This series explores a discussion with IBM on managing the employee experience. The participants in this discussion were:
IBM received positive feedback from its employees for its skills-based approach to compensation. This method has also served as an enabler for managers, where the conversation on pay did not have to center on why an employee was not receiving an increase in their salary, or explain that a stagnancy in compensation levels was due to budgetary constraints.
The conversation was now more centered on an individual’s performance – where a manager can say to an employee that they are being assessed on several parameters such as skills, competitiveness, and performance, among others. The conversation, therefore, now had much more evidence in terms of how they had arrived at a pay recommendation.
Employees, meanwhile, could see that IBM had introduced pay statements to include their salary, compa-ratio, and salary range. These changes have inspired employee confidence, where they acknowledge that their compensation is data-driven. In simple terms, they have been able to understand what their pay increases have been awarded for.
This does not mean that everyone was happy with the skills-based approach. However, employees now have received a better explanation, and therefore understanding as to why they were in a certain position from a compensation standpoint.
IBM’s management also received feedback aplenty, and especially from managers. They pointed out that pay related discussions had become significantly easier for them since they had everything at one place to have that conversation. Key data points—that are most relevant in a pay conversation—are now available to them at an individual level. This data is, in effect, a lot more personalized, and with concrete evidence.
Another aspect that helped IBM implement the changes in its compensation program was to introduce them in phases. The organization ran pilot projects initially, and was aware in terms of which employee segments it wanted to target first, and what geographies to cover initially. And as it did, its management also learned what's working and what's not.
From these pilot projects, for example, it learned that certain managers had actually seen skills data for the first time during their pay conversations. IBM recognized certain facets—that although a part of the pay-for-performance design—did not roll out as well as they would have liked them to. The organization, therefore, wanted it all to come together smoothly. As such, it became much more intentional in ascertaining that as they scaled further, these facets with irregularities were being address well in advance.
Furthermore, IBM ensured that managers had the ability to make changes and share their feedback during the cycle. Pilot projects have certainly helped the organization become more confident as it scales compensation solutions, encourages upskilling, and ushers in workforce transformation.
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