Read the case study below and answer the questions that follow. IBMs HR takes a risk With a $100 million restructuring effort, HR at IBM has a lot to prove - and it relishes the challenge. When Sam Palmisano took over as IBMs chairman and CEO in 2003, the worst was over. His predecessor, Lou Gerstner, handed over a company in much better financial shape than it was in 1993 when Gerstner took the helm and the company was nearing bankruptcy. With solid financial footing, Palmisano was able to focus on his vision for IBM, the company where he spent his entire career. Palmisano set out to re-create IBM as a globally integrated enterprise that broke away from the pack on the strength of its human capitalnot solely on its portfolio of products. When Palmisano announced his signature Business Transformation initiative, he called for IBM to establish an on demand global supply chain that provides customers with IBM products and services software, hardware, business processing, consulting and more wherever and whenever they need it. He then eliminated layers of management bureaucracy and moved the workforce closer to its global clients so that the company could compete on service delivery. Today, under Palmisano, the IT giant generates more than $90 billion in revenues. With 330 000 employees, it is among the 15 largest publicly traded companies in the world. Central to its resurgence is IBMs recognition that human capital is its most distinctive and manageable asset. Companies that rely on technological or manufacturing innovation alone cannot expect to dominate their markets indefinitely. Competitors can and do catch up. The quality and strategic deployment of talent is what separates winners from the alsorans. Thats why Palmisano chose to centre IBMs business strategy on the belief that its people are, and will continue to be, IBMs key market differentiator. HR and talent management not computers are IBMs core business. HR at centre stage As a result of Palmisanos initiative, HR finds itself in the spotlight. No need to fight for a seat at the table. No struggle to convince line executives that HR should be their business partner. HRs job is to deliver the people, to establish a ready supply chain of talent that will outperform the competition from top to bottom, from the executive suite to the factory floor. Palmisano has made it clear that if the company begins to lose revenue or market share, HRs piece of the responsibility will come from not delivering the right people to the right jobs at the right time. In this case, the head belongs to Randy MacDonald, senior vice president of HR. A seasoned HR executive, MacDOnald has Palmisanos ear and the respect of his fellow executives in the C-suite. His fingerprints are all over the key strategic and operational decisions of the corporation. They know Randy can cut costs, fire people, call a spade a spade. He has a history in the way he has stood up to union drives and he has taken criticism for IBMs cuts in pensions and other benefits for retirees, says Fred Foulkes, professor and director of the Human Resources Policy Institute at Boston University School of Management. His success has earned him the confidence at the top level. The more success you have the more license youre granted, Foulkes explains. MacDonald has taken that license and run with it. Foulkes says IBMs HR operation and MacDonalds business orientation are cutting edge. Clearly a leader like Randy has enormous impact, he says. He is among this generations top HR leaders. Now MacDonald is taking a big risk. Hes gambling on a radical HR restructuring that must pan out for IBM to continue as a market leader. I dont mean to be arrogant about it, but this is leading-edge, he claims. My team is doing things in the twenty-first century that nobody else has done. Its the wave of the future. HRs strategic gamble.

Keeping the human capital supply flowing wherever its needed is a daunting undertaking, one that MacDonald says is discussed in general HR circles but until now has not been done. The challenge led him to rethink the way HR delivers services. He says typical HR organisations operate out of silos talent, learning, employee relations, benefits, diversity a structure thats ineffective and inefficient. Blow it all up is my attitude. Dont think about silos think about end-to-end process. True to his word, in December, MacDonald announced a worldwide, $100 million reorganisation of HR, the Workplace Management Initiative (WMI), which segmented the 330 000 employees into a layer cake of three customer sets. One layer consists of executive and technical resources, another holds managerial talent, and the third is rank-and-file employees. Separate cross-functional HR teams serve each layer, by the end of this year, MacDonald says, Well manage each person within each group as an asset and develop them accordingly. Youll have talent, learning and compensation people all managing people within their assigned levels. MacDonald says its his responsibility to challenge the business plans of each unit in IBM. If I look at a three-year plan and it says were going to enter new markets I have to decide what skills well need three years from now to compete in these markets. I have to look at what existing skills I have that will become obsolete. Using metrics, MacDonald already knows his workforce breakdown. In three years, 22% of our workforce will have obsolete skills. Of the 22%, 85% have fundamental competencies that we can build on to get them ready for skills well need years from now. The remaining 15% will either self-select out of IBM or be let go. Roles and Skill sets No one at IBM is safe from being in that obsolete category. Everyone from top to bottom will be assessed and reassessed on their competency levels and placed where IBM expands in the future. Those who are lacking necessary competencies will have the opportunity to be trained if they can and want to be.

Under WMI, every role that workers, managers, and executives play 490 in all has been identified and defined. All IBM employees play at least one role, sometimes two, maybe even three (For example, Ted Hoff, vice president for learning, is a learning leader and a manager.) Internal analysts studied what people do in each role and determined the functional expertise or skill sets that the roles require in each job. There are 4000 skill sets, all closely defined and measurable, and monitored by MacDonald and his HR team. By the end of this year, each employee will have conducted a self-assessment and reviewed it with his or her manager to discuss the level of mastery the worker has achieved in each skill set. The manager will be sitting with a checklist of skills that youll need for your job, Hof explains. This will provide precision about performance and also will offer a road map as to how weve developed each person. Were not measuring how well you perform on a written test. Were measuring how youve demonstrated mastery in each skill set through your performance. Assessments in hand, employees will be told where they stand. Well tell you where we see your skill sets, which skills you have that will become obsolete and what jobs we anticipate will become available down the road, MacDonald says. Well direct you to training programmes that will prepare you for the future. MacDonald says that the early warning system should be a morale booster. People will sit back and say, I get this, you notified me. Now Ive got time to do something about it. Yet some people wont. Theres a segment that will choose to opt out theres nothing I can do about it, he says. Theres a segment that cant get re-skilled they dont have the intellectual capability or the drive to do it. But whatever happens, people will be able to decide for themselves. Three years from now, I can look people in the eye and say, We told you, but you didnt do it. The purpose of the ratings is so that MacDonald can easily locate who at IBM has the skill set needed for an open position anywhere in the world and fill it quickly. It will mean employees will have less security about what their job will be and where it will be in the future. But, because the overall IBM business strategy is to meet customers demands wherever they are, the HR strategy has to follow. Assembling the team To fulfil this strategy throughout the global company, MacDonald had to assemble an HR team that is truly businessoriented. Karen Calo, vice president for global talent in Armonk, N.Y., supervises team talent directors who are assigned to work with the managing directors of IBMs line units such as Global Technology Services (GTS) and Global Business Services.

The talent directors report to me but work directly with the business leader theyre assigned to support, she says. They do a lot of similar activities, helping to develop strategic and operations plans but in different contexts. If youre a talent director in Hardware, you may deal with issues relative to product life-cycle in a service business, you may be working on integrating solutions. The tie that binds all talent directors is knowledge of the individual business sectors. If you are an HR person who doesnt understand the business youre supporting, you cant be successful, says Calo. You dont necessarily need an HR degree you can always learn HR. Deep subject-matter expertise is important in some areas like compensation. But from a generalist standpoint, some of our most interesting hires come from outside HR. In recruiting for HR, Calo says shes intrigued by the business professional who really has been out there on the line who really understands the business, has good judgement and good common sense.

Kari Barbar, vice president of learning is an example. An experienced hardware engineer, Barbar, who is based in Research Triangle Park, N.C., recently transferred into HR to work directly with Mike Daniels, senior vice president of GTS in Somers, N.Y. Five years ago, I would not have considered leaving hardware development to move to HR, she says. But now, I see that our ability to develop expertise is what distinguishes IBM from its competitors. In HR, Im involved in driving the transition of the company. Barbars job is to determine the professional and technical skills that her client, Daniels, requires to grow GTS. She must provide both the selection of talent and training of existing talent and demonstrate to Daniels satisfaction that she has delivered value. To help develop those skill sets across the board, last year, IBM spent more than $700 million training its workforce. Ninety-five percent of the funding came not from HRs budget, but from line managers budgets. Putting the training line item on managers budgets ensures that the training is connected to their business goals. At the end of the day, HR and MacDonald will have to produce evidence to the line managers who funded the training that is has helped to keep the pipeline flowing. The pipeline also includes senior-level positions. Succession planning is a standing agenda item at Palmisanos monthly executive team meetings, Calo, Palmisano and his direct reports discuss the merits of candidates for any open senior-level position. We present a diverse slate of candidates who can fill the role, describe the competencies they have and those that are required for the position, Calo says. After discussion and consensus within the Operating Team members, the position is filled.

Question 1 (25 Marks) Examine whether the training and development function at IBM may be considered strategic in nature and discuss the recommendations that you can give Kari Barbar to assist in supporting the delivery of learning, considering the advances in technology.

Question 2 (25 Marks) No one at IBM is safe from being in that obsolete category. Everyone from top to bottom will be assessed and reassessed on their competency levels and placed where IBM expands in the future. Those who are lacking necessary competencies will have the opportunity to be trained if they can and want to be. In light of the above statement, conduct an in-depth research and critically evaluate various on-the-job training methods that can be applied to help employees at IBM to acquire new knowledge, skills and behaviours.