Conference 7.286::digital

    I've heard it said that DEC prefers to give its profit to
    employees though better pay checks rather then in lump sums.
    
    			Alfred

    What I've been hearing from my management is that salaries are based
    on what others in the industry are getting, NOT on our profits.
    (Unless of course DEC is doing badly...)

    Gee, I see my profit sharing every time I look in the stock pages
    of the paper.
    
    Burns
    

    Profit sharing only for those who can afford it...
    

    Just about anyone can afford the stock plan.  It is a guaranteed
    investement that beats about anything you can find, and you can
    recover your funds every six months.
    
    I do find it somewhat irritating that when profits are down, salaries
    are tightened, and when profits are up, salaries are tightened.
    This stuff about competitive salaries is nonsense, and we all know
    it, but I don't stay at DEC for the money.
    				Steve

    In Germany, it is customary for most employers to pay their employees
    a 'christmas gratification', usually worth one month's salary. Some
    companies see this as a method of profit sharing in that if the
    year was good, they may pay more, it it was bad, they pay less.
    
    DEC, of course, calculates your (monthly, as usual here) salary
    as annual_salary/13, and you get a double salary at the end of
    November... so it is only a way for DEc to keep part of your money
    untils almost the end of the year.
    
    re .-1: I wouldn't say that about anyone can afford the stock plan;
    besides it only covers DEC emplyees in very few countries.
    

    In the UK we have the following {profit sharing} schemes:-
    
    1. We receive a 15POUND gift voucher at christmas. As the amount
       is fixed it is not true profit sharing.
    
    2. ESPP..Yes , this is definately profit sharing for those
      who can afford it. It is not always possible to stretch
      your monthly outgoings to include the ESPP. Yes , I have now joined
      the  ESPP and hope that I can now enjoy some of the benefits of
      working for a PROFIT-MAKING company.
    
    Therefore my conclusions are as follows:-
                                                          
    I agree with the principle of profit sharing as the company certainly
    agrees with the principle of loss sharing!!
                                                          
    We do not at the moment have what could even be loosly termed a
    profit sharing scheme.
    
    There should be some recognition by the company for the
    "belt-tightening" experienced during the "lean" times. Yes , I know
    that this is a seperate issue but I think they are related to the
    basic principle that the company tightens our belts when things
    are going bad but does not reward adequately when things are going
    very well!
    
    Lastly , the salaries paid by DEC are determined each year by polling
    the INDUSTRY and ensuring that we are not paying {over the odds}
    which is further proof that our salaries do not reflect the companies
    profitability.(Only the lack of it)
    
    Sorry for the rambling but I though it was time I actually said
    something instead of just reading the notes files!
    
    Jim

    Re: .3 & .5
    
    How about the Direct Labor person earning $8.00 an hour and supporting
    5 people on that money?  You say they can afford the stock plan?
    I doubt it.
    
    How about the person who has to pay half their salary to an EX spouse?
    I doubt that they can afford the plan either...
    
    Or the person having to pay close to $1000.00 a month rent, because
    they can't afford to buy a house for $145,000, so has to pay the
    high rent, which puts them in a never ending circle, VS the people
    who have mortgages under $400.00 a month.... I'm sure they can't
    afford it either...
    
    And if they COULD afford it, how can they afford the taxes on the
    stock once they sold it?
    
    Just my 3 cents worth...
    
    
    GLK

    re: .8
    
    hear, hear! and an amen to that!

    Keep in mind that a director of Ford is also on the board of directors
    of DIGITAL ...  hummm
    
    

>    How about the Direct Labor person earning $8.00 an hour and supporting
>    5 people on that money?  You say they can afford the stock plan?

Hmm... $8/hour-> $320/week -> maybe $200 take-home/week.

DEC Stock contribution would range from $6.40 (min) to $32 (max) per week.

I think very few people can't find a way to save (SAVE, not SPEND) $6.40
per week to get a MINIMUM yield from that of $7.50 one-to-seven months later.
(MINIMUM assuming the stock price doesn't crash during the 24-hours necessary
to sell the stock at the end of the period.)
    
>    And if they COULD afford it, how can they afford the taxes on the
>    stock once they sold it?

There is no additional tax liability created by using the stock program.
The tax only reduces the profit earned by the employee by the same amount
that tax would reduce an equivalent raise.  The employee still has more
money at the end of the stock period than otherwise.

/john

    re: .11
    
    Your return on investment analysis seems to have neglected that stock
    is purchased in whole share increments.  This granularity could result
    in a considerable sum of money being tied up for an additional 6
    months.  If the stock price keeps rising, it might soon be the case
    that an employee earning $8.00/hr. who makes the minimum contribution
    won't have accumulated enough money at the end of a single period to
    purchase even one share of stock.
    
    In short, the higher the stock price rises the harder it is for
    those with limited disposable income to participate in this so-called
    profit-sharing plan.

re not being able to purchase even a single share of stock

One of the significant considerations in stock splits is to guarantee that
employees in the stock purchase plan can always get a reasonable deal.

That employee contributing $6.40 per week will have accumulated $166.40
at the end of a payment period.  Since the purchase is based on the lower
price at the beginning or end of the period, the price would have to be
$195 at both the beginning and the end of the period for the employee to
lose out.

You also forgot about the supplementary contribution option, which in effect
allows you to borrow from DEC the difference in the amount contributed and
the price of the next full share of stock.  This is then added to your
contribution over the next six months.  (And if you can't afford the higher
rate, you can always pay it right back with the share you sold at profit!)

/john

I don't know how someone can afford NOT to join ESPP.  If all the money gets
turned into Digital stock which you sell immediately, it works out to be an
effective MINIMUM of 61% interest!  Even if you took out a cash advance on a
credit card charging 20% interest, sold your stock immediately and paid off the
credit card with the money from the stock, you still come out ahead.  If you
deduct 10% of your salary, nearly all will get turned into stock.

-Mike

    Remember also that Digital's stated policy is to reinvest its profits
    in the business. So - no dividends are paid to stockholders, and
    employees are paid only salaries (some more than others, of course).
    
    Richard.

    Investing in employees by paying them better then competitive
    salaries would seem like a good thing to do. Especially since
    employees are asked to invest in the company (by staying around)
    and accept things like 6 month wage freezes and lower hikes during
    bad times.
    
    I read the other day that DECs turnover rate is around 5% which is
    considered very low. This is an indication to me that DEC employees
    are very loyal. Now that we are having a good year it seems like
    DEC should reward that loyalty with better then industry average
    wage raises. We are certainly performing better then industry average.
    
    I'm tired of hearing "a 4% raise is better then the 6% cut Wang
    is getting" or "the layoffs at other companies". Those companies
    have screwed up royal. DEC has not. I didn't come to work at DEC
    for the money and I don't stay just for the money. Just the same
    I don't want to be taken advantage of. If DEC was doing worse then
    average I would not be surprised if wage raises were worse then
    average (yes I know we've used cash surpluses to prevent that in
    the past). By the same token I am surprised that at a time we have
    huge cash reserves and profit performance way above average, the
    company is still using 'industry average' as a salary guide.

    We don't produce industry average computers. We don't have industry
    average people. Both are better then average and if DEC wants to
    keep it that way they should not short change the people who produce.
        
    		Alfred
    

    re .16
    
    Thank you Alfred. As always, you have more effectively spoken what
    many only can feel in their "gut". 
    
    _also_not_here_for_the_$$_but_want_not_to_be_taken..
    
    rene

    re .15:  Yes, all profits are invested back into the company.  That
    makes the company more valuable.  That means it is worth more $
    per share.  Ergo, stockholders can get the profit if they choose
    to sell their shares.
    
    Burns
    

    re: .16
    
    I have no idea of where that fantasy "5% turnover" figure comes
    from.  For that figure to be meaningful
    
    95% of the people who were employees in March 1986 still are here.
    90% ... March 1985 still are here.
    86% ... March 1984 still are here.
    81% ... March 1983 still are here.
    77% ... March 1982 stll are here.
    
    More than three quarters of everyone who was here five years ago
    still here? Hah!
    
    Regarding salaries and profitsharing:  The stockholders contribute
    nothing to the profits.  Profits are earned by the employees on
    their behalf.  More loyal employees are better for the stockholders
    in the long term than the low yields that DEC is able to now obtain
    on its surplus cash.

    Re: .19
    
    Pat... Do those figures incorporate Direct Labor, or are they
    just for indirect labor?
    
    Just curious...
    
    Gale

    Re: 5% turnover
    
    I'm sure that Picky Pat is aware that numbers like turnover probably
    refer to the current quarter or year.  It seems quite possible for
    a 5% turnover in past 12 months given the huge number of new people
    that we've hired.  I have a feeling that we'll be seeing a much
    higher turnover as soon as these expensive new hires have been around
    and realize how things really work at Digital.  Not that I feel
    that there is much terribly wrong here but I believe that many of
    the new people we've brought into the family have no idea how Digital
    works.
    
    The 5% is quoted in the March 23, 1987 of Forbes on page 154 in
    an article titled "DEC's democracy".  The sentences in question read
    "Net income is up 115% for the calendar year, and the employee turnover
    rate is the envy of competitors - only 5%.  That's less than half
    the industry average."

    I just got the magazine and haven't read past that part, yet.  It
    looks like another one of those "gee whiz, Digital's just great"
    articles which are popular right now.  Every time I see one I keep
    waiting for the other show to drop and for the media to go back
    to saying how old stupid we are.
    
    Don

    re -.1:
    
    Are you implying that the oldtimers understand how DIGITAL works?
    
    :^)
    grins,
    Marge
    

    There's nothing magic to computing true turnover, that is turnover that
    takes into account "bursts" of hiring.  Nominal turnover is taking the
    number of employees who left in one year divided by the _current_
    headcount, introducing a large bias since we are hiring right now
    and it's my guess that fewer (proportionally) left in calendar 1986
    than previous years.  That gives us the low figure of 5%.
    
    Turover comes from inventory management: the number of times a group
    of goods is sold and restocked during a given period of time.
    
    We have 5% turnover if and only if 95% of the employees in one year
    make it to the next regardless of hiring.  Will those of you who
    call this "picky", please give me a better definition?
    
    That's where (0.95)**N comes from where N is the number of years
    ago.  If more than three quarters of the employees who were here
    in 1982 are still here, then turnover was 5%.  What do you think?
    
    Reduced to the absured: If we started the year with 75,000 employees
    and ended the year is with 75,000 _different_ employees would we have
    100% turnover or 0% turnover? 
    
    (Direct or indirect labor doesn't apply here.  This is headcount
    not cost accounting.)
                                                             

    Cost center transfers in a company like DEC give a feeling that
    turnover is higher than it is.  (Or perhaps they simply disclose a
    "hidden turnover".)  
    
    Of all of the people I know who have left the groups around me in the
    past five years, I can only think of two or three who actually left the
    company.  The rest transferred to other departments at other sites.  In
    this light, I don't find the one-in- twenty figure per annum way out of
    line -- perhaps a little high. 
    
    But then maybe the figures are different between the bowels of Process
    and Design Support (where we're scarcely aware of flesh-and-blood
    customers) and a field office (where a customer may seem more real than
    the architecture -- perish the thought!) 
    
    Around here, it is quite possible to forget that there *are* other
    companies in the industry that some impetuous individual might, in a
    fit of despondency, rush off to work for.  Of course they'll be back;
    it's a jungle out there...

    						Parochially,
    
    						    Ralph

    DEC pay well??  Perish the thought!
    
    I'm also sick and tired of hearing that the stock purchase plan
    compensates us in some way.  I want the money in my weekly check,
    where it belongs.
    
    And, yes, I have read the Forbes article.  More DEC propaganda.

    The only way to achieve quality is to be real picky.
    
    I was not saying that Pat was being TOO picky except in assuming,
    tongue in cheek, that we had achieved 5% over some long period of time.
    Maybe Pat doesn't do those sorts of things.
    
    Keep right on being Picky Pat because I hope that we're on the same
    team.
    
    Don

    So long as there are thousands of people banging down the
    dorrs of Digital, trying to get a job, there will be no
    incentive to raise salaries relative to the rest of the
    industry.  As one of the bangers, I apologize to the rest of
    you for keeping your wages low.

    (As a matter of fact, I had three job offers in my hand one
    day last summer.  The lowest wage offer was Digital's.  But
    the other two were from companies that had recently had
    massive layoffs -- one had announnced theirs that week, in
    fact -- and I went with Digital.  It was the right choice,
    too.

    (What can you do?)

    	Tom Peters (author of In Search of Excellence) was the guest
    commentator on Nightly Business Report on 3/17/87. He is an advocate
    of profit sharing as a means of improving both a company's product quality
    and profitability. He used Ford as an example since they have dramatically
    improved their profitability and product quality. He even advocates
    changes to the tax laws that would allow the company to claim an
    investment tax credit equal to the amount paid out in profit sharing
    and a tax deduction for the recipients equal to 50% of their amount.
             

re .27:

>    So long as there are thousands of people banging down the
>    dorrs of Digital, trying to get a job, there will be no
>    incentive to raise salaries relative to the rest of the
>    industry.  

I don't think this applies in the UK yet the salaries are still calculated
in the same way as an industry average.

Dave.

    
    Sounds like a fun thing to have a copy of.
    
    Anyone still have one they'd like to throw on their Xerox machine?
    
      John
    

    On the same topic looked at in another way....I like DIGITAL so
    much I'd *LOVE* to promote DIGITAL's products on my own time (above
    and beyond the strange hours I already put in) and make a "profit"
    on the side, kind of like "moonlighting" but for the same company
    you work for. This would be another kind of "profit-sharing" and
    yet DIGITAL today considers this a "conflict of interest" since
    it does not want me promoting/selling/installing/supporting it's
    products because it thinks I'll be "taking away" some of it's profits.
    
    True, I would be getting some profit DIGITAL might've gotten, but
    on the other hand I might sell a system DIGITAL either hadn't gotten
    around to selling to some particular customer or even hadn't bothered
    to "nibble" at with respect to the customer.
    
    Yes, I'm talking about DIGITAL sales either being too busy or whatever
    to capture ALL business, so why can't I pick up some slack? I'm
    not talking 8800's here....just MicroVAXes.
    
    Anybody else out there like DIGITAL so much they would prefer to
    see someone buy a DEC product rather than a competitor's just because
    you know DIGITAL's is the better product service wise and everything
    else?
    
    Couldn't this ALSO be called "profit-sharing"?
    
    							Warren
    

re Kemerer wanting to do "extra" promotion of DEC products.

What's the problem with just working harder at your assigned job or broadening
it?  What's the problem with doing it in the DEC context?

If you do a better job at DEC, you should get a bigger raise and/or an earlier
promotion.  If not, then either you're not doing as well as you think you are
or there's a problem with your management (which should be addressed with their
higher management).

If you can't get the additional money you want through DEC, then I submit
you're working for the wrong company and would do better on your own.  See
the Forbes article "Hi ho, Silver" on page 90 of the 9 March issue.  The
"Lone Ranger" pictured on the opening page of the article is a former DEC
employee who was in much the same position you are.

/john

re: "we're digital and you're not!"

a few years ago?  you're dating yourself.  that add came out at least 7 or 8
years ago (I think). 

-mark

    
    re: Digital and you're not
    
    REminds me of when I hired on >10yrs ago...I sent my resume into
    DEC in response to a national ad.  At the same time, through friends
    already with the company, I was going through the interview loop
    for a position in NYC.
    
    Making a long story short...one day I received an offer letter from
    the NY Dec office.  The next day I received a letter from personnel
    saying thanks for the resume, but that they had no openings in the
    company which matched my background, but we'll keep your resume,
    etc, etc.
    
    Talk about confusion.  An offer letter in one hand and a rejection
    letter in the other hand, both from the same company.  Welcome to
    the wonderful world of DEC!!!!!!!  I look back and laugh now, but
    there wasn't much laughing back then.

    Even Mark is dating himself.
    
    As I recall, that 'ad' was in 1975 or 1976.  I remember seeing it right
    before the infamous 1976 Atlanta DECUS where RSX-11D was declared dead
    and some of the customers took offense.
    
    Another blast from the past,
    
    Don 

The recruiting ad's posted outside my office.  It's rumored to have
actually been run in a magazine somewhere, but nobody will admit to it.

While that's posted at work, the *real* Dec memorabilia, the infamous
"Visit Beautiful Downtown Maynard" poster is safely at home.  The poster
was pulled when a well known officer of the company was heard to remark
"There's nothing funny about Maynard."

(The poster shows the building 4 loading dock in all its grungy glory.)

Martin.

    Rumor has it that the "we're digital and you're not" ad ran in the
    National Lampoon, 1975-76 timeframe.  Any NatLamp collectors out
    there?

    I never saw it in the NL.  (there was a nice IBM takeoff at one
    time though)
    
    
    I've been readin the mag since about '73 and have had a subscription
    since about '74-'75
    
    
    -bill

    by the way, I do have a (bad) copy of the takeoff.  If anyone wants
    a copy, stop by my office and you can make one.  (I'm at MLO1-2/C37)
    
    -bill