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Wednesday, August 3, 2016

Useful diagrams for explaining Intel Corp selection of employees for termination in 2015 and 2016

Note: this article was updated and revised with new information and diagrams on 8/16/2016

Circumventing a program that was originally designed to retain younger and more mobile employees (for reasons of employment market competitiveness) and channeling this program to get rid of experienced and older employees who are compensated at a higher pay grades, seems to be behind the high correlation between an employee age and the probability of such employee to be selected for termination during the 2015 and 2016 layoffs.

Here are useful diagrams for explaining Intel Corp selection of employees for termination, based upon Stock Share Level (SSL) grants, as applied to the 2015 and 2016 layoffs.

The diagram below depicts the Intel Corp "Total Compensation" model that was in effect over many years, including 2016.


The "Total Compensation" model, which was also available as an application on the Intel Corp. employee web site shows that RSU grants was considered an integral part of an employee compensation. The RSU grant has cash value consequences that materialize whenever the RSUs become vested into the future, enticing employees to remain with the company in order to receive the vested amount of stock. It is clear that the SSL policy was established as a retention tool, pitting future stock grant (RSU) value against the lure of potentially higher salary offers, coming from competing companies. This policy, alongside the underground "no poaching" agreement that Intel Corp. and other Bay Area employers colluded in, kept most Intel Corp. employees on the "inside", for many years.

Intel Corp. also practiced a "Glass Ceiling" policy which was meant to prevent "runaway" employee salary increases, for employees whose "Total Compensation" level was considered, close or above "market value". Of course the guidelines for market value were totally under control of Intel Corp. HR Compensation department. Therefor, the pay modeling that employees were presented, was the picture that Intel Corp. wanted them to see, regardless of factual basis.


Following the Corporate HR compensation guidelines, as well as budget dictation that came from Corporate/Business Unit financial planners, managers had to exercise the means that were available at their disposal to cap the compensation of "highly compensated employees" (employees whose total compensation figures were close to, at, or above HR guidelines). One of the most common ways that Intel managers used achieve this effect was to grant an employee a lower amount of RSUs (classified at SSL4 or SSL5), in order to cap the "overall compensation" figures of such employees and to avoid being reprimanded for exceeding budgets or breaching compensation policy limits.

For clearly manipulative reasons Intel Corp. executive management decided to utilize the SSL grant levels given to employees as an employment termination criterion. By applying SSL4 and SSL5 as the selection criteria for termination, only 5% of employees in grades 2-6 were affected, while 15% of employees in grades 7+ were affected. Since employees in grades 7+ are typically more experienced (and hence older), an employee's age was in fact a significant factor, affecting the demographic profile in Intel Corp. employee layoffs of 2015 and 2016 in a significant way. The charts (see below) published by the OregonianLive web site, demonstrate this fact very clearly.

Note that the numbers specified for the SSL grant distribution percentages comes from Intel Corp. HR policy that was in effect in 2015 and 2016. The source for this data is Intel Corp. own documents.

Click on the diagrams below to enlarge the detail level.





Note: The OregonianLive statistical analysis and resulting charts were performed completely independently of our analysis. The data used for the analysis was based upon the OWBPA, U.S. Gov. mandated reports, originally filed by Intel Corp.

2015 Layoffs Employee Age Correlation- OregonianLive Chart



2016 Layoffs Employee Age Correlation - OregonianLive Chart



The chart below shows how Intel Corp. managers fared during the 2015 layoffs, relative to the general employee population hat was affected by the layoffs. It seems that being a manager at Intel Corp. buys a person a "second life"... :)


Your comments are welcome.

--Dr. Flywheel


2 comments :

  1. I read your blog frequently and I just thought I’d say keep up the amazing work! Branda Canton

    ReplyDelete
  2. There can be no doubt Intel tweaked the SSL algorithm to achieve the desired effect of ejecting older or more costly workers. The diagrams correlate with stats showing those age 50+ laid off three times more than those about half that age. Also not surprised managers got a bit of a pass.

    Curious how this could affect future stock allocations. I suspect another hidden company agenda is to encourage a shift in compensation to stock for older employees to avoid lower allocations, probably in lieu of the cash they would prefer to have instead.

    ReplyDelete

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