Only a handful of companies are systematic in managing their human assets. IBM decided that if it was going to attract, develop, motivate, organise, and retain talented employees, it had better be one of those companies.

The IT world has changed almost beyond recognition since the day in January 1932 when International Business Machines Limited was incorporated in Australia. Back then, the nascent company had a paid-up capital of £20,000, a staff of 10, and a mandate to sell weighing scales and time recorders out of offices in Sydney's Queen Victoria Building. Today IBM Australia is a vastly different creature, supplying IT, software and services to clients of all sizes, with a focus on helping them to adapt and prosper in the online world. Much of that transformation has occurred over the last five years, with rapid growth in its outsourcing business just about doubling IBM's headcount to more than 11,000 people. At the same time, IBM has undergone a sea change. From seeing itself primarily as a provider of technology, the organisation now has a new emphasis on services. When organisations are rushing headlong into a brighter future, however, some facets typically struggle to keep up. At IBM, rapid growth in new directions meant a strong culture of excellence, carefully nurtured over many years, was in danger of being left by the side of the road. In some sectors of the organisation were long-term IBMers who knew IBM's goals and their exact place in supporting and nurturing those goals back to front and inside out. In other sectors were clusters of newbies who had been left to work such things out for themselves. It was a far from satisfactory situation for an organisation increasingly staking its future on the quality of its people.

"Services is really all about people and therefore people are critical to what our company offers," says IBM Australia and New Zealand CEO Philip Bullock. "It's really important that our people are happy, skilled and challenged. This is not just about paying them; its about culture, the support mechanisms, and it's about making IBM the employer of choice. If we have better skilled people, more empowered people, people who can make decisions and be more accountable, obviously we are better able to support customers." By early last year it was clear IBM's Global Services arm needed a significant cultural change program if it were to achieve such goals. It found it in Carnegie-Mellon's People Capability Maturity Model (P-CMM), a maturity framework describing the key elements of managing and developing an organisational workforce. Like the Software Capability Maturity Model (see "And the Winner Is . . .", CIO July), P-CMM describes an evolutionary improvement path. This one is meant to take an organisation from an ad hoc approach to managing the workforce through to mature, disciplined progress of the knowledge, skills, and motivational processes that promote improved business performance.

Using P-CMM many organisations have made improvements in their people processes and practices, discovering along the way that their quest for continued improvement frequently mandates significant changes in the way they manage people. It was just what the IBM doctor ordered. Not only did IBM Global Services take it up, but it is now being introduced across the entire IBM organisation in the form of the PACE Culture Change Program (see "Cultural Benefits", p62).

Sponsored by the executive team, the PACE program is intended to improve IBM's people-related processes and practices and the underlying culture. People management is a key focus for improving how things are done, says IBM Australia and New Zealand chief operating officer for Global Services Vickie Regan. "We are very clear about the kind of company we want to be: an employer of choice, a company that attracts and retains skilled and talented employees, has a business culture that effectively uses its people skills and capabilities, and continues to grow and succeed in the marketplace," Regan says. The company sees PACE, supported by a Lotus Notes knowledge base, as a long-term effort. In recognition that culture doesn't turn around in a space of months, the program has a five-year outlook. Even after that, IBM accepts it will need to work at maintaining and evolving its culture. According to Regan, IBM has always had a strong culture, but in the past its maintenance relied on people "growing up through the company", absorbing the culture along the way. That culture began to weaken as the organisation's services business expanded and IBM found itself bringing in new recruits at all levels of the business. Conscious of the worsening problem, by the beginning of last year IBM began casting about for a management mechanism to help it strengthen its culture and its people.

In May 2000, the Global Services executive team met to discuss the issue. It concluded that during some periods over the last five years, when IBM had been accepting large intakes of people, the organisation had not been proactive enough in telling those people what it meant to be an IBMer. Moreover, sometimes there had been a rollout of processes or forms without any accompanying explanation of where and how people fitted into the company. That in turn meant some people weren't sufficiently empowered in some areas to do what they needed to do because they didn't understand their larger role in the organisation. IBM has a reputation for its performance evaluations, Regan says. At the beginning of the year the company sets goals for employees to ensure they understand how they fit within the organisational umbrella goals, then they are evaluated under a process called PBC (personal business commitments). But Regan says PBC was showing signs of failing to achieve its objective. "As we had new people coming in, they were given a sheet of goals; but we didn't explain it well enough," Regan says. "From a cultural point of view, we didn't give people enough time to truly understand where they fitted, how they belonged and how they were working to enable the company to grow and be successful. That was disempowering some people. It just makes people float around and feel a little bit not connected. That's not a nice feeling."

Regan says the executive team found that overall IBM didn't have a good way of managing its culture and moving it forward. The team decided the company needed a means of managing not just culture but also its people that was at least as structured and formal as its ways of managing finance. Back in May the executive team came up with what we saw as the values of the company," Regan says. "We agreed the three main values of the company are people, customers and excellence in everything we do.

"We did add one value and that was achieving greater success through teaming. The services company is growing and we need to team much more readily to be a full services organisation for our customers. We have to team right across the organisation and, in fact, right across the IBM global world because that's the power that IBM can bring to its customers: its full intellectual property from anywhere in the world." Next, the executive team listed under each value the behaviours that it would expect to see from people working in a culture where excellence and customers are the driving forces. From there the team established a cross-organisational taskforce, which is helping to prepare the foundation for the culture it wants the organisation to embrace. One of the first tasks is to get IBM's people processes in shape for re-launch and for improved practice within the business units, Regan says. The Services Business taskforce comprises 10 people, appointed by services general managers and rolled over every six months to provide maximum input from all areas of the business. Their mission is to look at ways IBM can move forward with the executive team's defined values and behaviours. It was the taskforce who selected P-CMM as the delivery mechanism.

"That [P-CMM] just gave us a structured way of looking at it," Regan says. "Then what we did with the taskforce was to do some work across the business. We bought in people, about 100 overall, to do some survey work [to discover] what areas they thought we should work on first. The Services execs knew that this was a long-term thing. Just like managing the financials of the company, this was something that we had to start doing constantly. "We didn't want to come with a big hit just to fix a few things. We wanted to go right back to bedrock and understand how to put something together that's sustainable, to keep reviewing our culture. So we started to have a look, picked some key elements, and we got a sponsor from the executive team for each of them." The taskforce started with issues like performance management, staffing, training, work environment, communications, compensation, team-building and participatory culture. One executive from the Services team was selected to sponsor each issue, who then worked with members of the taskforce to put down some guiding principles on what each of those items meant to IBM.

"Part of that work was to go and have a look at what IBM already had," Regan says, "and we had a lot of information and we had a lot of principles around some of those areas. Some of them were newer to us, like the teaming aspects. So we bought people back in from across the business again, and we ran full-day workshops on teaming in order to understand what everybody thought, and wanted to see in training. We pulled all that together and came up with some guiding principles that showed us where we needed to be to be excellent in these areas." Altogether the program has become multidimensional, she says. The team is reviewing each of the initial guiding principles while planning a cross-company process assessment. For instance, when it comes to training, the assessment considers where IBM is currently with all of its processes around training and education, whether those processes fit with the guiding principle, whether they have any gaps, and so on. The assessment program has already revealed areas where some processes don't fit or where there are holes in processes.

The team is also determining a cultural baseline. As IBM works on the future culture, it is important to understand where that culture is today, Regan says. "We have a good baseline of financials. We now need a good baseline for culture. IBM again has been fairly strong in doing this over the years because for many years we've always run an employee opinion survey. It is a way for the company to ask the employees how they feel on a number of key issues, from their jobs to the company to their manager to their teams. They're very specific questions. What we're looking to do in our baseline is add some questions to that survey this year so that year on year we can understand how well we're doing at understanding our culture and moving it to where we wish to go." Under the P-CMM construct an organisation is no more than a collective working together towards the same organisational goals. It is the workforce, the human resource that is the core of an organisation and that most greatly influences its survival.

P-CMM starts with viewing people as assets rather than expenses. Based on current best practice in fields like human resources and organisational development, the P-CMM guides employers on ways to win control of processes for managing and developing a workforce. It also helps them to characterise the maturity of their workforce practices, guides a program of continuous workforce development, sets priorities for immediate actions, integrates workforce development with process improvement, and establishes a culture of software engineering excellence. The P-CMM consists of five maturity levels that lay successive foundations for continuously improving talent, developing effective teams, and successfully managing the people assets of the organisation. Each is a well-defined path that institutionalises a level of capability for developing the talent within the organisation. IBM announced the P-CMM informed PACE program to employees in Australia and New Zealand at its February Kick Off, in a televised address. Each member of the leadership team has explained the program to his or her staff face to face. Regan says the communication plan, vital to the program, is being built around personal interaction between the leadership team and its staff.

"One of the important aspects of changing culture is that people really see that the leaders of a company are doing it," Regan says. "It starts with the leadership teams. If people see that it really is the way we now work in this company they'll start to work that way as well. "In addition, over-communication is [needed] in situations like this. What you generally find in communities is that once you start to communicate something good, you do have to constantly communicate it. One or two times aren't enough. You have to keep saying it, you have to keep doing it, and you have to keep changing it around slightly so people see new examples as you communicate it constantly."

That communication is now extending to 11,000 employees from Wellington to Perth, Tasmania to Darwin. Regan says to make the communications effective, the taskforce is trying to ensure it uses people words, not technology or company words, to convey its meaning. "If we make people feel great about being part of IBM and really make this a company that people see as the employer of choice in the marketplace, then that's how we want everyone to be feeling: that they're all individuals and they feel attached to the company." To that end IBM has also started to incorporate PACE into IBM education offerings, starting with a course for leaders called Back to Basics. "PACE is not a one-year thing, not a flavour of the month. This is to be a services-led business," Regan says. "We have to always understand where the market is going, where we think our solutions have to be and therefore where we think our people have to be in their education, their training, their feeling and knowledge of the marketplace. "Now all that can't come unless they're confident that the company they work in has the same values, the same behaviour, as they associate with, and that every person standing next to them in their team has them as well. That's where PACE comes in."