A Leadership Makeover at Ingersoll Rand

An interesting thing about change is that every change leads to another change. Just ask industrial conglomerate Ingersoll Rand. The company went through a series of acquisitions and divestitures from 2000 to 2008. After 65 small and medium-sized acquisitions, it acquired Trane, a climate control systems manufacturer, in 2008. Today, the company has more than 46,000 employees in 54 countries.

After a decade of portfolio transformation, company leaders were operating in silos rather than in cooperation; they tended to be directive rather than inclusive; and the culture was risk-averse rather than encouraging calculated bets. When Michael Lamach became the company’s CEO in 2010, Ingersoll Rand had thousands of employees scattered across the globe who were just getting to know the company they now worked for.

After its portfolio and employee roster makeover, Ingersoll Rand leaders decided the company needed an internal face-lift and focus on global integration, leadership and talent management issues. Success would require a strategy as well as a commitment to the idea that employees make a difference. With this in mind, the company sought to help leaders create that unifying commitment from employees via a consistent vision, purpose and values.

Those three things in addition to brand promise and competencies combine to describe the company culture — how employees behave, the kinds of decisions they make, what it’s like to work at Ingersoll Rand and what it’s like for customers to do business with the company.

The Goal of Global Integration
Owning a variety of manufacturing operations can create profitable opportunities. Diverse operations can supply and serve each other, and work together to offer customers integrated packages of products and services. However, achieving those kinds of synergies requires integration.

Less than a year after Lamach was appointed CEO, Dan Hawkins was named vice president of talent and organization development. Hawkins was tasked to work with Lamach and the executive leadership team to develop a leadership approach different from the siloed, directive approach prevalent throughout Ingersoll Rand.

Soon after joining the company, Lamach introduced three strategic priorities: growth through innovation, emerging markets and services; operational excellence; and progressive, diverse and inclusive culture.

Lamach’s vision included a new leadership approach to transform the company’s view of itself from a traditional, loosely knit industrial-manufacturing company to a progressive, diversified and well-integrated company with a unified culture. To assist, Hawkins turned to Corinne Mason, the company’s director of executive and leadership development.

However, while executives spend plenty of time talking about values and priorities, it is the middle managers and rank-and-file who embody a company’s actual culture. Further, in Lamach’s initial interactions with other company leaders, vocabulary became a key issue. As the new CEO attempted to convey his leadership expectations, he discovered his direct reports used different terminology and operated on a different wavelength.

Hawkins and Mason set out to introduce some common language to encapsulate the new leadership approach. Through one-on-one and group conversations with more than 100 of Ingersoll Rand’s leaders across the globe, the company developed five pillars of success: Model our values, inspire our people, focus on customers, create long-term value and deliver premier performance.

The five pillars were unveiled to 300 of the company’s top executives at an annual leadership conference in February 2012. Soon after they were rolled out to employees companywide. The company continues to emphasize these five foundational elements as often as possible. As a result, they have become part of Ingersoll Rand’s everyday culture and consciousness. The pillars are also printed for ready reference on employees’ identification cards.

Competencies and Accountability
However, Hawkins and Mason knew they had to drill down past common leadership language to define specific and measurable competencies expected of leaders and employees. The duo established a distinct difference in their competency model for Ingersoll Rand than was used in past models. Essentially, every employee has a responsibility to behave in ways that will help all employees, and the company, achieve success.

In the new model, Ingersoll Rand established two sets of global competencies: one set of six expectations for leaders and one set of seven for all employees. Each competency corresponds to one of the five pillars. The competencies drive and align behaviors to create a high-performance culture.

The company also has begun implementing a new level of accountability based on the competencies. The new expectations have been integrated into all HR processes, including learning and development materials and hiring guidelines. An updated 360 review is also driven by the new model. The competencies have become a central focus of the annual review process as well. Employees are reviewed on how they demonstrate knowledge, skills, abilities and personal characteristics, and ultimately how they achieve their business objectives. The competencies help to differentiate superior from average performance in a given job or role.

Ingersoll Rand’s strategy included communicating to leaders and employees — through assessment, leadership development, promotion and succession planning — that success at the company meant embracing the new model of leadership and competency. For example, organizational leadership reviews are completed with a filter for how successful individuals demonstrate leadership and the defined competencies. Succession planning considers the competencies, and managers inform their employees what competencies they excel at and which need further development.

Further, leaders are not only assessed on how they put the six leadership competencies into practice, but also they are assessed on how their direct reports implement the seven competencies expected of all employees. Every manager with five or more direct reports is given employee engagement scores based on employee surveys: How is your manager treating you? Is he or she giving you the training you need? Do you understand the new competencies, and is your manager encouraging and helping you to achieve them?

Ingersoll Rand informs its leaders through training, leadership conferences and one-on-one conversation that they need to: “Engage your employees. Coach them. Develop them. That’s all a part of your job as a leader at Ingersoll Rand.”

Fulfilling Future Workforce Needs
With 4,000 engineers globally, Ingersoll Rand relies on innovative thinking and technical expertise to deliver the best products and services.

The company wants a strong pipeline of talented individuals to continue its 143-year history of innovation. As a result, Ingersoll Rand funds science competitions focused on engineering and environmental sustainability and communicates its values, purpose and competencies to the future workforce.

For instance, the Solar Decathlon is a competition organized by the U.S. Department of Energy. It challenges 20 collegiate teams from around the world to design, build and operate solar-powered houses that are cost effective, energy-efficient and attractive. The program educates students and the public about building sustainable communities.

Ingersoll Rand also has hosted six Environmental Defense Fund, or EDF, Climate Corps fellows over the years. This program gives students practical experience and enables companies to connect with universities. Last year, the EDF Climate Corps fellows at Ingersoll Rand helped identify potential savings of $1.6 million in energy costs.

These coordinated investments in education have a direct correlation to increasing interest from job seekers. According to Hawkins and Mason, people are energized about the leadership model and high-performance culture. People want to be part of a company that is progressive and inclusive, where leaders spend more time with their teams instead of sitting in offices.

“Together, the renewed Ingersoll Rand vision, purpose, competencies and overall leadership model provide connective tissue and alignment across the company,” Hawkins said. “They are a shared way of thinking about who we are, why we do what we do and where we’re going that differentiates us from our competitors. They allow us to march forward in unison to achieve more than we possibly could independently and together to arrive at premier performance.”

Mason agreed. “Achieving premier performance can’t happen if we’re only in this with our heads. Each one of us must be in this with our hearts as well,” she said. “Helping our leaders achieve that unifying commitment is the objective of our improved approach to leadership at Ingersoll Rand.”

The improved approach to leadership is also having a direct impact on employee engagement and business results. When Lamach became CEO in 2010, Ingersoll Rand began a journey to increase the company’s operating capability, focusing on innovation and operational excellence. The refreshed approach to leadership was a driving factor behind that journey. The initiatives have increased Ingersoll Rand’s operating margins almost 400 basis points in the last three years.

Further, the company has improved its competitive strength and earnings per share. Employee volunteerism has increased 8 percent, and one of the most successful engagement programs, global green teams, doubled in participation. These volunteer teams focus on reducing Ingersoll Rand’s environmental footprint and improving overall operations.

Companies embarking on enterprise-wide change like Ingersoll Rand must define what they are trying to become. They must create a language with which to talk about that vision, translate goals into measurable competencies, hold leaders accountable to follow through, and those leaders must assist and encourage their direct reports to do the same.

Louis Carter is founder and CEO of Best Practice Institute, a professional learning and organizational change association. He can be reached at editor@CLOmedia.com.