have at least
    three components:
    
    	- Profit sharing.  Bottom line, this is what the company really
    	  wants the result of all compensation to produce - profits.  If
    	  DEC isn't profitable *nobody*, including BP, or 200 VPs, should
    	  get this part of their compensation.
    
    	- Specific goals (or "project" performance).  If you want to be
    	  a leader in, say, the Internet - then you give specific goals
    	  to a group, a program, a project.  This may, or may not,
    	  involve profit to the corporation - it may goal market share.
    	  But it *must* be measurable - "profits" are not how you goal
    	  a project, it *may* be how you goal the manager of the group.
    	  This is how you direct your strategy.  And how you attract the
    	  best, and the brightest to to work on it.
    
    	- Individual performance.  A 1 performer should be *well*
    	  rewarded for his contribution to the company, a 2 performer
    	  should also have a smaller share, a 3 performer should get their
    	  paycheck, anything below that should get the door.
    
    	  Individual performance should also be a part of the first
    	  two items.
    
    It's important to target the right thing, at the right levels.  Making
    a bonus completely dependent on ROI of a group to the company is what
    the *group* manager may be goaled with, it doesn't make sense for that
    to be the goal for the guy writing code, or designing hardware.  Their
    specific goals should be set to direct their specific actions, and the
    group manager should set those goals to meet *his* specific goal (which
    may be ROI to the company).  If the people at the bottom meet thir
    goals, but the group manager doesn't meet his - it is the managers
    fault - not the employees.  And it's the manager who does not get his
    variable compensation for specific performance - not the employees.
    
    All of these should be independent of each other.  A 1 performer in
    a group that isn't being targeted as strategic (say OpenVMS) should
    still get variable compensation based on that performance, but the
    goaled performance my be non-existant or very small - if the company
    is *not* rewarding that part of the business as strategic.  The
    profit sharing should be available to everyone as well.
    
    The "bonus" that we got however, rewards large groups of people, based
    on the performance of the group as a whole, on something most of the
    people in the groups have no control over - like Profits After Tax.
    Or worse, many people, in many groups don't even *know* what the criteria
    will be.  I certainly don't know what my grous criteria is - and my
    group is lumped in with completely unrelated groups - who are
    losing money - who *I* can't effect in any way.
    
    Should Harry Copperman be goaled on Profits After Tax to the
    corporation?  Sounds like a plan - and something appropriate for
    someone at *his* level to target.  Should the Internet Server Group
    be goaled on PAT?  You *probably* wan't to goal them on something
    like market share.  And within *that* group individuals might be goaled
    on shipping their product on time, under budget, with a minimum
    functionality/performance/bug rate - which helps meets their managers
    market share goal, which in turn works its way back up the line in
    meeting the short term, and long term goals of the upstream managers
    and organizations.
    
    

    
    rep .190
    
    
    Digital DID make a profit for the quarter, $59 million.
    
    Digital WAS divided up into autonomous division responsible for their
    own P&L, success sharing, budgets, etc.
    
    Two divisions made lots of money, most did not.
    
    I would venture to say that lots of the profits generated in NPB was
    the direct result of people putting in extra effort, time, etc.
    
    To not reward performance when the rules were defined by upper
    management is simply not right.
    
    Hudson can call itself Digital Semiconductor, instead of Digital 
    Equipment Corp, only further illustrates that we are supposed to be
    operating as autonomous divisions.
    
    Now whether a "...house divided" can stand or not, remains to be seen.
    
    I also agree that the 1 performers should be rewarded, and the 2s right
    behind them.  But aren't 1 and 2 performers rewarded with raises, RAP
    awards, and perhaps other ways (Stock, etc).  
    
    /art 

I'll take the cash.

Besides, "rewarded with stock" is a bit
of an oxymoron, not?

 re .-1

	"But aren't 1 and 2 performers rewarded with raises, RAP awards,
	and perhaps other ways (Stock, etc)."

	Nope... Unless you are real special... Or leave the company for a
	startup. That's probably the easier way to get a raise and stock
	(then to stick around here and show loyalty). And if a startup is
	too risky for you, there's plenty of stable (competing) networking
	companies willing to give conciderable raises to hire us away.

	Headhunters have been calling the last couple weeks with such offers
	(colleague just left for 10%+...).

								Chris
[Posted by WWW Notes gateway]

	Rewarding 1 and 2 performers defeats the purpose of a global plan
	due to the fact that the ranking is based on a supervisor/mgr
	perception of performance rating and that means personalities come in to
        play   My understanding is that personnel on warning are not to receive 
        bonuses, which removes the subjectiveness of a persons performance from
	the plan.

	

    "But aren't 1 and 2 performers rewarded with raises, RAP awards,
            and perhaps other ways (Stock, etc)."
    
    I was a consistant 1-2 performer and I got as my reward....
    
    
    
    The TFSO package in October of 1994.  I do not know of any poor
    performers who were let go in that round.
    
    Dave

> [That] Hudson can call itself Digital Semiconductor, instead of Digital 
> Equipment Corp, only further illustrates that we are supposed to be
> operating as autonomous divisions.

  Of course, we're *NOT* really operating as autonomous divisions,
  or certain divisions would never in their wildest dreams have
  bought certain over-priced, under-performing products from Hudson.
  We'd have gone to Motorola or Intel instead, just like most of
  the real customers in our industry segment do.

  But our loss was, quite literally, Hudson's gain. By the kludged
  metrics, they did really well, profiting off the rest of the
  corporation.
                                   Atlant

    .191
    
    You missed the point.  And no, Digital Semiconducter is *not* a
    seperate entity until we sell it off, or liquidate.  The *company*
    *didn't* make a profit.. you can't pick & choose what things that
    you *don't* want to count - like the write off for restructuring.
    
    The artificial "divisions" and who made or didn't make money is
    pure crap.  Put all the OpenVMS hardware, software, and service
    into it's own division, and give *me* the bonus based on profit.
    
    But saddle me with paying for the NT and Unix investment... and
    I'm screwed.  And there ain't diddly I can do about it.
    
    Goal the various NT groups on profits and *they* are screwed.
    
    

    re .196
    Actually, DS *is* about to lose in its monopoly in screwing the SBU.
    
    Look for the Workstation Group's first non-Alpha box [since Alpha
    was introduced] to be announced in the next couple of weeks.  If
    they decide to push it, it should eclipse their Alpha volume by the
    end of the calendar year.
    K
    

    
    .193
    
    Rewarding a 1 or 2 performance with a raise is the poorest thing
    a company can do as a reward.  It rewards something specific, with
    a long term cost.  Rewarding *sustained* 1 and 2 performance with
    a raise makes sense - within the bounds of what the job is worth.
    A sustained 1 performance means that the employees is very unusual,
    may be about to burn out, or clearly is in the wrong job category
    (i.e. a Principal Engineer who is operating as a Consulting Engineer,
    and is being rated as a Principal Engineer).
    
    We pay very high salaries to people who over the years were "rewarded"
    with raises and promotions for specific performance (not sustained
    performance and skill set) - like delivery of a product on time.  What
    have they done for us lately?  Many just take up space.
    
    

    .194
    
    Of course people whould be rewarded for their performance.  If there
    is no incentive to perform as a 1 performer, then why bother if
    you can get a 2 without breaking a sweat.
    
    Is DEC consistant in their ratings?  Heck no.  Can it be abused?
    Heck yes.  Are there ways to solve the problem of consistant ratings
    across the company, that minimize *pure* cronyism?  Sure.  Foolproof?
    Nope, too many fools.
    
    

    14 years and one day, I never got less than a 2 on any eval, but that
    was not very important.  I went the last 2-3 years without any pay
    raise, well any real raise.  Cost of living was 5% or greater, and the
    raises that we got were 1-2 %.  That is negative cost of living.  
    
    Then I got TFSO'ed...  
    
    Dave

 re: .181

         >>>>It would be nice if Hudson picked up the $40million in interest
    that burdens on the rest of the company for a mostly empty FAB6.

          I'm not arguing the $40million, but since I work here in Fab6
          since the beginning and it's "not" mostly empty.
          Half the fab has been in full operation for two years and
          the contractors are completing another area as I write.
          
          People work hard in this fab. Some of these people have
          "only" worked in manufacturing. They don't all have the 
          luxury of college degrees and big buck wages.  We as a group 
          are trying to make the "best" products that can be
          bought.  

          If the salespeople drop the ball and don't sell why
          shouldn't I get a bonus.
          If we have too many VP's who make the wrong 
          decisions, why do I have to get screwed?!?
            
 re: .195 

          >>I was a consistant 1-2 performer and I got as my reward....
          >>The TFSO package in October of 1994.  I do not know of any poor
          >>performers who were let go in that round.
          
          Boy do I hear you Dave!
          My husband and I both got TSFO'ed two years ago, I 
          went back into the fab and he went elsewhere.
          I put my time in and do a good job. I get 
          above average reviews. I've worked here for nine years 
          and NEVER received any FREE stock.  None of my groups 
          went on cruises or any of those little percs I used to 
          hear about in "the good old days".  

          Please, if you really want to know, people here in Hudson 
          say that there is "different" Digital "out there" than it is 
          here.
          BIG difference between corporate personel and Hudson
          personel.  The Orange Book is used as a tool
          just for management, not for the people who work 
          on the line.  

          DS (before it wad DS) did not try to garner any loyalty
          from it's workers.  In the old Fabs (1,2,3) people were
          bullied and basically treated like "stuff on the bottom
          of managements shoe".  Alot of talented people left the 
          fabs to go off into other groups. 
          Then FINALLY someone woke up and decided if DS wanted to
          keep "good" people then they would have to start treating
          them as such.  

re: .196 
          >>over-priced, under-performing products from Hudson<< 
          
          Where do you get your facts from to make this comment??

          Maybe I'm not educated as some, but unless they (DS) are
          really snowing us here, your comment IS NOT ACCURATE!

          over-priced - maybe, but compared to what??
          no one else has a functional 566 MHZ chip.

          under-performing - hardly...

          My last comment. I promise.

          As far as I'm concerned, let them sell off Hudson to
          HP or Intel or ANYONE that knows how to make this work
          and make a profit.  I probally would be better off and 
          and not feel so bad about taking your bonuses.  And I
          am NOT saying that to be a jerk, I DO feel bad for all
          of you that are getting screwed.

          All I do is work here and do a good job, it's not my fault
          the "higher ups" don't have a clue!

<----VERY GOOD NOTE! 

    re -2
    DITO!!

	re: .181 - Yes, the interest expense appears on the DS books.
		   I should know I'm the DS Budget Mgr.

	Here's basically how the interest expense and taxes are divided:

	The overall corporate interest expense is divided among those BU's
	that are losing money.  Interest income is divided among those BU's
	that are profitable.

	The overall corporate tax expense is divided among those BU's that
	are profitable.

	So, to get a BU PAT, use the following formula:

		BU Operating Profit
	     +	BU Interest Income
	     -	BU Interest Expense
	     -	Taxes
	     =	BU PAT

> re: .196 
> >>over-priced, under-performing products from Hudson<< 
> 
> Where do you get your facts from to make this comment??
> 
> Maybe I'm not educated as some, but unless they (DS) are
> really snowing us here, your comment IS NOT ACCURATE!
> 
> over-priced - maybe, but compared to what??
> no one else has a functional 566 MHZ chip.
> 
> under-performing - hardly...


  LCA was a disaster for my part of the world. It was the over-
  priced, under-performing chip I referred to. It should never
  have been designed as it was. Designed as it was, it should
  never have been built. Built as it was, it should never have
  been designed into products. DESIGNED INTO PRODUCTS, IT DIDN'T
  SELL. PERIOD, END OF STORY. WE LOST MONEY ON EVERY LCA PRODUCT.

  Folks here have made Larry Cabrinety jokes. If Larry had had
  the good sense/nerve to call your chip what it was, and had
  allowed us to design products with a competitive chip rather
  than LCA, he'd probably still be working here.

  HE took the fall for your lousy chip. Ed Caldewell didn't.

 -=-=-=-=-

  Please note carefully: My note doesn't refer to any chip other
  than LCA. You're right: the rest of your chips AREN'T under-
  performong and over-priced; they're JUST over-priced.

 -=-=-=-=-

  And with regard to your last comment about selling off DS to
  another vendor: I think that would be a wonderful thing for
  Digital Equipment Corporation.

                                   Atlant

According to the Dilbert priciple, managers *never* give employees a *bad* 
review.  A bad review only makes it more difficult to promote/transfer the
employee to a different group.


							-Paul

RE: .207

Note, Digital sold 100Mhz. EV4 "Pelican" systems, which have lower 
performance than the LCA 166Mhz system.  LCA45 was boosted up to 233 and 
266Mhz.

LCA is approximately 2/3 the performance as EV4, given the same clock 
speed.


							-Paul

re 204, 205

          Thanks for the support.  Wasn't sure I was coming
          back to work getting blasted by the rest of the 
          company!


re .207 

          Very interesting.  

>>LCA was a disaster for my part of the world. It was the over-
  priced, under-performing chip I referred to. It should never
  have been designed as it was. Designed as it was, it should
  never have been built. Built as it was, it should never have
  been designed into products. DESIGNED INTO PRODUCTS, IT DIDN'T
  SELL. PERIOD, END OF STORY. WE LOST MONEY ON EVERY LCA PRODUCT.

  Folks here have made Larry Cabrinety jokes. If Larry had had
  the good sense/nerve to call your chip what it was, and had
  allowed us to design products with a competitive chip rather
  than LCA, he'd probably still be working here.

  HE took the fall for your lousy chip. Ed Caldewell didn't.


 I don't even know who Larry Cabrinety is!  
 If you all know so much about designing products that the 
 consumer needs, why doesn't your group take the "bull by
 the horns" and design these products!  

 Maybe I don't know what goes on "outside" Hudson, I will
 be the first one to admit this, but if WE are designing chip
 products for YOU, then as a "customer" you have an obligation 
 to correct this situation!  So who is to blame??
 Maybe Marketing?? I don't know.  Maybe some bright bulb that
 decided we should get out of the PC business?  Maybe our
 President and BOD that keep changing the course of 
 the company constantly!?!

 All I see is alot of people complaining about Hudson and
 we don't deserve it.  Come work in my world for a day.

          Terry 

          

    
     >Maybe I don't know what goes on "outside" Hudson, I will
     >be the first one to admit this, but if WE are designing chip
     >products for YOU, then as a "customer" you have an obligation
     >to correct this situation!  So who is to blame??
    
    This is an extraordinary perspective.  The *customer* (even if
    internal) is responsible for making sure we build the right products?
    No wonder we're in such deep trouble.
    
    len.
    

    >	o Management has a right to not be happy with idea of paying
    >	  the bonus.  After all, it didn't have the effect of increasing
    >	  company profits.  And it's stupid to pay any kind of profit
    >	  sharing bonus when you don't make a profit.
    
    I hate to put too fine a point on this, but the fact of the matter is
    that before the SLT elected to take a restructuring charge (an act
    which they chose to do) the numbers for the company showed that we did
    in fact make a profit both for Q4 and the year. In fact, we made more
    profit this year than last year before they decided that we just
    couldn't manage without restructuring charge N+1. The restructuring
    charge, which was designed to pay for paring down unprofitable
    businesses, is in effect an investment made by the corporation to
    improve our financial performance in the future. There was no liability
    that required this charge be undertaken; it was an entirely voluntary
    act on the part of ther SLT. The fact that they made an investment of
    such a magnitude that it more than wiped out all of the profit this
    company produced in the last fiscal year does not in any way eliminate
    that profit, except from a tax standpoint. That profit still exists.
    There is no real reason why the restructuring charge couldn't be taken
    in this fiscal year; in fact the reductions in headcount and building
    closures will occur during this fiscal year. You are merely seeing
    David Letterman's stupid accounting tricks in your own corporation,
    designed solely to affect the market valuation of Digital stock. Thus
    your assertion that there is no profit with which to share is
    poppycock. Which leads us to the question, did you succumb to the
    "there's no profit" fig leaf, or are you a management type who's trying
    to sell such a story? This is simply a variation on the "lies, damned
    lies and statistics" theme, a simple numbers game. It looks better to
    take the restructuring charge against FY96 than FY97, because otherwise
    we made over $400M in 96 and we're going to have a rough Q1 and Q2 in
    97. Just don't try to sell me the "we don't have the money to pay for
    the bonuses" line. It's a lie, and we know it's a lie.

    viewing Atlant's notes through my mud-colored glasses, I think we need
    to be clear about what "Hudson" means.. To most of us outside of HLO,
    "Hudson" means all that is now called Digital Semiconductor. 
    
    Thre have been some chips in "Hudson's" past that have been, um, less
    that stellar from a design perspective. There have been many reasons
    for this, ranging from the "systems partners" not being clear as to
    what they were looking for, through overly optimistic goals in the
    semiconductor design group, into political forces not allowing a spade
    to be called a spade, to a lack of owning up to problems after the
    first LR. (from personal experience, I'd put LCA and SOC in this
    bucket; shields up!)
    
    There have also been some chips in hudson's past that followed a pretty
    rocky path, but with the cooperation of all involved (sand to customer)
    were set right and became (perhaps very) successful chips; such chips
    as CQBIC and SGEC would be in this bucket. (SGEC is a particularly
    interesting case, because everybody around the table learned a LOT from
    the experience, with the result that DS in now in a position of being
    able to produce killer network chips..)
    
    There have also been chips in Hudson's past that have gone according to
    Hoyle; lots of hard work on the way, but through constant
    professionalism and honesty among the workers, and through management
    trusting the workers to do their work, these chips came out the chute
    virtually perfect, and went on to be trouble free and successful (the
    NVAX/NMC/NCA would be in this bucket, for example).
    
    Note that none of this has talked about the *FAB* side of "hudson" ..
    my experience has been that, once a chip gets into true production, the
    folks in the fab do a fine job of producing what they are told. (yeah,
    yeah, there may be squabbles about allocations, hot-lots, etc etc, but
    this is not at all unusual). 
    
    In true notes fashion, we've slipped into a discussion of mismatched
    terms, unknown perspectives, and (maybe) lack of respect of another's
    opinions. (my perspective is that of someone heavily involved from the
    systems side with at least half a dozen major projects in HLO, from
    CVAX through EV4; I don't do that sort of work anymore, and with the
    exception of a little work with the ARM stuff have been using all
    outside micros since late /92)
    
    ...tom
    
    

    .213
    
    Like I said.  You can't pick and choose which rule you like and
    don't like.  If we had simply not laid anyone off, ever - we may
    have even lost less than we currently have.  If you can choose to
    not include restructuring charges, then what else can you decide
    to ignore next year?
    
    But the point really wasn't the fine distinction between the inclusion
    of the writeoff or not.  I could have chosen to say that the bonus
    didn't have the effect of increasing our net profits to what
    management had expected... The prospect of the bonus had diddly to
    do with how well, or poorly we performed.  It was poorly
    designed, haphazardly targeted, and a waste of money.  A well
    designed system of targeted bonuses tied to *specific* objectives
    where the individuals specific actions had a bearing on the
    price-of-tea-in-china - would have been a far, far better thing to
    spend the money on.  Instead it was not a bonus, not profit sharing,
    but a poor hybrid that achieved nothing.
    
    
    
    

  Just have to put my 2 cents in here and I'm sure you will rate it according
  to its cost...

  Does anyone remember the T11?  A 40-pin PDP11 on a chip?  Not stellar chip
  performance-wise to be sure but it seemed like the right thing to do at the
  time.  When I tried to support the T11 I got a lot of flack.  Why should we
  use the T11 when we could use 68000s for a lot more "bang for the buck".  A
  phrase I have always disliked.  I tried to poll customers (internal of
  course) for what the the T11 should have been and how the other CPUs
  compared and so on.

  No response for the most part.

  Got someone in my office one day complaining that they wanted to use
  another CPU chip because it was "so much better".

  AHA!  Real data coming!  I asked if he had data that backed that up and if
  they could share it with me so I could share it with my management.

  "Well, it was sort of a gut feeling..."  That's technical talk for no way
  did we want to use your/our chip.  Real data had nothing to do with it.

  Or something like that.  It's hell sometimes being a captive vendor.  Now
  that we are getting into the world at large we might even build something
  Digital designers will choose over the competition.

  But maybe not.

  	mikeP

Yeah, Mike, sometimes it seems amazing that we actually built our own VAX
chips into some of our own products (like PrintServers).  And then it was
amazing that we continued to do that long after much better chips were
being built into competing products.

No matter how you look at it, it's amazing.

___Pete

    

RE: .212 

  >>This is an extraordinary perspective.  The *customer* (even if
    internal) is responsible for making sure we build the right products?
    No wonder we're in such deep trouble.
 
 Don't worry Len, I don't make any "important" decisions around here
 so my "perspective" doesn't mean anything to anyone.

>>"then as a "customer" you have an obligation
 to correct this situation!"

          Let me clarify myself. Maybe I'm not making
          the right point. 
          
 You buy a new car.  You order this car from the factory.
 You want the red car with white interior, it comes in 
 three months later, white car with red seats.  You don't 
 take the car and then complain about it. You go back the
 the manufacturer and you tell them to change it or get 
 me a new car! 

 If our chips are not up to standards (which for all that 
 "they" tell us we manufacture the "best" products) then
 something should be communicated back to the designers??
 
 Back to "success" sharing, not profit. That's what it's 
 called here.

 Every goal that FAB6 set for this year was met.  
 -We setup a full production line ahead of schedule.
  With more than half the people in here had never 
  seen a semiconductor chip before they started.
  They all had to be trained.
 -In this Fab we run pretty "mean & lean", no "extra"
  bodies wasting space (like the "good old days") 
 -We "qual'ed" our CMOS6 line ahead of schedule.
 -We are running over 12 different product lines at one time.
 -And our yields are over what is projected.
 These are just a few "sucesses" that all of us here are
 very proud of.

 Sorry, I'm getting tired of "justifying" my 6.36%.
 I deserve it and I will spend it nicely, thank you very much!

        Terry
  

    
    just read through 25 pages of BP's speech.
    nothing about the "bonus fiasco" mentioned.
    
    
    

    re: .219
    
    BP didn't mention the "bonus fiasco" during his presentation.  He
    brought it up as the last issue of the Q&A session (and said that he
    didn't know if it would make it into the DVN since it was around or
    over the 1 hour mark).
    
    I gather the hardcopy of his presentation doesn't include the Q&A
    period?
    
    -- Russ

My copy has some Q&A.  Don't know if it is
comprehensive.

    Also, DS has budgeting plans for the next several years as to
    the amount of loss progressively decreasing, when profitability will
    occur in this time period and in what expected amount, etc.  I believe
    that so far we are consistently doing better than these plans.
             

	Karen, we exceeded the plans for fy96, which is why we are getting a
6.3% bonus. If we had just met the goals, the bonus would have been much
smaller. If we didn't meet the goals, we would have no bonus coming.

	As far as taking the restructuring charge in fy96 goes.... it does make
the value of the stock drop (for many reasons). Now it is a question of timing.
When do the big boys get their stock options? Wit the stock low, it would allow
them to make out pretty good in the future.



Glen

    >Like I said.  You can't pick and choose which rule you like and
    >don't like.  If we had simply not laid anyone off, ever - we may
    >have even lost less than we currently have.  If you can choose to
    >not include restructuring charges, then what else can you decide
    >to ignore next year?
    
     You're missing the point. Management set up the objectives, and we met
    them. After the fact, they attempted to add in an unannounced and
    unplanned for charge against the profits we made for an elective cost.
    This wasn't a matter of "not counting" real expenses like sales
    expenses, etc. To put it another way, if you allow them to throw in
    their restructuring charge after the fact prior to calculating profit,
    what after the fact, unannounced expenses will you allow them to add in
    their next year? A fleet of Porsches for the SLT? Whopping bonuses for
    the bigwigs? It is unreasonable and unfair to invalidate the metrics
    after they've been met. "Oh, but we didn't tell you that we're going to
    burden your division with a $100 million dollar charge prior to the
    calculation of profits, so when we say the goal is $64 Million in PAT
    we really mean $164M." That's baloney. 
    
    >I could have chosen to say that the bonus
    >didn't have the effect of increasing our net profits to what
    >management had expected... 
    
     Irrelevant. The various bonuses worked in various ways; some
    businesses exceeded their objectives and others fell short. You want to
    penalize the excellent performers (networks and storage) for the
    failures of other businesses units. That has the same effect the former
    Soviet Union's economic policies had; the reduction of worker
    motivation to the least common level. Work hard, get X. Loaf, get X.
    It's a very effective means of demotivating people, if that's your aim.
    
    >The prospect of the bonus had diddly to
    >do with how well, or poorly we performed.  It was poorly
    >designed, haphazardly targeted, and a waste of money.  
    
     I emphatically disagree. You think that Networks' success and the
    bonus were unrelated? You are plain and simply wrong. People did work
    harder, and the results are there in black and white. Not red.
    
    >A well
    >designed system of targeted bonuses tied to *specific* objectives
    >where the individuals specific actions had a bearing on the
    >price-of-tea-in-china - would have been a far, far better thing to
    >spend the money on.  
    
     And infinitely more difficult to create, much more costly to
    administer, and far more difficult to make fair. Other than that, great
    idea. He who proposes...
    
    >Instead it was not a bonus, not profit sharing,
    >but a poor hybrid that achieved nothing.
    
     That may well be your opinion, but yours is decidedly a minority
    opinion. So what business unit are you in, and what bonus did that
    business unit qualify for?

    After the DVN today in SHR, John Rando stayed around to answer
    questions.
    The bonus issue came up.
    
    To paraphase John's response:
    
    The entire SLT was involved in the decision. Digital wasn't making
    a profit, our shareholders were not making a profit, so they felt the
    only fair thing to do was not pay a bonus.
    
    As a result of the riots, the decision was reversed. The communication
    of the decision was also mismanaged, with reports leaked - instead
    of communicated - to the Boston Globe.
    
    The SLT wishes the whole thing would go away. Bonus
    plans for FY97 are being reviewed to ensure they are clear and that
    this thing doesn't happen again.
    
    End of paraphase.
    
    BTW: The Q&A session was taped.
    
    

    .224
    
    Go back to the original reply that you are responding to.  I *also*
    said in the *other* bullet, that the *employees* had every right to
    expect the bonus, and to be pissed off when the rules were changed.
    While I think the bonus/"success" sharing plan was misguided, that
    doesn't mean I do not think that management wasn't obligated to pay
    the bonus.  That's why the first half of what you are saying is
    irrelevant... infact we may be in violent agreement on the part that
    says that management *should* pay the bonuses as agreed.
    
    > I emphatically disagree. You think that Networks' success and the
    >bonus were unrelated? You are plain and simply wrong. People did work
    >harder, and the results are there in black and white. Not red.
    
    Yes.  I believe they are almost entirely unconnected.  Do I believe
    that hard work, that produces the requested results, *should* be rewarded --
    absolutely.  But you can't goal the janitor (or Dilbert) in the
    networks group based on profits after tax.
    
    >>A well
    >>designed system of targeted bonuses tied to *specific* objectives
    >>where the individuals specific actions had a bearing on the
    >>price-of-tea-in-china - would have been a far, far better thing to
    >>spend the money on.  
    > 
    >  And infinitely more difficult to create, much more costly to
    > administer, and far more difficult to make fair. Other than that, great
    > idea. He who proposes...
    >
    
    I don't agree here.  I think it's manageable.  It's not really a lot
    different mechanically than what we do today.  And it has the benefit
    of asking for *specific* results from the appropriate levels to achieve
    the goals of the next level up.  That is, Harry Copperman sets the
    goals for the groups under him, to achieve *his* goal.  In turn the
    groups under him set the goals for the next level down to achieve
    their goals, until finally someplace at the bottom, the line
    organization that actually delivers product is goaled to deliver
    something specific.  Which is what in practice should be happening
    even with the "success" sharing.
    
    You can bust your butt at the line level "hoping" for "success sharing"
    to happen by magic, but in fact what you are betting on is that your
    boss, her boss, his bosses boss, and on up the line made the right set
    of guesses...  well - that's the stuff you leave for *true* *profit*
    sharing - because you can't control the guessing above you.  But if
    you bust your butt to achieve the goals that were given you - you must
    be rewarded.  If you are *not* rewarded for the *specific* goals that
    you were given -- because some unconnected part of the company, or
    business unit fails to meet their goals - then you are unlikely to
    bust your butt next year.  So you end up having a negative incentive.
    
    > That may well be your opinion, but yours is decidedly a minority
    >opinion. So what business unit are you in, and what bonus did that
    >business unit qualify for?
    
    Perhaps.  But the minority of what group :-)  What business unit?
    I work for VMS, and despite VMS generating most of the profits for
    the company, I'm guessing that we'll get 2% -- because *we* have to
    carry the money losing groups under our SBU umbrella.  And unfortunately,
    we can throw good money after bad faster than we can print it.
    
    Did I bust my butt over the last year to deliver product, and come up
    with creative solutions to solve problems being created by our downward
    spiral?  Yup.  Wanna know how many 60+ hour weeks I did?  Did VMS
    exceed it's goals?  yup.  Did the engineers deliever everything they
    were asked for?  yup.  Did I deliver everything that I was asked for?
    yup (and more).  Did I expect the 2% bonus... nope.  Did I work
    less hard because I didn't expect the bonus?  nope.  Will I work harder
    next year because I might get as much as 6%?  nope.  Maybe I should
    find the group with the highest promised bonus next year and switch...
    

Re: .226

 I should find the group with the highest promised bonus next year and switch...

I would expect that more than a few people are going to take this into
consideration.

				Steve

    	What amazes me about this as much as anything is the amount of
    hand-waving and confusion in the SBU around this. I read and reread
    Harry Copperman's memo, and all I was able to extract from it is that
    some people will receive a bonus, and some won't. I couldn't figure out
    any criteria, if the selection was random, or *when* any of this was
    supposed to happen. The rumor mill says mid-September. The rumor mill
    says a 2% bonus is coming. I'll certainly take it, but at this point,
    is it going to have any affect on morale or productivity? I think
    not...but if it suddenly became 0%, I think we'd see attrition pick up.
    	Now, if the rumor mill is true, then everyone in the SBU is getting
    a 2% bonus in a few weeks, and if that's the case, wouldn't you think
    that SOMEONE...SOMEWHERE...would know some details? No one, including
    human resource people up to Harry's staff level have any clue what's
    going on...when we're getting this bonus and exactly how much it's
    going to be. How can this be? How can it really be tied to anything
    with so much vagueness and hand-waving going on? How can such a large,
    professional company handle such a simple thing so unprofessionally?

    >>Re: .226
    >>
    >> I should find the group with the highest promised bonus next year and
    >> switch...
    >>
    >I would expect that more than a few people are going to take this into
    >consideration.
    >
    Flip answer :-)
    
    You bet, you see even the driftwood in a group with a high bonus, and
    a high likelyhood of meeting their goals will get the bonus.  So it's
    not like you actually have to *do* anything.
    
    [Help!  I'm stuck in a Dilbert strip!]
    
    Serious answer :-|
    
    Bonuses *can* be a tool to direct the flow of talent within the
    company.  If you have a strategy that is based on, say, Alpha NT
    marketshare - then you can *direct* talent to that part of the
    company by financial incentives - i.e. bonuses.
    
    But to *do* that, you need to figure out the right balance, because
    not *everyone* can work for the Network group.  Nor do you want them
    to.  That's one reason that specific bonus plans are better than
    big-gun-if-this-huge-group-hits-the-lottery bonus plans.
    

    re: SBU bonus
    
    I believe that the only real question is to the exact amount of
    the bonus, based on the SBU's meeting the goals.  As you said,
    the rumor mill is 2% (because that's what the rate would have
    been for meeting the goals, which is what the rumor mill also
    says).  What hasn't changed, and I think what Harry tried to
    specify, is WHO will get a bonus.  As was laid out at the beginning
    of Q4 (when the bonus plan was announced) was than an SBU employee
    that was in existance for all of Q4FY96 in the SBU, and also in
    employee of Digital as of the bonus payout (mid-sept) would
    receive a Bonus.  Problem was that during Q4 (and even afterwards),
    folks from other business units (ABU, etc) were moved in to the SBU.
    Those folks didn't meet the "all of Q4" criteria, and as such
    wouldn't be part of the payout.  So, it's possible that an SBU employee
    next to you wouldn't get a bonus while you would.  i think that's
    what Harry's memo attempted to say. So, if you were in the SBU all
    of Q4 and are still with Digital on payout day, you get the bonus.
    
    At least that's the way I understand it.
    
    andy
    

    .230
    
    Yeah, but what *exactly* were our goals?  None of us mushrooms down
    here in the dark were ever too sure about that.  Did we meet them
    (ooops, I guess we did).  Did we exceed them?  If we gave, say, the
    UNIX and NT groups to the Network group - would we have gotten a
    6% bonus? 1/2 ;-)
    
    

    
    Well, I'm in th SBU Manufacturing and Distribution organization and our
    FY96 goals and the planned payout schedule against those goals were known 
    from early in Q1 FY96.  In addition updates were provided frequently
    against those goals.
    
    Do we know exactly what we're going to get?  Not yet, but I'd guess a lot 
    of that is because of the chaos from above and not because any issues
    within SBU M&D.
    
    Greg
    

>    with so much vagueness and hand-waving going on? How can such a large,
>    professional company handle such a simple thing so unprofessionally?
    
    I don't know how it's done, but I'm told it takes years of practice.

RE: 225

>>> To paraphase John's response:
    
>>> The entire SLT was involved in the decision. Digital wasn't making
>>> a profit, our shareholders were not making a profit, so they felt the
>>> only fair thing to do was not pay a bonus.
    
>>> As a result of the riots, the decision was reversed. The communication
>>> of the decision was also mismanaged, with reports leaked - instead
>>> of communicated - to the Boston Globe.

If this is an example of how the SLT makes a decision, then I think we need 
a new SLT team!

I believe we need a team that will make decisions based on the most 
possible input, consider all effects of the decision, make the decision, 
communicate it thoroughly, and defend it if necessary with a sound 
argument.

Dilbert defines decisions as "something done by our competitors".  The 
bonus issue seems to be a big example.


							-Paul
 

>Dilbert defines decisions as "something done by our competitors".  The 
>bonus issue seems to be a big example.

	Just ask those employee's who've been targeted by our competitors.
	The numbers I've heard from friends who have left certainly
	make it seem like a bonus to leave!

							mike

    Whatever happened to the announcement last week regarding the SBU
    bonus? Anybody heard anything?
    
    
    
    
    -Bert-

Last week's memo said that we'd see the bonus in mid-September.

				Steve

    Harry Copperman is sponsoring an SBU Employee Forum on Wed., Aug 28, in
    the MRO cafeteria (3-4 p.m.).  Maybe he'll spring some good news on us.
    
    Mike

re: .203 <--- very good note

RE: 238

> Harry Copperman is sponsoring an SBU Employee Forum on Wed., Aug 28, in
> the MRO cafeteria (3-4 p.m.).  Maybe he'll spring some good news on us.
 
	Can anyone who attended this give a report as to what was said
	about the SBU bonus (if anything)

-Dave

    
    
    It was said that SBU will get 1.5% to 2.0%. Depending on the area you
    are in. 

    
    Makes it all worth while.  I'll try not to spend it all in one
    place.
    
    

	You mean at McDonalds??

							mike

    
    Nah.  I'll wait for another one of those $100 Filene's basement sales
    to pick up some cheap interview suits ;-)  But I'll spread it around -
    I'll also get a haircut.
    
    

I attended the meeting.  Harry said depending on the SBU
organization (region) you're in you can expect to receive
1� - 2% which will be paid out around Sept.19th.

I'm not really complaining since we have never received a
bonus in the past.  I will say, however, that this whole
bonus plan should be re-looked at.  I also think if the SLT
wants the company as a whole to work together, it would be
much fairer to give the same bonus percentage to "everyone"
in the company.  Of course, I'm only a peon but I think this
would help the company.  Right now, people are upset that
different groups that we work with received 5 - 6 times the
amount we received.

We were also offered ice cream, cookies, soft drinks and I 
think coffee after the meeting so I guess we got part of our 
bonus yesterday.

    re: .245
    
    I totally disagree. If each group has its own profit and loss goal and
    they meet it, they should get a bonus based on their work, not the work
    of others. This is because I can't control the actions/decisions of
    another business group and I should neither suffer or benefit from the
    decisions made by that group. 

    Well, the Digital Semiconductor group gets to set rediculous
    uncompetitive prices for it's only, and totally captive til
    now, customer: the SBU.  So while DS is achieving its "goals"
    (losing money, just less than they said they would) and gets 6%,
    the SBU gets shafted with 2% because they have to compete in the
    real world.  Perhaps the DS folks should get 6% only if they
    commit to buy a few Multias each from auction.
    .02 Kratz
    

    I am not convinced that you (as an individual contributor) do control
    the actions/decisions of your own business group.  I also have
    reservations on how individual BU's profit and loss are calculated. 
    That information is NOT public.  The inter-BU transactions are NOT
    based on the fair (as in open market) pricing.
    
    Give me a spreadsheet which gives the following beak-up and show me
    that all columns add up to give total Digital picture as filed with SEC.
    
    BU		Revenue		Cost		Profit/Loss
    =========================================================
    BU-A
    BU-B
    BU-C
    BU-D
    =========================================================
    Total
    Digital
    
    - Vikas

    I think they should have a two tier bonus system.
    
    Tier 1
    ------
    If the corporation is profitable overall then everyone gets x%
    bonus based on the size of the profit. This would be good for moral
    overall since every business unit will have it's up's and downs over
    time.
    
    Tier 2
    ------
    This level of bonus would be based on the performance of the business
    unit you worked in. All metrics would be BU specific. This would
    continue to reward the successfull business unit's. Yes the tier 1
    bonus would cut into this tier slightly but we all work for the same
    company and each Business Unit's success is somewhat dependent on the
    other business unit's in the company.
    
    
    The sum of tier 1 & 2 determines if you buy that new car or take the
    SO out to dinner.
    
    Pete

    >Well, the Digital Semiconductor group gets to set rediculous
    >uncompetitive prices for it's only, and totally captive til
    >now, customer: the SBU.  So while DS is achieving its "goals"
    >(losing money, just less than they said they would) and gets 6%,

    Digital Semiconductor does a good amount of business to external
    customers, who by the way wouldn't be buying the chips if they were
    so non-price competitive.  Furthermore the goals used by DS are
    agreed upon with Digital upper management.  Give it a rest.

    Cheers,
    --Dave

    > I totally disagree. If each group has its own profit and loss goal and
    > they meet it, they should get a bonus based on their work, not the work
    > of others. This is because I can't control the actions/decisions of
    > another business group and I should neither suffer or benefit from the
    > decisions made by that group. 

    Well, are we all Digital or not?

    People may view this whole thing differently depending on whether 
    they got (a good or any) bonus or not.  But it looks to me that from
    "Digital's" perspective this whole thing can have some unpleasant
    effects.

    If worker A works as hard as B for the good of Digital, why should
    they get different bonuses?   Is it really very fair that some groups 
    can get 12% while others aren't even allowed to shoot for more than 6% from 
    the start.  The incentive to employees is scary:  seek work in the groups with 
    the best bonus plans.

    Folks should get bonuses for hard work.  Money is a great motivator.
    But as implemented, everybody was playing a different game. 

    Now Digital has to deal with jealousy and finger pointing between groups.  
    Look at the MCS meeting note (a yearly complaint).  Look at the "overpriced 
    chips" arguments.  The groups that weren't successful at maximizing their 
    profits by any means fair or foul will make sure they do next time.  People
    will (what do I mean "will?") ask themselves "does this help my group," not 
    "does this help Digital?"  Is this the behavior that's best for Digital?

    And if complaints rise, could the fallout drive Digital to just drop the whole 
    success sharing program altogether?

    - Sean

    re: .246
    
    As a ground pounder/bottom rung on the ladder/trenchrat (take your
    pick), I have no influence on the SBU's actions/decisions. Even if I
    did, and from what I've heard, the SBU had a great year before it was
    hit with the restructuring charge, it wouldn't matter. If we knew what
    the goals were and were told that we met or exceeded them, then we
    would have every right to expect the commensurate bonus promised. But
    wait, if we make/exceed the numbers and are then hit from left field with
    something like the restructuring charge, well I think you'd have to
    agree that it doesn't seem fair. At that, even the ones who do make the
    decisions and take the actions that determine the BU's profitability
    have no way to know how it will turn out, even if the numbers are
    initially great. And since it seems to have been decided to give
    smaller raises because of the chance of getting bonuses, then it's kind
    of tough to plan that trip to Disneyworld next year. 8-}

|    If worker A works as hard as B for the good of Digital, why should
|    they get different bonuses?   Is it really very fair that some groups 
|    can get 12% while others aren't even allowed to shoot for more than 6%
|    from the start.  The incentive to employees is scary:  seek work in the
|    groups with the best bonus plans.
|
|    Folks should get bonuses for hard work.  Money is a great motivator.
|    But as implemented, everybody was playing a different game. 


	First of all, bonus is not a question of working hard, but working
	efficiently on the right things. Second, allowing different groups
	to set different goals with different rewards is a micro version of
	what happens in the real world anyway. Don't you think people leave
	Digital for better salaries on the outside?

	The groups that can pay a good bonus are presumably doing the right
	thing and it would be great if "micro market forces" caused a natural
	migration of our workforce to those areas. In other words, the
	prospect of earning a bonus might be enough incentive for some of our
	internal staff to voluntarily train themselves to meet the needs in
	the areas where we are successful.

	The problems we've seen with the bonuses to date are not really
	why one group gets a different bonus from another, but that management
	changed the rules when it came time to pay. As a result they caused
	more damage than not having offered them in the first place. It boiled
	down to a question of trust, or lack thereof.

	Most of us work very hard. But just because we work hard does not
	entitle us to a bonus. Having nothing but the same bonus across the
	board is a very bad idea because you have very little influence over
	the outcome and chances are great that it will be a very small average,
	like the 1.5% from the SBU (hah!!). Might as well not have it at all
	and roll the money into global things like a Windows based TMS,
	better food in the cafeterias, 10x10 cubicles, education reimbursement,
	etc .. things that are more satisfying than a Happy meal.

	>Per

    >Folks should get bonuses for hard work.
    
    You get PAID for hard work.  BONUSES are for good results.  It is NOT
    TRUE that hard work necessarily produces good results.
    
    Mark

    
    Re .251:
    
    The optimal bonus plan would cause each of us to ask at least once
    daily:
    
    1) Does this help DEC's bottom line?
    
    2) Does it help my BU's bottom line?
    
    3) Does it make customers happy?
    
    If we are truly focused on the customer, any relevant bonus plan should
    have at least one metric that corresponds directly to customer
    satisfaction. And we should not be encouraging decisions that are good
    for the BU and bad for DEC as a whole, but groups that are more
    successful at what they do should be at least a bit more rewarded.
    
    (Come to think of it, the order of the three questions
    should be reversed... NAH, that's too much like "the right thing".)
    

    RE: 4760.252
    
    >pick), I have no influence on the SBU's actions/decisions. Even if I
    >did, and from what I've heard, the SBU had a great year before it was
    >hit with the restructuring charge, it wouldn't matter. If we knew what
     
    I understood that the SBU made 96% of the goal. Are you saying that 
    that 96% was AFTER the restructuing charge? If so, it sounds like we
    must have exceeded the secrete goal?
    
    Deb   

    How about good ole "Profit Sharing" for ALL employees based on
    profitability of the corporation.  HP does it, why don't we.  Digital
    would establish a % of the total profit to be distributed to a Profit
    Sharing "Pool".  Then, all employees share a similar $ amount or a
    similar % of pay amount.  This creates an environment of complete
    cross functional cooperation.

>> Folks should get bonuses for hard work.
>     You get PAID for hard work.  BONUSES are for good results.  It is NOT
>     TRUE that hard work necessarily produces good results.

	Not quite true Mark.  Most (probably all) of these bonus plans are
	part of a move to what is being labeled "variable compensation".
	That means *smaller* raises, and the bonus (also called "profit
	sharing") is what makes it "variable".  Ie. if you are in a BU
	that gets no (or token bonus which some would call an insult and
	worse than no bonus at all) bonus then you are *not* getting paid
	for hard work.  Add on top of that the corporate average time
	between "raises" used to be 12 months, but is now 15 months, and
	the situation gets worse.

	Also bonuses that reward all employees in a BU equally, regardless
	of their individual performance (though all the profit planning
	plans appear to indicate "under" performers on written warning
	don't get the bonus), reminds me so much of those summers
	working in a union shop where everyone received the same hourly
	wage.  Individuals had no reason to work harder than the others.
	And in fact it was frowned upon as working harder made everyone
	else look bad.  The favorite saying was "ship the shit", and
	everyone would chuckle.

	And not rewarding hard working employees in BU's that don't currently
	happen to be profitable starts a vicious cycle of attrition from
	those BU's to either other BU's that are currently profitable, or
	worse, leave Digital.  It's a vicious cycle because as those employees
	leave the BU, the less likely things in the BU will improve due
	to the attrition and lack of hard working employees.  You might as
	well just shutdown or sell off those BU's ....

re: .258

Before one can move to a successful group, 'they' will
reorganize the various groups that are successful, e.g. my
group was in Storage, now that part of (or all of) Storage
is in the SBU.  I can never keep track of reorganizations
or TLAs within Digital.

    o Most workers have little or no direct control over things like
      Profit After Tax.  While success in their job assignment may
      contribute to the success of the group and company, it is only
      as good as the decisions made by many layers of management that
      resulted in the work assignment.
    
      No matter how well, efficient, or hard someone works - goals
      such as profitability are collective.
    
      Collective goals and rewards are good.  As long as the collective
      makes some kind of sense, and the measurement of the success is
      public.  That is, the numbers and the reward should not be able to
      be "fudged" or have the appearance of being fudged.
    
    o It is perfectly valid to reward one goup of people more than
      another... it allows you to focus resources.  If you can make
      15% working for group A, or 3% working for group B, then there
      will be people trying to transfer into group A.  And it means
      that group B is *not* strategic.
    
      That is - Networks are strategic (6-10%).  Systems are not (2-6%).
      And since this looks like 2 years in a row that it was *good* to
      be in Networks, people should think about shopping their resume's
      to that group.  And people in the SBU should consider other careers.
    
      That is the idiocy of making the reward strictly group centered, and
      using large groups.
    
    o Successful work *should* be rewarded.  And individual performance
      *should* be a part of that reward.  A raise and a promotion may not
      not the right reward however, since it is the most expensive.
    
      And if you have a system that does not reward the specific
      performance of and individual -- then you write off the best and
      the brightest.
    
    So.  The correct tiering is:
    
    	1 Company profits.
    	2 Group goals.
    	3 Individual performance against goals.
    
    We have picked #2 as the sole means of rewarding performance, other
    than a raise.  And a raise is forever.
    
    

    
    I was told months ago a bonus was in the works, and it was to be 2 %.
    Same manager told me the other day it would now be 0 %. I didn't get
    my hopes up when I was told I would get a bonus, as I've been around
    enough to know what the words of managers are worth. Having no preset
    expectations, I wasn't disappointed when the news came. I'm not
    complaining, as that does nothing but show people I'm complaining.
    I am, however, doing something about it, as in taking the energy that
    is produced by frustration, and directing it into positive action.
    
    I have heard from the anonymous person spoken of in the "Dear Bob"
    string, who are still listening, they are interested in working with me
    on The 7 -ates, which are all action words. I have a con-call next week
    with yet another anonymous person, who is yet another step higher than
    the other anonymous person. I will keep you posted, somewhere in the
    DIGITAL notes, as to progress.
    
    Bob

    

    What about all of those (me and others that I shall not name) who don't
    and never have disagreed with the decisions of our senior managers. I
    believe they are fundamentally correct. Stating this is a first for me,
    but I am tasked to write something by those that support me.

    And yes, I have survived 10+ TSFO's, so my point is extremely
    prejudiced by the fact that I am still employed.
                                                           
    NOTE: Digital Equipment Corporation survives and still provides the
    best products that meet our customers needs. Flame off, this is a
    personal belief and one that I keep pushing.

    My point: Bonus's are a good thing and they should be continued!
    Good work, no matter who does it, no matter where it comes from and no
    matter why it is done should always be rewarded.
    
    If and when the board can provide this option we should support the
    policy. At the same time we need to remember how fortunate we are and
    think about those that no longer have such options.

    Would any one of those who can access this conference disagree?
    Remember, we still work for DEC (oops) and they are still there to
    support us. I know this sounds contite and I know it should be said
    better but... 
    
    I support DEC. I am a mid level employee and will debate my point
    anytime because I still, with pride, work for DEC!


    Hal Bettle
    dtn 381-1661
    USA 603-881-1661
    STAR::BETTLE

    P.S. When DEC fails me (and I don't think DEC will) I'll be the first
    one to start looking elsewhere. Until then I'll stand by Digital! You
    have all been to me me good 16+ years.
    

    
    Hi Hal,
    
     Thanks for your input. I support Digital (aka Digital Equipment Corp.,
    aka DEC). (see 4752.75, and replies). Hard work should be rewarded, at
    any level. Good workers (at any level) should not be removed, and bad
    workers, should be removed. My concern here in the bonus string, is
    that we (the employees) made the numbers, and then, due to an unforseen
    (by us) restructuring charge, were told we didn't make the numbers.
    
    Just doesn't seem fair, does it? The analogy of the carrot before the
    horse works well in this problem. To take away the carrot, after winning
    the race, may have been the straw that broke the camels back.
    
    I could elaborate on the story in Exodus regarding the Hebrew children
    being forced to "make bricks without straw", and I may do that at a
    later time, but for now, I'm pleading for Mr. Palmer to stop "letting
    my people go". If you remove the support of a structure, it will fall.
    If you "outsource" the support, you have only hired hands. There isn't
    the much needed factor of loyalty with them. They only have a "pocket
    interest", and not a heartfelt concern for product, and customer
    satisfaction. Which, unfortunately, I see less and less even among the
    "die hards", who haven't been TFSO'd. To me, this is painful, to the
    individual, and to the Corporation as a whole. What do you think?
    
    Regards,
    
    Bob

    After reading a few replies and looking around at what is happening. I
    am actually convinced that the bonus was never going to get paid. The
    corporation has its ways of getting out of paying it, and no doubt they
    will.
    
    The idea was to get us to work our butt's off, and then get a kick in
    the teeth. They never intended to pay us anyway.

    
    Hi Steve,
    
     That may or may not be the case? Those who know, aren't saying, that
    is for sure. At least, telling us what they know. The silence in "Rome"
    is still deafening.
    
    Hal,
    
     After I wrote the reply earlier, I thought about what you said a
    little more. Especially this; "and never have disagreed with the
    decisions of our senior managers." I have had managers (who shall
    remain nameless) speak of the early TFSO's, in or around 1988, where
    the 3 & 4 performers got BIG packages of BIG $$$'s, and lesser and
    lesser packages since, for the good performers. And what they spoke,
    I am prohibited by the Notes' P&P's to repeat.
    
     Mr. Palmer, in his recent DVN, said mistakes have been made in the
    past. From page 17 of 53, in VTX Livewires' Transcript of Bob Palmer's
    remark's at Q1..., lines 4&5, "... but we hadn't done a good job of
    managing our logistics and our channels." There were other places in
    the transcript where he admitted making mistakes, and admitted being
    human. I personally admire a man who admits he is human. Capable of
    error, and learning from it. I give him much credit for doing the many
    excellent things he has done. As far as those who are reporting to him,
    he should know who is, and who is not, doing the best they can to be a
    "value added" employee, regardless of level.
    
    Thanks for listening.
    
    Bob

RE Spreading bonuses evenly - let's remember the genesis of the 
current bonus program (at least according to Larry Walker). Larry
told us in the first quarterly meeting where the topic came up (some
8 quarters ago) that he had instituted a bonus program for NPB as
part of his new mandate to run things as a more independent business
unit. It was strictly a unilateral action with the BU, something he
undertook as a motivational method to improve NPB results.
Apparently some other BU's got interested in doing the same thing
for their people; this resulted in the whole program being kicked up
to corporate level to provide some degree of coordination (how much?
I have no idea). Thus different programs for different BU's. 

So what's the current status of "independent BU's" given this
fiasco? Has the SLT reasserted control over the BU reins?

	
	Re: .247 - DS sets ridiculous pricing..

	The reply in .250 is correct.  DS does sell chips outside the company
	as well as internal.  And the price is the same for all customers.  And 
	prices to the SBU are set thru negotiation.  And our prices are based on 
	pricing curves in the Semiconductor Industry.

	Re: .249 - 2 Tier plan

	Your tier 1 is profit sharing.  Many other companies offer
	profit sharing.  However many of those other companies don't offer 
	pensions, or 401K plans with matching %, or ESPP, etc.  Some other 
	companies offer all of the above.  It depends on how the company 
	chooses to set up its comp & benefits program, and what is affordable
	to the company.

	Actually, Digital has a 3 tier variable comp program.  Tier 1 is 
	Sr. Mgmt.; Tier 2 is middle management; Tier 3 is the base pool for
	all those not in Tier 1 and Tier 2.  My understanding is that Tier 3
	is being funded, Tier 2 is basically getting nothing and Tier 1 is 
	getting nothing.

	Re: .264 - Never going to pay anyway

	If you feel that way, why are you still working here?

	Re: many

	BU PAT is calculated using the following formula:

		BU Revenue 
	minus	BU Cost of Goods Sold
	equals	BU Gross Margin
	minus	BU R&E 
	minus	BU SG&A
	equals	BU Operating Profit
	plus	BU Interest Income (if applicable)
	minus	BU Interest Expense (if applicable)
	equals	BU Profit Before Tax
	minus	BU Tax
	equals 	BU Profit After Tax (PAT)

	It's actually very simple.  And BU Mgmt. know what their targets
	are.  They are part of the budgeting process.  Yes, the interest income,
	interest expense and taxes are allocated out from Corporate.  But the 
	BU Mgrs. are told what those numbers are during the budgeting process.

RE: .267

  Thanks for that break-up.
  
  Now, can somebody fill them up with the actual numbers for all the BUs?
  Would they add up?
  
  The reason I have been so retentive about this individula BU PAT
  matrix is because for FY96 it relied on the IBP.  The IBP had no bearing
  on open market pricing.  With discounting and so on, often IBP was
  *higher* than the street price.
  
  - Vikas

	In my opinion, the BU numbers should NOT be posted in this forum.
	It is/should be provided on a need-to-know basis, not in a public
	forum. Digital does not provide BU level information externally.

	If you feel you need-to-know the results of your individual BU, ask 
	your management.  Ed Caldwell, the DS VP presents our results to the
	population at a quarterly meeting, but the information is not 
	distributed.

in re .264:

|    
|    The idea was to get us to work our butt's off, and then get a kick in
|    the teeth. They never intended to pay us anyway.
|

	I have to give management the benefit of the doubt when it came to
	intentions with the plan. But I think they naively underestimated
	what they had set in motion by offering the bonus. And this shows
	how completely disconnected some of our managers are with reality
	in Digital.

	>Per

    re: .267
    
    >Why are you still working here?
    
    Because I get immense job satisfaction, I enjoy what I am doing,
    and find it exciting. 
    
    I do not need a bonus scheme to may me work harder. I believe I work
    hard enough without the added incentive of a bonus scheme. 
    
    If management want to give me a bonus for doing what I do anyway, then
    sure I will go along with it. But what really pisses me off, is that
    the promise was made, and the forms were signed. And now the silence is
    chilling. No one is standing up being accountable for this. So much for
    taking responsible for your actions. Sure there are things we do not
    want to hear, like we will not be getting bonus's but at least have the
    common decency to tell us. 
    
    Steven 

I just did my part to help out Digital (or DEC's) bottom line...

My 5 year old NCS Card had developed many cracks and bends to the point
that it almost had broken in two and the card reader outside PKO3-1 
was having trouble reading it.

Well I could have gone and filled out some paper work to get a brand
new NCS card and taken up *valuable* company time and resources (that
obviously were not *customer* focussed).

Instead I went to the secretary and askd her for some "wide" transparent
tape. At first she showed me only the "narrow" familiar transparent tape but 
after some badgering, she reached into her desk and pulled out the "wide"
transparent tape. I took maybe $0.00002 worth of "wide" tape from her and 
wrapped it carefully around my cracked NCS card. BINGO, the NCS card was now
in "like new" shape (it even worked in the NCS card reader!).

Now you may think that I might have *saved* the company at most a couple of 
bucks but I figure it differently:

	Cost of "new" corporate issued NCS card	: 	$    2.00
	Money saved by not filling in paperwork
		to obtain new card		:	$  290.00
	  (security guards time, security
	   department's secretary's time,
	   signature approval loop for form)	
	Cost of *NOT* having the NCS card break while
	   in card reader				$   90.00
	  (Security would need to assign person to
	   guard entrance while repairs being made)
	Cost of *NOT* having to telephone call maker	$   14.00
	   of NCS card reader describing problem
	  (Cost includes being put on "HOLD" 15
	   minutes, as well as NOT using a DTN
	   number to access a outside line)
	Cost of *NOT* having NCS card reader analyst
	   at PKO site to analyze how a broken card 	$ 2000.00
	   could jam the reader (R/T airfare and 2 
	   nights accommodations at the WESTIN hotel
	   in Waltham, car rental, 3 meals a day)
	Cost of paperwork/memos written to inform
	   upper levels of management of status of	$19459.95
	   NCS card reader
	  (16 memos written to management, plus the
	   appropriate federal ,state and local
	   authorities)	
	Cost of *NOT* needing to issue new NCS cards
	   to entire NCS community			$34799.82
	  (costs associated with determing that magnetic
	   strip inside NCS card does not cause cancer
	   or birth defects over time if card is cracked) 

	TOTAL COST SAVINGS TO DEC (I mean DIGITAL)	$56655.77


Well, this will mean next year's GPA *may* pay out 2.000000000001%
instead of 2.000000000000% 

Re: .272

Spendthrift!  You could have saved millions by NOT having Digital switch 
(again) to a different access card vendor, necessitating new cards and new
readers at all facilities!

					Steve

Sounds like the old story of the kid saying to dad "look, I saved 50c by walking 
home instead of catching the bus", and dad clips the kid around the ear and says 
"you idiot, you could have saved $5 by not catching a taxi".

PJDM

Exactly.

	Steve

    
    Hi Bob,

    I appreciate your comments as well as the input of others. After
    reading my original comments I want to re-iterate (possibly restate) my
    point. I support the decisions of my (our) managers and still support
    the bonus program, unconditionally!

    Yes, I still don't know the numbers or if I am eligible, but I think I
    am.
                       
    I agree with other replies that better decisions could have been made.
    Note, I use the word "better." I'll leave this debate to others and
    will watch with interest. But, since I was not slammed in my first
    reply, expect me to pose additional comments and questions.

    Anyway, we are still here, Digital continues and I will continue to
    profess our virtues. There are a lot.

    Thanks again to all of you (and those that are not here (I won't
    forget)) for keeping this cooperation alive,

    Hal Bettle