BU628 Leadership in Practice Rockwell Automation Group E v2 PDF

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ASSESSING THE LEADERSHIP AT ROCKWELL AUTOMATION Leadership in Practice Project

Dana Campagnolo Nick Dinka Lauren Hishon Marko Miokovic Kevin Rankin Kathryn Simonovic Michael Wayne

LEADERSHIP BU628A

Table of Contents Executive Summary.....................................................................................................................................2 Company Profile..........................................................................................................................................2 Women in Engineering................................................................................................................................4 Leadership within Competitors....................................................................................................................4 Rockwell Automation Leadership...............................................................................................................5 Exhibit 1: Rockwell Automation’s Suitability Model..............................................................................6 Leadership Analysis.....................................................................................................................................7 Proposals for Change.................................................................................................................................11 Risks & Contingency Plans...................................................................................................................12 References.................................................................................................................................................14

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Executive Summary Rockwell Automation (Rockwell) is a publicly traded international company specializing in the production of hardware, software, and services that support the manufacturing and operations of other organizations. Keith R. Nosbusch was the former President of the company, and held the role of CEO from 2004 until June of 2016 when Blake Moret, a 30-year veteran of the company, took over the position. This leadership transition must be handled delicately as it can be either a danger, or an opportunity, depending on how it is handled. Both Nosbusch and Moret have identified the shortage of female representation in their workforce and leadership as a current and future issue. Though the issue of a lack of female representation exists industrywide, Rockwell must actively seek to minimize the underlying issues such as women not being given opportunities for advancement, women losing interest in the engineering field, or women being offered better opportunities in other fields, if it wishes to maintain a strong, diverse workforce.

Structural change at Rockwell also may need to be addressed as there has historically been a hierarchical structure of male-dominant senior leadership. This has created an implicit “old men’s club” mentality, which may be impacting the lack of female representation. To address this, Rockwell is currently in the process of restructuring from such a hierarchical scheme, to a matrix-style. However, structural frictions still exist both between head office and satellite locations, and between “late-career” staffers and newer workers. Mid-to senior management contains adequate female representation, but entry and senior level representation is low. To successfully succeed in the long term, Rockwell must create programs focused on recruiting women into entry level positions, training these women to grow into leadership positions, and creating a suitable working environment to maintain their female workers and leaders.

Company Profile Headquartered in Milwaukee, Wisconsin, Rockwell is a large, publicly traded international company that produces a wide range of hardware, software and services, primarily to support the manufacturing and operations of other organizations. 2

The company’s wide array of products include industrial control panels, systems and components, motor control devices, and the software, security and networking technology required to run them These products are currently sold under a variety of brands, including Allen-Bradley and ICT Triplex, among others. Their current services range widely, and include asset management, consulting, front-end engineering and design, maintenance and repair, and other services in support of its clients’ hardware and operations. The company’s clients come from a wide range of sectors, including automotive, mining, power generation, water treatment and many others (Rockwell Automation, 2016). Founded in Milwaukee in 1903 as Compression Rheostat which made motor controllers for industrial cranes, the company has gone through many evolutionary changes in the years since, with its fortunes following broader trends along with the United States economy. It thrived during the two world wars as a result of government contracts connected to the war effort, but struggled during the great depression. The company (then still named Allen-Bradley) was purchased by Rockwell International, the manufacturing and aerospace conglomerate, in 1985 and combined in the late 1990s with Reliance Electric, Dodge power systems, and a recently launched software business, to form Rockwell as it stands today. Keith R. Nosbusch, became President of the new company and held the role of CEO from 2004 until June of 2016, when Blake Moret, a 30-year veteran of the company, took over the role. With the arrival of a new generation of leadership, there is both a danger and an opportunity with respect to the issue of women in the company. Despite well intentioned policy initiatives, the number of women in frontline roles has been declining, and attrition is making it difficult to plan for the nurturing of future female leaders. The company hired its first female employee – Julia Bizewski Polczynski - in 1918, and she rose to the position of foreman the following year. Rockwell must reclaim this early spirit of openness to empower a new generation of female leaders drive the company to a prosperous and innovative future.

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Women in Engineering There are very few women engineers in the industry for various reasons. One reason has been linked to the number of women in undergraduate engineering degree programs; only 19% of all engineering degrees are held by women (Orson, 2015). Further, 11% of women who receive these degrees do not enter the field, and almost 40% quit the engineering profession within the first few years of work (Orson, 2015). While it may seem as though many women are leaving the workforce to take care of children, that many not be the only reason. In one study, it was determined that women left the industry for a number of reasons, including: not being given opportunities for advancement, losing interest in engineering, or being offered better opportunities in other fields (Orson, 2015).

Leadership within Competitors Although the industry in which Rockwell operates is very fragmented, their most notable competitors are GE and Siemens. While both are global enterprises that span multiple sectors, they are the most relatable in the type of operations conducted. There are important insights that can be drawn from the leadership styles implemented at these firms as well, especially relating to women in leadership.

In 2013, Siemens had a change in CEO with the hopes of more effectively competing with GE. The new CEO, Joe Kaeser, leads with quick action, which is contrasting to their previous CEO, who tended towards delegation rather than action. Mr. Kaeser was concerned with their position in the industry and therefore restructured the company to have the power centralized around him, allowing him more control over the decision making. Siemens as a result, operates on a directive style of leadership with a dual board structure. They are noncollaborative and tend towards a theory X leadership style. In 2013, two women from the board left, leaving the highest woman in leadership as a divisional head, one level below Siemen’s top management (Webb, 2013). However, Mr. Kaeser has publicly stated that gender quotas may be necessary to place an emphasis on women in leadership roles within their company (Webb, 2013).

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In contrast to Siemens, GE Canada has had a female CEO, Elyse Allan, since 2004. They have received many accolades for women in leadership and in the industry, including The Times Top Employer for Women, Working Mother 100 Best Companies, and being named #3 for Top 50 Employers for women engineers (GE, 2016). GE’s leadership style is collaborative, transformative, and tends to be more theory Y. They even have a women’s network which provides a mentoring relationship between women within the company, where they help to share information, experiences, and develop future women in leadership (GE, 2016). These awards and programs, as well as having a female CEO who actively promotes a collaborative work environment and demonstrates clear lines between a work-life balance, may help to attract and retain women to the company.

Rockwell Automation Leadership Rockwell has always had a hierarchical structure with most of their senior leadership being males. This has developed an implied leadership style within top management, below the board of directors at Rockwell, that promotes an “old men’s club” mentality. Rockwell promotes a majority of its senior positions from within, so many of the leaders have been part of the company for quite some time. This older generation, or “late-career staffers”, tend to be directive, task-oriented leaders. They strongly characterize Theory X leadership in that decisions require specific approval based on position within the organization. Historically, their buildings have been made up of offices and cubicles where better offices were given based on seniority and role, with the most senior-level positions being placed on the highest floors. The hiring practices that were put in place emphasized technical capability and innovation over soft skills such as empathy, communication, or sociability. The traits they hired for are congruent with much of the staff they currently employ, and an increasing number of employees with this mentality will continue if the culture is not changed. Likewise, promotions and recognition are based primarily on experience, technical capability, and seniority, meaning that there has not been much diversity present at the top of the organization. Many recognition programs emphasized and rewarded the ability to win big orders (sales), creating a more competitive atmosphere. These views are largely based on the theory that leadership is a skill. 5

Over the past 5 years however, the company has begun to restructure and is in transition from a hierarchical scheme to more of a matrix-style. Responsibility is now given based on region or business unit. Leadership is trending away from directive and task oriented to more democratic, collaborative, supportive, and relationship based. They also are putting a larger emphasis on coaching and mentorship to develop their employees. With this change in leadership approach has also come a change in hiring practices, which are now based on the “Suitability Model” (Exhibit 1). This model depicts Rockwell’s explicit leadership and vision, which emphasizes such factors as temperament and IPC. This differs greatly from the technical skills that their previous practices emphasized. Likewise, promotions are now supposed to be based on person-role “fit” and fit within the team. Recognition is also given for team performance and strategic successes (as opposed to individual and task successes). Exhibit 1: Rockwell Automation’s Suitability Model

From a fixed asset perspective, Rockwell’s buildings are transitioning to include more collaborative work spaces where workers can come together and collaborate on team-based 6

projects. These changes in culture were driven by Susan Schmidt, Senior Vice President of Human Resources, and Blake Moret, the newly appointed CEO. These teams will foster betterrounded results by utilizing multiple perspectives and strengths. The company has also adopted a more theory Y style of leadership over the past 5-7 years where key business planning decisions are made by cross-functional groups who have been appointed the power to make decisions and execute plans that drive business results in a more rapid manner. With all of this being said, Rockwell is still split between the two different cultures; the old vs. the new. The main split is said to be divided into two areas of the organization: head office and satellite locations, with the “late-career” staffers sticking with the old mentality, and the new, younger employees adopting the new approach.

Though the explicit leadership is mainly consistent throughout the organization, the implicit leadership style at Rockwell differs between these divisions. The question then becomes, who or what exactly is influencing the leadership at Rockwell?

If we understand leadership as an influential process, this divide at Rockwell is quite interesting as those in satellite locations, where there are mainly new employees that are adopting the new approach, should be influenced by upper management at head office. However, the head office houses most of the senior leadership team which includes “late-career” staffers that have the “old men’s club” mentality and leadership style. This unclear tie between leadership and influence makes it very unclear as to what the future leadership of Rockwell may look like.

Leadership Analysis Senior and mid-level leadership at Rockwell is currently shifting to a better mix of men versus women, with approximately 7 men to every 3 women. However, front line engineers and sales individuals are still male dominated positions, due to the lack of appropriate female applicants. Having a diverse workforce is incredibly important in engineering as it contributes to creativity, innovation and productivity (AAUW). Without female engineers, there is a “brain waste” of half the population (AAUW). It is known that more diverse teams come up with better solutions, ones that are more representative of the entire population (AAUW). For example, 7

airbags were originally designed for the average sized man, and not designed for females or children (AAUW). These airbags were created by a group of male designers and resulted in a lot of unnecessary injuries (AAUW). This unfortunate mishap stemmed from a workforce not diverse enough to consider all stakeholders. In an engineering firm that develops technology, having a diverse workforce that comes up with the most creative and innovative products and solutions will be imperative for future success. The problem lies much deeper than Rockwell not hiring female engineers, in that they don’t get many female applicants to hire. 95% of applicants are male for any position at Rockwell. This is the result of a greater issue that surrounds the engineering disciplines that feed skilled workers into this industry. The 19 male to 1 female ratio of applicants that Rockwell sees on a typical engineering posting is reflective of the enrollment numbers at many of the electrical, systems design, and mechanical engineering programs at Universities across North America. The literature says that if the goals of engineering research and curriculums were reframed to be more relevant to societal needs, more females would enter engineering programs in general (Nilsson, 2015). For example, at MIT there is an interdisciplinary program that focuses on developing “technologies that improve the lives of people living in poverty”; 74% of the 230 students enrolled in this program are female (Nilsson, 2015). Even though enrollment in certain fields of engineering are low, there are female engineers in the industry; Rockwell needs to get better at attracting these potential female applicants to increase their diversity. Two of the five regional VPs in North America at Rockwell are currently women, which shows that there are women in leadership positions at Rockwell. Therefore, it is determined that the main issue is not with females in high leadership positions, rather with the issue of women not entering Rockwell’s workforce at the entry level. This means that there is a threat over time of not enough women avaiable in the pipeline to promote into those leadership positions. As Rockwell is a company that has a strong culture, it typically develops talent internally and promotes from within. There is an implicit “old men’s club” mentality that exists at Rockwell and this would certainly impact the amount of effort that hiring female applicants is given. There is also a

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women’s group at Rockwell that promotes women in the industry. This initiative was started with middle managers, adopted by a couple of key members of the board of directors, and launched back down throughout the organization. Some members of the “old men’s club” seem to have passed it along more as a “check the box” activity rather than truly looking at the advantages and buying into the program. As a result, the desired organizational change is at risk in some large sectors of the company. If programs are initiated at the top management level and delivered with passion and ongoing accountability, they are more likely to trickle down to the front lines, which may also help with recruitment of female talent. Here, the followership and leadership is not consistently aligned, causing any influential change of hiring and recruiting practices to be nearly impossible. There is also a disconnect between the satellite divisions of Rockwell and the main corporate headquarters. The Satellite divisions are seen as being further along with adopting the new-age leadership profile than the headquarters in Milwaukee. Looking at the Canadian organization, the most senior leader is a female leading a team of over 500 employees from coast to coast. Her core direct team is made up of 2 females and 7 males, and though the senior leadership team is made up of only 30% females, it is diverse in background and culture. The team has adopted the new leadership goals, and spends a considerable amount of time investing in coaching, mentoring, development, and ongoing career discussions with all employees looking for career advancement, and many who show the traits of potential leaders. There are times where the career and succession plans are called into question by corporate, typically when a promotion or position change is put forward by the regional team. Again, having the top leadership, and here the top corporate leadership, not aligning their views with followership actions results in a lack of company objectives being accomplished and the feeling of disconnect between the sub-regions and head office. Rockwell has invested a lot of time and money into attempting to improve the issue of women in the front lines of the organization. The Science, Technology, Engineering, and Math (STEM) organization is one of the leading organizations in the United States to ensure that these core skills are instilled within our youth from an early age. Their primary goal is to prepare our children for roles within science and technology, and a key target group of this organization are 9

young women. Rockwell has been a key lead sponsor of this organization for many years, and more than just funding, many of the employees volunteer as coaches to lead teams that compete at these events. Most recently, the 2016 Champion of the STEM competition was a team sponsored by and coached by Rockwell. Rockwell has also spent considerable time working with and supporting two other organizations, PWC (Professional Women’s Council) and SWE (Society of Women Engineers). One of the key senior leaders, Lee Tschantz, the North American Senior Vice President of Sales, has been heavily involved with advancing both organizations over the past 5 years. PWC has Rockwell chapters in Canada, the US, and a number of other countries. Lee was honoured with an award f...