Attract and retain top talent by advancing pay-for-skills

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What was it that set IBM on the path to include skills in compensation decisions?

Let me start with the external factor what we were experiencing. And what we were seeing was the emergence of new technologies that was redefining the talent needs. We were seeing new professions emerging, higher skill levels needed for those new professions. That was a disruption we were seeing in the industry that was helping us understand the need for skills.

Second thing that was happening within IBM was we were changing how we pay for performance. We were making a fundamental shift in our pay philosophy. We were moving away from considering performance as the only factor to consider when looking at salary decisions. And we were moving towards using multiple factors.

And we believed that to assess performance, we don't need to necessarily use base pay, but we can use a variable pay program. So that shift we were also experiencing internally. And the final thing was we felt that our employees were demanding greater pay transparency, and we needed to make sure that as we talk about base pay, we needed to explain to our employees what could they do in order to have a more competitive base pay.

This is part of a larger shift we undertook at IBM. We knew that the half life of skills was five years, so half of what's learned gets obsolete or forgotten in five years. And so we really needed to rethink how we embed skills across the employee journey, all the way from who we hire, how our employees learn, how we grow people in terms of mentoring and other experiential learning promotions. And pay was just a natural evolution of that journey, as well embedding skills across the lifecycle.

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