Home > Articles

This chapter is from the book

IBM’s Challenge

IBM’s global business strategy (refer to Figure 1-1) was created in response to key challenges faced by the firm and similar global companies. Issues of talent development and retention, knowledge creation and transfer, and sustaining business impact can each be tied to clear trends facing the company.

The well-noted “War for Talent” concept as articulated by the McKinsey & Company14 report reflects the increasingly competitive market for talent, leaders, and innovative knowledge workers. This report declared that knowledge or talent is now the key factor in driving the effectiveness of many organizations today and in the future. Thus, a company’s capability to attract, develop, and retain talented individuals provides a competitive advantage as the war for talent persists. Issues such as social capital, communities of knowledge, and talent management have replaced some traditional human resources topics of hiring, staffing, and performance evaluation. The McKinsey research included surveys of 13,000 managers and executives across more than 120 companies, along with case studies of 27 leading companies. It found clear evidence that better talent management leads to better performance. On average, companies that did a better job of attracting, developing, and retaining highly talented managers earned 22 percentage points higher return to shareholders. Unfortunately, as the authors noted in the report, organizations have a long way to go in being prepared for the ongoing talent war. Thus, organizations like IBM needed to face several issues impacting its current and future pipeline of knowledge within the organization—its people.

The first clear challenge is that the global war for talent means that top organizations around the world must pay more attention to the impact of high employee turnover, particularly among diverse employee segments. For example, Ernst & Young discovered that a lack of retention of women was costing the firm about $150k annually, in addition to causing a decrease in client satisfaction because the people responsible for their projects frequently changed.15 Nortel Networks faced difficult challenges after three years of widespread layoffs and a decline in share values. It made the retention of the remaining talent within the company a strategic priority to help stem the negative trend. Deloitte management made the decision to focus more strongly on developing its international talent in the late 1990s but could only recruit about 1% of the organizational global workforce to participate. To meet this challenge, they created a Global Development Program, which began by understanding what attracted potential candidates to work at Deloitte internationally. Its focus on global retention helped Deloitte design an effort to double the number of participating countries and employees in these efforts. Deloitte executives see this strategic focus on global workforce development as a factor in the company’s 2002 11 percent growth in global revenue.16

The significant impact that employee turnover has on key performance metrics is not unique to these few companies nor to IBM. This disturbing trend was highlighted by the findings of the most recent “corporate leavers survey.” Conducted by the Level Playing Field Institute, this study showed that each year across the United States, more than 2 million professionals and managers voluntarily leave their job because they feel that they are treated unfairly.17 This study concludes that voluntary turnover costs for U.S. firms in 2007 reached a staggering $64 billion dollars. This research also showed how employees who left their firms later provided information that discouraged potential customers and job applicants from working with their former employer. Thus, ignoring retention issues may impact future recruitment of talent and new customers into the organization. Also disturbing was the finding that people of color were three times more likely to report that workplace unfairness was a key reason for their voluntary exit compared to white males. The clear message from these studies and other corporate examples for IBM is that turnover and the loss of human capital is an expensive proposition that negatively impacts an organization’s competitiveness.

The second challenge involves generational differences that are causing a dramatic change in what employees expect from their employer, as well as how they view the meanings of work and career. A great deal has been written, particularly in the United States, about the impact of “Generation X” and the emerging “new millennials” and their requirements for a satisfactory workplace environment.18 These changing demographics are providing a talent pool of potential employees who expect a very different workplace than traditional organizations may provide. For example, members of Generation X have the following expectations about the work environment:

  • Bureaucracy will be replaced with more participatory management
  • The value of the employee shifts from being defined by tenure toward an emphasis on accomplishments, and open communication is facilitated throughout the organization
  • An employee-friendly work environment is cultivated that includes respect, learning, collaboration, work-life balance, and a sense of purpose19

Similar observations are now being offered in terms of values and workplace preferences for those in the next generation of new millennials.20 After several decades of research trying to identify the key drivers of employee turnover, it is clear that supportive relationships that build what is frequently called “relationship wealth”21 are essential, and are becoming increasingly important to new generations of employees (for example, Generation Xers and new millennials). What this suggests to companies like IBM is that organizations must not simply look to attract and retain talent, but must focus on employee development and ultimately engagement of talented knowledge workers.

The third challenge is that the particular issues faced by the IT industry may require a somewhat unique approach to workforce development and utilization. The vital role that knowledge and intellectual capital play within the IT industry has been recognized by a number of industry leaders. For example, Microsoft CEO Bill Gates noted in his speech before the Joint Economic Committee of Congress that, “The lifeblood of our industry is not capital equipment but human capital.” Similarly, Intel CEO Andy Grove commented that today’s global economy “is all about human resources.” In a speech at INSEAD, IBM CEO Sam Palmisano argued that, “We need to think seriously about issues in a global—not just a multinational context...the new skills we’ll need to develop...and the new kinds of organizational culture that will be required.” Each of these leaders within the IT industry points to the demands for knowledge workers, the challenges faced within this dynamic industry, as well as potential solutions.

IT effectiveness has been clearly linked to the pool of available knowledge professionals across a wide variety of IT specializations. As demand increases yet the supply remains stagnant, those with valuable skills, knowledge, and expertise will seek out the best options.22 In one research study of human capital within the IT industry, the profile of the typical IT worker was found to be distinctly different than that in other industries. IT professionals were found to typically be younger workers who have less of an investment in a firm-specific employment relationship compared to older and more long-term employees.23 This means that they utilize a different cost-benefit perspective to determine whether to join, stay, or leave any organization or employer.

In addition, change within the IT industry happens at a rapid pace, which has a significant impact on career opportunities and mobility for people within the field. The issue of “knowledge obsolescence” or having expertise that is no longer in use or that has been replaced by newer knowledge and technology is a challenge for these workers. Career stagnation, or what is called “career plateauing” which creates a feeling of being trapped in one position with little opportunities for growth and change, is also a key concern.24 What this means for IT and IT-related organizations is that the need to develop an approach to recruiting, training, and developing employees must be done in a manner that is flexible enough to meet the challenging demands for these talented knowledge workers.25 Employees within the IT industry require access to rapidly changing information,26 broad information sharing within the workplace, and flexible opportunities for competency development. Interestingly, a number of studies also focus on the need to go beyond traditional monetary bonuses and rewards to effectively drive performance and retention among IT professionals.27

Clearly this array of challenges highlights the need for an innovative set of solutions for companies like IBM. To outline a response, IBM examined the market trends, but then focused on internal analysis and benchmarking to determine the specific issues within the IBM culture. Several key questions were raised. What is the nature of recruitment, retention, and development across the business enterprise? How was the climate and culture of IBM viewed by current and potential employees? Did people see the existing employee support system, including mentoring, as useful? The response and revitalization of mentoring came as part of IBM’s response to these critical questions.

InformIT Promotional Mailings & Special Offers

I would like to receive exclusive offers and hear about products from InformIT and its family of brands. I can unsubscribe at any time.


Pearson Education, Inc., 221 River Street, Hoboken, New Jersey 07030, (Pearson) presents this site to provide information about products and services that can be purchased through this site.

This privacy notice provides an overview of our commitment to privacy and describes how we collect, protect, use and share personal information collected through this site. Please note that other Pearson websites and online products and services have their own separate privacy policies.

Collection and Use of Information

To conduct business and deliver products and services, Pearson collects and uses personal information in several ways in connection with this site, including:

Questions and Inquiries

For inquiries and questions, we collect the inquiry or question, together with name, contact details (email address, phone number and mailing address) and any other additional information voluntarily submitted to us through a Contact Us form or an email. We use this information to address the inquiry and respond to the question.

Online Store

For orders and purchases placed through our online store on this site, we collect order details, name, institution name and address (if applicable), email address, phone number, shipping and billing addresses, credit/debit card information, shipping options and any instructions. We use this information to complete transactions, fulfill orders, communicate with individuals placing orders or visiting the online store, and for related purposes.


Pearson may offer opportunities to provide feedback or participate in surveys, including surveys evaluating Pearson products, services or sites. Participation is voluntary. Pearson collects information requested in the survey questions and uses the information to evaluate, support, maintain and improve products, services or sites, develop new products and services, conduct educational research and for other purposes specified in the survey.

Contests and Drawings

Occasionally, we may sponsor a contest or drawing. Participation is optional. Pearson collects name, contact information and other information specified on the entry form for the contest or drawing to conduct the contest or drawing. Pearson may collect additional personal information from the winners of a contest or drawing in order to award the prize and for tax reporting purposes, as required by law.


If you have elected to receive email newsletters or promotional mailings and special offers but want to unsubscribe, simply email information@informit.com.

Service Announcements

On rare occasions it is necessary to send out a strictly service related announcement. For instance, if our service is temporarily suspended for maintenance we might send users an email. Generally, users may not opt-out of these communications, though they can deactivate their account information. However, these communications are not promotional in nature.

Customer Service

We communicate with users on a regular basis to provide requested services and in regard to issues relating to their account we reply via email or phone in accordance with the users' wishes when a user submits their information through our Contact Us form.

Other Collection and Use of Information

Application and System Logs

Pearson automatically collects log data to help ensure the delivery, availability and security of this site. Log data may include technical information about how a user or visitor connected to this site, such as browser type, type of computer/device, operating system, internet service provider and IP address. We use this information for support purposes and to monitor the health of the site, identify problems, improve service, detect unauthorized access and fraudulent activity, prevent and respond to security incidents and appropriately scale computing resources.

Web Analytics

Pearson may use third party web trend analytical services, including Google Analytics, to collect visitor information, such as IP addresses, browser types, referring pages, pages visited and time spent on a particular site. While these analytical services collect and report information on an anonymous basis, they may use cookies to gather web trend information. The information gathered may enable Pearson (but not the third party web trend services) to link information with application and system log data. Pearson uses this information for system administration and to identify problems, improve service, detect unauthorized access and fraudulent activity, prevent and respond to security incidents, appropriately scale computing resources and otherwise support and deliver this site and its services.

Cookies and Related Technologies

This site uses cookies and similar technologies to personalize content, measure traffic patterns, control security, track use and access of information on this site, and provide interest-based messages and advertising. Users can manage and block the use of cookies through their browser. Disabling or blocking certain cookies may limit the functionality of this site.

Do Not Track

This site currently does not respond to Do Not Track signals.


Pearson uses appropriate physical, administrative and technical security measures to protect personal information from unauthorized access, use and disclosure.


This site is not directed to children under the age of 13.


Pearson may send or direct marketing communications to users, provided that

  • Pearson will not use personal information collected or processed as a K-12 school service provider for the purpose of directed or targeted advertising.
  • Such marketing is consistent with applicable law and Pearson's legal obligations.
  • Pearson will not knowingly direct or send marketing communications to an individual who has expressed a preference not to receive marketing.
  • Where required by applicable law, express or implied consent to marketing exists and has not been withdrawn.

Pearson may provide personal information to a third party service provider on a restricted basis to provide marketing solely on behalf of Pearson or an affiliate or customer for whom Pearson is a service provider. Marketing preferences may be changed at any time.

Correcting/Updating Personal Information

If a user's personally identifiable information changes (such as your postal address or email address), we provide a way to correct or update that user's personal data provided to us. This can be done on the Account page. If a user no longer desires our service and desires to delete his or her account, please contact us at customer-service@informit.com and we will process the deletion of a user's account.


Users can always make an informed choice as to whether they should proceed with certain services offered by InformIT. If you choose to remove yourself from our mailing list(s) simply visit the following page and uncheck any communication you no longer want to receive: www.informit.com/u.aspx.

Sale of Personal Information

Pearson does not rent or sell personal information in exchange for any payment of money.

While Pearson does not sell personal information, as defined in Nevada law, Nevada residents may email a request for no sale of their personal information to NevadaDesignatedRequest@pearson.com.

Supplemental Privacy Statement for California Residents

California residents should read our Supplemental privacy statement for California residents in conjunction with this Privacy Notice. The Supplemental privacy statement for California residents explains Pearson's commitment to comply with California law and applies to personal information of California residents collected in connection with this site and the Services.

Sharing and Disclosure

Pearson may disclose personal information, as follows:

  • As required by law.
  • With the consent of the individual (or their parent, if the individual is a minor)
  • In response to a subpoena, court order or legal process, to the extent permitted or required by law
  • To protect the security and safety of individuals, data, assets and systems, consistent with applicable law
  • In connection the sale, joint venture or other transfer of some or all of its company or assets, subject to the provisions of this Privacy Notice
  • To investigate or address actual or suspected fraud or other illegal activities
  • To exercise its legal rights, including enforcement of the Terms of Use for this site or another contract
  • To affiliated Pearson companies and other companies and organizations who perform work for Pearson and are obligated to protect the privacy of personal information consistent with this Privacy Notice
  • To a school, organization, company or government agency, where Pearson collects or processes the personal information in a school setting or on behalf of such organization, company or government agency.


This web site contains links to other sites. Please be aware that we are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of each and every web site that collects Personal Information. This privacy statement applies solely to information collected by this web site.

Requests and Contact

Please contact us about this Privacy Notice or if you have any requests or questions relating to the privacy of your personal information.

Changes to this Privacy Notice

We may revise this Privacy Notice through an updated posting. We will identify the effective date of the revision in the posting. Often, updates are made to provide greater clarity or to comply with changes in regulatory requirements. If the updates involve material changes to the collection, protection, use or disclosure of Personal Information, Pearson will provide notice of the change through a conspicuous notice on this site or other appropriate way. Continued use of the site after the effective date of a posted revision evidences acceptance. Please contact us if you have questions or concerns about the Privacy Notice or any objection to any revisions.

Last Update: November 17, 2020