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Articles
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Volume 6, Number 3___________________________________________________________
April, 1987
Win
Hindle
Focuses On Executive Committee Issues And
Large Customers
Digital
As
A Reference Account — Business Success Generates New
Business
Bill
Strecker
Elected To National
Academy Of Engineering
Corporate
Systems
Group Announces New Organization
BOIS
Reorganizes
To Target Expanded Markets
New
Immigration
Law Affects Digital's Hiring Practices
Digital
Changes
The Long-Term Disability Plan In July
"At this juncture in the company's growth,
Digital must have someone from the Executive Committee who is
responsible for and has the time to follow up on important issues
throughout the company," explains Ken Olsen, president. "In
particular, we need to maintain organizational balance within the
functions and further promote company-wide teamwork. In addition,
we need to focus high-level executive attention on large customers
in industries that we are now targeting.
"I’ve asked Win Hindle to take on these
important new responsibilities that will enable him to do things
that both of us have wanted him to do for some time. In addition
to his knowledge of Digital's values, strategies and strengths,
Win has the unique ability to help various organizations work
together as a team. In his new role, Win can help Digital by
bringing more cohesion to the major parts of our business.
"He also has a knack for understanding the
business needs of customers, particularly in some of the
industries we are just now entering. His ability to work with
customers has long been underutilized.
"People inside the company have been requesting
more of Win’s time to provide guidance in their work with major
customers. This change in responÂsibilities should free him from
administrative tasks to give him more time for these important
efforts."
Win joined Digital as assistant to the
president in 1962. He became a product line manager in 1964, and
was named a vice president and group manager in 1967. He became
vice president, Corporate Operations, in 1978, and has been an
active member of Digital's most senior committees since then. Last
year, he was promoted to senior vice president.
As part of this change in responsibilities:
o Corporate Quality managed by Frank McCabe now
reports to Jack Smith, senior vice president;
o Corporate Purchasing managed by Ron Payne,
Corporate Information Systems managed by Bel Cross, and the
Corporate Consultant Group managed by Ben Fordham now report to
John Sims, vice president; and
o Corporate Planning managed by Ken Swanton
reports to Jim Osterhoff, vice president.
Corporate Public Relations, Marketing
Communications and Management Systems Research continue to report
to Win.
Digital recently announced a new business
structure that includes:
o A consistent, revenue-based discount schedule
for systems and peripherals.
o A one-year warranty on all hardware system
products. Resellers may pass this warranty through to End Users.
o A software license policy that eases moving
software within companies and retains the Reseller's ability to
sub-license operating system software.
o Discounts and earned credits that recognize a
Reseller's business costs in handling and selling products.
At DECWORLD 86, we explained our strategy to
the Reseller community. Digital will invest account management and
dedicated selling resources in target accounts identified from
Industry Marketing plans. We would like Resellers and Third
Parties to manage the selling activities in other accounts on
behalf of Digital.
Our intent was clear then. Now our new business
structure should help produce the behavior to execute that plan.
That is why the announcement of this new business structure is so
important.
A number of efforts have now come together. For
instance, the just- announced new business agreement (terms and
conditions) indicates a subtle but significant change in
philosophy. We used to call our contractual arrangements with
customers Sales Volume Agreements (SVAs). Now we call them Digital
Business Agreements (DBAs). We have begun to shift our
relaÂtionships with customers from being based just on what they
buy (the sales volume) to the nature of the business that goes on
between us.
We have done away with a complicated set of
multiple business structures. In some cases, discounts were based
on the number of units a customer bought. In other cases, they
were based on the value of the system. Certain systems were in one
category, and other systems were in different categories with
different scales. And a warranty had to be purchased separately.
Now all customer purchase dollars for hardware
and software products count toward their basic discount agreement.
To establish the base discount, the same rules apply to all
customers, whether End Users or Resellers.
Discounts begin at a yearly purchase level of
$500,000. The largest volume discount is 21%. And we have added a
full one-year warranty on all products.
In other words, we are maximizing the
purchasing leverage of our customers. And the reaction from almost
all customers has been very positive.
To encourage the Reseller community to serve
the other accounts which we are not targeting directly, we offer
another discount or "adder". Adders, ranging from 5% to 15%, take
into account the fact that, for a business reselling lower priced
systems, the selling costs represent a higher perÂcentage of the
fixed costs of the business. In other words, for the first time,
we are recognizing the business needs of the Reseller customer and
not just their product volume.
In addition to the basic volume discount and
the product adders, we also offer Resellers a 5% earned credit for
making sales into accounts that do not have Digital Business
Agreements. This credit recognizes the sales investment the
Reseller has to make to bring Digital's theme, messages, products
and architecture into new accounts. This is an after-the-fact
credit against invoices. They report to us where they sold the
product so we can verify that, indeed, we are not doing business
there.
In summary, we have a new business structure
that counts all of the dollars purchased. Resellers can have
product adders reflecting the size of the system sold. They also
have an opportunity for earned credit. Plus, they get a one-year
warranty on every system. And, on top of that, a shelf-life
provision allows Resellers to pass the warranty through so that,
by and large, the End User will see that same warranty regardless
of the channel which handled the sale. Customers can also elect to
buy either a two-year or a three-year warranty at the time of
purchase. And the cost of the extended warranty also counts toward
the volume agreement and gets discounted.
Meanwhile, we have put in place a program
called the Digital Development Account Program, which works
closely with Distributors to make sure that accounts that fall
below the $500,000 volume discount threshold are adeÂquately
serviced by Distribution channels. We will work with Distribution
organizations to provide seminars and other support for these
"development" accounts.
But we have shifted the primary account
management responsibility for those accounts to the Distribution
community. We have made provisions so the Distribution community
can grant some discounts to those accounts. And the Distribution
community will provide strong, localized support and product
availability.
Basically, the new business structure, in
conjunction with our integrated industry plans, allows for an
orderly marketplace. It allows us to commuÂnicate with our users,
whether they are End Users or Resellers, in a clear fashion. And
the Reseller community feels good because Digital is providing a
predictable, stable business structure. They know what to expect.
For now, any customer can choose to continue to
operate on their current agreement or move to the new one. Our
objective is to have all customers
operating on the new terms no later than the
first of July, 1988. But the new structure offers such
overwhelming advantages — a year's warranty and counting all
purchase dollars toward the volume discount — that I expect a mass
migration very quickly.
This business structure applies worldwide. The
only exception is that some small countries in GIA and Europe are
using different entry levels. They will grant discounts to
companies buying less than $500,000 and have inÂserted one more
bracket in the discount schedule because, otherwise, they would
eliminate their entire indirect business.
As of today, Digital has articulated
an All Channels Strategy based on integrated plans by industry; has put CMP and SCMP
partnership programs in
place; and now has followed
up with the new
business structure. We have conveyed a clear and positive message
to all the partners who work with us
-- we are committed to them, and they
are a part of our plans. Our
strategy is concrete now. They believe it. And I believe our
relationships are much better.
Our All Channels Strategy is working -- it is
an important competitive weapon for Digital, and it also gives our
customers a competitive advantage.
Digital's success in using its own products to
deal with its own business problems has become an important sales
message. Bruce Ryan, vice president, Corporate Controller, and
others have been delivering this message repeatÂedly at customer
seminars.
"We use our own computer systems with every
application you can imagine in a major enterprise," says Bruce.
"We tell our customers about the business problems we had a few
years ago and the things that we've done to fix them. When I bring
in the financial results, people are stunned. It's a great sales
tool because people see how utilizing our own systems has helped
us to improve the way we run the business.
"What we've accomplished so far is a powerful
message for our customers who face business problems similar to
ours. But we must keep it in perspective. We're performing closer
to where we should be, but it is going to take hard work to
sustain this level of success."
Here are some of the key points from Bruce's
talk:
o The order acknowledgment cycle has been
reduced from 60 days to 11. While it used to take us 60 days to
acknowledge an order, we now deliver 90% of our product in 60
days.
o Our accounts receivable measurement, DSO
(days sales outstanding), imÂproved from 92 to 62 days in the
U.S., thus adding over $300 million to our cash-flow.
o Inventory turns, historically, have been in
the 1.8 to 2.1 range, but at the end of Q2 FY87, were up to 3.6.
As revenue grew 36% in the 1985-86 timeframe, inventory was
reduced by 35%. These improvements added over $800 million to the
balance sheet as of the end of Q2.
o The Manufacturing population at the end of
FY86 was the same as it was in FY81. And over that time the
revenue has increased by over $4 billion.
o Manufacturing has made significant
improvements in cycle time by estabÂlishing goals of 50%
improvement on specific products. We are therefore more reactive
to our customers -- building what we sell, instead of having the
Field sell what we build.
o As of the end of Q2, gross margin as a
percent of net operating revenue has improved over 11 points
compared to the same period in 1985. That has been made possible
in large part by new products, higher quality, and manufacturing
productivity.
o Financial closing cycle —- the time it takes
to close the books and understand the results at the end of the
quarter — takes one week less now than it did two years ago. That
has been made possible by the use of distributed data processing
and development of the Financial Architecture.
o In January, Digital was given a AAA credit
rating by Moodys, joining a select list of only eleven other U.S.
industrial companies with that rating.
o Digital's improved performance has generated
significant confidence among the investment community, as
evidenced by the increase in the overall market value of Digital's
stock by $15 billion over the last two years.
"While the improvements in our receivables,
inventory performance and operÂating profit have brought our cash
balance to $2.3 billion, we must bear in mind that these are
one-time corrections," Bruce emphasizes. "This money, which is
needed to fund our growth, isn't going to be available forever,
and these kinds of dramatic improvements are not going to continue
happening."
(excerpts from a speech presented at a
mid-March press conference)
Enterprise-wide integration — having an entire
company work together to bring products and services to market --
is a fundamental requirement for the future survival of large
manufacturing companies. Digital's efforts at integrating its own
enterprise have made a significant difference, and can serve as an
example for customers.
Critical success factors for our manufacturing
customers include:
o effective utilization of production
resources,
o rapid time to market, o production
flexibility, o customer satisfaction, and o continued quality
improvements.
These factors all depend on effective
management of information throughout a company.
Progressive companies used to think of
automation as the productivity tool. But now more and more leading
companies are viewing Computer Integrated Manufacturing (CIM) as a
survival requirement, as an essential element of a competitive
strategy. CIM is effective management of information throughout
the manufacturing enterprise.
By using information and making information
readily available throughout a company, you can get machines,
processes and people to work together toward the same goals.
Information enables you to cut back inventory and precisely target
production to market demand. It enables you to recognize quality
control problems immediately, or even to anticipate them, thereby
reducing scrap and rework. Information enables engineering,
manufacturing and services to get involved in product development
early, to work together as a team to take a product to market
quickly.
The companies that survive are going to have to
integrate their enterprise, allowing their employees to take part
-- using their creative abilities, education, training and
motivation. This is a significant management and organizational
challenge. And enterprise-wide networking will be at the heart of
these changes, providing people with the tools to work as a team.
Many people are getting impatient and
disillusioned with the idea of CIM because the concept has been
overblown and misrepresented by some computer vendors. The
confusion and disappointment with CIM results from differing
expectations being set with top management and operating groups.
At the top management level, computer vendors talk to customers
about linking "islands of automation" together to meet business
objectives -- a difficult, but obtainable goal. But in the
manufacturing facilities themselves, those same vendors have sold
customers totally incompatible non-networked computers, resulting
in more disconnected islands of automation. And the situation is
getting worse. There is now a myriad of disconnected personal
computers installed on the factory floor — one for every job — and
there is very little networking going on. So while top management
is being told about linking islands of automation, unconnectable
"pebbles of automation" are being installed on the factory floor.
The emphasis has been on individual computers,
but the most important part of CIM is integration. Integration,
like quality, must be designed in. Af ter-the-fact integration is
costly and generally doesn't work well. And most computer vendors
have not yet designed integration into their products. They offer
products that consist of multiple architectures and that can't
communicate over either a wide-area network or a local-area
network.
Customers are left with the huge task of trying
to get all of this equipment to work together. Instead of just
worrying about manufacturing, they end up worrying about trying to
integrate computers.
Basically, an effective CIM solution must be
built on a foundation that supports enterprise-wide integration.
And the products and services that Digital has announced have
integration designed in, allowing our customers to concentrate on
their business problems, rather than trying to integrate
computers.
Digital's strength in this area derives from
its history and vision of computing. In the early 1970s, while
much of the rest of the computer industry was trying to build
mainframes big enough to handle all the data processing for a
company or a division, we were building minicomputers. Since the
total computing of a company was really the sum of the computing
needs of sub-groups, we set out to develop a new and different
style of company computing that would allow customers to:
o buy computers for small groups,
o place the computers where they are needed,
o add new computers as needed, and, most
importantly,
o have them all work together.
The result of that vision is that today Digital
alone can offer enterpriseÂwide integration, while the rest of the
industry is struggling to prune their incompatible architectures
and implement networking.
The first piece of the foundation is Digital's
network solution, which allows customers to build seamless
enterprise-wide integration, step by step, around the world. Think
of the acceleration in time-to-market when an engineering group in
Reading, England, a manufacturing group in Boston, and a service
group in Phoenix can electronically work together as if they were
in the same office. Think of the improvements possible in asset
management when the Materials Resource Planning (MRP) and
inventory management systems of a sub-assembly plant in Cleveland
are integrated with the final assembly, inventory and broadcast
systems in Detroit.
Since the networking vision is based on systems
and people working together, any system can talk to any other
system without going through a host comÂputer. We call this
approach "peer-to-peer." This is very similar to emerging
management styles which eliminate hierarchical layers of
management and emphasize cross-functional work groups and
decentralized decision making.
A network designed with this degree of
flexibility becomes a vehicle to support enterprise-wide
integration and organizational involvement.
The next component of the foundation is the VAX
family of compatible proÂcessors, which extends from the factory
floor to the corporate information center. The new Industrial VAX
systems are part of this family, with one architecture,
designed-in integration and a wealth of systems software,
including languages, tools and databases. When customers plug
these systems into the network, they are plugging into the same
network that connects engineering, sales and the rest of the
enterprise.
Multi-vendor interconnect is the third
important part of enterprise-wide integration. Digital supports
industry standards that make multi-vendor networks possible.
Applications and services are the building
blocks which, when combined with the foundation, result in
solutions. Customers can choose from a large number of high
quality applications for the factory, engineering, sales -- the
whole enterprise. These applications have been developed by our
partners on this Digital foundation, allowing our customers to
build enter- prise-wide integrated solutions.
In today's competitive world, successful
implementation of CIM must be based on an enterprise-wide vision,
which requires enterprise-wide networking and distributed
processing as the foundation. Digital has the foundation and the
building blocks to work in partnership with our customers to
implement CIM solutions.
Bill Strecker, vice president, Product Strategy
and Architecture, has been elected to the National Academy of
Engineering. Election to the Academy is the highest professional
distinction that can be conferred on an engineer, and honors those
who have made important contributions to engineering theory and
practice, or who have made unusual accomplishments in new and
developing fields of technology.
Of the academy's 1400 members, only about 70
are in computer science, including two others from Digital -- Ken
Olsen, president, and Butler Lampson, corporate consulting
engineer.
The Academy cited Bill for "contributions in
the design of multiprocessors and cache and memory hierarchies and
in the development of a major computer systems product complex."
Bill's work on cache memories led to the
development of the PDP-11/70, the leading minicomputer of the
1970s. He was the principal architect of the VAX computer system,
the primary system sold by Digital during this decade.
Also, Bill was the principal architect of CI
interconnect and VAXcluster communications architecture. This has
become the principal means of building high performance Digital
computers and is considered to be the leading high bandwidth
architecture in the world.
Finally, Bill has led the effort to
successfully position Digital's product strategy and strategic
engineering investments over the past several years.
Bill joined Digital in 1972 as a member of the
Corporate Research and Development Group. After holding a variety
of engineering and management positions, he became manager of
Engineering Product Strategy and ArchiÂtecture in 1984, and was
named vice president in 1985. He holds Bachelor's, Master's and
Ph.D. degrees in Electrical Engineering from Carnegie-Mellon
University, where he was a Hertz Foundation Fellow and a member of
Phi Kappa Phi. He holds several patents on central processors and
computer interÂconnects, and is the author of numerous technical
publications.
The Corporate Systems Group (CSG) has been
organized to increase Digital's focus and market penetration in
the corporate information systems, teleÂcommunications and
financial markets. CSG is one of the five strategic product
marketing groups reporting to Peter Smith, vice president, Product
Marketing.
Focusing on corporate computing and networking,
CSG will develop the product application strategies, systems and
programs for corporate computing across all industries, with
special emphasis on MIS production systems, financial services and
telecommunications industries. The marketing activities of CSG
will be closely aligned and integrated with those of the other
Product Marketing groups and Industry groups.
"We are working with Corporate Software
Services, European Marketing, and GIA Marketing to determine how
to best connect our groups to make CSG's marketing and systems
engineering activities truly worldwide in scope and impact," says
Bill Steul, vice president, CSG.
Now in start-up mode, CSG consists of the
following groups:
CORPORATE MIS MARKETING, managed by Patrick
Zilvitis, is responsible for developing product and application
strategies for MIS production and endÂuser computing systems. This
effort includes multi-vendor telecommunication networks reguired
by businesses, government and educational organizations. The
emphasis will be on defining and marketing computing platforms and
data base products and applications that clearly differentiate
Digital from major competitors.
FINANCIAL INDUSTRY PRODUCT MARKETING, managed
by David Stroll, is responÂsible for defining market requirements
and providing integrated solutions for retail banks, wholesale
banks, investment companies, brokerage houses, and insurance
companies.
TELECOMMUNICATIONS INDUSTRY PRODUCT MARKETING,
managed by Bill Kania, is responsible for defining market
requirements and providing world-wide comÂputing and networking
solutions for telecommunication equipment suppliers, service
providers and subscribers of telecommunication services. This
group will align its marketing and systems engineering efforts
with those of the Telecommunications Industry Marketing group, the
European Telecommunications Competency Center and GIA marketing.
ARTIFICIAL INTELLIGENCE MARKETING, managed by
Bill Kania, is responsible for marketing Digital's Al technology
across all strategic markets and indusÂtries by providing
leadership to the product marketing groups with special emphasis
on CIM, financial and telecommunications applications.
ON-LINE TRANSACTION PROCESSING (OLTP)
MARKETING, managed by David Stroll, is responsible for defining
cross-industry market requirements and for develÂoping and
acquiring OLTP applications. Working closely with HPS (High
Performance Systems) Engineering, this group develops Digital's
OLTP market strategy and works closely with the product and
industry marketing groups to define systems engineering and
marketing solutions platforms for distributed financial computing
environments. Because of the importance of OLTP to Digital's
future business and market goals, David Stroll also reports to Bob
Glorioso, vice president, High Performance Systems.
SYSTEMS ENGINEERING (open) is responsible for
defining systems specifiÂcations, prototyping characterization,
testing and documenting solution system platforms for corporate
computing, financial and telecommunication industry applications.
This group will be closely aligned with High PerÂformance Systems
Engineering, other Engineering product business units and Software
Services Engineering.
MARKETING COMMUNICATIONS, managed by Barbara
Watterson, is responsible for developing and communicating
Digital's corporate computing and networking messages. The group
will scrutinize competitors' product, service and marÂketing
strategies to better direct Digital's corporate computing
messages. This group will work closely with High Performance
Systems Marketing, with Rose Ann Giordano's Consultant and
Information Systems Marketing group, and with the field marketing
programs groups.
FINANCE AND PLANNING, managed by Terry Fink, is
responsible for CSG's financial management, business planning and
analysis, and decision support systems.
PERSONNEL, managed by Barry Moore, is
responsible for CSG’s personnel administration and planning,
recruiting, organizational development and employee relations.
Henry Ancona, vice president, Business and
Office Information Systems Group (BOIS), has announced the
following organizational and management changes:
Gene Hodges is group manager for the
Office Information Systems Group, which includes PC-based
solutions, the ALL-IN-1 integrated office systems family, end-user
information management and computing, and business communications,
including electronic mail, videotex and conferencing. Gene joined
Digital in 1974, and most recently has been responsible for the
company's ALL-IN-1 strategy.
Howard Woolf is group manager of the new
Electronic Publishing Systems Group, responsible for Digital's
worldwide strategy and solutions for desktop, departmental,
production publishing and documentation systems. He will work
closely with the Media Industry Group and will provide focus for
the electronic publishing and documentation systems across all
Product Marketing solutions groups. Howard, a Digital employee for
13 years, has been responsible for the Document Publishing Group
within OIS for the last year. He will continue to market Digital's
word and document processing solutions.
Jim Willis has accepted the position of
group manager for the new DistriÂbution, Marketing, Sales, and
Service Business Systems Group, responsible for Digital's
worldwide strategy and complete business solutions for these
corporate functions. Jim, who has been with the company for 18
years, was most recently manager of the Indirect Channels Group
within the Channels Marketing Group.
Mike Carabetta is manager of the
Financial and Accounting Business Systems Group, responsible for
Digital's strategy and business solutions for the financial and
accounting functions of corporations and government. He will also
serve as acting manager of the Administrative Business Systems
Group, responsible for strategy/business solutions for
administrative functions in business and government. Mike has been
with Digital since 1984, and has been responsible for the New
Ventures Group in OIS for the past two years.
John Doherty has been appointed manager
of Corporate Personnel Policy and Procedures, reporting to Erline
Belton, manager, Corporate Employee RelaÂtions. John has been with
Digital for 13 years, most recently as manger of Human Resources
for Software Services, CSS and Educational Services. He also has
had such positions as recruiter and Personnel manager, and has
been a line manager in the Product Support organization. John
received his bachelor's degree from Northeastern University and
hold an MBA from Suffolk University in Boston, Mass.
Ross Myerson has been named associate
medical director, reporting to Richard Porter7~medical director.
In this position, Ross will develop, implement and supervise
health protection and medical monitoring programs for employees
who work with potentially hazardous materials. He also will
consult on matters such as the medical aspects of manufacturing
processes and site health promotion programs. Ross joins Digital
from IBM Corp., where he was senior managing physician at the
Fishkill, N.Y., semiconductor facility. During that time, he was a
lecturer in occupational medicine at the Mount Sinai School of
Medicine in New York City, and an instructor in advanced cardiac
life support at Vassar Brothers Hospital in Poughkeepsie, N.Y. He
also served as attending physician in emergency medicine at St.
Francis Hospital, Poughkeepsie. Ross received his M.D. degree from
the George Washington University School of Medicine and Health
Sciences, Washington, D.C., and a master of public health degree
from the Boston University School of Public Health. He holds a
bachelor's degree from Washington University in St. Louis.
Peter Robohm has joined Digital as
director, General Services Industry, reporting to Bob Hughes, vice
president, Service Industry Marketing. In this position, Peter
will be responsible for developing the integrated marketing plans
for wholesale/retai1 distribution, travel related services, data
services, transportation services, and other industries within
that group. Peter joins Digital from IBM Corp., where he was MIS
manager in the InforÂmation Systems Group. Previous assignments
with IBM included administrative assistant to the IBM senior vice
president and group executive; manager of the IBM Scientific
Centers; manager of Science Industry Marketing; program manager,
Government Industry Marketing; and management skills development
manager, Data Processing Division. A Navy veteran, Peter holds
bachelor's and master's degrees from Dartmouth College, Hanover,
N.H. He also attended the Brookings Institute and the Stanford
University Executive Program.
Grace Smith has been named to the newly
created position of manager of Public Affairs, reporting to Bruce
Holbein, manager, Government Relations. In this position, Grace
will develop programs to present Digital and its strategic issues
to government officials. She will work out of Digital's
Washington, D.C., office. Grace joins Digital from Telocator
Network of America, the national trade association for the mobile
communications industry. She has also worked in several
congressional offices. She holds a bachelor's degree from the
University of Maryland and an MBA from George Washington
University in Washington, D.C.
The Simpson-Rodino Immigration Reform and
Control Act of 1986 (IRCA) imposes significant new
responsibilities on Digital as an employer. It will alter
Digital's procedures in selecting and hiring employees in the U.S.
The statute is intended to curtail employment
opportunities for ille- gal/unauthorized aliens in the U.S.; and,
at the same time, prevent emÂployment discrimination on account of
national origin against citizens and certain authorized aliens.
The major provisions of the law are as follows:
o It is unlawful to knowlingly hire an unlawful
alien on or after NovemÂber 6, 1986.
o It is unlawful to continue to employ an
unauthorized alien who was hired on or after that date.
o Employers are required to inspect documents
of all individuals hired on or after November 6, 1986, to verify
their identification and eligibility for lawful employment.
o Employers are required to certify in writing
and under oath that they have inspected required documents.
o Employers are required to retain certificates
for on-demand inspection by the federal government for at least
three years.
o Employers are prohibited from evading these
statutory obligations through use of an "independent contractor
subterfuge."
Unauthorized aliens who can document that they
entered the U.S. prior to January 1, 1982, may apply for temporary
alien status if they can establish that they have continuously
resided in the U.S. since that date, if they apply for
legalization between May 6, 1987 and May 6, 1988, and if they meet
current citizenship requirements.
The Act also includes provisions prohibiting
discrimination based on naÂtional origin against citizens or those
who have been granted authorization for employment, based on the
provisions of this Act. Employers are, however, permitted to give
preference to a citizen over a non-citizen if the two are equally
qualified.
The Immigration and
Naturalization Service is finalizing regulations specÂifying the
documents employees must provide, and the certification form
employers must provide. Therefore, the government is prohibited
from imposing any sanctions during a grace period of November 6,
1986, through
May 31, 1987. It may issue warnings between
June 1, 1987, and November 1987. After that date, the full
sanctions of the law will be imposed.
This statute only
impacts employees hired on, or after, November 6, 1986.
The law does not require companies to act on
individuals who commenced employment prior to that date, even if
they are "unauthorized aliens."
In May, Digital will distribute information on
how it will comply with these provisions through the Personnel
organization and in newsletters. ApproÂpriate Employment and
Administrative personnel will receive training on implementation
and maintenance procedures. Implementation will begin in June.
Though the basic features of Digital's
Long-term Disability (LTD) Plan will remain the same, the company
will soon make several changes affecting the specifics of the
plan.
The current Long-term Disability Plan offers
employees who purchase coverage income protection beyond the six
months provided by the company’s short-term disability plans.
Under LTD, disabled employees receive two-thirds of their base
salary. Payments continue in most cases, for as long as employees
are totally disabled up to age 65, or until they retire. And
because the program is fully paid by employees, LTD payments are
tax-free.
Effective July 1, 1987, Digital will:
o Increase employees’ cost by $.09 a week for
each $100 of base weekly salary.
o Offer Digital's 4,100 U.S. employees not now
in the LTD plan an opportunity to elect coverage without proof of
insurability or a physical. Employees must enroll by June 26,
1987, and be actively at work on July 1, 1987.
o Improve the rehabilitation incentive.
Employees returning to work on rehabilitation status may continue
receiving LTD benefits offset by 50% rather than the current 70%.
o Raise the minimum monthly benefit from $50 to
$100
o Raise the maximum annual salary amount used
to calculate premiums from $90,000 to $180,000. This means the
most anyone will pay for coverage will rise from $4.32 to $11.76 a
week.
o Double the maximum benefit employees may
receive from $5,000 to $10,000. (The benefit amount still will be
two-thirds of base salary but with this higher maximum.)
o Offer employees over age 70 LTD coverage with
benefits available for one year.
o Contract with The Prudential Insurance
Company of America as Digital's new long-term disability insurance
carrier.
Why change insurance carrier when the rate is
higher?
Digital's effort to control employees' weekly
cost is actually one of the reasons for changing LTD carrier. This
new cost reflects the first increase in the negotiated insurance
carrier rate since the LTD Plan began and is, in fact, less than
if the company had not made the change.
As our workforce has aged, the number of
disability claims has increased. Needing more revenue to fund the
plan, our current insurer requested a rate increase higher than
what the company would accept. So, Digital looked to the insurance
marketplace for a more competitive LTD price and program.
Starting July 1, 1987, Prudential will become
Digital's Long-term Disability Plan insurance carrier, and the
administrator for employees who became disabled after July 1,
1986.
The LTD plan offers administrative services
focused to manage LTD claims as efficiently as possible and
program features that help disabled employees return to the
workplace as valuable and productive workers.
This claim management program includes:
o Disability Verification and Management
o Social Security Disability Benefits
Assistance
o Vocational Rehabilitation
All U.S. employees will receive a Benefits
Bulletin at home during the first week in June that explains the
plan changes and program. Managers will receive more information
in the future about how the changes will affect disabled
employees. Employees who have further questions about their LTD
benefits or changes should contact their Personnel Services
Administrator.