Just a few months into his tenure as CEO of manufacturing company Caterpillar Inc., Jim Umpleby was clear: He needed an HR partner.
The organization, which employs more than 109,000 people worldwide, had never had an HR leader with a seat at the proverbial table—but with a re-envisioned business strategy closely tied to people success, Umpleby knew he needed a strategic leader who could elevate the function. And that is what he found in Cheryl Johnson—HRE’s 2023 HR Executive of the Year.
Johnson came to the organization in 2017, after a more than 20-year career at multi-industry conglomerate Textron and its subsidiaries, most recently as executive vice president of HR. Before accepting the chief human resources officer role at Caterpillar, Johnson says, she was already energized by how aligned the CEO, leadership and HR teams were on the enhanced focus on people strategy. While the vision and energy were apparent, Johnson knew she needed also to bring to bear a change management philosophy, particularly around culture, to execute the strategy successfully.
“It was a prime moment for me,” she says, “to take everything that had been developed in me over the years and really apply it in a new environment. It was very exciting.”
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Change at the top
From the start, Johnson says, the cornerstone of the culture change needed to drive a new talent strategy was evident: leadership development.
“We recognized that, without a transformed culture, our ability to deliver our enterprise strategy was going to be challenging,” Johnson says. “So, any time you need culture change, you have to start with the top, with the leaders.”
Johnson led a team to develop a framework of leadership traits that would be essential for Caterpillar’s growth. It was a nearly nine-month process that took into account the organization’s rich, nearly 100-year history, along with the future vision and the complexity of the global operation—yet with a focus on simplicity for scale.
Using the identified seven attributes, the team built a university-like training program: 100-level to 400-level courses, with content directly tied to driving business strategy and revenue, which started to roll out in 2019.
“We ensured that the elements of that curriculum were foundational and that threaded through the building blocks were pieces of our enterprise strategy—the things that were most important for our leaders to understand so that they could teach it to the rest of the organization,” she says. “[This includes lessons about] what it means to be a services organization, what it means to be operationally excellent, what it means to have a good aftermarket.”
Ultimately, the program aims to instill a growth mindset in leaders—equipping them with the tools to bring this perspective to employees, Johnson adds.
More than 10,000 leaders around the globe have taken part so far.
In addition, in the last three years, more than 6,000 leaders have utilized a new 360 leadership-assessment tool developed under Johnson’s guidance. A full 94% said the assessment was beneficial to their skills growth.
Since the redesigned leadership development initiative launched, readiness for top leadership positions has advanced 20% year-over-year, and, she says, the work has been instrumental to Caterpillar’s improved operating margins in the last four years.
The work also came at an ideal time—right before the pandemic.
When the team was designing attributes like “intellectual curiosity,” “sound judgment” and an “enterprise mindset,” they never could have imagined how, just 18 months later, leaders would need to turn to those traits to guide the organization through a global health crisis.
“Those attributes actually carried us through the pandemic,” Johnson says, noting the strategy helped create a “language” for leaders, enabling them to demonstrate to their teams what it truly means to advance the enterprise’s success.
A tech-fueled skills transformation
To bring to fruition the goal of marrying people and business strategy, Johnson says, the HR function itself needed to evolve to carry out this new imperative—shifting from bureaucracy to strategy, to embrace its clear value as a thought leader for the entire business.
Previously, Caterpillar had HR leaders embedded in each of its divisions but not in the business segments, which she says fueled a “gap” that cut the C-suite off from understanding talent issues.
“Our group presidents, who each lead major segments of our business, didn’t have access to or perspective on talent because they just couldn’t see it,” says Johnson, who quickly recommended that Caterpillar embed an HR leader in each of its business segments. They now sit alongside group presidents and offer strategic insights on everything from DE&I to employee engagement.
To build out her HR leadership team, Johnson recruited half externally and the other half from among those who had been “raised in Caterpillar” and could offer valuable tenure and institutional knowledge.
“That collection of leaders really went to work at the CoE level and at the business level to begin the work necessary for culture transformation,” Johnson says.
Key to this journey was technology.
To support its pursuit of becoming a strategic partner, Johnson says, HR needed to embed efficiencies in its work as well as derive insights from technology that could give the team a competitive advantage in everything from recruiting to retention.
Under Johnson’s leadership, Caterpillar turned to Workday as its new HCM provider. Then came March 2020.
The project was in the planning phase, with funding secured, when the pandemic hit—and many organizations around the globe hit the pause button on tech implementations.
There was “no opposition” from the C-suite to moving forward, and the organization went live with Workday globally in January 2021.
In its first year and a half, employees turned to Workday for more than 100,000 transactions—cutting HR’s administrative costs by $20 million a year.
As the HCM solution greatly expanded the amount of data available to HR, Johnson focused on building out the HR team’s data analysis skills—to ensure they were maximizing the impacts of these new insights.
This was part of a more strategic focus on skills, enterprise-wide, as Caterpillar has been on a several-year journey of identifying critical skills—across job levels and divisions, taking into account the wider market.
So far, that has included skills identification for 139 HR roles and, enterprise-wide, the consolidation of 98 job titles, with the project expected to conclude early next year.
Communicating the value of the pivot to a skills focus—particularly with the complexity of an organization organized by divisions and not functions—has been a particular focus of hers, Johnson says.
“It’s really convincing the organization to come along with us on that journey of developing this common language—this framework of how we think about what it takes to be successful in a role,” she says. “And when you can cultivate a language that permeates the enterprise, it makes things a lot more malleable. Then, we’ll do the harder work of ensuring that it takes hold in the culture.”
Inclusivity through transparency
Communication has been a driving factor in the success of Caterpillar’s skills transformation—a reality that held true across Johnson’s other accomplishments at the organization.
Apart from prioritizing employee safety and wellbeing throughout the COVID-19 crisis, for instance, Johnson says, leadership was also sharply focused on soliciting and responding to employee feedback.
“We made sure that we listened very carefully to what employees were saying they needed,” Johnson says, noting the organization altered benefits to meet evolving employee needs and quickly transitioned development and education programs to virtual settings so career growth wasn’t disrupted.
Despite the disruptions the pandemic did bring to the organization, its employee engagement scores stayed the same or improved throughout the years of the crisis—and she says consistent communication and transparency from leadership were critical to that win.
Those have also been influential in the organization’s recent DE&I efforts.
Johnson says Caterpillar had already done a “tremendous” amount of good work in this area; for instance, long before her arrival, it had 14 different employee resource groups globally. However, the DE&I focus was largely led division by division, not unified enterprise-wide.
She and her team created a universal DE&I framework to standardize and guide the entire company’s work. They also launched the D&I Report, now in its third year, which highlights where the organization is on its DE&I journey, including the progress made in representation and inclusion, and where more work is needed.
“It creates a way for us to be accountable to ourselves and to our constituents—putting that information out there and then challenging each other to help,” she says. “We want to have an inclusive environment. That’s not just leaders’ work; that’s each and every individual’s work to ensure we are creating an environment where people feel valued and heard, where they feel like they can belong, where they feel like they can bring their DNA into the workplace and use it successfully to help the team be productive.”
That transparent messaging around inclusivity is critical to Johnson’s leadership in the area of labor relations.
Johnson cites three pillars that are central to Caterpillar’s approach during a labor negotiation.
“Fundamental to any negotiation, we strongly believe in bargaining in good faith, respecting the role of the union and treating them respectfully throughout the process,” she says. “Second, we prepare well in advance and build robust contingency plans, so we are ready for any scenario. And finally, we have strong communication with leaders and employees to keep them informed of what’s happening during the entire process.”
HR with humility
Core to Johnson’s work has been the belief that HR must “think more holistically about humans.”
It’s a philosophy that she says was informed by her own upbringing in Chicago’s South Side—where she saw firsthand the pervasive impacts of barriers like racism, sexism and poverty. Those experiences fueled her resiliency, inspired problem-solving and emphasized the power of empathy.
“I brought all of those things not only into this HR role but every other role that I’ve had,” she says. It’s been humbling, she adds, to use those capabilities to craft people strategies that have had tangible impacts for current and future generations of the workforce.
“I recognize that there’s an absolute privilege to be in the seat that I hold, and I’d never take that for granted,” she says, urging her fellow HR professionals to recognize the power their positions afford them—to match the right “DNA” to the right role to drive personal and business success.
Johnson’s ability to leverage her HR expertise to advance business objectives has made an impression on Umpleby, who calls her a “trusted business partner.” He says her strategic execution of the revamped people strategy has yielded “significant improvements” in the company’s financial results, employee engagement, and recruitment and retention efforts.
“Her leadership and vision have transformed the HR function to align with the company’s business strategy, sharpened our focus on talent development and cultivated a culture of continuous improvement,” Umpleby says.
Tracy Keogh, chief people officer at Great Hill Partners and one of the judges for this year’s HR Executive of the Year competition, says the judging panel was impressed by Johnson’s success at making Caterpillar’s HR function more strategic across a range of dimensions.
“While we received a number of wonderful nominations this year, Cheryl’s accomplishments stood out due to her strategic impact across so many aspects of her business—culture, labor relations, talent development, operations and much more,” says Keogh, who was named HR Executive of the Year in 2015, when she was CHRO at Hewlett-Packard. “Her years of accumulated contributions across multiple organizations have made her an invaluable member of our industry.”
Johnson, however, leans into humility in how she thinks about that work—and the Executive of the Year award.
“It’s been an honor to lead the work—but it’s leading the work of some amazing people,” she says. “I never lose sight of that.”
Every year, Human Resource Executive® selects one HR leader for our prestigious HR Executive of the Year honor, which has now been bestowed upon 35 individuals since 1989. Along with this top recognition, we have recognized more than 100 leaders on our HR Honor Roll.
A panel of eight judges reviewed this year’s submissions and based their selections on candidates’: ability to handle significant problems in HR, success at launching innovative programs that achieve measurable results, role and/or success in establishing the HR function as an integral part of their organization, management skills as demonstrated within the HR function, and contributions to the HR profession.
Judges for 2023 were Elizabeth Clarke, executive editor, Human Resource Executive; Dr. Fred Foulkes, professor in the Questrom School of Business at Boston University; and six former HR Executive of the Year winners: Peter Fasolo, EVP and CHRO, Johnson & Johnson; Diane Gherson, former CHRO at IBM; Kathleen Hogan, executive vice president for human resources and chief people officer at Microsoft; Tracy Keogh, chief people officer at Great Hill Partners; David Rodriguez, former global HR officer at Marriott; and Ellyn J. Shook, chief leadership and HR officer, Accenture.