This HR Executive of the Year is Transforming IBM

How Diane Gherson is helping to drive innovation at Big Blue.
By: | October 17, 2018 • 14 min read

Standing before a packed ballroom of attendees at the HR Tech Conference last month, opening keynoter Mike Rowe (of Dirty Jobs and Somebody’s Gotta Do It fame) decried the trend of companies requiring college degrees for so many jobs.

“I understand the rationale behind credentialing,” said Rowe, who’s long advocated for greater respect and appreciation for skilled workers without a college degree. “But I think credentialing is hurting us and widening the skills gap.”

Surprisingly enough, the CHRO of one of the world’s largest and best-known tech companies shares similar sentiments with the TV host.

“We have over-rated the college degree and, by doing so, have really precluded a large part of the population from joining the digital era,” says Diane Gherson, senior vice president of HR at IBM and this year’s HR Executive of the Year.

Gherson’s doing more than just talking about it, however. Under her leadership, HR at IBM has mounted a series of innovative programs to give people without a college degree or a traditional tech background a decent shot at rewarding careers in tech. IBM’s New Collar initiative brings people with nontraditional backgrounds into the technology industry by assessing their skills rather than their pedigree. Last year, New Collar roles accounted for 15 percent of the company’s hires in the U.S.

This is far from the only pioneering program Gherson has overseen. Since the Ottawa, Canada, native took the reins of IBM’s HR department five years ago, the function has become a veritable hotbed of innovation. Gherson has encouraged HR staffers to take their ideas to the next level, and the results have been tools like CogniPay, which uses artificial intelligence to help managers make market-driven compensation decisions, and Blue Matching, which connects IBMers whose jobs were eliminated, or who want to change careers, with other opportunities at the company.

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Gherson has also played a crucial role in helping IBM position itself for success in areas like AI, blockchain and the cloud, as the changing landscape of business software has forced the company to start pivoting from its traditional model. She’s led a dramatic restructuring of processes such as performance management and learning to help IBM become more nimble and forward-thinking while helping employees master new and better ways of working.

Gherson’s reputation resonates beyond the walls of IBM, says Chairman and CEO Ginni Rometty.

“Diane’s track record for redefining and advancing the profession of HR for IBM is one that I frequently cite with clients,” she says.

A “Gold Standard” for Inclusion

Long before the #MeToo movement sparked a reckoning within corporate America about workplace inequities, IBM had a rich history of taking the lead in hiring and promoting women and minorities. It hired its first female and black employees in 1899. It brought on its first disabled employee in 1914 and appointed its first female vice president, Ruth Leach Amonette, in 1943. In 1953, when IBM was considering opening new manufacturing facilities in Kentucky and North Carolina, CEO Thomas Watson Jr. stated in a letter that the company believed in equality and would not comply with those states’ “Jim Crow” laws mandating separate facilities for blacks and whites.

The governor of each state acquiesced, and several years later the facilities opened with black and white employees working side by side.

More recently, IBM was recognized by LinkedIn for hiring the most graduates of historically black colleges and universities (HBCUs) of all the 2018 LinkedIn Top Companies and was named a 2018 Catalyst Award winner for advancing women in the workplace. Gherson herself helped lead the business community’s opposition to Texas’ so-called “bathroom bill,” which would have banned transgender people from using bathrooms that did not correspond with the gender listed on their birth certificate. The bill ultimately died in the state legislature last year.

“Diane is very committed to maintaining IBM’s reputation as the gold standard for inclusion,” says Rometty.

That standard is evident in IBM’s blockchain program, which—unlike at most tech companies—is led by women such as Senior Vice President for Industry Platforms Bridget van Kralingen. Blockchain, a ledger-based system that’s designed to be tamperproof and is the underpinning for bitcoin and other cryptocurrencies, is considered to have enormous potential for a range of industries and business functions. IBM is positioning itself to be a key player in helping those industries reap the benefits of blockchain.

“There’s this thing going on in blockchain called ‘blockchain bros,’ but at IBM the blockchain team is over 60 percent women, as well as many highly qualified men,” says van Kralingen. “We’ve been able to do that because of the amazing bench of tech and business leadership that IBM has been building, with the support of HR.”

As companies try to outbid each other over tech talent with gold-plated pedigrees, Gherson has instead led IBM to seek out people from nontraditional backgrounds who demonstrate the potential to master valuable technical skills and helping them grow. IBM’s Tech Re-Entry Program offers a 12-week internship for women who’ve been out of the workforce for an extended period to update and hone their skills for careers in tech. Within the last two years, 95 percent of the program participants have been recommended for full-time employment at IBM. In addition to helping people without college degrees find good jobs, the company’s New Collar initiative also helps other workers with nontraditional backgrounds find a new perch in the tech economy, including Tara Welch, a nurse who had to take early retirement after being diagnosed with chronic pain. She enrolled in the New Collar initiative’s apprenticeship program, which is registered with the U.S. Department of Labor and gives trainees a regular paycheck while they learn new skills with the help of mentors.

“Today, Tara has a great job and is actively working in blockchain instead of being at home collecting disability,” says Carrie Altieri, IBM’s vice president of communications for people and culture.

Making jobs available to people without degrees and from non-tech fields is common sense, Gherson says.

“There’s a talent shortage, so why not bring in people who are hungry to learn and give them apprenticeships, so they can either join IBM or go somewhere else with a skill that’s going to let them join the digital workforce?” she says.

Embracing Disruption

Despite the company’s sterling reputation in areas such as diversity and innovation (Fun fact: IBM in 2008 became the first-ever company to win more than 1,000 patents within a single year), the widespread adoption of cloud computing earlier in the decade seemingly caught IBM flat-footed.

“They were kind of late arriving to the cloud and by the time they got there, other companies like Amazon were well-established,” says Fred Foulkes, professor of organizational behavior at Boston University and director of its Human Resources Policy Institute.

The cloud disrupted one of IBM’s major sources of revenue—managing its clients’ on-site data centers—while declining margins in the computer-hardware business led the company to sell off large chunks of its operations in that area (IBM sold its PC business in 2004 and its x86 server business in 2014). New revenue sources in areas like artificial intelligence would have to be found and old ways of thinking dispensed with.

“We were a very different company five years ago,” says Gherson, referring to when she was appointed CHRO after serving as vice president of talent. “Nearly 50 percent of our revenue today comes from areas we were not even in back then, like healthcare. Almost 50 percent of our current workforce has joined us within the last five years.”

IBM’s transition to being a major player in cloud-based services and Al-based products (including its Watson AI platform) hasn’t been smooth sailing. The company’s revenue declined for 22 straight quarters during this decade as it exited old businesses and invested in new ones. Recently, however, things have been looking up: Revenue and profits have grown for the last three consecutive quarters.

“They seem to have made the transition, and they’ve done it in part by reskilling existing employees and successfully integrating new ones,” says Foulkes, who serves on the panel that named Gherson HR Exec of the Year.

Under Gherson’s leadership, HR has helped IBM prioritize employee experience and co-creation, with the company’s new performance-management system being a prime example, says van Kralingen.

Like many companies, IBM decided to move away from the once-a-year performance review toward a continuous-feedback model. Unlike at other companies, Gherson reached out to employees to solicit their ideas for a new system. She received tens of thousands of comments and ideas and, working with HR staffers and employee focus groups, helped design a new, app-based system called Checkpoint that’s proven much more popular than the old one with managers and employees.

“When we redesigned our PM system, Diane led with an agile approach,” says van Kralingen. “She’s very analytical and data-driven.”

Concepts such as agile (an iterative approach to project management that prioritizes speed and collaboration) and design thinking (designing a process that prioritizes the user experience) are part of IBM’s new mantra, and for good reason, says Gherson.

“The IBM of five years ago was oriented to operating with efficiency; today, we’re oriented to operating with speed,” she says. “Five years ago, we were focused on getting the process right; today, we’re more focused on innovation and the experience we’re creating for our clients.”

Gherson has been instrumental in helping the company’s leaders lead the transformation and keep employees energized, says van Kralingen.

“You have to have great talent in order to produce amazing tech, and a lot of what Diane’s been doing recognizes that fact,” she says.

Building Transformational Leaders

Indeed, helping IBM’s leaders and senior managers prepare themselves to lead the company’s transformation has been one of Gherson’s top priorities.

“We needed to build leaders who could take us through the transformation and create an experience for our people that met their needs and expectations,” she says.

Gherson defines a transformational leader as someone who’s willing to disrupt, is comfortable working closely with people who have “radically different points of view,” and is at ease with both telling and being told “uncomfortable truths.”

Early on in her tenure, Gherson and her team identified 36 attributes of transformational leaders. IBM’s top managers were then assessed against these attributes via 360-degree feedback. For many, it was a wake-up call.

“These were very successful people and now they were hearing they were below the 50th percentile of their peer group,” she says.

Managers were given a coach and told they had six months to address the gaps uncovered by the assessment. The transformational-leadership scores went up dramatically at the end of the period, says Gherson, and are now vital when it comes to important assignments, she says.

“In the past, we looked at past performance, experience and leadership potential; now, we look at transformational-leadership score,” says Gherson. “If a particular unit requires transformation and a person’s score isn’t what we need it to be, then that person isn’t going to cut it.”

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