Solving the problem of unacceptably high turnover among high-potential managers in emerging markets is a challenge for many companies. IBM Global Business Process Delivery partnered with Northeastern University College of Business Administration to address this challenge head-on. The solution, an online MBA program tailored for IBM, was launched in India in 2008. The program was so successful that IBM introduced it in China in 2010.
The development of this program began in 2006, when Peter Lynt, IBM general manager of global business process delivery, shared that IBM was experiencing an unacceptably high turnover rate in its India operation. As a result, the company was suffering from decreased productivity and employee loyalty in its Mumbai, Bangalore and New Delhi process delivery centers.
IBM and Northeastern collaborated to craft an educational program for IBM’s high-potential managers. Lynt said the program should “find a way to enhance the talent pool in India by enabling IBM’s key people to further their educations.” The supposition was that this program would allow employees to build managerial expertise while garnering corporate loyalty and reducing turnover. The program offered several benefits:
Accreditation: Accredited by The Association to Advance Collegiate Schools of Business (AACSB), Northeastern University’s online MBA program allows Indian managers to obtain a degree that is international in scope and application. Currently, few MBA programs accredited by the AACSB exist within India.
Flexibility and accessibility: Because the online MBA program is offered asynchronously, employees are able to obtain an education, regardless of location and schedule. Employees who are given the opportunity to advance their careers by traveling or relocating are not bound by a traditional classroom.
Interactivity: The online MBA program utilizes discussion boards, short videos, spreadsheets, PowerPoint presentations, group assignments, cases, simulations and chat rooms to engage students. Cohorts of 15 students regularly interact with faculty, instructors and peers to discuss course material and business applications. Students are also given the option of consulting Northeastern faculty members during office hours. Program participants are afforded the opportunity to engage in conversations with individuals from different cultures, thereby developing their skills as leaders in an international company.
As part of the admissions process, the College of Business Administration and IBM management worked to establish criteria for student selection. Northeastern’s graduate admissions team worked with IBM to provide information and materials to India managers and to market the program locally.
Top candidates were nominated by IBM India senior management. College faculty and admissions staff then flew to the three India locations to conduct interviews. Admissions criteria included the level of support from the applicant’s immediate manager and division head; the candidate’s current job responsibilities and identified level of potential; the candidate’s level of commitment; and an assessment of the candidate’s ability to handle the program. Ultimately, 15 high-potential students were chosen to comprise IBM’s inaugural class.
Those selected are expected to abide by several essential criteria. Program participants are required to remain at IBM for at least one year upon obtaining their MBA. Also, to encourage ownership of the learning process, students are expected to make a small financial contribution toward their degree cost. As an investment in its workforce, IBM funded the remaining tuition.
IBM employees enroll in 17 online courses delivered over 24 months. Each course spans five weeks, with a one-week break in between classes.
As the pilot cohort neared graduation in December 2010, IBM witnessed significant benefits. Virtually all of IBM’s Indian students are expected to complete the online MBA program on schedule, and the turnover rate — the source of IBM’s original challenge — has declined dramatically. Compared to a 14 percent attrition rate among high-potential employees not selected for the program, those selected experienced a 5 percent attrition rate. IBM finds this difference between comparable groups to be a compelling measure of the program’s success. Also, due to less employee turnover, IBM sees reduced expenses associated with recruitment and training.
Program participants in India also have expressed positive reactions to the online MBA curriculum. Bhuvana Natrajan said, “I have gained the ability to think through, analyze and articulate a solution to various business problems. I feel that the course gives you a framework to explore your creativity much better in your quest for appropriate solutions for business challenges.” Senior managers also have noted positive outcomes including promotions within the company; an increase in company loyalty; and improvements in job performance.
In response to India’s reduced attrition rate and additional reported success factors, IBM again partnered with Northeastern to bring online education to high-potential managers in China.
Due to its experience in India, Northeastern emphasized the need to establish active buy-in and sponsorship from IBM managers before launching the program. Senior managers were more thoroughly educated about the nominations process, program requirements and the role the senior manager plays in supporting the employee’s education. Also, the program’s time commitment was more finely outlined so that potential applicants could more accurately assess the feasibility of completing the degree on schedule.
Once again, IBM and Northeastern collaborated to determine the eligibility guidelines for potential participants. Strict selection practices in China emphasized the value of the degree. Excitement was built throughout the company via selection announcements and internal marketing efforts.
On-site visits by Northeastern faculty and program administrators further contributed to the success of the program’s launch in China. Representatives from the program guided applicants through the admissions process via personalized communication and on-site interviews. Nine high-potential employees were admitted to the program, having met admissions criteria similar to their Indian counterparts. As a demonstration of their investment in the program, members of IBM’s and Northeastern’s leadership teams welcomed the newest class during an on-site ceremony in China.
In 2010, IBM also launched Northeastern University’s online MBA program in its Dalian and Shanghai locations. It is projected that a mentoring partnership will form between classes, as India MBA graduates mentor employees from Shanghai and Dalian while they adjust to their new managerial and educational responsibilities. Northeastern also hopes to establish additional opportunities for India and China cohorts to interact as students and alumni, thereby strengthening relationships internationally.
By investing in top talent, IBM experienced less attrition among high-potential employees, thereby creating stickiness among this population. Students became more educated and well-rounded in several business functional areas, including global leadership and global business process delivery. As a result, IBM experienced fewer expenses associated with retention, recruitment, training and lost productivity.
Increasingly, companies are looking for ways to recruit by investing in education. Because online learning offers borderless educational opportunities, it may soon become the global solution to attract, recruit, retain and develop high-potential employees. It is IBM’s hope that it will strengthen its position as an employer of choice as the program expands into additional global markets.
Thomas E. Moore is the dean of Northeastern University’s College of Business Administration in Boston. He can be reached at firstname.lastname@example.org.