Good morning!
When Maryjo Charbonnier started working for tech giant IBM in 2021, she was asked to tackle a project that would be daunting for any HR professional: spinning off an entirely new company.
IBM announced in 2020 that it would be turning its managed infrastructure services division into a new public company called Kyndryl. To do so, Charbonnier had to transition around 80,000 employees to the new enterprise, establish a new organizational chart, overhaul existing processes, and reimage a new culture. And she had two years to complete the mission.
“During those initial days, I felt like I ran the world's largest emergency room instead of an HR department,” Charbonnier tells Fortune. “There was constant chaos.”
The company has been on solid footing for several years and has brought on several high-profile partners, including Microsoft, Amazon Web Services, Google, and ServiceNow, among others. Kyndryl’s stock rose 87% in 2023 and is currently up 70% year-to-date. Employees also seem to be largely content with the new culture; the company’s most recent engagement survey found that 90% of workers feel they are treated with respect, and 86% feel they can be themselves at work.
Fortune sat down with the CHRO of Kyndryl Maryjo Charbonnier to discuss how she managed the spin-off and what it was like crafting a new company culture from scratch.
This interview has been edited and condensed for clarity.
When tasked with spinning out Kyndryl as a new company, where did you start?
When you’re managing a spin-out, you don’t get to pack your suitcase. You only get to unpack it and figure out what parts you want to keep and which you don’t.
The first thing I did was start surveying employees and working with the leadership team to rebuild and redefine what the new company’s culture would be. We knew we wouldn’t be able to transform the business if we didn't change the culture first, so we started looking at employee behavior and asking questions about what kind of employees we wanted to work with at this new company. If we run one of the world's largest professional services firms and the most prominent tech services companies in the world, what behavior do I want to show up in front of the customer?
That question led us to six key behaviors: restless, empathetic, devoted, flat, fast, and focused. We started thinking about, ‘How are we going to build them into the system as we revamp every process that we had as a corporate enterprise, particularly within the HR systems?’
What are the unique challenges that CHROs face when spinning out a company?
During those initial days, I felt like I ran the world's largest emergency room instead of an HR department. There was constant chaos. I had to find new brand leaders, build a new org chart, and ensure our processes were set up efficiently, all while handling a massive amount of transactional HR. Everyone needed a new offer letter. Everyone had questions about new benefits, how payroll would work, and what compensation plans would look like. We had to pick out and get an entirely new board set up. There was a ton of stuff. We were giving birth to a $17 billion organization.
Companies also don't spin off their crown jewels. Most parent organizations are spinning the thing that is not growing fast enough, which was our issue as well. Coming out of IBM, the company didn’t have the most profitable positioning, so the biggest challenge was the timeline. We had two years and needed to get our finance, procurement, payroll, and HR systems up and working stat to bring on customers. That means we had two years to sunset 48 different systems and reconceive a new one.
How did you help employees throughout the transition?
We wanted managers to communicate continuously as the new company was formed and as we reopened the Kyndryl offices. [Return-to-office] decisions should be made best locally, so we trained managers on how to do that. While some people can do their jobs remotely, others can’t. So, we had to renovate our career ladders and how people move throughout the organization.
Recently, in the last year, we’ve also added skills to each job title so employees can better gauge where they stand in their new roles. That way, should employees want to seek out further opportunities or find alternative roles, they can rate themselves against these skills to see where they stand.
What advice would you give CHROs managing a similar transition?
I always say you have to train HR first before any other department. Also, as a CHRO, I understand that building a strong company culture is a team job. Our core group consists of myself as the head of HR, our head of transformation, the head of marketing, and the head of communications. Together, we work on shaping the culture of the company. To do so, you need to spread the right message. In our case, when it came to culture, everyone felt like they had fingerprints on it and were part of it, which was core to our success.
Brit Morse
brit.morse@fortune.com
