Leadership & Employee Motivation at Caterpillar

This assignment delves into the issue of leadership performance and employee motivation at Caterpillar Inc. It examines how reduced salaries and benefits for new employees impact morale and proposes solutions using a three-step problem-solving approach grounded in OB (Organizational Behavior) concepts. The analysis aims to identify key problems, their root causes, and practical recommendations to enhance leadership effectiveness and boost employee engagement.

Running head: PEOPLE LEADERSHIP PERFORMANCE
People leadership performance
Name of student
Name of University
Author note

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Table of Contents
Introduction......................................................................................................................................3
Step 1: Defining the problem...........................................................................................................3
Step 2: Identification of causes using OB concepts.........................................................................4
Step 3: Recommended solutions to overcome the issues................................................................5
Conclusion.......................................................................................................................................7
References........................................................................................................................................8

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Introduction
The report focuses on the various aspects concerned with the leadership performance of
people and its impact on better performances by workers and further leading to enhanced
organisational productivity with ease and effectiveness. The business organisation Caterpillar has
been considered as the case study here where several problems have been faced along with
relevant solutions to overcome those effectively and conveniently. The most important causes
with the utilisation of organisational behaviours concepts have been illustrated here as well and
how these causes can lead to issues at various levels such as individual level, group level and at
the organisational level (Aamir et al. 2012). The problems faced by the organisation Caterpillar
have been illustrated here along with the gaps that are defined between the present and expected
situation. One of the major problems is the lack of motivation, turnover of 30,000 employees in
the year 2009 (Cat.com 2017). Based on the case study, the 3 –step problem solving approach in
leadership is essential for overcoming these kinds of problems and ensure successful functioning
of the business organisation. It is the responsibility of the leader of Caterpillar to solve the
problems by following all these three steps properly (Ahmed and Shepherd 2012).
Step 1: Defining the problem
The most important problem here is the reduced benefits provided to the workers, which
has even de-motivated many workers. It is a major problem in this case because any workers
gain the positive mindset when they are paid good amounts of wages along with other added
benefits to keep them motivated and perform to their potential. This is considered as a major
problem, because though the profit level of Caterpillar has increased along with the high amount
of wages paid to the CEO Oberhelman of Caterpillar in Australia. To identify the problem, it is

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important to know all the variables and gather relevant information related to the problem faced
by the organization (Bello 2012). The facts are obtained to gain a proper understanding of the
problem and make a clarification as well. The problem here is the less amount of wages and
benefits provided to the new and existing employees of Caterpillar (Cat.com 2017).
When asked about the issue, the company’s higher officials stated that the company
cannot afford to provide more benefits because they are not aware of the issues that may be
experienced in the future. Though it could be seen that there had been few areas where the
company had lacked growth and development, still the company maintained a good financial
status, because of which the higher management staffs are CEO were paid well (Cameron 2012).
The company maintains a good corporate culture, according to opinions of few members, though
most of them stated their unwillingness regarding lack of opportunities to advance in their
professional career, not considering the issues within workplace properly, reduced wages and
other benefits and lack of skills and knowledge of products and business processes (Choudhary,
Akhtar and Zaheer 2013).
Step 2: Identification of causes using OB concepts
The facts obtained are weighed to make a final decision and make sure that proper
approaches are developed to handle the problem with ease and effectiveness. The Integrative
framework for Understanding and Appling OB has been used to manage inputs, processes and
outcomes. The inputs include personal factors such as fewer wage paid to employees, and new
hires are also provided with lesser benefits that resulted in the business problem. The various
processes are managed at individual, group or team level and organisational level, based on
which the outcomes are derived too. The processes in business include annual savings of $8.8

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million that resulted from reduced attrition and rate of employee turnover (Grant 2012). The
outputs have increased largely within few months along with $2 million increased profit level,
and the break-even point has decreased by 50 percent. The company wants to expand its
operations overseas but there has been reduced efficiency of labour, and they have been provided
with lower benefits as well, which is the problem here (Cat.com 2017).
The personal attributes and skills achieved by studying the organisational behaviour
could be positive behaviour and attitude, ability to work as a team and leadership skills too. The
interpersonal skills can allow the individual to actively listen and communicate with others to
understand the problem that is needed to be resolved (Jehanzeb et al. 2012). The causes of these
problems, as seen from the case study could be lack of investments in human capital by the
employers. Unethical behaviours, reduced cooperation can be caused by inappropriate goals,
pressure from the higher officials and lack of reward system. At the group level, lack of
communication is the major cause of such problems while at the organisational level, lack of
good corporate culture can lead to issues such as decreased productivity, deteriorated
performances, etc. If all these roots of problems are prevented, then the problems will be
overcome as well (Nixon, Harrington and Parker 2012).
Step 3: Recommended solutions to overcome the issues
As soon as the decision is made, it is important to act accordingly and achieve the desired
positive results. Determination and willingness to act accordingly are important for acting on the
decision that has been made. The leader of Caterpillar must consider the views and opinions of
the employees and then make a proper decision that can bring positive outcomes in business. At
present, the high amount of peaks achieved by Caterpillar has decreased due to the higher use of

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natural gas and reduction in prices of coals, and it further decreased the sales of big mining
trucks. This made the company to reduce the production level and lay off many workers from the
Asian mining sector (Northouse 2015). Still, from the various articles and responses of staffs, it
could be understood that the company had been doing quite well and even better than before, so
rewards must be provided to the employees in the form of increased wages and added benefits
for allowing them to perform better.
To mitigate the problems faced by Caterpillar, it is important to address the causes. In
the present days, employers need to focus on the motivation. It is recommended to provide them
sufficient wages and provide them with various benefits as well to ensure that they perform to
their potential and drive the workforce efficiency. There are two different types of motivation
such as the extrinsic motivation and intrinsic motivation (Rock 2014). The major aspects of
motivation include the content theories, which have helped the managers and leaders of the
organisation to identify the needs and requirements of employees that are needed to be fulfilled
for keeping them satisfied along with the focus on internal and environmental factors impacting
on the motivation of employees (Wong and Laschinger 2013).
The McGregor's Theory X and Y can be used where the problems like employees
disliking to work can be identified. The major cause due to which employees dislike work is the
fewer wages and benefits provided to them. The Theory Y shows that employees can be self-
engaged and remain committed to their responsibilities, once their needs and preferences are
fulfilled. Maslow’s hierarchy of needs theory can be used within Caterpillar to fulfill the needs at
various levels such as self-actualisation, esteem, love and belonging, safety and physiological
needs (Wright, Christensen and Isett 2013). Thus, it is recommended that the company uses
proper motivation theories and fulfill the needs and requirement of employees so that they are

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kept satisfied, and there is lesser turnover of employees. This would create positive outcomes in
terms of better performances, positive work behaviours, lesser turnover and job satisfaction too
(Cat.com 2017).
Conclusion
The topic was concerned with the people leadership performance and how leaders could
keep the employees motivated by reducing the chances of issues experienced at Caterpillar. The
salaries were also reduced along with lesser numbers of benefits provided to the new employees.
The new employees who are recruited are also paid lesser wages, which is a major problem too.
Based on the case study, the 3-step problem solving approach was applied where the first step
helped to identify the main problem faced. The second step identified the causes of such
problems using OB concepts within the organisation and the third and last step in the topic
provided some recommendations that could resolve the issues and ensure that those might not
occur again.

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References
Aamir, A., Jehanzeb, K., Rasheed, A. and Malik, O.M., 2012. Compensation Methods and
Employees' Motivation (With Reference to Employees of National Commercial Bank
Riyadh). International Journal of Human Resource Studies, 2(3), p.221.
Ahmed, P. and Shepherd, C., 2012. Innovation management. Pearson Higher Ed.
Bello, S.M., 2012. Impact of ethical leadership on employee job performance. International
Journal of Business and Social Science, 3(11).
Cameron, K., 2012. Positive leadership: Strategies for extraordinary performance. Berrett-
Koehler Publishers.
Cat.com. (2017). Cat | global-selector | Caterpillar. [online] Available at: http://www.cat.com
[Accessed 1 Sep. 2017].
Choudhary, A.I., Akhtar, S.A. and Zaheer, A., 2013. Impact of transformational and servant
leadership on organizational performance: A comparative analysis. Journal of Business
Ethics, 116(2), pp.433-440.
Grant, A.M., 2012. Leading with meaning: Beneficiary contact, prosocial impact, and the
performance effects of transformational leadership. Academy of Management Journal, 55(2),
pp.458-476.

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Jehanzeb, Khawaja, Mazen F. Rasheed, and Anwar Rasheed. "Impact of rewards and motivation
on job satisfaction in banking sector of Saudi Arabia." International Journal of Business and
Social Science 3, no. 21 (2012).
Nixon, P., Harrington, M. and Parker, D., 2012. Leadership performance is significant to project
success or failure: a critical analysis. International Journal of productivity and performance
management, 61(2), pp.204-216.
Northouse, P.G., 2015. Leadership: Theory and practice. Sage publications.
Rock, D., 2014. Quiet leadership. HarperCollins e-books.
Wong, C.A. and Laschinger, H.K., 2013. Authentic leadership, performance, and job
satisfaction: the mediating role of empowerment. Journal of advanced nursing, 69(4), pp.947-
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Wright, B.E., Christensen, R.K. and Isett, K.R., 2013. Motivated to adapt? The role of public
service motivation as employees face organizational change. Public Administration
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