As IBM celebrates its 100th birthday, many observers are rightly calling attention to the many strategic changes the company put itself through to remain relevant amidst dramatic technological and economic change. But one of the biggest transformations IBM went through is less about computers and more about culture. Over the last decade and a half, the company has realigned its HR practices and strategies to move away from the analog ways of the past and to embrace a variety of 21st century approaches, including some highly unconventional ones.
A first step in changing its HR profile occurred back in the mid-1990s when the company dropped its famous dress code requiring a dark suit and "sincere" tie in favor of "business casual." Next, the company that grew powerful in the early 20th century largely by manufacturing punch clocks got rid of "badging in" for a substantial portion of its workforce. According to the company, a full 40% percent of IBM's 400,000 global employees now work remotely.
The major reason IBM changed its HR rule book? The old one no longer fit the workforce. In the twenty-first century, the company has flourished by buying up successful companies around the world and selling off divisions that aren't thriving. That means half of its workforce has been with the company less than five years and a 65% now reside outside of the United States — a dramatic change from even just two decades ago.
To maintain high worker morale, productivity, and loyalty in such a diverse and changing conditions, IBM has placed new emphasis on the "resources" component of HR in four directions.
- First, it emphasizes equitable benefits for all, in all countries, regardless of race, gender, ethnicity, or sexual preference. By extending same-sex partner benefits, IBM earned 100% rating from the Human Rights Campaign and has received similarly high ratings from international women's labor groups.
- Second, the annual Global Pulse Survey gathers feedback from over 40% of the IBM workforce each year, on both workplace conditions and issues and on the community conditions in which IBM workers live. The company emphasizes and rewards volunteer work in its communities.
- Third, employees, not just executives, are eligible for a performance-based bonus program.
- Fourth, and perhaps most indicative of the depths of the change at IBM, training has taken on paramount importance. The company invests approximately $1700 per IBM employee to train people to new skill areas needed by the company, including interactive and interpersonal skills.
To maintain its leadership position, the company has been willing to experiment with bold new methods. It has found you need innovative ways to train productive interaction and collaboration for such new IBM hallmarks as global teaming, crowdsourcing, mass collaboration, and endeavor-based work (where the company moves employees as needed for short periods of time, to contribute particular skills to a specific project, in the manner of a movie crew).
Enter Chuck Hamilton, Virtual Learning Strategy Leader at IBM's Center for Advanced Learning in Vancouver, Canada. He exemplifies IBM's unconventional attitude toward developing the talents of its unconventional workforce. Hamilton makes about 15 business trips a year via commercial airlines but he also, on any given day, might be found zooming around the virtual world Second Life with spiky hair and a kilt, holding training sessions with colleagues from a dozen different countries whose avatars might be international superheroes like Monkey King or Captain Vyom. Or he might be holding a session with a hundred Chinese colleagues in IBM business casual for whom it is just more efficient live-chatting via desktop than battling the Beijing traffic.
When I ask Hamilton, skeptically, if it is possible to conduct a conventional business meeting in a virtual environment, he answers that of course you can — but why would you? He is convinced that the zaniness of virtual environments plus the steep learning curve of making your avatar function from a keyboard is an effective icebreaker, especially important when partners need to overcome differences in cultural traditions, languages, work ethics, and political systems in order to complete a project together. Second Life's oddities lend an improvisational quality to interactions that it's harder to achieve in formal business meetings. "Playing in a band I learned that you need to leave spaces for others to fill," Hamilton insists. "Given this opportunity, people step into the gap. Talented teams connect, commingle and co-create."
IBM is one of the only manufacturing behemoths of the industrial age to thrive in the digital age and it has done so by redefining its company mission from business machines to global connection, data flows, and interactive human networks. It understands what most businesses — and MBA programs- — are only beginning to understand. Getting rid of the punch clock and the sincere tie are just a starting point. To be successful as an interactive global network requires changing your HR game all the way down.
This blog first appeared on Harvard Business Review on 8/18/2011.