This HR Executive of the Year is Transforming IBM
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.
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.
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.”
Thanks in no small part to Gherson’s leadership, agile and design thinking are now “at scale” in IBM, says van Kralingen, noting, “Diane has been absolutely pivotal in helping us find a way through.”
Innovation Within HR
Under Gherson’s leadership, HR at IBM has been involved in creating AI-based products that, in some cases, are now commercially available. These include Candidate Assistant, which was designed to help job applicants find openings at IBM that are a good match for their skills and experience (and was named one of HRE’s Top HR Products of 2018 earlier this month).
HR staffers throughout IBM have been encouraged to come up with ideas for improving the company’s employee experience, and they’ve responded enthusiastically, says Gherson.
“Innovation doesn’t start at headquarters,” she says. “It’s really important to lay out what your priorities are and give people permission to experiment.”
CogniPay, for example, was the brainchild of several HR staffers at IBM’s India operation. The tool, which is designed to ensure that employees’ pay raises are based on the current market for their skills and to encourage them to update their skills, is linked to IBM’s transition to a “skills-based” company. It’s scheduled to go into effect for half of IBM’s 366,000 employees by the end of this year.
“It used to be that you’d learn a skill and it would last you for 30 years,” says Nickle LaMoreaux, IBM’s vice president for compensation and benefits. “Now, skills in the tech world have about a three-year lifecycle.”
Showing employees the market demand for their skills can encourage them to acquire new ones, she says.
“It’s really important to base pay decisions not only on the skills that you have, but on future skills and the supply and demand for those skills,” says LaMoreaux. “That’s a hard shift for managers to make because they’re used to making these decisions based on performance.”
The vehicle employees turn to for help in acquiring new skills—IBM’s learning platform—was also revamped to offer an experience similar to that of Netflix or Amazon. The new platform offers employees customized learning options tailored to their skills and experience level. Employees can also receive guidance in choosing courses via a live-chat advisor as well as ratings from co-workers who’ve taken the courses. The new platform has proven effective: Usage rates are up 38 percent from 2017 to this year, the company says, while course completions are up 125 percent from 2015.
Another tool co-created within HR, Blue Matching, came about several years ago as IBM was examining its business portfolio.
“We were looking at some key areas of our portfolio and decided that, even if we ended up exiting those areas, there were great people working within them whom we’d hate to lose,” says Obed Louissaint, IBM’s HR vice president for IBM Watson and Cognitive Solutions.
Blue Matching uses data analytics to identify jobs within IBM that would be a good match for an employee’s skills, experience, location and past performance. This tool, along with others developed by HR, helped save IBM an estimated $107 million in reduced turnover costs and improved productivity last year alone.
Louissaint credits Gherson’s leadership style with helping employees feel comfortable sharing their ideas.
“I think Diane is one of the most collaborative leaders I’ve come across,” says Louissaint. “She rolls up her sleeves and co-creates.”
A Crucial Revelation
Gherson herself says working alongside employees has been revelatory when it comes to incorporating concepts such as design thinking into her own outlook.
“We were working on developing a piece of talent software, and I’d never done design thinking before,” she says. The software was being evaluated by a manager who provided some rather critical feedback. “This person had zero background in talent, and I knew all about talent, and I remember saying to myself, ‘They’re not a talent expert!’ ”
Yet it was a crucial recognition, says Gherson. “I realized that this person was going to be a user of the product and thinks like a user, so they were actually perfect for giving feedback. Because at the end of the day, managers aren’t going to use a product if they don’t feel it’s useful for them.”
Deb Bubb, vice president and chief leadership and learning officer, who joined IBM fairly recently after 16 years at Intel, admits she felt some trepidation about moving to a different company.
“The data clearly show that when executives transition to a new employer, many of them end up not making it,” she says. “A lot of that has to do with the skill and sensitivity of the gaining organization.”
Gherson, however, has been a role model in this regard, says Bubb.
“She really listens, shows curiosity, asks tough questions and makes room in the conversation for different points of view,” she says. “She knows how to navigate IBM and find the right place for new ideas to take hold.”
Gherson was recruited to IBM from Willis Towers Watson 15 years ago by former CHRO (and another HR Exec of the Year) Randy MacDonald, says Foulkes. (MacDonald passed away in 2016.)
“I have a feeling Randy saw in Diane the potential to be his successor those many years ago,” Foulkes says. “He would have been so proud that his investment of time and energy produced this really excellent leader.”
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