Caterpillar Inc. popularly known as CAT is a leading manufacturer of construction and mining equipment. The company, with its headquarters in Illinois, was established in 1925 after the merger of Best Tractor Company and the Holt Company. The company faces stiff competition from a Japanese company Komatsu that produces cheap machinery. However, the company is a leading firm in America and employs about 65,824 people (‘Caterpillar Inc.’, 2008). CAT has been very successful over years with the company offering its products to over 200 countries all over the world.
Operations at Caterpillar Inc. are governed by the corporation’s vision, mission and core business values. The three elements have been critical to the company’s success over the year. For instance, the vision for the company is becoming a leader in providing the best value in machines, engines and support services for customers. The mission of the organization is to enable economic growth through infrastructure and energy development. To achieve the vision and mission of the organization, the company applies innovation and technology for improved sustainability of the performance of the enterprise’s products (‘Caterpillar Inc.’, 2008). The core business values have been critical to the company’s success that leads to increased annual sales.
Succession plan at Caterpillar
The company has developed effective succession plans to ensure robust talent pipelines are in place. CAT competitiveness and profitability have been realized as a result of developing and implementing the policies across its plants all over the world (Cunninghann, 2011). The succession plan at the company aims at pooling the qualified personnel for active performance at the enterprise. The company has never had an outside CEO or a chairman throughout its existence. Caterpillar has developed a philosophy of promoting leadership from within. Leadership at Caterpillar inc. Spends much time all over the years in succession planning.
Leadership changes at Caterpillar
For instance, the organization made its major leadership change at 2010. The company’s board of directors elected Douglas Oberhelman for the post of the CEO and vice chairman. Prior to his appointment to lead the organization, Douglas Oberhelman previously worked as the group president of the company. He had the responsibility for the gas turbines business, rail services, human services, remanufacturing divisions. The change in leadership will lead to additional responsibilities to the new CEO. Douglas Oberhelman was expected to manage the transition and keep the company updated on its strategy. Douglas had the responsibility of ensuring resource alignment and defining critical success factors for the organization.
Douglas Oberhelman appointment is after the retirement of James Owens, who had served as the company’s CEO and chairman to the board for a long time. After announcing his retirements plan, the company’s board developed an effective succession plan that would ensure a smooth transition. James had provided excellent leadership to the company and was instrumental in the business growth and development (‘Caterpillar Inc.’, 2008). He will be recognized for his efforts in ensuring the company’s sustainability especially during the severe global recession of the 1930s. His charismatic leadership style was instrumental to the overall success of the organization and had enabled implementation of the organization’s expansion strategy.
James Owens announced his retirement plans in 2008 and was scheduled to retire according to the company’s policy at 2010. The selection of the successor had to be very cautious to ensure a smooth transition. James still worked as the company’s CEO and the chairman of the board even after the appointment of Douglas to offer internship and also update the CEO-elect. Throughout this period, the governance committee and the board of directors worked round the clock to ensure that the right candidate was selected to fill the void. The choice of a candidate had to follow the organization’s culture of developing employees’ careers within the company.
Successor and his competencies
The choice of Douglas as the James’ successor was seen as the best bet for the company. Caterpillar’s board had confidence in his appointment and also had full backing of his predecessor. Douglas Oberhelman had great understanding of the Caterpillar Inc. since he had worked at the company since 1975. He first joined the company in the treasury department where he held various positions (Wolpert, 2010). For example, he worked as the senior finance representative, district manager for the company’s North American commercial division, managing director and vice general manager for strategic planning at Shin Caterpillar Mitsubishi Ltd. in Tokyo.
Oberhelman also acted as the company’s vice president a post elected in 1995. As the vice president, Oberhelman served as the chief financial officer (CFO) with administrative responsibility for the corporation’s accounting, treasury, tax, information services and marketing support systems. He worked in this capacity until 1998 when he became a vice president with responsibility for the engine product division where he was concerned in the development and global marketing of caterpillar’s engine business (Anderson, Anderson & Mayo, 2008). He also had administrative duties in the engine business of the Caterpillar Company (‘Caterpillar Inc.’, 2008). Oberhelman was elected in the caterpillar’s executive office in 2002 as a group president. He handled the strategic support division, cat’s financial products and also in charge of Asia and Pacific region. He was once responsible for legal services and systems and processes divisions at the company. Prior to his appointment as the company’s CEO, Oberhelman was acting as the overseer of human services as well as caterpillar’s growing remanufacturing business.
Oberhelman had great knowledge in manufacturing, marketing, and support of industrial and large power systems, industrial gas turbines and rail services. His vast experience and understanding of the company made him the best candidate to succeed James. He had strong background information regarding the caterpillar’s business ranging from financial, manufacturing and marketing operations within the organization (Muller, Tilgen & Pfohler, 2011). Oberhelman expertise in all critical facets of the organization and his international business experience places him in a proper position of taking the company a step forward. In his previous roles, Oberhelman had proved his relentless focus on execution and results.
Talent development and management
As earlier stated, the succession plan at Caterpillar ensures robust talent pipeline are put in place to ensure sustained competitiveness and profitability at the organization. The company’s leadership has a tendency of nurturing skills and developing careers of the employees at the organization. The competence of the employees is the benchmark in the succession plan at the Caterpillar Inc. CAT has a talent management and development team that creates a competency map for the six critical positions in the succession line (Schiemann & Meisinger, 2009). The competency maps evaluate key requirements such as experience levels, leadership abilities and skills required for effective performance in the specified positions. By the help of competency maps, the succession team at the organization can assess the volume of candidates eligible for a leadership role in a certain period. The organization also has an internal development plan responsible for supporting qualified candidates accelerate their career progression.
The development plan and succession competency map are essential tools in the company. CAT can ascertain the readiness of leaders in the succession process. It is imperative noting that the organization has a culture of internal career development, and competency map helps in pre-planning in cases of forced succession process especially due to death or resignation of incumbent leaders (Schiemann & Meisinger, 2009). Succession planning process has distinct components that make the process a success at the Caterpillar Inc. identification of talent, development, and selection of talents are the primary elements of the succession process at the caterpillar.
Talent management team had a significant role in the succession process of James Owen by Oberhelman. This team had an obligation of ensuring that the leadership needs of the organization are effectively fulfilled. Caterpillar’s culture is career development for the employees and talent management team has the role of talent identification. The team collects essential information concerning the eligible candidates and develops talents for selection in the succession process. The team had a significant role in the selection of Oberhelman as the CEO and the board chairman. The team had confidence in his previous performances in the firm and recommended him as the best candidate o succeeds James Owens.
The succession process at Caterpillar inc. is an inclusive process where the CEO, the board of directors and the human resource department has a role to play. All the three arms have a role in talent management. For instance, the board and the CEO must ensure a conducive working environment for career development. Human resource has the obligation of enhancing leadership development (Cunninghann, 2011). The team handles caterpillar’s development programs that put in place measures of developing other leaders within the organization. Oberhelman went through this leadership programs that prepared him for the long journey of becoming the company’s CEO and chairman to the board. James Owens, the outgoing company CEO, was also significantly involved in the selection of his successor. In essence, the three members had a strategic alignment and unity that allowed a successful succession process.
Caterpillar Inc has been successful over the years. It has been able to conquer both domestic and international markets that are evidenced by the ever increasing sales and profitability of the organization. Much of this success can be attributed to the organizations culture of result oriented leadership prevalent in the organization. The organization’s leadership has been instrumental to the success story evidenced in the caterpillar case study. All the leaders in the company are developed within the organization’s development systems. This has been instrumental since the sustainability and growth of the company is not hindered during the transition period (Maggie, 2015). The leadership change from James Owens to Douglas is a clear example of how a successful succession is essential for organizational development. It is, therefore, paramount for any organization to have a clearly defined succession plan that ensures a smooth transition.
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