EDS Reinvents its Workforce

By Alison Wellner

Nov. 9, 2004

In 1962, a disgruntled IBM salesman named H. Ross Perot founded Electronic Data Services in Plano, Texas–a step that history records as the advent of the data outsourcing industry.

    Today, more than 40 years later, EDS Corp., a company with $21 billion in 2003 revenues and 119,000 employees worldwide, faces what may prove to be an even more formidable challenge: reinventing itself.

Keep the “airplane in the air”
    This year, EDS announced plans to transform itself into a leaner, stronger and smarter organization, paving a path back from a series of business blows, including the bankruptcy of key clients, a downgraded credit rating and an SEC investigation.

    At the heart of a multipronged turnaround strategy is a plan to better manage the company’s core: its workforce. “If you back up a minute and ask, ‘What is our differentiator as a company?’ clearly our differentiator is the people we’ve got, and the skills that they’ve got,” says Tina M. Sivinski, executive vice president of human resources.

    The company faced many challenges, however, in making the most of that human resource, she says. Far from operating as a single unit, the company’s tens of thousands of employees, scattered around the globe, had little cohesion. The organization had devolved into client-account silos, with individual teams, structured around vertical lines of business, operating almost in a vacuum from one another–to the point where teams were using their own computer software and billing systems.

    EDS had to get its human resources in step with supporting the company’s larger business plan and unify its workforce, Sivinski says. Her task: to redesign the company’s internal processes to make that happen. And, she says, “to keep the airplane in the air while you’re changing the wing.”

Creating a data warehouse
    The first step was to get a handle on the company’s workforce as a whole. EDS maintained five separate databases cataloging information on its employees’ work histories, training, skills, abilities andcompetencies.

    Starting in July 2003, and over the course of six months, EDS employed its internal programming talent to merge those databases into one data warehouse. (The company would not reveal how much this effort cost.) The team also plugged in any holes in information. “The CVs weren’t as updated on the professional side as on the technical side,” explains Sivinski.

    In addition to recording raw skills–the ability to program in a certain language, for example, for its 150 executives worldwide–the database also records ratings on 200 “competencies.” These are attributes such as leadership, integrity and Sivinski’s favorite, sense of humor. This information comes courtesy of 360-degree performance reviews for the top 150 execs–assessments where everyone who works with an exec gives feedback on his or her performance. “They’re graded on hard and soft skills, strengths and weakness,” Sivinski says. “We’ve now mapped this to the entire top leadership of the company. We can tell you on one page using a bar graph how we rate on every category,” she says.

    To date, 82,000 employees are in the database, company spokeswoman Liz Bonet says.

Employees are “thirsty”
    It’s not just for the data-geek glory of it all that EDS went through that exercise, however. Armed with the information stored in the data warehouse, next up was a careful assessment of the current skills of the current EDS workforce, against the multiyear plan for the organization that EDS execs had developed.

    Starting with the company’s technical workforce, which numbers 85,000, the company was able to analyze gaps and surpluses in its talent base–not just for today, but for 18, 24 and 36 months down the line, says David C. Arcemont, vice president of global learning and development.

    For example, EDS learned that it had 22,000 programmers trained in COBOL and other so-called legacy languages–far more than the company was going to need for the foreseeable future, Arcemont says.

    On the other hand, the company was certainly going to need more programmers trained in Microsoft’s .NET program. “In another key area, we learned that we have an extreme deficiency in our project program management,” he says. After all the gaps and surpluses were analyzed, Sivinski says, the company sent out an e-mail to its employees discussing each employee’s current portfolio of skills–and the skills the company was going to be in short supply of now and down the road.

    Such an e-mail would seem fairly ominous to a worker who just found out that his or her skills were becoming obsolete–and it would be if the e-mail wasn’t paired with an opportunity for retraining in key areas. For example, EDS created a training program that will lead people from COBOL and other legacy languages to Microsoft .NET capability in 16 weeks, and instituted a buddy system to help people who are retooling connect with people who have the skills and knowledge that they need.

    To build employees’ skills in project management, EDS also created a distance learning MBA program in project management with Southern Methodist University in Dallas. More than 9,000 employees have registered for training in specific areas. “Our employees are very thirsty for self-development,” Sivinski says.

    Arcemont says the system isn’t a closed environment; the information isn’t available only to human resources. “Employees can go in (to the system) and say, ‘I know my assignment is ending in the next six months, so what will be the hot skills or capabilities in the next six months?’ ” Then, the employee can enroll in appropriate training to get there.

130,000 people in 45 days
    A workforce trained in the skills that EDS needs does no good if the skilled workers are all in one division, or in one country, and the need is in another sector or location, though. And it does no good if a network of personal connections keeps some workers bolted in one place, when it would be in the better interests of the company as a whole to have that person elsewhere.

    To address the issue of “factions” or division by team and department, the company underwent a large-scale analysis–were the right people with the right skills in the right jobs at the moment? The company was then completely reorganized, redesigned from scratch around the results of this analysis. The company went from an organization that was divided by lines of business into three divisions: service delivery, portfolio management and global sales and client solutions. Within 45 days of the original transformation in July and August 2003, the company reassigned its entire workforce of 130,000 employees, Sivinski says. In October, EDS laid off 5,200 workers, eliminating duplication of effort.

    As the teams were reconstituted, EDS took a different approach to staffing up again, Sivinski says. Rather than starting with a standard organizational chart, Sivinski says the process started with a blank slate–a room that she describes as “a floor-to-ceiling set of whiteboards, markers and no ego.” Existing organizational charts were set aside, she says. “We needed to regroup and understand the requirements of the business,” she says.

    It starts with deciding on the business tasks a team or department needs to tackle, and then isolating the skills and capabilities needed of the team members. From there, it’s back to the database. “We do a global search for competencies and come back with a group of CVs of those skilled people,” Sivinski says. “We find people that you didn’t know existed with the skills required, and you create very high-performance teams,” she says. It makes the process of staffing a team or department less personal. It also helps to uncover talented people who may be laboring in different areas of the organization, and allows a leaner, tighter organization, Sivinski says.

A living plan
    All of this is well and good, but won’t these changes become obsolete over time? It’s a common pitfall that companies can fall into with efforts like these, says Susan K. Wehrley, an independent consultant who specializes in workforce planning in Brookfield, Wisconsin. “Strategic planning doesn’t work when it’s done once a year and put into a drawer afterwards,” she says. It must be a “living plan” that is revisited on a regular basis, she says.

    To make sure that the database is updated, training is being administered properly and EDS is making the most of its workforce, the company opened a workforce management office September 1.

    Richard McSpadden Jr., director of leadership, coaching and development, is running the workforce management office with a staff of 12. “We have this real simple mission statement: the right person and the right place, at the right time, with the right leadership,” he says.

    The office has two major tasks, McSpadden says. “The first is responding to the business. For example, if someone needs a person with a .NET specialty and also needs a person who can travel, we have the enterprise view, so we can give them their options,” he says.

    The second step is anticipating those needs ahead of time, he says. In the end, McSpadden should be able to pinpoint entry-level employees who need to be noted as high performers, identify early trends in surpluses or deficits in workers with certain skill sets, and so on. “And then it gets to where we are predictive,” Sivinski says. “That’s the end state.”

Tough choices
    Of course, all of the technology, planning and training can’t make business realities disappear. In September, EDS announced that it would cut as many as 15,000 to 20,000 employees as part of an effort to trim $3 billion in costs over the next 24 to 30 months. In October, the process began when the company offered more than 9,200 employees voluntary early retirement. “We anticipate that 4,600 employees will take it,” company spokesperson Bonet says.

    If all goes right, the new system at EDS should mean that a few years down the line, the company will not find itself in the position of needing the workers that it has shed. “This is a … very, very methodological process,” Sivinski says. It’s a process that should free up EDS to shift its creative energies away from its “transformation” and toward its future.

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