IBM's agents of influence.

Big Blue's HR professionals become risk takers firmly rooted in its businesses.

With below-market-prediction sales and a recent workforce reduction of 25,000, IBM recognizes that small business will drive the economic growth in the '90s and that technology will become increasingly customized,

The massive IBM reorganization is a way of responding to these challenges and still maintaining an identity with which stockholders and customers can identify. Because IBM is trying to do more with fewer employees, and because each unit is now responsible for such bottom-line considerations as profit and return on assets, the new structure requires risk taking on the part of many employees who haven't in the past been accustomed to risk and bottom-line justification of every function, including HR.

In the new environment, the HR professional is more of a business partner. "We want to make sure that HR is equipped with a strong business orientation to meet the challenges it will face in the future," says Bill Stopper, director of personnel development at IBM corporate offices.

IBM training programs are designed with this purpose in mind. Michael Michl, director of IBM's Sands Point International Personnel Development Institute housed at Sands Point, Long Island, N.Y., oversees training programs designed to address HR skills gaps.

"Within the past year, we have focused more on business training, financial measurements and business strategies and how they are linked to HR strategies," he says. "We emphasize how to provide value to your internal customer. We have to change the mindset of personnel, so that they can be agents of influence. We propose to give HR professionals an understanding of their customers and their businesses."

The programs designed by the institute are also customer driven, changing every year to fit the needs of the various units. When asked what skills would be needed during the next decade, Michl said he wouldn't presume to plan that far ahead. Part of his function is to respond to the needs of the units as quickly as possible. Right now, he's concentrating on the twin thrusts of business training, which he says doesn't come easily to HR people, and making his students aware of the power of information technology. "We want to inspire people to use technology," he says.

Essential skills of HR

Bill Stopper sees four areas where HR expertise will be needed at the business unit level in the future. The HR manager must know what skills are needed, where to find the person who has them, and how to deploy these quickly to address customer needs. HR also must know how to keep labor costs down by implementing the most effective compensation and benefits packages, especially in the area of health care.

Being an effective HR professional demands an awareness of diversity and a vision that allows all people to be productive, with good child-care and elder-care programs. It demands knowing how to move from individually based, competitive measurements of effectiveness to more employee involvement and teamwork. HR must know and communicate how to manage and reward teams.

The HR professional needs to be more oriented toward the needs of management--the internal customer--and has to be able to act with a speed that may not have been necessary in the past.

"Things are changing so fast that the company is inventing itself as it goes along," says Don Carmichael, a member of IBM's corporate employee relations and planning staff, whose job is to look at trends for the future.

One of the recent weeklong international employee-relations seminars at the institute--attended by employees from the United States, Japan, Canada, Chile, Mexico and the Netherlands--included presentations on new information technology, how personnel is changing in IBM's new decentralized environment, new directions in compensation and benefits, labor's international agenda, democratization in Eastern Europe, the future of the EC's internal market plan, and the implications of the North American Free Trade Agreement for HR. There was also a fascinating "environmental scan" by Don Carmichael that emphasized how important it is to react fast in a world where constant change is the norm.

The seminars provide a wealth of information for HR people to use in making decisions for their individual units, but they serve another purpose as well.

"IBM has always had a community spirit and this provides an opportunity for networking among HR people throughout the world," Michl says. "Personnel has always had a strong international focus; we want to preserve that. Now that the units are more autonomous, we want to know if their identity is changing and to try to maintain the common culture of personnel. This is more difficult in the transformative process, where there is turmoil. Training gives us the chance to emphasize the strong, common underlying objectives of the corporation in an atmosphere where there is less control and more risk than before."

Preserve IBM's identity

There is another function that HR at the business unit level has to play these days--that of helping to preserve the identity of the company. IBM's identity is now a matter of basic values and beliefs in the diverse units that make and sell different products.

"What makes IBM...IBM...is how we practice the values we share: belief in respect for the individual, the best customer service of any company; excellence in everything we do...a commitment to trust and to personal integrity. These enduring values will bond our network of companies," says a piece of company literature that describes IBM's new management system.

The corporate identity is the focus of the IBM chairman and the management committee; unit-level HR professionals have been inculcated with the corporate values through management training.

There is a lot of emphasis now on communicating the values. Corporate staff visit sites, review employee opinion surveys and monitor business plans to ensure that values are being implemented. Ethical issues are detected quickly and dealt with. According to Stopper, it's known in IBM that the easiest way to lose your job is to mistreat employees.

HR strategies

HR strategies developed during the last five years to uphold these values include being:

* The employer of choice.

* A learning organization.

* An empowering organization.

* A flexible workforce.

* A producer of market-driven quality.

* A company that can eliminate redundancies in training and education.

The challenge for HR professionals working in the various units is to envision programs that emphasize these values. "Personnel will no longer just quote policy, but will find the right solutions for policies," says Bill Stopper.

Individual-unit HR strategies for finding and maintaining a quality workforce are crucial to survival. For example, Programming Systems, an IBM business unit dedicated to the development and delivery of software, employs a highly skilled and mobile labor force. HR must find ways to retain computer programmers. The unit is implementing a compensation strategy to reward a team for delivering products to market sooner and with higher quality and to reward individuals for their contributions.

Technology Products, which manufactures semiconductors and semiconductor packaging solutions, must ensure that whatever strategic directions the company takes will mesh with local customs, laws and practices. It shifts resources as needed to leverage competitive advantage.

Applications Solutions, whose composite offerings include applications software and hardware and worldwide management consulting, has small development and service teams located close to the customer. The challenge is to develop support and personnel services that conform to the customs and regulations of various countries while making the programs as cohesive as possible.

Networking Systems, which provides various networks for the exchange of data, has surveyed the HR policies and practices of its top 10 competitors and will use this information in redesigning some HR programs.

Workforce Solutions, IBM's new HR service company, is the preferred vendor for delivering programs that will make the units competitive. This means units have to give Workforce Solutions the first chance to bid on programs for compensation and benefits, occupational health, HRIS, or employee work and family programs.

"Initially we thought about using outside vendors in this new environment. Then we realized that we would be as good at delivering these services as anyone else, and that eventually we could make money if we could outsource these services," says Stopper.

HR at the unit level is responsible for strategic staffing plans, advice and counsel and such influence functions as succession planning.

"The beauty of having HR people at the elbow of the line managers is that they can quickly make the changes needed to preserve corporate values," Stopper says.

IBM's strategy is designed to give the company back its competitive edge. Its restructuring is occurring in the midst of tremendous change in the marketplace. In order to respond with the flexibility needed during the coming decade, IBM has committed itself to a more powerful HR function within the individual units.

IBM Takes New Approach to HR Service

IBM announced a radical restructuring in December 1991 that gives the company's different manufacturing, marketing and sales, and service functions unprecedented freedom to focus on quality and customer satisfaction. IBM became a family of 13 companies, each expected to perform in a tough global marketplace. Nine global manufacturing and development business units and four geographic units that perform marketing and sales functions are in essence separate companies (partnerships, subsidiaries, equity alliances, affiliates).

The HR function is delivered partly through a service company called Workforce Solutions and partly by HR professionals employed at the individual units. HR plays an enormously important role in IBM's plans for the future.

Each business and geographic unit must meet objectives for return on assets, revenues, net earnings, cash, customer satisfaction, employee morale and quality as negotiated with the management committee of the corporation. Each unit also has to implement human resource plans consistent with corporate policy and prevailing geographic and industry practices. The geographic units also provide services needed by all business units in the geographic area and assess the impact of business unit actions in that area. For example, a work stoppage at a factory that manufactured IBM equipment in Europe would affect the IBM geographic unit that includes Europe, the Middle East and Africa.

Workforce Solutions, a provider of leadership training, employee development, compensation and other services, now has to be self-supporting and to recover its costs by direct charge to the units. It may eventually develop into a profit center and market its services to companies outside the IBM family. Still another layer of HR functions is found at the corporate level, which is responsible for developing general policies and principles and communicating them to operating units, as well as providing advice and counsel.

"Each member of the new family of businesses will carry IBM's traditional values forward, but with a greater entrepreneurial spirit. This entrepreneurial vision is also transforming the personnel function around the world," wrote Walt Burdick, IBM's senior vice president of personnel in a recent company newsletter.

The company's HR staff was reduced by 45 percent in the 1991 restructuring, a downsizing that puts pressure on HR to eliminate redundancies and make sure that every program or activity adds value.

Linda Thornburg is an Alexandria, Va.-based freelance writer who specializes in human resource issues.