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Eaton HR head Sue Cook wants the company's values to be so pervasive that they are in the water.
When Sue Cook, now vice president of human resources at the Eaton Corp., began looking for a new job 10 years ago, she had a list of requirements.
Topping her list was “a values-based company that doesn’t just have a nice brochure about [values].” She was looking for a company with high ethical standards that permeated every part of the organization—“almost like it’s in the water” employees drink.
In addition, she wanted to return to a big company with a sophisticated HR function, as at IBM Corp. where she had worked for 17 years. Finally, Cook was looking for a company “where HR could make a difference.”
At that point, Cook had been disappointed with interviews at several companies where she met some CEOs who made her wonder how they ever got the job. “Two of those CEOs were later fired for sexual harassment,” she recalls. “My error there,” she says, “was in assuming that all big companies do sophisticated HR work.”
When she visited Eaton, “I didn’t know what kind of company it was. In fact, I thought it was the stationery company [Eaton Paper],” Cook says.
Cook learned that Eaton was a diversified industrial manufacturer of everything from truck components to aerospace and electrical industry products—and she felt a strong affinity for the people she met there.
Eaton CEO Alexander Cutler (at the time he was president and chief operating officer) says Cook observed that Eaton “really runs itself by its values. People come here, they’ve seen it not like that elsewhere, and they know it could go away in a hurry,” he says. As a result, employees “tend to protect [the strong values system].”
There was only one drawback, Cook thought, and that was the location. The company’s headquarters is in Cleveland, where Cook grew up and had no desire to return. However, geography soon became irrelevant as “I realized that there was so much we [HR] could do to help the company win, so much opportunity to make a difference with the HR function” at Eaton, she says.
In accepting the job, Cook says she “did exactly what you are not supposed to do—I went with my gut reaction.” With “a woeful lack of due diligence, I just went with the people.”
Out of the Typing Pool and into ‘Personnel’
After graduating from the University of Colorado with a history degree in the early 1970s, Cook had expected to be a teacher. At the time she “thought that’s what you had to be” if you were a woman. However, a stint of practice teaching soon convinced her that working with kids was not what she wanted to do.
Soon afterward, she says, “the law of unintended consequences” took over her life. Cook married and moved to Chicago, where her husband took a job with Price Waterhouse (now PricewaterhouseCoopers). The firm was auditor for IBM at the time.
As a young, college-educated woman with a liberal arts degree, says Cook, “it wasn’t like everyone was jumping up and down, just waiting for you to join their workforce.” Many young women like her were interviewing for secretarial positions. When her husband told her there was an opening in the typing pool at Science Research Associates, an IBM subsidiary in Chicago, Cook applied and got the job.
She didn’t last long in the typing pool, though. Within a few weeks, Cook was offered a job in “personnel.” Although she didn’t know what personnel was, the new position was a step up, so she went to work in benefits administration.
Cook liked HR because “it’s analytical.” Even then, she says, much of her work was in metrics, benefits costs, compensation, pay-for-performance programs and relocation costs. She had found her career.
And IBM was her kind of company. “At IBM, your job was always just to do the right thing,” says Cook. After she and her husband divorced, she moved around to company locations in New York, Vermont and Florida, learning more and more about IBM and HR. “Changing jobs made me better professionally,” she says.
In 1988, Cook moved to Cupertino, Calif., to head the HR function at Tandem Computers. These were go-go years in Silicon Valley, and she found a very different culture there.
“Silicon Valley is very binary, or it was when I was there,” she says. “Either you were rich, or you weren’t. Because of stock options, there was no middle of the road. These were young companies trying to establish their values, and it was hard to find terra firma.”
She began to feel pressure to compromise. “For example, at IBM, if you falsify an expense report, you’re gone. In the Valley, they say, ‘Isn’t he the No. 1 sales rep? Maybe we should have him pay back that $400.’ ” To Cook, it felt like “walking on ice floes.”
She decided the time had come to make a move.
The Eaton that Cook joined in 1995 had undergone some dramatic changes since its founding in 1911 in Bloomfield, N.J., as the Torbensen Gear and Axle Co. The little axle maker moved to Cleveland, changed its name and expanded into other areas over the years through a series of acquisitions. From its beginning as a small company that built truck axles, the Eaton of today has grown into a large, diversified industrial manufacturer with 55,000 employees around the world.
Tom Hanson, VP of compensation and benefits, says Eaton was still part of a very homogeneous industry when he joined the company more than 32 years ago. In the late 1970s, however, Eaton acquired several dissimilar lines of business. The head of each business line was autonomous and pretty much “ran it as they pleased,” says Hanson. As a result, the company had very divergent policies and procedures. “We needed to stop reinventing the same wheel over and over,” he says.
Then-CEO Bill Butler brought Cook in to help change the strategic view of the company, says Hanson.
Steve Bartlett, vice president for HR programs, who was recruited right out of college more than 23 years ago, says one of Cook’s strengths is that “she’s good at making the case for doing something new and getting senior-level support.”
Cook “loves change,” says Cutler, who has been with the company for 29 years and became CEO five years ago. She has “extraordinarily good organizational awareness. She brought us orientations from a couple of big companies that gave us helpful perspectives on what was right with Eaton and what could be improved.
“Sue was the first senior manager we’d brought in from the outside in quite a while,” he says, and “she really revitalized the entire human resource function.”
Building One Eaton
Cook says her predecessor had been told that “he was to be the HR person for the senior management of the company.” He was terrific, she says, but “the needs for the HR function at Eaton had changed. I’m a big believer in functional excellence, but that had never been part of the [HR] charter.”
Because operations were so decentralized when she arrived, Cook says, it was hard for HR to make an impact across the company. Someone new could come in and “just ignore that” as they made changes, she says, and that’s what she did.
However, “I didn’t go in and say, ‘Off with their heads,’ ” says Cook. She was aware that Eaton was not like IBM, which she describes as a “big bang” company that loved big, expansive ideas. Cook understood that rushing in and announcing sweeping changes was not the way to success. Instead, she simply “started doing things.”
She began by calling a meeting of HR division managers at corporate headquarters. “I found out later that many people in separate divisions had never met.” The first meeting drew 12 attendees. “At our last meeting, we had 85 people,” says Cook.
She learned from Butler that he had received many complaints about “meeting twice a year, and was that necessary?” The CEO asked those who complained, “Do you see your HR support improving?”
“Well, yeah, I guess,” they told him.
“Well, when it’s not, call me,” Butler replied.
With strong support from senior management, Cook began standardizing practices (what the company today calls “One Eaton”) and putting needed technology in place to facilitate standardization. One result is the Eaton Business System, which has as its model both operational excellence and functional excellence. As Hanson puts it, “how you do things matters.” Leaders are judged both on results and on how they get those results.
Under the Eaton Business System, each manufacturing site is required to be certified every other year in seven categories: leadership, strategic planning, customer and market focus, information and analysis, human resource focus, process management and business results. Senior managers serve as certification examiners.
“Sites that have low scores have a remediation period in which to improve,” says Cutler. “If that doesn’t happen, we change the managers. The first year the system was in operation, we changed out 17 units,” which let managers know that the company meant business.
Cutler has empirical proof that the system is working. “A site that was one of our worst sites last year had the highest score this year,” he says.
Talent and Training
Cook believes that training managers is crucial to an organization’s success. “Invest in making your managers good,” she advises. “Your leverage point is always the managers.”
Eaton University, which was established under her watch, provides online and classroom training for employees at all levels. In addition, a three-week executive education program, “In the Zone,” trains Eaton senior managers in groups of 25.
And employee surveys are taken seriously. Cutler says the response rate to the annual surveys, which are administered online in most countries, is 97 percent. “That’s best-in-class—and we’re not giving cars away to get it!” he says.
Cutler attributes the high response rate to the fact that employees can see that management responds to their comments. Action plans are required to address concerns that show up on the surveys each year. This year, for example, Eaton will roll out a new rewards and recognition program designed in response to last year’s comments from employees.
“Eaton is a high-performance, high-reward, high-expectations environment,” Cutler says. “We must deploy faster and faster. To keep up, we must have the best talent, so the central issue for HR is organizational capability,” he says.
In fact, “talent and how you think about talent” may turn out to be the most significant differentiator for a high-performing organization, says Cook. “You compete on IQ points,” she stresses. “You’ve got to have the horsepower, so you must give talent opportunities to grow.”
Cook says the practice when she came to Eaton had been to “reward people who got really good at something by saying, ‘You must stay there forever.’ ” Cook began moving people around to give them a chance to learn new things. “Someone did that for me,” she says.
values vs. Rules
Her overarching goal throughout all the changes, says Cook, has been to ensure a culture where, “every day, you just know that Eaton is going to do the right thing.”
She understands, however, that a company cannot enforce its values with rules. “I hate rules. You can’t write enough rules to cover a workplace,” she says. “You have to rely on your values system and how you communicate it so people can be self-monitoring and set the organizational boundaries.” She believes that “you get what you expect. If you expect low, you’ll get low.”
Because employee privacy is so important to Cook, a manager who asks to look at an employee’s e-mail must get HR’s approval. “IT knows that I won’t approve it if they are doing it as a substitute for good management,” she says.
The company allows reasonable personal use of the e-mail system, and “we don’t monitor e-mails,” says Cook. “If something surfaces on the ethics hotline, we go in and investigate, but we won’t go into the system and search out people who are misusing it. Our policy isn’t rule-based; it’s based on trust.”
(Of course, sometimes employees inadvertently turn themselves in. Cook recalls one employee who had downloaded 27 pornographic movies before he called the IT department to complain that his computer was running slow. Without his call for help, the company wouldn’t have known about the downloads, says Cook.)
Eaton also has an all-salaried workforce with “no time clocks. I don’t want to work where someone is watching [every move],” Cook says. Eaton had the first all-salaried manufacturing plant in the United States in 1969, says Hanson. Although about 20 percent of Eaton’s U.S. workforce is unionized, Bartlett says no nonunion plant has become unionized during his 23 years at the company.
Don’t Ask, Do Tell
Cook’s forthright attitude probably explains much of her success. “I’m pretty opportunistic,” she says. When “opportunity falls in your lap,” she believes in “playing the hand you are dealt. I think our [HR] function has benefited from it.”
In Cook’s experience, the “direct ask” (a marketing term) is not always the best method. Frequently, she says, “all the direct ask does is give somebody the opportunity to tell you no. Sometimes not asking is really the way to get the order.” She agrees with former Apple Computer executive Deborah Coleman’s advice: “Don’t take a no from someone who has no authority to give you a yes.”
As for the HR function’s evolving role, “it never occurred to me that I wasn’t [at the table],” Cook says. She doesn’t wait to be asked for her opinion, and she suggests that other HR leaders may need to “extend” themselves to the CEO. “Find a way to deliver something they need that they haven’t thought of,” she urges. “You need to find opportunities to get the order.
“I think there are opportunities for HR people to identify spots to add value” in their companies, Cook says. “If you are the center of expertise for something in your company that is done for your employee base, why would you not be doing it for your board?” she asks. “If you are a recruiting expert, why are you not hiring directors? If performance management is your area, why are you not working with your board on performance management for the CEO and for the whole board? If it’s comp, why aren’t you working on board comp?”
Living the values
In Cutler’s opinion, one of the most important decisions people make is the decision of where to work. He tells new employees that Eaton has two hopes for them: that they come with their own strong personal ethics, and that they never compromise them. He wants “the heart of the place to be where your heart is,” he says.
That sentiment is echoed by others at the company. Hanson says he feels “blessed” to work at Eaton. “Eaton allows me to take the high road,” he says. And Bartlett, who has never worked anywhere else, senses “that the integrity, respect and trust I feel at Eaton are unusual.”
Clearly Cook found in Eaton the kind of ethical organization she was looking for 10 years ago, and she has worked hard to make it even better.
“Sue’s a woman of strong convictions,” says Hanson, “a high-caliber individual.” She makes sure, he says, that “we’re working on the right stuff.”
Ann Pomeroy is senior writer for HR Magazine.
At a Glance: Sue Cook
Personal: Age 58. Born in Pittsburgh. Single. Lives in Cleveland.
Current Job: Vice president of human resources at Eaton Corp. in Cleveland, 1995-present.
Previous Jobs: Vice president of human resources at Tandem Computers in Cupertino, Calif., 1988-95. Prior to joining Tandem, Cook spent 17 years in human resources at IBM Corp. in Chicago; Armonk, N.Y.; Burlington, Vt.; White Plains, N.Y.; and Boca Raton, Fla., where she was site personnel manager for 11,000 employees.
Education: Master's degree in personnel management and industrial relations from Loyola University in Chicago. Bachelor's degree in history from the University of Colorado.
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