The key to Caterpillar CHRO Kim Hauer’s success: Aligning HR initiatives to business strategy.
Two years ago, Caterpillar Vice President and CHRO Kim Hauer embarked on a journey that led to a pivotal shift in the vision of the company’s human resources function. It’s new mantra: We build the team that builds a better world. And how does the HR leader with nearly 20 years of experience at the construction machinery designer and her team do just that? Through communication, leadership development, and taking chances on innovative initiatives that are tied to business strategy. For example, a current challenge Caterpillar is facing is finding the right roster of digital talent. Hauer’s data-driven solution? Using analytics to understand where this talent is located and what attracts them to an organization. With proven information in hand, she can earn executive buy-in to build hubs in different geographies to land Caterpillar the talent they need to grow their digital capabilities.
This is just one way Hauer is building a better team to build a better world. Recently, HRO Today had the opportunity to speak with the 2016 CHRO of the Year Lifetime Achievement award winner. Here, she describes Caterpillar’s Enterprise People Strategy, how HR should respond during tough times, and how to stay ahead of changing workforce dynamics.
HRO Today: How do you ensure HR’s strategy aligns to the business?
Hauer: We started a transformational journey back in 2014 when there was a refresh of our business strategy. It was clear that the HR strategy needed to evolve and align with that, though we had updated our people strategy just a few years prior.
The key stakeholders of our business—our customers, our people and our stockholders—make up a pyramid, and we make promises to each. For our customers, it’s a promise to be a champion for their enduring success. For our stockholders, we strive to deliver superior returns. Under people, our statement is to attract and develop the best team. During that transformational time, we asked ourselves, is this right focus for our company and the most important to our people?
HR should be focusing on what motivates people and how to deliver on a business strategy. That thought evolved into a year-long journey of workshops with HR business professionals all over the world and many conversations with our business “customer”—the people we serve. That’s what really shifted the dialogue to not just what people bring to the company, but what can the company give to employees. We came out with a revised vision: We build the team that builds a better world. And accompanying this vision are four clear priorities:
1/. Best HR: making sure we have the HR capabilities to deliver on strategy
2/. Cultural Stewardship: driving the Caterpillar culture in a way that we believe will be successful
3/. People Value and Commitment: valuing what employees bring and making sure employees leave better than when they first started
4/. Connected: staying connected to the business needs and employees, and communicating in meaningful ways We have actions in each one of the priorities and believe this will drive success for HR and the business.
HROT: What efforts have you executed to drive the Enterprise People Strategy?
Hauer: The key is to start with consistent communication. Our HR leaders spend countless hours communicating these principles, the vision, and why they are important to company success. It’s a constant cadence of explaining the direction. We have a scorecard under each of the key deliverables that we track consistently and share transparently. I start every meeting with a visual of our enterprise people strategy, and anything we talk about gets connected to that, and ultimately our business strategy.
For example, under Best HR, we’ve done a lot of work under the leaders as teachers approach. I personally taught a session regarding the say on pay vote in the compensation arena. We took the top 50 high potential HR leaders and spent a number of hours talking to them about say on pay, an area of the business that even our HR professionals typically don’t hear about. They learned how the board is involved, how the say on pay works, what talking to shareholders is like, how we engage with investors, and really doing a nuts-and-bolts training on executive compensation. Our HR leads don’t get exposure to that on a day-to-day basis so here was an opportunity in Best HR to grow and develop high performers.
Under People Value and Commitment, one of the first things that jumps to mind is our focus on values-based leadership. There is a large percent of our workforce that has been with the company less than five years so we are doing values-based leadership training. It’s not about spending a lot of money; it’s about getting people together to discuss our values of integrity, teamwork, commitment, excellence and sustainability. We want to share stories of how those values come to life and connect people to them. This helps steward the culture— also one of our key priorities.
HROT: How are you tracking the impact of the Enterprise People Strategy?
Hauer: One of the newer things we are doing is called Employee Insights. Instead of doing an annual survey, we target different groups of employees every quarter with a shorter, user-friendly survey that can even be accessed on mobile devices. We are looking at different populations and different attributable data sets so we can make correlations. Are there gender differences Location differences? We can really mine the data in a much different way than we have ever been able to before, and we can get a real sense on how we are doing.
For example, for our values-based leadership training, we can target a survey for employees who have been through that training and see if their employee experience has been different. This will help us see if the training has had an impact on our employees’ behaviors and their response to the company.
Linking strategy with the Employee Insights tool will give us real-time data and help drive and shape how we execute our people strategy.
HROT: How did you get executive buy-in for the Enterprise People Strategy initiative?
Hauer: The key to getting executive buy-in is ensuring that the strategy is not a one-off initiative. It is about having and showing a clear understanding of how the enterprise people strategy will help drive the business strategy.
As a company, we need to shift from a heavy equipment manufacturer to a solutions company. If you can link how focusing on cultural stewardship will help employees to think about solutions instead of just product, you will get buy-in a lot faster. Saying it’s an important HR initiative is not enough.
HROT: How are you leveraging analytics in your talent decisions?
Hauer: We have a small HR analytics team that is really focused in on having the right people, in the right place, at the right time. We run analytics on anything that has to do with the talent lifecycle, from strategic workforce planning and predicting future needs, to where we attract people and how we retain them. But the devil is in the detail.
One of the more recent examples is linking talent to the solutions provider we need to be. We are going to need a lot more digital talent, and those employees are often a lot different than our traditional Caterpillar hires. We are using data analytics to understand the marketplace for digital talent, where the talent is, and what attracts that type of talent. We are also working with social media sites to figure out where people are and how we might need to recruit differently. For example, in the past, we always felt that we needed to hire employees for our headquarters in Peoria. For talent in the digital space, Peoria may not be their location of choice. We are looking to build hubs in other geographies and use data to make the case that we’ll be able to get the talent that we’ve struggled to get in the past in these locations.
HROT: What is currently your toughest HR challenge?
Hauer: To be frank, we are in our fourth consecutive down-turn year as a business, and there are a lot of tough decisions being made right now. There have been reductions in headcount, among other decisions that can weigh heavily on our employees’ minds. It can be quite a distraction when you are executing on key short-term priorities that have to be done.
During these times, one of the keys is transparency. You don’t want to lose sight of your future vision and the big things that are important. But in tumultuous times, most employees are concerned with the short-term actions and their individual impact. Communication is key. We recently launched a website so any employee, anywhere in the world can ask a question and get a transparent, honest answer within 24 hours. Being transparent on a timely basis with your team during tough times is one of the most important things you can do.
HROT: What is the biggest workforce change you are currently seeing?
Hauer: The way we think about getting work done is going to continue to evolve and change. Jobs will no longer be about working full time, 40 hours a week, in one location. We are already seeing a lot of people view work differently. For example, employees may want to work on a tech project on a machine at Caterpillar, but then move on once it’s done vs employees who are looking for longevity and stability in an employer
As HR leaders, we need to think about how we tap into talent in a different way and manage that without alienating our more traditional workers.
HROT: How can businesses be agile to the changes that come with new workforce preferences?
Hauer: You have to be open-minded and that is hard to train. For example, in my work environment, we dramatically changed the layout. We no longer have offices and cubes—it’s an open seating environment on steroids. Employees can come in and work as they please and I can’t monitor who is here and who is not. We’ve now been in this space over one year, and there was a lot of hesitancy at first. Will it work? Will people still be productive? But it has been one of the best experiments because people are so much more willing to share information and be more creative. We see people gathering and talking who would never have done so before. These are small examples, but we need to come up with ways for people to see things differently. The results I see from this one small pilot are significant. The more we can expose traditional thinkers to the benefits of change, the better off we will be.
Kim Hauer understands the critical nature leaders play in defining culture and executing successful outcomes. With this in mind, she led an aggressive leadership development program (LEAD) to build a leadership pipeline over the next 10 years—not just for Caterpillar, but also for key dealer and customer personnel. At LEAD’s foundation is building leaders who are results-driven and held accountable for team members’ growth and development. LEAD includes partnerships with organizations including Duke CE and Disney Institute who bring in external experts to teach, which compliments an internal leaders as teachers approach. This approach engages internal business leaders as instructors for courses tailored to address specific business strategies.
LEAD is global, but is executed on a local level to ensure Caterpillar’s high-performers are motivating other employees, considering talent needs, and reinforcing company values. In the past two years, Caterpillar leaders have embraced LEAD with more than 30,000 completed courses, however the biggest focus emphasized through lead is on-the-job opportunities and coaching in the moment. Organizational aggregate data shows a three-point improvement in the work climate in the last year.
HR team members should be focusing on what motivates people and how to deliver on a business strategy.
Recognizing Great Work
Kim Hauer’s initiatives have driven Caterpillar to become an award-winning employer of choice. Here are a few recent industry honors the organization has earned:
• 2016 HRO Today CHRO of the Year Award – Lifetime Achievement
• The 2016 Military Friendly® Employer by Victory Media
• On Diversity Inc.’s Top 25 Noteworthy Companies, Top 10 Companies for Global Diversity, and Top 10 Companies for Employee Resource lists
• On Chief Executive Magazine’s Best Companies for Leaders