This series explores a discussion with IBM on transitioning and leading the change across the organization. The participants in this discussion were:
When IBM was updating its compensation programs, it first changed its performance management system. It moved away from traditional ratings, and implemented a new performance review program called Checkpoint.
As the organization transitioned from the performance management system into the new framework, it was also an ideal time to discuss Checkpoint’s implications for IBM, in terms of its rewards strategy.
Managers and employees at the organization were then familiarized with the new system. They were also briefed about how IBM was going to view compensation in this new performance environment.
At the same time, there were other factors that the company wanted to lay more emphasis on. Key discussions points, in this regard, were the reward strategy, what the organization’s philosophy was, and why there were changes coming about, especially amid a market that was experiencing disruption.
The technology-led changes resonated well and their timing was perfect. It started with company management talking about the new skills-based approach to compensation philosophy and the rewards strategy. The next step was to showcase how these programs were going to be implemented.
Both managers and employees were aware that skills were now an invaluable trait, and that they had to keep up with the market and changes in technology. More importantly, they understood that upskilling was necessary.
It must be highlighted here that outcomes from changes cannot be expected overnight. Rather, it is a journey. And in IBM’s case, it took five years to get to where it is currently at. The changes have also spawned a shift in mindsets.
An underlying goal is to work towards the new skills-based pay changes consistently. They must be reinforced every so often by casting the spotlight on why they are important, and how there will be added value not only on an individual level, but also across the company. Periodic repetitions are also necessary since compensation is a deeply personal topic for everyone, and because changes need to be embraced company wide. In simple terms, they become “more real” with frequent reiterations. It is also a big cultural shift for IBM’s teams – across compensation, analytics, and technology.
It is imperative for employees to now reinvent their ways of working since they're no longer just doing process and administration. They are also understanding whether the investments are going to the right areas.
Employees’ responsibilities too are different now since the current focus is much more around design and less about process and execution. Design was an important aspect of the changes made. It has also added immense value from a transparency and managerial efficiency standpoint.
Managers, in particular, need highly personalized information. And the only way to collate highly personalized information at scale—for an organization as large as IBM—is through AI. It brings vast data points together into one personalized recommendation. Additionally, it helps in understanding the rationale behind the recommendation, to enable informed decision-making.