LESLEY HOARE: To get started, will you tell us about your background, including an overview of your human capital experience?
JUDY BACCHUS: Human resource management is actually my second career, following 13 years in retail as a merchandise buyer for a department store chain in western Pennsylvania. At an early age, I had the opportunity to run a small P&L, which gave me a different lens to view the role of HR. When I left retail, I took the opportunity to consider what I would most like to do next in my career. Similar to what we suggest to our employees, I participated in a workshop to consider assessments based on my interests, leadership style, and experience. My strengths pointed to three areas: politics, sales, or HR. I took the HR route and have been in this area for about 20 years.
My career also started by running a P&L in a business, and once you’ve walked in those shoes, it makes quite a difference. Please tell us a little more about your current role at Kennametal.
My progression at Kennametal has been one of those success stories that HR professionals like to share—talent management executed by design. I was the planned successor for the role of Chief Human Resources Officer (CHRO). When my former boss resigned from the company after seven years, he and I had about 18 months to prepare for my transition into the leadership role as CHRO. We did some interesting things during that time, such as working on executive compensation. You don’t get exposure to that area unless you’re in the top job. Additionally, I participated in a program sponsored by Cornell that prepares candidates for the HR C-suite. I was able to learn from the experience of other people who were new to the leading role. As I moved into that role as the planned successor, the transition worked very well. My transition time with my predecessor met my needs in terms of career path, ensured I was well prepared to meet the needs of the organization, and provided a smooth shift to the CHRO role.
Will you tell us about your HR strategy and how you’re tying it into your organization’s objectives?
Kennametal’s competitive advantage rests with our people and our proprietary technologies that advance industry. On the people side, technical know-how is our specific advantage. Customers expect us to provide technical expertise to help keep their operations running productively. In most cases, this happens on the factory floor. When working with our customers, we bring highly-skilled technical talent and application engineers who take a holistic approach to optimize customers’ processes. That may mean diagnosing aspects such as speed and feed rates in production to determine which materials and products are best suited for the conditions at hand, or it may even require the design of a customized solution that can substantially improve their productivity. That is what differentiates Kennametal in industry.
In terms of strategy, it’s really about the business needs, which are based on what our customers are trying to accomplish. We are able to offer our best when we have intimate knowledge of the customer’s operations, allowing us to build programs around their technical requirements. It’s not only about what we make; it’s what we know. Whether we acquire or develop, the know-how of our technical talent is the big differentiator for us.
Has that strategy evolved or changed since you came on board in your role?
Yes, it has. All organizations try to do risk assessments. Our executive team set out to address aging demographics, which is both a challenge and opportunity for Kennametal. On one hand, the shortage of technical talent in our industry makes us more indispensable to our customers. However, we have our own aging demographics to manage. We have three basic functions that are absolutely critical in terms of aging demographics: sales, manufacturing engineers, and traditional R&D engineers. So, we started to design programs to focus on knowledge management and workforce development in those three areas. We are still early in the journey, but we have the framework in place and are now working to execute that plan. It takes a lot of time to transfer knowledge, document appropriately, train people, and so on. That’s an example of a strategy on which we have focused over the past 12 months.
Engineering is one of those critical talents. Since there is so much exciting work going on in other industries, does the demand exacerbate this particular challenge?
Most students are no longer interested in things such as metallurgy or material sciences. We are doing something unique to get ahead of this challenge. Currently in the United States, there are some 600,000 open jobs in manufacturing that the industry is collectively unable to fill. Kennametal has started working with local high schools to engage interest at that level and help students gain an appreciation for rewarding opportunities and experiences they’ll find in our industry. We began with a high school near our corporate headquarters because we felt like we could develop a partnership there. We asked for the top 12 or so science and math students, including those that scored well and those who had an interest in the areas. We built a pipeline program called the Young Engineers. We bring them in, and from art to part, they create something and actually market it. They get hands-on lab experience working with our technicians, designers, and engineers, while also learning about the business acumen that goes with these roles. We’re planting a seed. We realize they may not come to Kennametal, but we want them to be inspired to pursue sciences such as metallurgy, engineering, or manufacturing. We started the program in western Pennsylvania. We’ve just completed our first pilot in Ohio, and we’re now looking at our additional opportunities to expand the program domestically. We also would like to figure out how to develop something similar outside of the United States.
Regarding high potentials and leaders for the future, what programs do you have in place to identify and develop those high potentials?
Similar to other companies, we have a traditional performance management system, including an individual talent development plan. That’s the first place we would identify development needs. We have a very robust succession planning process. It includes levels from CEO down. We go down to level five, mainly because we see great opportunities to shape future skills in the middle part of our organization. The succession planning and talent review process happens twice a year. We work from level five up, and talk about the talent needs. We assess those that are performing at a high potential level and begin to think about their long term contribution to the company (i.e. whether we see them crossing business areas, being deep in one particular area, or leading a large P&L someday). We try to figure out the gaps and fill in the precise steps of their career paths. We have a very transparent action plan. The executive team actually identifies these people and their gaps, and we agree upon a plan to fill those gaps. The plan may be an ex-pat assignment or an MBA program. It could involve some cross-functional assignments. Regardless, it’s very transparent to the leaders who can most support the development of those people, and that allows us to track it. It doesn’t always work out perfectly, but the system is in place. There is a lot of energy behind it, but it’s always a two-way street. The individual has to want to do those things too.
What are some things you consider when identifying potential?
We look for leaders who can lead in a global environment. That doesn’t necessarily mean they have lived elsewhere. It means they listen and learn, understand there are differences, and start to apply their knowledge to relate to other people. These are people who drive common processes and programs and develop two-way (or more) types of collaboration and communication skills. Additionally, we’re always looking for strong P&L leaders with GM capability. We see a gap in the market for that as well, so we look for people who understand how a business works and about the financial levers you pull to get value out of an organization. Those are the primary things we’re looking to identify. Finally, I would be leaving out a core component if I didn’t mention that we look for learning agility in the high potentials.
You mentioned executive transparency. What about transparency to the individuals themselves?
At a senior level, we’re transparent with individuals, because we want to give them every opportunity to succeed. We have regular conversations with people we’re looking to develop and retain, perhaps for C-level positions. The area where we still have a debate is below that level. How much do you tell an employee, knowing that someone who demonstrates high potential in one role doesn’t necessarily convey the same potential if moved somewhere else? In a new role, an individual may take some time to get back on his or her feet and increase potential once again after mastering that particular role. We do struggle with it, and I believe transparency is important. It also takes leadership courage to tell employees whether they are high potential or not and the reasons why. You show employees the gaps and help them fill in those gaps. It takes a lot of resolve. What often separates leaders from managers is the ability to develop people, including frank conversations about performance.
When I say succession planning, what does that mean to your organization?
Our organization has some very clear metrics included on every executive’s performance management review, including our CEO. As you can imagine, those objectives are important to the Board. Each one of us has a metric where we are expected to have one or two successors ready for our C-suite roles within two years. In that 24-month range, we need to have someone ready to take on the role if one of us should leave. We’re also expected to have an emergency plan in place. You may identify someone who has very strong technical skills and could hold it together but may not have an interest or capability to be the long-term leader. With the criteria we have in place, I believe we can comfortably say we have identified at least one successor. But it’s tough to find two. It creates competition, which is sometimes good and other times is a challenge. We are definitely measured by those two metrics.
We’re also looking at the next level down. We like that level to have one or two successors ready as well, but their criterion is a bit more open. If 75 percent of their positions have successors, we’re pretty happy with it. It’s a huge challenge. We know that if you measure it, it tends to happen. On the other hand, you have to find the right talent. We don’t put someone in that box just to satisfy the metrics. There is a lot of conversation and assessment around whether the succession plan is valid.
How far down in the organization do you use a plan for a job succession versus a pool?
We require succession planning through level three, which includes any direct report of the C-level executives. Below that level, most of our businesses do succession planning for another level or two. At the middle levels and even deeper, it’s treated as a talent pool with groups of high potentials going through targeted talent programs. Being in 60 countries, we struggle with the mobility of the pool and their willingness to move, not just across a region but maybe from a center of excellence to something that’s more of a generalist role. The issue of willingness sometimes makes it difficult for us to fulfill some of those plans.
Is there a language challenge when looking for leaders in some of the global market roles?
Yes, we have that challenge. In Asia, they are very anxious to learn and speak English, so while there may be a language barrier, the willingness to learn is there. We’re in the process of bringing a couple of our European leaders to the United States to get them exposure, with hopes they will go back and be able to lead a little bit differently than they are today. There are still cultural barriers within Europe, and we struggle with that.
Tell us more about how you develop cross skills and build a pool of international talent.
First, let me speak to knowledge management and retention. Even though we’re very concerned about these functions, the processes we put into place can be leveraged anywhere. There are two main tactics on which we focus our knowledge management efforts. One is an individual knowledge transfer, where you have someone who’s very deep in a certain technology and it’s only necessary for a few more people to understand and know it. In that case, we put an individual knowledge transfer plan in place versus one for a broad technical base or retiring skill set.
Secondly, we have started building communities of practice, which are similar to informal networks with a very specific process and a key knowledge holder leading it. This leader tends to be someone who has been with the company for a long time and understands the way things work. The leader must be willing to communicate through documentation, storytelling, videotaping, and roundtable discussions. In the last six months, we have started in those specific areas. It takes a lot of willingness and collaboration. We have technology tools, such as SharePoint, to help us communicate with each other. We’re trying to take leaders with the deep skill to teach another generation what we do. It’s very driven by the products and technologies we have, including advanced materials and highly-engineered metallurgical components. It’s important to have the process in place so that an engineer doesn’t just document ISO 9000 and think it’s enough. We need them to explain the “why” behind the steps, tell the story, and give some practical examples of applications. Those are some of the things we’re doing right now. It’s very early in the journey, so one of our main questions is about how to measure the effectiveness. We’re still working to figure that out, but we believe it will be evaluated by the comfort of the targeted learners with critical/transferred knowledge dimensions as well as evaluations of the thoroughness of the knowledge transfer (assessed by the knowledge holders).
Additionally, we have some good, targeted rotation programs. Right now, we have between 15 and 20 ex-pat assignments. We tend to keep those in areas that are a little bit higher in the organization. For example, just in the six years I’ve been at Kennametal, we’ve had five leaders from the finance organization go to Europe and come back, all taking on larger roles. The effect is two-fold since it also helped the European leadership team understand how to more effectively get things done at Kennametal. It helped them get over the hurdle of the operating system and the language and cultural barriers. Having someone at the table that has been there and lived it helps them work more effectively. It has worked so well that we’re now going to try it in Asia for the first time. We’ve done the same thing with marketing. Those skills are very easily transferred across regions. Some other areas aren’t as easy. For example, it’s difficult for an HR person to go to Europe and try to lead effectively. With 19 countries, an employee base speaking multiple languages, and employment laws that are extremely different, it’s a much bigger challenge.
Does your organization do short-term assignments and rotations as well as the ex-pat route?
We’re looking to do more of that. I believe we have to break this barrier that an ex-pat assignment must be two or three years, because it’s a huge expense and demand on the family that has to go with the transferred employee. We’re looking at some alternative arrangements. A function of companies with which I’ve worked where it’s been effective is in the IT realm. They bring people to and from India, Asia, or Europe for three months. That’s not too disruptive and avoids many of the challenges around visas that you have with a direct ex-pat assignment. We are definitely looking at it. At this point, it’s happening a bit more organically than planned.
Are there other unique advances your organization is making in the HR arena?
One segment that’s growing for us is related to returning military veterans. It’s a good talent pipeline for us, and we’re starting to put more attention toward how we can attract post-military professionals and integrate them into our organization, while also providing support and outreach to their families. That pipeline is increasingly important because we find that the military veteran skill set fits really well, especially for technical supervisor or managerial jobs, in our plants.
Secondly, we have a unique differentiator called the Kennametal Knowledge Center. It’s like a university where we train employees, customers, and our distributors. We train about 3,000 people per year in this program, focused on industrial and machining technologies. It’s done in six languages. That is another differentiator for us that is helping to build our pipeline, while also supporting growth via the training we extend to customers and distributors.
Judith L. Bacchus is Vice President and Chief Human Resources Officer of Kennametal, Inc. In this position, she oversees all human resources responsibilities worldwide. Bacchus joined Kennametal in April 2006. Celebrating its 75th year as an industrial technology leader, Kennametal, Inc. (NYSE: KMT) delivers productivity to customers seeking peak performance in demanding environments. The company provides innovative wear-resistant products and application engineering backed by advanced material science. With approximately 13,000 employees and nearly $3 billion in sales, the company realizes half of its revenue from outside North America and 40 percent globally from innovations introduced in the past five years.
Prior to her current role, Bacchus served as Vice President, Human Resources for Kennametal’s Shared Services, Growth, and Business Segment functions and also led the Global Talent Acquisition team. Before joining Kennametal, she was Human Resources Generalist, North America for the Marconi Corporation. She has more than 20 years of experience as a human resource professional. Bacchus earned her Bachelor of Science degree in administration and management from LaRoche College in Allison Park, Pennsylvania. She and her husband currently reside in Pittsburgh, Pennsylvania.
Lesley Hoare is a Senior Human Resources executive with extensive talent management and development expertise. She is a successful change leader with global experience in both the design and implementation of complex talent programs and initiatives. In her former role as Vice President of Talent Management and Diversity & Inclusion with Kimberly-Clark Corporation, Hoare led the development of Kimberly-Clark’s global people processes in the areas of Talent Acquisition, Learning & Development, Performance Management, Leadership and Succession, and Diversity & Inclusion.
Prior to Kimberly-Clark, Hoare spent 17 years with Hewlett Packard in a variety of leadership roles in Customer Education, Consulting, Leadership Development, Executive Development, and Talent Management. Hoare holds an Education certificate from Durham University and MSc in Training from Leicester University in the UK. She was formerly Co-Chair and Program Director for the Conference Board, Talent Management Council and was recognized as the 2007 winner of the Chief Learning Officer Innovation Award.