Caterpillar Inc.’s Strategic Human Resource Management

Subject: Company Structure
Pages: 12
Words: 3270
Reading time:
15 min
Study level: College

Introduction to the organization

Human resources can be defined as the individuals’ contributions to an organization in terms of efforts, skills, and capabilities, thus enabling the organization to maintain its existence. Also, SHRM is regarded as a management strategy employed to manage the employees to achieve a strong competitive advantage (Baets & Oldenboom 2008). Essentially, SHRM entails the management of the employees’ contributions to the firm to achieve the desired goal, thus, an organization with a well-equipped and efficient staff is bound to realize a competitive position. This only comes when there is proper planning in place and the employees work tirelessly towards achieving the goal (Parker 2001). SHRM has played a major role in the development of the resource-based theory of the firm through its business field (Baker 2002).

The company initially started as Caterpillar Tractor Co. in 1925 in the State of California. The name of the company changed to Caterpillar Inc. five decades later. The company tops all the other rivals all over the world in producing various machinery and hardware for construction. The organization likewise is the main service supplier through Caterpillar Financial Services, Caterpillar Remanufacturing Services, and Progress Rail Services (Barney 1991).

The company was formed in 1925. Two companies came together to form in. The two companies are Holt Manufacturing Company and C. L. Best Tractor Company. The merger happened in 1925. Consequently, Caterpillar Inc. was formed in California. Caterpillar hardware is conspicuous by its traditional trademark “Caterpillar Yellow” uniform and the “CAT” logo (Pynes 2013). Mr. Douglas R. Oberhelman is both the chairman and the CEO of the company.

The vision is to make a situation in which all individuals’ fundamental needs are satisfied in a naturally practical way and an organization that enhances the nature of the environment and the surrounding community. The mission is to empower financial development through infrastructure and energy improvement and to give solutions that bolster groups and protect the planet (Baum, Locke & Kirkpactrick 1998).

The strategy is to give workplaces, items, administrations, and solutions that make beneficial and effective utilization of assets as we endeavor to accomplish the vision. The company applies development and innovation to enhance the manageability execution of Caterpillar’s items, services, arrangements, and operations. The company holds that sustainable advancement is improved by creating frameworks that boost life cycle advantages while additionally minimizing the financial, social, and ecological expenses of possession, as reflected in the manageability standards (Berger & Berger 2004).

The company’s items are sold through an overall system of dealerships, 50 of which are situated in the U.S. There are 141 other merchants outside of the U.S. CAT (Caterpillar Company) merchants reach out to more than 180 countries with CAT and CAT related offices traversing more than 500 areas around the world. This permits CAT to be near their worldwide client base (Chatman & Cha 2003). The company provides a wide range of products which are more than 300. The company is based in the state of California. Also, there are several offices located across the world. The organization’s structure is a top-down approach, where there is a central authority giving all the instructions and making the key decisions (Robbins 2003).

Organizational structure

Organizational structure

Roles of the human resources department

Just like any other organization, CAT Company has a well-functioning HR department. The HR department has several roles that are essential for the sustenance of the police force. The HR department of the company plays six distinct roles. The roles include:

  1. Recruitment: They publicize job vacancies, look for competent candidates, screen candidates, carry out interviews, and make recommendations for employment (Gretchen & Porath 2012).
  2. Safety: The security of the working environment is very essential. One of the principal elements of the human resource is to bolster work environment security and keep up logs for injuries and casualty reporting. Also, human resource security and danger experts regularly work intimately with the human resource benefits authorities to handle issues of compensation (Holbeche 2005).
  3. Employee relations: This is the human resource sector given the mandate to foster the relationship between the employer and the employees. The department does this by measuring job fulfillment, the engagement of the workers, and settling workplace disputes. Employee relations capacities may incorporate creating administration response to the workers’ unions, and manage the contracts of the employees by the unions (Kotter & Heskett 1992).
  4. Compensation and benefits: The role of human resources incorporates setting pay structures and assessing focused remuneration practices (Kalpic 2002).
  5. Compliance: Consistency with work and job laws is a basic human resource capacity. Resistance to comply can bring about working environment dissensions in light of negative work ethics, hazardous working conditions, and general disappointment with working conditions that can influence efficiency and at last, productivity (Li & Green 2010).
  6. Teaching and growth: The training in leadership may be required of recently enlisted workers and supervisors or directors. Professional improvement opportunities are for workers searching for limited time opportunities or representatives who need to accomplish individual objectives, for example, completing an advanced education. Projects, for example, educational scholarships frequently are inside of the domain of the human resources’ training and development sector (Neely, Gregory & Platts 2005).

Internal and external environment

In CAT Company, the roles of the human resource officer include the procurement of staff products under the SPPS (Staff Product Purchase Scheme), updating the staff data on the medical insurance datasheet, and carrying out training programs under the TTT (Train the Trainer program) system. The Human Resources Department manages the administration of individuals inside of the association (Phillips 2005).

The office is in charge of drawing in workers, assigning them in their positions, and guaranteeing their performance. All the workers have their records in the System for Time and Recording (STAR). This record is updated regularly. The participation, yearly leaves, easy-going leaves, debilitated leaves, complimentary leaves, and so forth are likewise redesigned consistently into the framework. The employees must have confidence in their human resources department (Robson 2002).

There are different exercises in the human resources department that keep the senior officers at the department busy. The human resource personnel additionally handle the training between departments, supervising the training, organizing the TTT training, and the introduction, training, and settling of newly recruited employees. The update of the staff data on the medical insurance datasheet takes place regularly (Russell & Taylor-Iii 2008). The launch of the SPPS was done this year, soon after I had joined. This program helps the employees to remit payments in installments for acquiring a commodity. This scheme applies only to the police officers who have been in service for at least one year (Porter 2008).

Purpose of the performance appraisal

Performance appraisal ought to concentrate on three targets: execution, legitimate issues, and coming to concurrence on what the worker is going to enhance in his execution and what you are going to do. Both the manager and worker ought to perceive that a solid relationship exists in the middle of preparing and execution assessment (Rodger, Meehan & Tanner 2006). There is a privilege of every worker to be included in occasional meetings for the sole purpose of examining their execution and clearing up their expectations. These sessions will be more profitable when the director and his subordinates will take them as a beneficial one if there will be two-way correspondence (Trivellas & Dargenidou 2009).

When the objectives are recognized, an arrangement for their accomplishment ought to be created. The arrangement may call for assets or backing from other staff individuals keeping in mind the end goal to achieve the results. At times, the arrangement may include extra preparation (Cadez & Guilding 2008). The boss ought to stay in touch with the representative to guarantee the preparation encounters are delivering the fancied effect. The worker advancement objectives ought to be perceived as honest to goodness, and arrangements ought to be made to achieve the objectives through formative encounters or training. Empowering improvement is a proficient obligation. It also persuades a representative to seek extra responsibilities (Cadez & Guilding 2012).

What’s more, the quest for these destinations will likewise enhance the prospect that present representatives will be qualified as applicants when positions get to be accessible. This methodology inspires current execution; it also helps the enlistment of current workers as a qualified possibility for future positions. It is certain that a worker gains from his qualities and shortcomings (Cinquini & Tenucci 2010). Nobody can preclude the significance of securing the support of workers in the assessment process. Representatives feel that they are considered as important as people and that the administrator is genuinely worried about their needs and objectives.

Organizational communication

Compelling correspondence is one of the key segments of the human resources in any association, particularly the police department. Furthermore, it turns out to be especially more vital for an ever-busy police force to have a decent correspondence between the administration and the staff. This will have a direct effect on service delivery (Dashtbayaz, Mohammadi & Mohammadi 2014). Additionally, it brings a more transparent working atmosphere, thus, changing the employees into the faithful and abler staff.

The workers need to convey clearly and on time what they need, and the administration ought to listen and ensure they are all aware of all their staff’s prerequisites and needs. Along these lines, if this is present in a working environment, then it makes a positive climate and both the parties can speak with one another with clarity which will urge staff to put forth a stronger effort more than they always do (Dillman 2007).

Human resource policies and procedures

The resource-based theory, also known as the resource-based view of the firm, is one of the latest strategic management concepts to be enthusiastically embraced by marketing scholars. This theory focuses mainly on the resource base a firm has other than the finished products of the firm. A firm gains competitive advantage by suitably employing its resources in production (Dwairi & Jurkus 2007). The competitive advantage here refers to the state where the firm adopts strategies of production which add value to the resources and these strategies are not common in the competing firms (Aver & Cadez 2009).

Resource diversity gains a competitive advantage if the firm has quality resources which the other competing firms do not have; for instance, suppose an insurance firm decides to introduce a new insurance product to the market, it can only gain a competitive advantage when no other firm has a similar product in the market as per that time (Gerdin & Greve 2008). Resource immobility, on the other hand, applies to resources that cannot be obtained and maintained easily by the competing firms because of their high costs; for instance, suppose a firm is debating whether to acquire a ‘common’ operations software or instead acquire a customized operations software which is suited to their needs (Henri, Boiral & Roy 2015).

The firm won’t have any competitive advantage when it acquires the ‘common’ operations software because the other competitors already have it. When it acquires the customized software, there will be a competitive advantage as the software is not available to the competitors.

Resource-based view over time

The resource-based theory further entails that the resources owned by the firm can be used to serve two purposes: creating a competitive advantage and achieving excellent performance in the long run. Competitive advantage is created by the scarce and essential resources and it can be maintained for over a long period until the firm becomes self-sufficient (Langfield-Smith 2008). Other than a competitive advantage, the resource-based theory is dependent on the economic rents and the firm’s performance. Economic rent is the return on resources over and above the real cost of the resources.

Therefore, the firms will strive to maximize the economic rent to maintain their competitive advantage, but the value of the rents will tend to depreciate over time because of stiff competition and the emergence of new and efficient technologies. The firm’s performance applies to the strategies it adopts to efficiently use the resources to achieve the desired outcome (Naranjo-Gil & Hartmann 2007).

As stipulated earlier, SHRM has had a major contribution to the resource-based theory of the firm. A firm’s resources include management strategies, firm’s characteristics, firm’s assets, etc. that help the firm to create management decisions that will enable them to achieve a competitive advantage. The firm resources have been categorized into three different classes, i.e. physical capital resources, human capital resources, and organizational capital resources (Oates 2015).

Physical capital resources entail a firm’s machinery, physical geographic location, nearness to the source of raw materials, and the technology used in the firm. Human capital resources, on the other hand, entail a level of expertise, employees’ relationship, intelligence; etc. Organizational capital resources include the relationship between people within the firm and between the firm and people outside the firm, the firm’s organizational structure, etc.

It is not automatic that all the firm’s capital resources (physical, human, and organizational) contribute to the firm achieving a competitive advantage. Sometimes, there might be a negative result or no result at all when the resources are mismanaged. This will lead to the firm not achieving its goal of adopting a relevant strategy that will gear them toward achieving a sustained advantage (Trkman 2010).

When a firm adopts a production strategy that adds value to its resources but the strategy is not common to all the other competing firms, and further those competing firms are not capable of imitating the advantages of those strategies, then the firm is said to have a sustained competitive advantage. A firm’s competition is assumed to include not only its current competitors but also potential competitors that are projected to enter the industry at a certain future date (Tucker, Thorne & Gurd 2009).

A sustained competitive advantage can also mean a competitive advantage that lasts for a longer duration of time. For instance: consider a telecommunication firm which has a competitive advantage due to its large number of subscribers; when it introduces a new product to the market, it is bound to have a sustained advantage for some time since the other competitor’s firms still can’t offer any worthy competition (Yi & Tayles 2009). The maintenance of competitive advantage relies on the capacity of the competitor firms to emulate that competitive advantage. If competitive advantage still exists after attempts to duplicate that advantage (by the competitor firms) have stopped, then there exists a sustained competitive advantage (Barney 1991).

SHRM postulates that decisions which are relevant to the growth of the firm and are in line with the firm’s objective are implemented while the decisions which are not in line with the firm’s objectives and do not add value to the firm’s resources are ignored. For example: consider an IT firm to be counted in the league of other well established IT firms (such as Microsoft, IBM, etc.). For such a firm to constantly offer first-class services, it must have a wide range of efficient personnel, who have to go through a competitive recruitment process (Chernow 1999).

The firm has to maintain high standards and employ a management strategy that is in line with its objective to hire high-performing individuals, who are very qualified and are well paid. This is an essential requirement to boost the goodwill of the firm in the labor market. The firm will, therefore, work so hard to be ranked among the already established firms such as Microsoft and IBM (Haley 1986).

Various models determine whether SHMR exists in a given organization. These models include open system theory and a universalistic perspective. Open system theory asserts that the source of a company’s inputs is the environment i.e. from its customers or the other companies (Lundberg 2001). The universalistic perspective argues that excellent performance by the firm is attributed to good SHMR practices for example: on job training, job definition, etc.

Many firms would adopt any strategy possible for them to maximize their returns on the resources (Miller 2000). Thus from the resource-based theory’s point of view, continued diversification will tend to accelerate the performance of the firm. Therefore, high performance is exhibited by the firms with a continued diversification and vice versa. This occurs because high performing firms are endowed with a large resource base. A highly diverse firm poses a major challenge in terms of management. There is a strategic relationship between the different resources shared by various business units (Morgan 1997).


Human resource is characterized as the individuals’ offerings to a company in terms of determinations, services, and competences, thus empowering the company to maintain its presence. Also, SHRM is regarded as a management strategy employed to manage the employees to achieve a strong competitive advantage. The resource-based theory essentially links itself with resource diversification. This is evident in the level of the interrelationship between the performance of the firm and the rate of diversification. The interrelation can be seen in terms of planning strategies, management’s view of the interrelationship, etc.

The diversification process is therefore considered as a dynamic process since the firm also has dynamic capabilities and knowledge (Lawler 2000). In the future, it is postulated that great opportunities will arise when a firm decides to employ a strategy that links the resources in the firm which makes them a sustainable competitive advantage. Diversification of the resources is also related to the performance of the firm regarding the external links among the resources. This will help to identify the firm’s future position about the level of competition in the market (Lucifora & Origo 2015).

The firm will be in a good position to counter the challenges that come about by linking the changing resources with the way they adjust to the diversification process. The resource-based theory of the firm seeks to harmonize the many various performances of the resources. This helps to have a clear understanding of the nature of the relationship between the resources of the firm to execute fully the planning process (Montana & Charnov 2008). Another opportunity that comes about is the provision of a clear disparity between the incentives of the resources and the level of competence of the firm to make diversification.

This helps in painting a clearer picture of the benefits of diversification and also prevents the firm from engaging in anti-competitive behaviors. The internal resources of a firm play a major role in the production process (More 2008). The internal resources here entail strong, reliable, and equipped personnel who implement the relevant strategies aimed at achieving a sustained advantage to the firm.

In the past, human resource management was categorized as per the various roles it plays within the firm. These roles included: recruiting employees, training the employees, and appraising the employees (Muller 2011). The integration of these roles has created some major problems in the human resource departments of the firm. One such problem is the inability of human resource managers to comprehend how to synchronize all their functions (Nyberg 2008).

Therefore, the human resource departments have not yet realized that everything they do in the firm will eventually contribute towards the main obligation of the firm. When a firm becomes strategic, human resource managers will be responsible for the works they do (Ola & Trond 2015). They have to experience and absorb the pressure that is brought about by being in the position of management so that in the event the firm achieves its goals, the human resource managers will feel like a part of the team responsible for that achievement. The managers will, therefore, set their own goals and adopt efficient management strategies that will drive them towards the goals.


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