How Caterpillar Transforms People Into Butterflies

A caterpillar transforming into a butterfly is somewhat analogous to the career development for a Caterpillar Inc. employee. Except, instead of complex biological factors, it is Caterpillar’s HR function that serves as a catalyst to advance employees’ careers.

For instance, take Kimberly Hauer, who began her career at the manufacturing company as a college intern in 1995 and moved up the ranks to vice president and chief human resources officer. “When I joined as an intern … I had no intention of staying at Caterpillar, but I can’t imagine what life would look like if I hadn’t,” she said.

At the time of her internship, Hauer was studying business at Purdue University. She was taking an interviewing course, and for an assignment she interviewed the HR manager at Caterpillar Inc.’s Lafayette, Ind., facility.

The HR manager offered Hauer an internship in the HR department, and she spent the following year interviewing production workers — technical, experienced machinists and assemblers — for positions at the company.

“The experience of changing people’s lives and offering them an opportunity of employment probably got me most excited about the function, and [made me] decide that was the career path for me as I completed my college career,” she said.

Following her internship, Hauer joined Caterpillar full time in May 1997. She progressed through various HR roles before landing in her current role as chief human resources officer in January 2011.

HR’s Evolution: Moving Beyond the Tactical
Caterpillar is one of the world’s largest manufacturers of construction and mining equipment, diesel and natural gas engines, industrial gas turbines and diesel-electric locomotives. It has about 120,000 employees around the world — more than half of whom reside outside of the United States.

When Hauer first joined the company, HR focused on tactical elements such as getting paperwork processed and ensuring employees were paid on time. Since then, she said she has watched the function evolve into more of a business partnership role.

“We started to put HR practitioners and HR reps in place — the idea was that they would partner with the business leaders, understand what needed to be done and get a little more specific on how we help in driving better business value,” she said.

Today there is more business integration and collaboration with business partners because Hauer said the business needs HR, and HR needs the business. She said she feels like an integral part of the leadership team with responsibility to help the business succeed. “We’re all in this together, and if what I’m doing doesn’t drive value to the business, then I shouldn’t be doing it. That’s a different perspective than ‘I’ve got this HR policy and you need to follow it.’”

While Hauer manages the human services team, she said there are HR professionals embedded within each of Caterpillar’s business units who don’t directly report to her organization. However, she said it’s imperative for her team to have regular discussions with these individuals, which enables her function to intimately align itself with Caterpillar’s business needs.

One of the biggest challenges — and something she pays a lot of attention to — is keeping HR connected to the business. She said it’s easy to sit in a corporate office and focus on HR; she has to challenge herself to get out into the facilities, out into the different regions of the world to understand how HR can influence business results. “We’re a large, global company with many different product lines, and whether it be our logistics business, our energy and power business, our construction industry business, it’s our duty to understand how HR impacts and can drive results for that.”

Hauer travels globally to gain insights and understand firsthand how HR can affect the business. For instance, she took a trip to Europe earlier this year and toured two of the company’s manufacturing sites known for expertise in lean manufacturing. “I was walking the floor understanding what they’ve done in the plant, how that drove culture change for them and what that impact was on the business so I could understand what that felt like as we try to replicate in other manufacturing environments,” she said.

Leadership Development: Preparing for Flight
Similar to her own professional journey up the corporate ladder, Hauer and her team have leadership development programs and initiatives in place to develop other leaders at the organization.

Caterpillar’s development program LEAD, or Leadership, Excellence, Accountability and Development, is available to every level of leadership. It starts with an emerging leader program, which offers specific curriculum for up-and-coming individuals who aren’t leaders yet, but have the potential to move into leadership roles.

There are various curriculums for supervisors, managers, department heads and executives. Curriculums are designed to meet leaders where they are and help them progress to the next level, Hauer said. The content varies based on how long the leader has been in a role, and programs are designed to be sustainable as well as factor in different competency needs.

Caterpillar also has an invitation-only capstone program developed in partnership with Stanford University called “Digging Deep.” The program — reserved for candidates at the executive level — operates under a leaders-as-teachers model where senior leaders teach various components.

Hauer said the LEAD program has one additional, unique element — what the company calls a Leadership Impact Summit. Once a year, each of Caterpillar’s roughly 30 vice presidents hosts an impact summit with leaders in his or her division.

“The purpose of that summit is to articulate the business strategy and the business goals and what success looks like, and then tie that to leadership. How does becoming a better leader lead to those business results?” Hauer said.

Leaders examine aggregate data by division to understand where there are gaps and opportunities to improve. Further, individuals who go through the program should understand how improving their leadership competencies can lead to better business results. “They come out with an understanding of how improving those areas will drive business results that they can build into their performance plan,” she said.

The idea is to provide a big-picture view and make learning into an integrated experience rather than a one-off training experience. “I’m proud of the connectivity,” Hauer said. “It’s not about going to a class and coming back and putting the book on the shelf.”

A Focus on Inclusion
Caterpillar’s diversity strategy is closely aligned with its talent management strategy. That was not always the case. Hauer said historically the company had some false starts on its diversity journey, but during the past two years, she and Latasha Gillespie, the company’s director of diversity and inclusion, have worked closely with the leadership team to determine the right diversity and inclusion strategy.

For instance, employee safety is a primary concern, and Hauer said every internal meeting begins with a slide with information on the importance of safety, emergency exit routes and who can help during a crisis. Using this as a template, the company created a platform to present its diversity message to all employees. Now, instead of focusing on the standard slide about physical safety during meetings, groups are encouraged to add the “Be Present” slide.

The slide “speaks to the emotional safety and the idea that we want each and every employee coming to the table each and every day with their best thinking, best ideas, asking for the opinions of others, engaging others in the conversation, being open to different ideas, championing those changes and ideas when they come out of the meeting,” she said.

Sonya Miles, lead HR manager for Caterpillar’s Integrated Manufacturing Operations Division, said the company’s HR and diversity and inclusion strategies help to drive innovation by enabling individuals with diverse backgrounds and perspectives to have a voice and be able to contribute.

“We witnessed the beginning of this journey back in about 2000 when the company launched Six Sigma,” Miles said. “It gave all employees a voice, a chance to have a seat at the table and share their thoughts and opinions in a meaningful way. It was the beginning of driving an inclusive culture by allowing us to bring employees from around the world together to share their ideas and contribute in a meaningful way.”

Caterpillar’s diversity and inclusion journey, however, is not just something that’s “socially acceptable to do,” Miles said. It’s about creating sustainable change — and ultimately being accountable to shareholders and customers.

It’s “about driving real change and helping employees to better understand the value and business case for diversity and inclusion,” she said. “We were able to leverage our leadership development programs [among other] things to ensure we’re building inclusive environments, where everyone felt comfortable contributing freely and bringing their whole self to work every day.”

Adopting this mindset can have long-range business implications, as can changing the focus of employee resource groups to ensure they are more involved in helping to drive the business forward. For instance, Caterpillar tapped its Korean employee resource group for help offering tours to customers of that ethnicity. “Rather than do everything in the English language, we engage the resource groups to help make that cultural link and present in their language in many cases to make them feel more at home,” she said.

Caterpillar executives and senior officers also meet regularly with employee resource groups to discuss mentoring and development. Some ERG members are even invited to participate in a diversity dinner with the company’s board of directors, where they are free to engage in candid discussions.

It’s All About the People
What enticed Hauer about HR — even as far back as when she interned — is its focus on people and the effect that she believes people can have on organizational success. Whenever she’s asked what about HR excites her, she said this is how she describes it: “Let’s talk about the assets that a company has. I like to ask an audience what they think of our manufacturing facilities and what happens to the value of that asset over time. Inevitably they answer: ‘It decreases.’ Then you go into our products — they also depreciate over time, and our competitors can replicate that. But when you think about our people, I would argue that’s the one asset that has the ability to appreciate over time.”

She said that’s why Caterpillar focuses on understanding every employee’s full potential and offering long-term development opportunities. It’s also why leaders are asked to evaluate long-term career prospects for each of their employees.

“What does that 10-year cycle look like, and what are the next three jobs that someone might work through to maximize their potential?” she said. “Having that honest conversation around potential and what experiences and competencies need to be worked on for that employee to reach potential is really important.”

Deanna Hartley is a former senior editor at Talent Management magazine. She can be reached at editor@talentmgt.com.