Creating a new corporate culture is not a simple task, but it is one that Caterpillar Inc. has chosen as necessary to assure the future leadership of the company. Sales and revenues topped $36 billion in 2005 for the world's leading manufacturer of construction and mining equipment, diesel and natural gas engines, and industrial gas turbines. And the company proclaims it is "driving positive and sustainable change on every continent."

Caterpillar's goals for 2020 center around aggressive growth and increased profitability by going into new geographies particularly in Asia, adding new product lines, and being more entrepreneurial than in the past. The company, however, faces the challenge of the pending retirement of older employees. It also must be able to hire new employees in the regions of the world where Caterpillar is experiencing the highest growth.

Vision, execute, legacy

Caterpillar estimates that it will need to hire the equivalent of its current workforce by the year 2020 as it grows to 120,000 employees. Working with the company's executive leaders starting in 2001, Caterpillar University defined the leadership characteristics (or competencies) required to achieve Caterpillar's 2010 goals for the company's 8,000 leaders - supervisors, managers, department heads, and executives. Caterpillar is revisiting these competencies to ensure they are still relevant, and the company is on track to meet its goals for 2020.

To put in place the leadership "language" it created in 2001, the company worked with an outside consultant to launch The Caterpillar Leadership Framework. Through a program called Making Great Leaders, Caterpillar emphasized three leadership competency clusters designed to instill a Vision of success, build the skills to Execute the vision, and assure the creation of a Legacy through developing future leaders. The MGL program is a highly interactive, two-day event in which leaders receive feedback on their leadership via assessment tools that focus on competencies, styles, and climate. Leaders are given time in MGL to create development plans and receive individual coaching. MGL cascades from the top of the company to front-line leaders, with Caterpillar's CEO and top management participating as well. The CEO provides continued sponsorship by asking all managers and above to participate in MGL by the end of 2006.

Accountability of leaders

By the end of 2006, the majority of Caterpillar's 2,500 managers will have participated in MGL, along with hundreds of the company's front-line supervisors. Measuring success and holding leaders accountable are important parts of the company's new "people" strategy. By 2010, the goal is to have 80 percent of employees engaged in the new culture and have 80 percent of leaders possess new leadership competencies. Engagement and leadership are measured each year through an employee survey. It measures the progress toward the 80 percent targets. Both of those goals were above 70 percent as of early 2006 which is more then a 20 point improvement over five years ago.

Chris Arvin, Dean of Leadership, Caterpillar University says, "This is a prime example of our leaders becoming serious about leaving a legacy by actively developing themselves and teaching others. Leadership development has become a critical element of Caterpillar's strategy and its importance is recognized if Caterpillar is to reach its goals for 2020."