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- [00:01]
Alison Beard
Tired of manual time consuming expense management processes? Switch to the U.S. bank Commercial rewards card and get a Streamlined all in one card expense and travel management solution. Learn more at usbank.com HBR.
- [00:21]
Hannah Bates
Welcome to HBR on leadership, case studies and conversations with the world's top business and management experts and selected to help you unlock the best in those around you. The best leaders know that a person's skills and their ability to learn new ones is more important than the type of degree they have. Ginny Rometti, former chairwoman and CEO of IBM, lives this lesson. She spearheaded a company wide shift to skills based hiring and development during her tenure. In this episode she shares how her mother's commitment to education without a formal degree helped their family overcome adversity and inspired her approach to talent management throughout her career at IBM. She also discusses why a Skills first mindset is critical to building resilient teams and organizations. This episode originally aired on HBR IdeaCast in March 2023. Here it is.
- [01:32]
Alison Beard
Welcome to the HBR IdeaCast from Harvard Business Review I'm Alison Beard. The most successful people out there in business or anywhere else are those who are always ready to learn. They're constantly thinking about how to improve, where they can grow, in short, what new skills they need to develop. Whether it's something technical like a new coding language or so called softer stuff like communication and collaboration, the best leaders are also thinking about skill building on their teams and in their organizations, even across society as a whole, to tackle looming challenges and seize emerging opportunities. This is something today's guest knows really well. She learned about the importance of training and development first from female role models in her family, then by practicing it herself in her own career with focused study and stretch assignments. As she rose through the ranks to CEO, she infused her Fortune 500 company with an ethos of continuous learning and skills. First talent practices and now as a public and private board director, she's encouraging other organizations to do the same. Ginny Rometti is the former Chairman and CEO of IBM and author of the new book Good Leading Positive Change in Our Lives Work and Ginny, welcome.
- [02:49]
Ginny Rometty
Thank you Alison. I'm very happy to be here with you.
- [02:54]
Alison Beard
How early on in your life did you develop this strong belief in the importance of building marketable skills through different kinds of education and training?
- [03:04]
Ginny Rometty
It probably goes back pretty far and I think the biggest impact was just really watching my mother, my aunt, who found themselves really dealing with tragedies and had to get enough skill to really move forward. So when I was very young, my Father abandoned our family. My mother had had no education beyond high school. And to really save us from losing our home, being on food stamps, my mother went back and got some education. It wasn't really a degree, but it was a set of skills. Having just only gone to High School, four children, very young, age 32, she began to go back to a community college. And at first it was just taking some courses in accounting and then some very basic courses in computing. Now this would be the 1970s, so very different world than what we know today. But with those types of courses, she began to qualify for different jobs, which were first clerical, but then moved up with each little run and in a way to make more money each time.
- [04:06]
Alison Beard
And then how did the desire to challenge yourself in new areas and focus on your own self development play out in your career?
- [04:15]
Ginny Rometty
At first, when I saw my mother, the lesson I learned from the time when my father abandoned us was my mother's decision to never let anyone, including him, define who she was. But the second lesson, sort of the corollary to that, was to absolutely be independent. Meaning I was already watching her and saying to myself, look, somehow, some way, I will always be able to take care of myself and not have to rely on someone. When I started school now, I did have an aptitude for math, but it was really problem solving. I always really wanted to understand how an answer got created. And math and the sciences are very logical in that order. I did realize the more and more I learned, yes, knowledge was a door opener for me. And back then it was the 1970s when I was in college. And at that time in engineering, I would be the only woman in many of these classes. And when you are the only one that comes with its upsides and its downsides. I always thought about anything I said somebody would remember because I was the only one there. And so knowledge became a bit of a shield. Then it made you study harder because you knew if you're going to speak up, people were going to remember it.
- [05:24]
Alison Beard
And then as you started your career very early on in IBM, you seem to identify particular areas where you really did need to learn and grow. You tell a story about walking into one of your railroad clients and spending a Sunday using the software on their machines. You know, that kind of learning, the technical stuff, but also soft skills like communication, emotional intelligence, leadership. So how did you pinpoint those areas as someone who aspired for greater things and then figure out how to get the skills you needed?
- [05:59]
Ginny Rometty
Yeah, so it's a very interesting question because I think there's two parts to this, how to get them and then which skills. It did teach me the value of apprenticing going into something you didn't know before. And one way to do that is working with experts and you just learn, you know, at their side. And I would do that many, many times in IBM and that would be one way to get those skills. Now often that's hard skills, but I often watched and I saw something else. And I think it's a really important point that you can always learn from any situation is the soft skills are often more important. And at one time what I witnessed was how well other people communicated. And I can remember in my very early training being taught, you know, how to present to a customer or how to present a conclusion of a project or an engineering program we were working on. And I got such harsh reviews after this. And now some people would find that very odd because many people today think I am a great communicator, but I was horrible to start and that idea of not being defensive and then saying, you know what? You can learn any of this. And in fact I believe very strongly many of these soft skills, you know, are a science that can be learned. And very early in my career, I would listen to what people said to improve things like communication skills. And then as time would go on, I would watch the best. And even though I was listening for the content, I was also at a little book. I would diagram the presentations and the speeches to say what was it that made people really memorable in what they said? And there are some very, you know, kind of a short list of things you can do that will make what you say in benefit and is the words I use in the book to be in service of someone else. So it isn't about you sharing everything. You know, a great communicator says, what do I want them to learn and how can I make it really easy for them to do so? And that would set me down a path of having gone from horrible communicator to I hope now good communicator.
- [07:58]
Alison Beard
And then as a team leader when you were a young manager with a small group of direct reports all the way up to CEO when you had the C suite reporting to you but were responsible for the whole organization, how did you push your people to develop their own skills and make sure they were constantly training and had that same.
- [08:20]
Ginny Rometty
Learning mindset, it would over decades this idea of always be learning and I mean one of IBM's great values was an idea of like treasure wild ducks, so always be looking for something different. But as time would go on, I think actually I watched the environment value more and more like exact expertise in a skill. So I said, gee, we're hiring experts and that's good. Except sometimes when an expert has only done the same thing forever, that's not a good thing. The world's changing so fast, it means they actually don't want to learn something else. And as I would go on and then be CEO and have many direct reports, you know, you really worry about how do you get a workforce that yes, has the skills that you need? Represents a lot of different groups out there. And I had quite an experience very early on. We were looking to hire cyber skills. This is 2012. There weren't many in the marketplace. And so we had had a little experiment with a high school that in a very poor neighborhood, working with a community college. We gave it some input on curriculum. We went ahead and gave them electronic mentors of our people and a chance maybe to get a job even only with an associate degree. And lo and behold, wow, we witnessed people absolutely could get this skill, maybe didn't have a college degree. They had a wonderful curiosity and a willingness to learn. And it would teach me a lot about hiring people and wanting to develop and really reinforce for people who had a propensity to learn a curiosity that that's the number one thing. And IBM itself at the time had 2 out of 10 people who had skills for the future, great skills for the current, but not the future. And it was really not just the workforce I would hire. It would then be applied to this, actually the workforce that was there and we put such a focus on how do you build skills that are contemporary and then the whole system to put transparency around that. So the people then take responsibility to say, look, it's my responsibility too, to be sure I have a skill that is meaningful in the marketplace and I'm incented to continue to improve it. And that happens with transparency and then being rewarded with it.
- [10:41]
Alison Beard
You did step in as CEO at a time of massive digital transformation where you had to sort of shift the company in a very different direction. So talk to me about, you know, just as when you were young, you identified the skills you needed yourself to how, when you're leading this global organization, how do you identify what those skills are and then approach recruitment and reskilling?
- [11:08]
Ginny Rometty
I think when anyone goes and attacks a transformation, what people talk about the most is what in the portfolio changes. So what do I make that's changing? What I would come to learn is that how we did our work and the skills we had would actually be equal, if not more important, and would probably be the tougher of all those things to do. Change how work was done and then change the skills. And so in part, yes, of course you need different hard skills. We were entering an era of not just one technology trend, but you had cloud, you had AI along with it, all of this data, you had mobility, you had social networking starting. So unlike any time in history, you had four or five trends all going at once, feeding on each other and accelerating. So yes, there were those hard skills to teach. And honestly, we did something called Think Academy. Impress upon people that we all had to change our skills. It was compulsory first Friday of every month and I taught the first hour and so I had to be sure I knew something that was worth sharing. And my, my point was not to be a great teacher, but my point was like, hey, look, all of us, me too. You know, we all have to keep learning these things. But then there would be things like when I say how work's done to teach a whole workforce, things like design thinking, because we were an enterprise company living in a world totally influenced by consumerism, which meant, hey, even though this is a very complex, you know, enterprise business to business product, hey, when I come to work as the user of it, I expect it to be as simple as my iPhone. That would lead to things like training and design thinking. And so it was not just the skill, it was training in how to do work differently. And I come back to then, so how did you incent people? It was back to what I said a minute ago, very transparent with them about, well, let's look at our all of our own skill inventories. And then we use things like AI to help people find what is the right pathway for someone with what might be my current skill to get a new skill. We could infer so much using technology by the kind of projects, what people did, their resumes, et cetera, that we pretty much had a good handle on what skill level people actually had. And then go down a path of a lot of experiential learning. And then at the end of the day, you have to reward and pay people that way and promote them. So the accountability systems would change the skills and like putting the data in people's hands so they could manage it themselves. And then sort of a Netflix type learning system that's out there. And then an awful lot of experiential I can remember doing not the AI jam at the time, it was the cognitive jam. It was really at the heart of a belief that AI should augment man and not replace man. How could people understand what it was, what AI was if they didn't actually touch it, feel it? And we said everybody in the whole company form a team, pick anybody you want cross functional, you can work on a client problem, your own business problem. Hey, something for society. And we want you to use all these AI tools and go build something. Even if you don't know how to build, then get a builder on your team, put a marketing person on your team. Anyways, almost 10,000 teams got formed. I tell that story because it was a massive way to take a couple hundred thousand people and put them in experiential training.
- [14:33]
Alison Beard
Let's talk about skills first, hiring. How does it differ from traditional recruitment practices? And why do you think that it's a better way to do it?
- [14:42]
Ginny Rometty
I have back in the back of my head my mother who while didn't have a degree actually was pretty smart and was able to get the skills to do some pretty tough jobs. Second, I would do all this apprenticing. I would actually build a consulting company and never have an MBA myself, but I would learn then the third I would when I became CEO, stumbling upon this idea of my goodness, instead of perhaps hiring all college graduates, I had found a pool of people by the way, all from underrepresented groups that if I was willing to re credential a job that had been over credentialed, I could bring far more inclusion and get good employees into the workforce. So many things started to now may have set at the beginning seemed as isolated events all connected to me. And it got me starting to look and say how many people in the world have a college degree? How many jobs really needed to get started? Even all developed economies, it's about 65% do not have a college degree. If you look in America, black Americans, it's almost 80% do not. And I and my own experience had been hey, did all my jobs really require a Ph.D. or a college degree to get started? And then we started to push more and more jobs. We were 95% all jobs PhD or college and from the finest universities. As we pushed and pushed, we ended up at only needing 50% needed a college degree to get started. Didn't mean that you might not need one down the line. But this starts dawning on me that this is a really false barrier for so many talented people to join the workforce.
- [16:31]
Alison Beard
And you mentioned the pace of change. If you got a PhD 20 years ago, what you learned Might not apply anymore.
- [16:38]
Ginny Rometty
Yeah, no offense to all of our great, great degrees, it may not apply or you got it in something that you're like, okay, what am I going to do with this degree and technology skills were changing three to five years and they maybe even shorter at this point in time. I didn't call it skills first to begin with. Right. Actually when we started hiring people that did not have a college degree, I really had to deal with the bias in the organization because people said, are you dumbing down the workforce? So like engineers, we did a lot of studying of the results and the net net of that was nope. After about one year, their results were actually equivalent to our degreed people. And by the way, they actually took more education, they were thirstier and a more diverse group. We were hiring and at first we called them something called new collar, not white collar, not blue collar, something new. So not a bad thing. Please don't try to say, oh well, you're not as good as these other people or as bad as something else. And that really worked for a while. And then I started to say, well, this is bigger than IBM. And by the way, I also then started to do this and well, now it's almost 30 countries around the world. We got these programs going. So this is a very universal thought. And so the idea was, could I hire you for your skills first, not just your degree? And I was just talking to someone last night and I said, the point is, they said, oh, you don't believe in college and I'm a vice chair at a university. I said, that's not the point. I said, what I believe is that where you start does not have to determine where you end. I felt like it's an on ramp much earlier for some people. And by the way, I also started to now witness so many of the people that were skills first we hired, they all went back to get four year degrees in many cases. Okay. But their pathway was different. So I became an am such an advocate that skills first is not only a way to get access to a more inclusive talent pool. Goodness knows, in a lot of new areas we need talent. You do get a better company. I don't have to help convince your listeners or you of that topic. There's plenty of data that says a more inclusive workforce develops better products. But the thing that has really propelled my work today on the heels of George Floyd's murder. Not just that I was reminded of it a decade ago with the good and bad tech in the digital divide and saying, look, too many people are being left behind. And that rips at a social fabric of any country. It rips at democracy if people don't think they have a better future in front of them. So to me, this is a way to get a lot of people better opportunity. And if we do that, we will have healthier communities, healthier democracies. Economic opportunity is the greatest equalizer there is.
- [19:25]
Alison Beard
Yeah, and I absolutely want to get into that sort of potential for broader impact. Let me first ask you though about what this looks like in practice. You know, do talent management systems need to be completely overhauled? Do HR leaders and hiring managers need completely different training?
- [19:43]
Ginny Rometty
Yeah, Skills first is a talent strategy. It's not a program. It means your real philosophy is building people, not just buying them. So my experience has been that it will not happen because it's so cultural. It won't happen without top down support. The work and studies I've done already in many of the biggest companies in this country. In the United States, about 75% of their good family sustaining jobs now all require a college degree when it is probably 2x what it should be. So in other words, you could remove that over credentialing from half those jobs. It just over time. It happened after the war. It happened as the great American dream. It happened for lots of reasons. It was an easy filter to get lots of resumes and get through a bunch of them. So it absolutely changed a talent strategy, a build versus buy. And then you have to do things like not only change the job requisition to represent skills, you have to give managers a license to hire, meaning train them. So how do they now hire differently? You gotta ask different questions I can't ask you about. So tell me all of your travel experience. I mean, I probably haven't traveled anywhere in many of these cases. As an example, you need to have a standard job evaluation rubric to do the kind of hiring. You got to be really aware of bias that is just implicit and built over time that has to come out. And some people might say, well, hey, it's riskier. You're asking me to take a risk. So some people say, okay, I got to put some kind of incentive in the system. You have to hire in big groups. If you only hire people that are skills first, in tiny little, you know, two, three people, your company will never change. You will kill them. They will not change you. You've got to hire a big enough group so it is a culture. And then you have to find the pathways like okay, these people do have a skill where do I find them? Most companies don't have those pathways into their firm yet, so those have to be built.
- [21:54]
Alison Beard
So what are some of the most effective ways to assess people's skills today? Especially softer ones?
- [22:00]
Ginny Rometty
Yeah, these are not new ways, by the way. So it's just a matter of whether you use them. Right. So a, there's testing you can do because you're really trying to get at people's problem solving and their willingness to learn. You can get those two problem solving skills and their capacity to learn. You get people with strong in one or both of those areas, you're going to end up with a really great employee. And so there is more qualitative assessment to it and then there is some testing you can do on those topics around propensity to learn and around problem solving. This is not just about bringing people in though. This is about how to treat a whole workforce. Right. Because that's what I saw. I had to transform a whole workforce. And I realized, hey, this hiring of this new pool, it actually intersects exactly on top of reskilling an entire workforce.
- [22:47]
Alison Beard
Yeah. And it's interesting because when you talk about skills, you're not just talking about, you know, this person is credentialed in so and so coding language or, you know, this person has able to write a speech. You know, it's actually about curiosity and problem solving too.
- [23:06]
Ginny Rometty
Yes. And those are soft skills. Right. And teamwork. And, and, and to this point we say, well, what else do you change? I mean, then you have to think about how do you do career paths that way or movements to jobs in promotions. So there are a lot of companies now after a couple years that have been at this, not just IBM and Bank of America. I saw some statistics, actually we put them in the Harvard Business Review article that, you know, B of a internal promotions, 30% before with skills first, they're up to 50% have now come from internal versus hiring from outside. As an example. This is actually the issue for companies like Delta Airlines who say, look, in this case, if you're trying to promote a diverse workforce, they're like, I have got at the entry level, many, many diverse candidates. My real issue isn't getting more, it's promoting then up and through and into other professions. I mean, Skills first is a perfect fit for that.
- [24:00]
Alison Beard
You did preside over this transition, this, you know, transformation of the business, reimagining of the portfolio, new hiring strategy. And that meant that revenues didn't grow in the way that investors wanted them to. So for other leaders who are Thinking that they need to embark on this kind of change. How do you make the case that you're setting the company up for the future, even if there might be some short term pain or slowdown?
- [24:28]
Ginny Rometty
Yeah. When I took on my position, you know, every CEO gets their set of challenges. Mine was the business model needed to change. We needed a new technology platform, we needed to change how we work, we needed to build new skills. Okay. And you know, when you're as large as we are and were, that's a tough job and it takes some time. So you're right about what you decided. However, at the end of the day, I view you're a steward of this company. Right. And it was my job to build it a foundation to grow again one day versus cease to exist, which could have also happened. And what the team did I'm actually quite proud of because 50% of the portfolio was modernized, still returned $43 billion to shareholders and 100% increase in a dividend. And employee skills went from 2 in 10 to 8 and 10 in record engagement. So I would tell people, do the right thing for the long term. You have to have a board that supports that. I knew that many of the things I did would not come to complete fruition during my tenure. I was quite aware of that. But I always believed I had to do them. And my predecessors did things like that too. And I think when you have a company that is, you know, over 100 years and we're the longest standing tech company, you do learn that. And to me it is the greatest definition of stewardship. You realize that, but you do those things. And so many things did come to fruition and others have come to fruition now. The company is doing very nicely, growing very strongly. So it was giving them a foundation and then they continued to make the changes and move on from there.
- [26:07]
Alison Beard
How does the work that you did at IBM and now that you're doing it, other organizations focusing on this talent development skills first, how does that fit into this bigger idea of purpose driven organizations focusing on all stakeholders, not just shareholders. And your notion of good power that you talk about in the book, first.
- [26:30]
Ginny Rometty
Off, I never felt focus on any of this was about corporate social responsibility. I needed great employees. At the same time, I also believe strongly in an inclusive workforce. And I have, I mean really over decades, believe society gives companies a license to operate if they live properly at the intersection of business and society. So this is not do good work. I need employees. And this lives right at that intersection, which I often think when you deal with multiple stakeholders, you look for those opportunities to live at those intersections. The only way you get to be 100 years old is you're constantly balancing the tensions between those stakeholders and they're a virtual cycle. Meaning it is not good for IBM if the world doesn't like technology. It's not going to be good. If the community thinks it suffers, it will not be financially good for a company. And so to me, this wasn't hard. There was no leap of faith to make. This was exactly what a company is supposed to do. And I'm one of the folks very involved in the purpose of the corporation that something called the Business Roundtable put out. But it wasn't. The companies that had really been around the longest with deeply rooted values really felt in many ways. Enshrining multiple stakeholders and writing that down was how they operated, by the way. And as I always say, you know, media would like to write it black and white, but we live in a gray world. I'm constantly dealing with, is this short term, long term, am I impacting one versus the other? Sometimes I have two bad answers and I have to find a third way through something. And this topic, to me, the beauty of it is that it sits at that intersection, that it is really good for business and it's really good for the world. And so when you say, why do I work on it? Even now, as I was retiring and the murder of George Floyd happened, I referred to that earlier. Some of my great colleagues, Ken Frazier, Ken Chenault, some of the country's most senior and respected black leaders said something. They said, you know, guys, everyone's maybe talking, giving money, thinking about racial justice, but we should do what companies can do best. We should hire people, create economic opportunities, opportunity. And at the time, I thought to myself, okay, that is, I agree a hundred percent. They've got the what, but I have the how. And it's called skills. First, the idea of good power is how to do meaningful things in a positive way and to really get tough stuff done, you actually do need power. The irony, because most people say, oh, power's negative. Solving problems needs power, but it can be good power, meaning when you see tensions, go get right in the middle of them and not compromise, but try to resolve them. So unite people with what can be made, progress on versus divide them. Do things respectfully but without fear. Celebrate progress, not perfection, because perfection would be changing the education system. That's just not going to happen. But I could make a lot of headway with all the things we've talked about. And typically when people go for perfection, they end up polarizing. You know, you're with me, you're against me. It's all this or it's all that or it's none of this. And then you make no progress. Right? So it suffers. And I'm just real believer that we each have that ability that I hope I encourage people to remind them they have this power at all parts of their life, and it actually grows with potency over time and with scope over time. And so eventually, like, where I am at this part of my ripe old age, you know, working on a real societal problem, and I don't want people to shy away from them and feel like, oh, boy, this is like, you know, we're giving up. Do not give up. You know, just like when I had to change a big company. Okay, you may not see the fruition of everything, but you will make progress.
- [30:25]
Alison Beard
Terrific. Ginny, thank you so much for joining me today.
- [30:28]
Ginny Rometty
Thank you very much, Alison.
- [30:34]
Hannah Bates
That was Ginny Rometti in conversation with Alison Beard on HBR IdeaCast. Remti is the former chairwoman and CEO of IBM. She's also the author of the book Good Leading Positive Change in Our Lives, Work and World. We'll be back next Wednesday with another handpicked conversation about leadership from the Harvard Business Review. If you found this episode helpful, share it with your friends and colleagues and follow our show on Apple Podcasts, Spotify, or wherever you get your podcasts. While you're there, be sure to leave us a review. And when you're ready for more podcasts, articles, case studies, books, and videos with the world's top business and management experts, you'll find it all@hbr.org this episode was produced by Mary Dew and me, Hannah Bates. Ian Fox is our editor. Music by Coma Media. Special thanks to Maureen Hoch, Erica Truxler, Rob Eckhart, Ramsey Gabaz, Nicole Smith, Anne Bartholomew, and you, our listener. See you next week.
- [31:47]
Ginny Rometty
Sa.