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IBM IOptimas Award-I Winner for Financial Impact

The tech titan, in an effort to improve workforce efficiency by cataloging employees’ talents, implements a global database and saves $1.4 billion.

October 24, 2008
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IBM knows how to cost-effectively manage the components that go into its computers. But as the Armonk, New York-based company began in recent years to focus less on manufacturing and more on providing services, it realized it knew little about how to best manage its global supply of employees.

    Harold Blake, a director in the company’s supply-chain organization, says IBM knew the whereabouts of "every nickel and dime resistor capacitor that went into building a service product."

    "But we didn’t know the same of our people," he says.

    To make amends, Blake applied his understanding of supply chain to IBM’s human resources—all 386,558 of them. Beginning in 2004, the company undertook a workforce management project whose goal was to break down the barriers between businesses, identify each employee and his or her skills, and make them available in a global database to any manager who could use them.

    Blake says the goal of the company’s Workforce Management Initiative was "to get the right person, right skills at the right time, place and cost. That’s what it was all about: effectiveness, efficiency and competitiveness."

    The challenge, of course, is that people are not machines and that cataloging one’s achievements is not as easy as listing the specs of a supercomputer. Among the first tasks Blake faced was anthropological.

    He and his team asked the question: Is it possible to implement a common language to describe a person’s expertise? The answer was yes, but it was no easy task. While words existed to describe what people did, the words often meant different things in different business units. A project manager in a software group may be someone whose job is to focus on middleware, operating systems and databases. In the hardware business, a project manager was something else entirely.

    Blake says each of the business units tailored their descriptions. "So you were never able to compare a project manager within one tower versus another tower versus another," he says. "You could never search for those skills."

    Since the goal was to create a huge, searchable database of all employees, Blake’s team had to come up with ways to describe the essence of a project manager, for example, and then add specific skills as a subset of that title.

    "It required dialogue, and believe me, that is no easy task," Blake says.

    Eventually, each business unit agreed on a hierarchy of jobs and how each position could be universally defined, along with each position’s secondary roles and the skills that a person needed to fulfill each function.

    Today, every IBM employee has a profile in a database, complete with drop-down menus and comment fields. A person’s job skills are defined by a common nomenclature. The database has led to significant savings, the company says. For any project, managers can identify the skills they need and find employees who match that need, as well as their availability and cost. The tool also helps employees make career decisions by seeing which skills are in demand.

    If IBM needs to hire temps, for example, it can do so en masse, rather than piecemeal through individual business units. Savings from hiring, deploying, tracking and paying for contracts alone have totaled $276 million in the past three years, the company says. Total savings from 2004 projected to the end of 2008 equal $1.4 billion.

    IBM is intent on becoming what it calls a "globally integrated enterprise." And this initiative "is an example of how to make that happen," Blake says.

    For its achievements in creating a system that is resulting in significant cost savings, IBM wins the 2008 Optimas Award for Financial Impact.

Based in Armonk, New York, IBM has more than 386,000 employees worldwide. Incorporated in 1911 as Computing Tabulating-Recording Co., The company changes its name to International Business Machines Corp. in 1924 to reflect its global expansion and diversification into business computing. The company in 2006 had $9.4 billionin earnings on $91.4 billion in revenue.
 

IBM's history of producing innovative business technologies began by manufacturing time recorders, electric tabulating and accounting machines and developing punch-card technology. Today, the company manufactures advanced information technologies, such as computer systems and software, and combines this expertise with IT business consulting services.

    Workforce Management,October 20, 2008, p. 22 -- Subscribe Now!

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