This series explores a discussion with IBM on business impact and changes in recruiting and retention practices. The participants in this discussion were:
In terms of whether a skills-based approach to compensation affected IBM’s workforce retention, culture or demographics – there have been varied impacts. The primary one is retention of key workforce skills. On this front, the organization has witnessed significant improvement.
In fact, in those instances where managers have followed recommendations, the retention level in their teams is currently 33% higher, relative to managers who have not followed through on the changes. This outcome is “huge in terms of retaining key talent” and ensuring that talent pools are paid competitively.
A second impact was felt from broader shifts occurring in the market and especially in transparency. It has helped IBM forge ahead, in terms of equity and broader compliance shifts, and become a thought leader in this space. It has, therefore, brought the organization much closer to “setting the standards and bar” in pay philosophy and in being seen as market leaders.
A third impact is felt in IBM’s own human resource (HR) departments. The organization has been on a journey to move away from administrative work to more value-added work. This helps its HR practitioners free up more time from their administrative roles and focus on higher value work. More importantly, it helps HR practitioners in their career growth since they can now get ‘up-banded’ and promoted. IBM has fewer personnel in such roles, but they're doing higher value work. And this is a significant part of the journey, both for the individuals and the organization.
Between short- and medium-term impacts, there was a distinct shift in people's thinking on account of the skills-based approach to compensation. They began introspecting on what they could do, and what skills they were already proficient at. In simple terms, there was a lot more conversation around skills. And it all started happening when IBM introduced its skills-based compensation program.
Over the long-term, and apart from the broader market shifts already taking place, the new pay structure has clearly helped the organization reduce attrition of high scarcity skills.
IBM’s management acknowledges they have observed “the market pays differently, and there is a differentiation in paying for them”. These developments have been instrumental in helping IBM adopt a wider view where they are staying abreast with current market developments. Moreover, IBM is also being able to prioritize investments in these areas.
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