Talent Strategy, Talent Management Program, Enabling Human Resources Core Competencies

Talent Management: Recruiting, Engaging, g g g g g, Developing, Retaining & Sustaining p g g g Your Workforce, and Enabling Human Reso ources Core Competencies in Support of Customer and Shareholder Val lue Creation Richard Swartzbaugh © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Recruiting Engaging Developing Re Talent Management: Recruiting, Engaging, Developing, Re etaining & Sustaining Your Workforce, and etaining & Sustaining Your Workforce and Enabling Human Resources Core Competencies in Support ofof Customer and Shareholder Value Creation ‐‐ ‐‐ Executive Summary‐‐ Customer and shareholder expectations continually increase, and d a variety of forces continuously shape industry competition.1 Despite these realities, many organizations do not have alignment of: (a) talent management practices 2 (talent strategy, talent management program) & enabling human resources core competencies, (b) organizational culture, (c) strategy, (d) execution, (e) continuous improvement. 3 This is especially critical when customers, sh hareholders, business leaders, and your workforce are focused on value creation, measurable results, regulatory compliance, and doing the right thing the right way. A variety of proven techniques exist to achieve alignment, and en nsure that innovation and people remain the source for competitive advantage. Key components include: (a) A Talent Strategy focusing on recruiting, engaging, develo oping, retaining & sustaining your workforce that continuously adjusts and improves based on measurable r results, industry best‐practices, innovation, economic factors, shareholder, customer, management, and employee needs, g , , g , p y s, organizational culture, and the countries and regions that it , g does business, (b) A Talent Management Program focused on human capital l planning, talent acquisition, talent engagement, talent development, talent deployment, leading talent, talent ret tention, evaluating human capital, and continuous improvement, (c) Enabling Human Resources Core Competencies, including g Staffing, Compensation & Benefits, Employee Relations, Performance Management, Training, Organizational Deve Performance Management Training Organizational Deve elopment, Payroll, HRIS, and implementation of policies, elopment Payroll HRIS and implementation of policies procedures, and practices across the business, and (d) Alignment of Organizational Culture, Strategy, Executionn & Continuous Improvement through: Organizational Mission, Vision, and Values, including M M&A integration, Those responsible for strategic planning, Those performing the activities required to execute strat tegy, Those implementing enabling human capital, process, an  nd technology solutions, Best‐in‐Class practices across the organization, Employer‐of‐Choice initiatives, and Continuous improvement. 1 Michael E. Porter, On Competition (Harvard Business School Press, 1 1998). 2 Companies with mature talent management capabilities see eighteen 2 Companies with mature talent management capabilities see eighteen percent higher earnings and other benefits The Hackett Group n‐percent higher earnings, and other benefits. The Hackett Group, n December 17, 2009. 3 Robert S. Kaplan, David P. Norton, “The Office of Strategy Managem ment” (Harvard Business Review, October, 2003). 2 © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Recruiting Engaging Developing Re Talent Management: Recruiting, Engaging, Developing, Re etaining & Sustaining Your Workforce, and etaining & Sustaining Your Workforce and Enabling Human Resources Core Competencies in Support ofof Customer and Shareholder Value Creation ‐‐ ‐‐ Table of Contents ‐‐ Topics p Slide(s) Executive Summary 2 Business Fundamentals 4 – 16 Illustrated Talent Strategy, Talent Managem ment Program, 17 – 58 Enabling Human Resources Core Com mpetencies 3 © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Recruiting Engaging Developing Re Talent Management: Recruiting, Engaging, Developing, Re etaining & Sustaining Your Workforce, and etaining & Sustaining Your Workforce and Enabling Human Resources Core Competencies in Support ofof Customer and Shareholder Value Creation ‐‐ Core Values & Organizational Purpose The fundamental distinguishing dynamic of enduring great Companie es is that they preserve a cherished core erything that is not part of core ideology1 ideology while simultaneously stimulating progress and change in eve (illustrated @ right): Put another way, the most enduring and successful Companies disting guish their timeless core values and enduring core purpose (which should never change) from t their operating practices and business strategies1 (which should be changing constantly in respo onse to a changing world) (illustrated @ right): What we are deeply passionate about? The essential strategic difference between the good‐to‐great and comparison companies lay in the intersection of the following three circles referred d to as the Hedgehog Concept 2 (illustrated @ right): What we can be best What drives our at in our market? economic engine? 1 Jim Collins & Jerry Porras, Built to Last ( C ll l (HarperCollins Publisher, 1994). C ll bl h ) 2 Jim Collins, Good to Great (HarperCollins Publisher, 2001). 4 © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Recruiting Engaging Developing Re Talent Management: Recruiting, Engaging, Developing, Re etaining & Sustaining Your Workforce, and etaining & Sustaining Your Workforce and Enabling Human Resources Core Competencies in Support ofof Customer and Shareholder Value Creation ‐‐ Understanding Value Creation – Internal and External Value Drive es 1) Creating value (ways to increase, or maximize future value through stra 1) Creating value (ways to increase or maximize future value through straategy); 2) Managing for value & performance (governance, change management, organizational culture, communication, leadership, and results); 3) Measuring value creation & performance. Internal Value Drivers Products & Enterprise Services, Performance Mission, Including Talent, Management, Vision, Continuous Leadership Technology, & Alignment Shared Business Shared Decision Decision Improvement Development, Development, Business of Total of Total Culture Corporate Culture, Growth Growth Corporate Values Planning Process & Quality and Structure Processes Rewards Strategy Governance Locations Rate Communications INCREASED ORGANIZAT TIONAL PERFORMANCE Economy Industry Markets Shareholders Brand Suppliers Custom mers Competition Legislation Government New Entrants New Entrants External Value Drivers 5 © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Recruiting Engaging Developing Re Talent Management: Recruiting, Engaging, Developing, Re etaining & Sustaining Your Workforce, and etaining & Sustaining Your Workforce and Enabling Human Resources Core Competencies in Support ofof Customer and Shareholder Value Creation ‐‐ Putting the Product/Service – Value Chain to Work The Service/Product Value Chain creates a sustainable competitive advantage through the alignment of relationships between / p g g g p high‐quality products, support services and business practices, thus ena abling employees to deliver products & services to customers, thus ensuring employee engagement, customer satisfaction, and shareholder satisfaction. The links in the chain – which should be regarded as propositions – are as follows: 1) Employee engagement results primarily from high‐quality support t services and products, policies and practices that enable employees to deliver service & products to customers; enable employees to deliver service & products to customers; 2) Value is created by satisfied, loyal, and productive employees, and innovative products; 3) Customer satisfaction is largely influenced by the value of services and products provided to customers by employees; 4) Customer loyalty is a direct result of customer satisfaction; and 5) Shareholder value (e.g., profitability) and growth are stimulated primarily by customer loyalty. Illustration: Illustration: Employee Internal Shareholder Continuous Employee Retention External Service Customer C Satisfaction Improvement Service Customer Quality, Engagement E atisfaction Sa Value Loyalty Products Employee Revenue Productivity Growth, NOI • Innovative products Innovative products Retention •Retention for customers •Referrals For a detailed article •Our talent strategy is focused on recruiting, engaging, developing, retaining, and sustaining • Service results •Pr roducts and regarding the service‐profit your workforce in support of customer and for customers serv vices designed chain, see: J. L. Heskett, T. shareholder value creation: and d delivered to O. Jones, G. W. Loveman, 1) 10‐step talent management program, W. E. Sasser, Jr., and L. A. 2) Enabling Human Resources core Enabling Human Resources core meet targeted g competencies, and stomer needs cus Schlesinger. “Putting the 3) Alignment of organizational culture, strategy, Service Profit Chain to execution, and continuous improvement Work.” (Harvard Business 6 Review, July‐August, © 2010 Richard d Swartzbaugh 2008.)

‐‐ Talent Management: Recruiting Engaging Developing Re Talent Management: Recruiting, Engaging, Developing, Re etaining & Sustaining Your Workforce, and etaining & Sustaining Your Workforce and Enabling Human Resources Core Competencies in Support ofof Customer and Shareholder Value Creation ‐‐ Strategy: A Business Management System Robert S. Kaplan, David P. Norton. “Mastering the Management System.” Harvard Business Review, (January, 2008). 7 © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Recruiting Engaging Developing Re Talent Management: Recruiting, Engaging, Developing, Re etaining & Sustaining Your Workforce, and etaining & Sustaining Your Workforce and Enabling Human Resources Core Competencies in Support ofof Customer and Shareholder Value Creation ‐‐ The Balanced Scorecard & Strategy Maps Execution Framework Strategic Alignment of (a) the un nits responsible for Organization Alignment strategic planning, (b) those performing the Alignment activities required to im mplement strategy, and Is the businesses network of internal Is the businesses network of internal (c) enabling human ca apital, processes, and Are the businesses various units, Are the businesses various units, performance drivers aligned with technology solutions. departments, and constituents the customer and shareholder aligned with the enterprise value proposition? value proposition? Exe ecutive Strategy Focused Organizational gy g Strategy Focused Organizational gy g Principle – Translate Strategy Principle – Align Organization to Operational Terms Plan With Business Strategy Kaplan, Norton, “Strategy Maps,” Align Kaplan, Norton, Alignment, Adapt Plan P (HBS Press, 2003). Organization (HBS Press, 2006). Learn Align Planning & Control Stra ategy Human Capital Systems Alignment Align Alignment Analyze Human Operate Are the management Capital Are all the employees’ systems, for planning, operations, t f l i ti Cont tinuous competencies, goals, training, t i l t i i communications, and Impro ovement and total rewards aligned with control linked to the strategy? the business strategy? Lead dership Strategy Focused Organizational Strategy Focused Organizational Principle – Make Strategy a Principle Make Strategy a Principle – Make Strategy Principle Make Strategy Continual Process Everyone’s Job 8 8 Kaplan, Norton, The Office of Strategy, Kaplan, Norton, Strategy‐Focused Management (HBR, Oct. 2005). © 2010 Richard d Swartzbaugh Organization, (HBS Press, 2000).

‐‐ Talent Management: Recruiting Engaging Developing Re Talent Management: Recruiting, Engaging, Developing, Re etaining & Sustaining Your Workforce, and etaining & Sustaining Your Workforce and Enabling Human Resources Core Competencies in Support ofof Customer and Shareholder Value Creation ‐‐ The Balanced Scorecard & Strategy Maps Execution Framework Mission, Vision, Values Strategy Review Meetings Strategic Busines ss Planning Strategic Executi ion Planning Corporate Role Integrated HR/ITT Planning Align Business Units Budget Linkage  d k Align Support Units Exe ecutive Align External Partners Align Board & Shareholders Plan Align Adapt Plan P Organization Learn Align Stra ategy Align Ali Analyze Human Operate Capital Cont tinuous Impro ovement Human Capital Management Program: Human Capital Management Program: Lead dership Strategic Awareness, Talent Strategy, Total Rewards, Competency Process Improve ement Balanced Scorecard Reporting System Development, Performance Management, Initiative Managgement Business Analytics (dash boarding, Leadership Model & Development, Best‐Practice Shaaring score carding, surveying, benchmarking) score carding, surveying, benchmarking) Technology, HR core competencies Technology HR “core competencies” Innovation I 9 Kaplan & Norton, Alignment (p. 279) © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Recruiting Engaging Developing Re Talent Management: Recruiting, Engaging, Developing, Re etaining & Sustaining Your Workforce, and etaining & Sustaining Your Workforce and Enabling Human Resources Core Competencies in Support ofof Customer and Shareholder Value Creation ‐‐ A Sample Strategy Map, and Balanced Scorecard How shoul ld we How do we look appear t to to our investors? Customeers? How do we sustain To satisfy stakeholders, our abili our abili to learn ity to learn ity what processes must we what processes must we and immprove? excel at? Managemment by Objectives (“MBO”) should be SMART: Specific, Measurable, Robert S. Kaplan, David P. Norton. Achievab ble,, Realistic, and Time‐bound. “Mastering the Management System.” Harvard Business Review, H dB i R i Drucker, Peter F. The Practice of Management: A Study of the Most Important Function Drucker Peter F The Practice of Management: A Study of the Most Important Function (January, 2008). in Americ can Society (Harper & Row, 1954). 10 © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Recruiting Engaging Developing Re Talent Management: Recruiting, Engaging, Developing, Re etaining & Sustaining Your Workforce, and etaining & Sustaining Your Workforce and Enabling Human Resources Core Competencies in Support ofof Customer and Shareholder Value Creation ‐‐ A Continuous Improvement Model Continuous improvement is an ongoing effort to improve products, services or processes. These efforts can seek “incremental” improvement over time or “breakthrough” improvement all at once. Among the most widely used tools for continuous improvement is a a four‐step quality model—the plan‐do‐check‐act (PDCA) cycle, also known as Deming Cycle or Shewhart Cycle: l k D C l Sh h C l (1) Pl lan (4) Act (2) Do (3) Ch heck (1) Plan: Identify an opportunity and plan for change. (2) Do: Implement the change on a small scale. (3) Check: Use data to analyze the results of the change and determi (3) Check: Use data to analyze the results of the change and determi whether it made a difference. ine whether it made a difference. ine (4) Act: If the change was successful, implement it on a wider scale a and continuously assess your results. If the change did not work, begin the cycle again. Other widely used methods of continuous improvement — such as Six Sigma, Lean, and Total Quality Management — emphasize employee involvement and teamwork; measuring and systematizing p p y g y g g processes; and reducing variation, defects, and cycle times. g y 11 © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Recruiting Engaging Developing Re Talent Management: Recruiting, Engaging, Developing, Re etaining & Sustaining Your Workforce, and etaining & Sustaining Your Workforce and Enabling Human Resources Core Competencies in Support ofof Customer and Shareholder Value Creation ‐‐ ‐‐ Did you start your technology strategy by selecting well‐suited employees? ‐‐ Did you consider the needs of both your employees and custom mers? ‐‐ Do you have a tool to assess skills sets for the tasks at hand? ‐‐ What behaviors are the most important for gaining and keeping y p g g p g g your customers? ‐‐ How do your employees react to change? ‐‐ Do you know what drives their behavior? ‐‐ Have you allocated financial resources for a people‐centric man nagement process? 1. People People, Process, Technology Triad 2. Process 3. Technology ‐‐ Did you map out a process for the project? ‐‐ Is this last step before deciding on a technology solution? p p y ‐‐ Are all the steps in the process necessary? If not, go to the people section and begin again. ‐‐ Do you have more than one group doing the same ‐‐ What specific business objectives does the technology thing? solve? ‐‐ Are all Departments working together as a team? ‐‐ Does it integrate with the current infrastructure and ‐‐ Have you done any business process mapping existing database(s)? and/or re‐engineering to take out the redundancies in ‐‐ How long will it take, and what does it cost to integrate? the process? the process? ‐‐ How will you manage people to use it based on business How will you manage people to use it based on business ‐‐ If you replace people with technology, does the objectives? How will you manage hidden costs? technology provide what the customer wants? ‐‐ What is the ROI? How is that measured? Have you ‐‐ When you agree to service levels with internal and addressed handling hidden costs? external providers, do you have a reporting structure ‐‐ Have technology vendors provided industry references. in place? 12 © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Recruiting Engaging Developing Re Talent Management: Recruiting, Engaging, Developing, Re etaining & Sustaining Your Workforce, and etaining & Sustaining Your Workforce and Enabling Human Resources Core Competencies in Support ofof Customer and Shareholder Value Creation ‐‐ Foundational Systems & Processes 13 © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Recruiting Engaging Developing Re Talent Management: Recruiting, Engaging, Developing, Re etaining & Sustaining Your Workforce, and etaining & Sustaining Your Workforce and Enabling Human Resources Core Competencies in Support ofof Customer and Shareholder Value Creation ‐‐ Translating the Organizational Mission, Vision, and Shared Value es Into Desired Outcomes Peters, Thomas. In Search of Excellence (1982, Harper ( , p Collins); see, also, McKinsey’s “7‐S” Model. 16 © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Recruiting Engaging Developing Re Talent Management: Recruiting, Engaging, Developing, Re etaining & Sustaining Your Workforce, and etaining & Sustaining Your Workforce and Enabling Human Resources Core Competencies in Support ofof Customer and Shareholder Value Creation ‐‐ The Human Resources Shared Services Model Shared services is traditionally defined as an operational m model in which services are delivered by business entities internal to an organization but which operate independently – Shar red Services Centers (SSCs). SSCs: Operate as a business; Provide well‐defined, process‐based or knowledge‐based d services for more than one unit of a company (division, business unit, or agency); Have dedicated resources; Utilize contractual arrangements or service level agreeme ents (SLAs) with their internal customers to define the type, scope, and price of t the provided services; and Are fully responsible for managing costs, quality, and tim meliness of services Note: Some “Corporate” functions require resources, consu ultation, and Subject Matter Expertise (SME’s) that are traditionally led by a “centralized” (a/k/a “corporate”) func ction. Examples may include: Payroll, HRIS, Total Rewards, OD / OE, Labor Counsel, Regulatory Affairs, etc. 17 © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Recruiting Engaging Developing Re Talent Management: Recruiting, Engaging, Developing, Re etaining & Sustaining Your Workforce, and etaining & Sustaining Your Workforce and Enabling Human Resources Core Competencies in Support ofof Customer and Shareholder Value Creation ‐‐ The High Performing Human Resources Model 18 © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Recruiting Engaging Developing Re Talent Management: Recruiting, Engaging, Developing, Re etaining & Sustaining Your Workforce, and etaining & Sustaining Your Workforce and Enabling Human Resources Core Competencies in Support ofof Customer and Shareholder Value Creation ‐‐ The High Performing Human Resources Model 19 © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Recruiting Engaging Developing Re Talent Management: Recruiting, Engaging, Developing, Re etaining & Sustaining Your Workforce, and etaining & Sustaining Your Workforce and Enabling Human Resources Core Competencies in Support ofof Customer and Shareholder Value Creation ‐‐ The Six Sigma Methodology Applied to Human Resources 20 © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Recruiting Engaging Developing Re Talent Management: Recruiting, Engaging, Developing, Re etaining & Sustaining Your Workforce, and etaining & Sustaining Your Workforce and Enabling Human Resources Core Competencies in Support ofof Customer and Shareholder Value Creation ‐‐ Illustrated Talent Strategy, Talent Management Program & Enablin ng Core Competencies Illustrated Talent Illustrated Tal lent Illustrated Enabling Human Illustrated Deployed Strategy: S Management P M P Program: Resources Core R C Talent Management T l tM t Competencies: Program: Our 10‐step talent Our talent strategy is management p program is Our enabling Human Our deployed talent focused on recruiting, focused on rec cruiting, Resources core competencies management program is engaging, developing, engaging, deveeloping, support the Talent Strategy, focused on recruiting, retaining, and sustaining retaining, and sustaining retaining, and sustaining retaining, and sustaining g and the Talent Management g g g, p g, engaging, developing, your workforce in your workforcce in Program, including retaining, and sustaining support of customer and support of cus stomer and recruiting, engaging, your workforce in support shareholder value shareholder v value developing, retaining, and of customer and creation. creation through: sustaining your workforce in shareholder value creation support of customer and through a number of Out talent strategy 1) Alignment t of shareholder value creation aligned people‐centric continuously adjusts and continuously adjusts and organizatio onal onal through: through: programs, processes, programs processes improves based on culture, str rategy & vendors, technology measurable results, execution 1) Staffing & Selection solutions, and industry best‐practices, 2) Human cap pital 2) Compensation, Benefits infrastructure that works innovation, economic planning, 3) Organizational in unison to help ensure factors, shareholder, 3) Talent acqu uisition, Development, Training the successful design, customer, competitor, 4) Talent eng gagement, 4) Employee & Labor deployment, and management, and d 5) Talent dev l l d velopment, Management Relations M R l i continuous improvement i i employee needs, 6) Talent dep ployment, 5) Performance of the: organizational culture & 7) Leading ta alent, Management & structure, and the 8) Talent rete ention, Appraisals 1) Talent strategy, countries and regions 9) Evaluating g human 6) An Integrated 2) 10‐step talent that we do business. capital, andd Information, Technology, management program, Recruit 10) Continuou us us a and Knowledge o e ge 3) Enabling Human E ab i g u a Engage improvem ment Management Approach 7) Environmental Health& Resources core competencies, and Develop Safety, Workers’ Comp, 4) Alignment of ADA organizational culture, Retain 8) Business Affairs strategy, execution, Sustain and continuous improvement 21 © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Recruiting Engaging Developing Re Talent Management: Recruiting, Engaging, Developing, Re etaining & Sustaining Your Workforce, and etaining & Sustaining Your Workforce and Enabling Human Resources Core Competencies in Support ofof Customer and Shareholder Value Creation ‐‐ Illustrated Talent Strategy: Recruit, Engage, Retain Illustrated Talent Strategy: Our talent strategy is focused on recruiting, engaging, developing, retaining, and sustaining retaining, and sustaining your workforce in support of customer and shareholder value creation. Out talent strategy continuously adjusts and continuously adjusts and improves based on measurable results, industry best‐practices, innovation, economic factors, shareholder, customer, competitor, management, and d Recruit employee needs, organizational culture & Engage structure, and the countries and regions Develop that we do business. Retain Sustain 22 © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Recruiting Engaging Developing Re Talent Management: Recruiting, Engaging, Developing, Re etaining & Sustaining Your Workforce, and etaining & Sustaining Your Workforce and Enabling Human Resources Core Competencies in Support ofof Customer and Shareholder Value Creation ‐‐ Illustrated Talent Management Program Illustrated Talent Management Program: M P Our 10‐step talent management program is focused on recruiting, engaging, developing, retaining, and sustaining retaining, and sustaining your workforce in support of customer and shareholder value creation through: Recruit 1) Alignment of Engage organizational organizational culture, strategy & Develop execution Retain 2) Human capital planning, Sustain 3) Talent acquisition, 4) Talent engagement, 5) Talent development, l d l 1) Alignment of Organizational Culturee, Strategy, and Execution 6) Talent deployment, 2) Human Capital Pla anning 7) Leading talent, 8) Talent retention, 3) Talent Acquisiti ion 9) Evaluating human capital, and 4) Talent Engagem g g ment 10) Continuous Continuous 5) Talent Developmment improvement 6) Talent Deploymment HRIS 7) Leading Talen nt 8) Talent Retentio on 9) Evaluating Human Capital 10) Continuous Improvement 23 © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Recruiting Engaging Developing Re Talent Management: Recruiting, Engaging, Developing, Re etaining & Sustaining Your Workforce, and etaining & Sustaining Your Workforce and Enabling Human Resources Core Competencies in Support ofof Customer and Shareholder Value Creation ‐‐ Illustrated Enabling Human Resources Core Competencies Illustrated Enabling Human 1) Staffing & Selection – Human capital planning, competency‐based selection (values‐based, leadership, Staffing & Selection Human capital planning, competency based s selection (values based, leadership, s Resources Core R C technical, job specific), skills grids, motivation factor analysis, integrit ty testing, background and reference Competencies: checks, immigration, internal opportunity system, diversity, etc. 2) Compensation, Benefits – Executive, sales, base, variable incentives, equity, perks, employee benefits, Our enabling Human job observation, job analysis, job documentation, job design, job descr riptions, compensation surveys, Resources core competencies market analyses, salary & bonus structures, non‐monetary rewards, t team‐based incentives, employment support the Talent Strategy, g and the Talent Management agreements, merit processes, expatriate compensation, exempt / non‐exempt analyses (FLSA), supervisor t it ti t ti t/ t l (FLSA) i Program, including analyses (NLRA), talent retention programs, career ladders. recruiting, engaging, 3) Organizational Development, Training – Human capital manageme ent program, job‐specific skill developing, retaining, and development, career development, leadership development, employe ee and executive coaching, sustaining your workforce in succession planning, mission vision and values development, surveys and benchmarking, employee support of customer and g g p y g y gy p engagement practices & surveying, culture surveys, strategy maps, balanced scorecards, human capital p shareholder value creation through: through: planning, learning needs analyses, compliance training, skills training g, talent deployment, 360s, etc. 4) Employee Relations, Labor Relations, Legal Compliance, Risk Man nagement, Policies, Procedures, 1) Staffing & Selection Practices, Employee Handbook – Policies, procedures, practices, emp ployee handbook, wage & hour 2) Compensation, Benefits compliance, employment law, labor law, “issue free” workplace, “em mployer of choice” practices, ADR, 3) Organizational mediation, arbitration, administrative agency complaints, grievances, employment terminations, Development, Training 4) Employee & Labor litigation, collective bargaining, contract negotiations, unfair labor pr litigation collective bargaining contract negotiations unfair labor pr ractices, legislative affairs. DOL, IRS, ractices legislative affairs DOL IRS Management Relations M R l i FTB, SEC, DFEH, EEOC, OFCCP, NLRB, EDD, etc. 5) Performance 5) Performance Management, Performance Appraisals – 90 day, bi‐ann nual, self‐appraisal, annual Management & appraisal, goal setting, managing against agree‐upon SMART goals, e etc. Appraisals 6) An Integrated, Information, Technology, and Knowledge Managem ment Approach – Applicant Tracking 6) An Integrated System (ATS), Human Resources Information System (HRIS), HR Inte ernet, HR Intranet, Automated Time Information, Technology, a and Knowledge o e ge & Attendance, Automated Employee Records, Payroll, Automated Sch d l & Att d A t t dE l R d P ll A t t d Scheduler, performance management f t Management Approach system, learning system, dashboards, scorecards, etc. 7) Environmental Health& 7) Environmental, Health, Safety, Workers’ Compensation, ADA – Inju ury & Illness Prevention Program Safety, Workers’ Comp, (IIPP), Return to Work Program, Hazmat, Hazcom. ADA 8) Business Affairs – Quality and continuous improvement strategies a and programs, cost reduction and 8) Business Affairs cost control, performance to schedule, performance to budget, service p p g e level agreements, total customer g satisfaction, vendor management, contract negotiations, financial plan nning & analyses, EPLI carrier and claims mgmt. 24 © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Recruiting Engaging Developing Re Talent Management: Recruiting, Engaging, Developing, Re etaining & Sustaining Your Workforce, and etaining & Sustaining Your Workforce and Enabling Human Resources Core Competencies in Support ofof Customer and Shareholder Value Creation ‐‐ Illustrated Deployed Talent Management Program Illustrated Deployed Talent Management T l tM t Program: Long‐Term Enterprise Internal & Enterprise HR Dept. H Strategic Objectives, Our deployed talent External Mission, Vision, Missi ion, Metrics, Business Goals, Tactics, management program is Value Drivers and Values Talen nt, Structure Goals Metrics focused on recruiting, Organizational Organi ational g g g, p g, engaging, developing, Talent Workforce Engaagement retaining, and sustaining Diversity, EEO Communication Acquisition Redeployment Str rategy your workforce in support Strategy of customer and HRIS Policies, shareholder value creation Employee Competency Payr roll, HRIS, through a number of Total Procedures, Assimilation and Based Selection Autom mated Time aligned people‐centric Rewards Practices, EE On boarding On boarding Solutions & A & Attendance programs, processes, programs processes Handbook vendors, technology Attrition Reduction Employee Succession Cultu ure, Climate Job Structures, solutions, and Strategies Relations Planning Surveys S and Framework infrastructure that works in unison to help ensure Team & Enterprise Performance Organnizational Capabilities the successful design, Individual Dashboard, Coaching Deveelopment, & Capacity deployment, and Development Scorecards Services, 360’s Learnin ng, Training Management continuous improvement i i of the: Career Retention Regulatory Assessments Goal l Setting 1) Talent strategy, Planning Strategy Compliance 2) 10‐step talent Competitive Fairness, Org. Structure, and Comppetency & Goal‐ Voluntary & management program, Total Total “issue free” issue free Executive Team Executive Team based Performance d Performance d Involuntary Involuntary 3) Enabling Human E ab i g u a Rewards environment Functionality Managgement Process Separation Resources core competencies, and Continuous Improvement, 4) Alignment of HR Department Surveys (Strategic, M&A Integration, organizational culture, Benchmarking, Competitive Functional, Service Level) Divestitures strategy, execution, Analyses and continuous improvement 25 © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Recruiting Engaging Developing Re Talent Management: Recruiting, Engaging, Developing, Re etaining & Sustaining Your Workforce, and etaining & Sustaining Your Workforce and Enabling Human Resources Core Competencies in Support ofof Customer and Shareholder Value Creation ‐‐ Competency Frameworks 26 © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Recruiting Engaging Developing Re Talent Management: Recruiting, Engaging, Developing, Re etaining & Sustaining Your Workforce, and etaining & Sustaining Your Workforce and Enabling Human Resources Core Competencies in Support ofof Customer and Shareholder Value Creation ‐‐ A Competency Model for HR Professionals Strategic Business Partner Committed to Building Shareholder & Customer Value Through Human Capital, and Alignment of Organizational Culture, Strategy & Execution Helps The Enterprise Define It’s Mission, Vision, and Values HR Expert Helps the Enterprise Define it’s Business Strategy, Including People, Process, and Technology Initiatives, and Translate that Strategy in Execution  Knowledge of Human Capital Management Principles (a/k/a “HR Helps the Organization Execute Through Objectives, Goals, Tactics, and Core Competencies”) Metrics M ti Builds HR Core Services & Helps the Organization Define it’s Talent Strategy Deliverables HR Expert  Customer Service  Applies Business Procedures Strategic Business  Manages Enterprise Resources Partner  Undertakes Activities Leading to Undertakes Activities Leading to Building Key HR Processes, Leader Technologies, and Tools Takes Reasonable Business Risks Ethical Chang ge Agent Decisive Mentors HR Team Mentors HR Team Builds Trust Advocate Solves Problems Focused on Quality, ROI, Delivery, Customer Service, Innovation, Continuous Improvement Leader Change Agent Advocate Manages Transformation & Change Values Diversity Identifies issues, solves problems  Resolves Conflicts Consistent With Enterprise Shared Values Consultation  Communicates Clearly Research & Analysis R Respects Others t Oth Builds Consensus Committed to Fair Outcomes for the Good of the Enterprise & it’s Workforce Influences Others Consistent With Mission, Vision, and Shared Valu ues ”People Champion” Providing Solutions to the Enterprise & its Workforce 27 © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Recruiting Engaging Developing Re Talent Management: Recruiting, Engaging, Developing, Re etaining & Sustaining Your Workforce, and etaining & Sustaining Your Workforce and Enabling Human Resources Core Competencies in Support ofof Customer and Shareholder Value Creation ‐‐ Understanding the Primary Drivers of Recruitment, Engagement, and Retention Employer Talent Management System Focused on Recruiting, Engaging, Developing, Retaining, and Sustaining your Workforce, Employer Talent Management System Focused on Recruiting Engaging Developing Retaining and Sustaining your Workforce and a “Talent Compact”: Promises M Made, Promises Kept. Pay Benefits Purpose: Culture: ‐Guiding Mission & ‐ Authenticity values Meritocracy ‐Global citizenship ‐Global citizenship Connection ‐Committed to the Talent‐Centricity region Brand: Opportunity: ‐ Known for ‐Challenging Work Excellence ‐Accelerated Career ‐ Leading Global Track Company ‐Continual Training / Learning Work ‐ Inspirational Development & Development Environment Leadership ‐Competitive Pay Recruiting talent is about: Engaging talent is ab bout: Retaining talent is about:  Competitive health care benefits  Senior managem ment’s interest in  Advancement opportunities  Competitive base pay Employees as val lue creators  Co‐workers with skills needed for the organization to  Advancement opportunities  Overall work env vironment succeed  Work/life balance  Decision‐making g authority  Market‐competitive total rewards, and benefits  Pay raises linked to individual Pay raises linked to individual  Company reputa Company reputa ation  Senior management interest in Employees Senior management interest in Employees performance  Caliber of co‐wor rkers  Employee involvement in decision‐making How to Measure Employee Engagement  Gallup Q‐12 crite eria  “Great Place to W Work” criteria  Human Sigma u a Sig a  Best‐in‐Class Tale ent Engagement Metrics 28 © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Recruiting Engaging Developing Re Talent Management: Recruiting, Engaging, Developing, Re etaining & Sustaining Your Workforce, and etaining & Sustaining Your Workforce and Enabling Human Resources Core Competencies in Support ofof Customer and Shareholder Value Creation ‐‐ Talent Pipeline (Note: Steps need to be confirmed, and sequenced d based on business needs) Engaging, Talent Managinng Recruitment On boarding Training, Retaining Sustaining Planning Performan nce Developing Talent Planning •Align Organizational Culture, Strategy, and Execution •Align workforce capacity & capability to Strategic Management System •Attrition patterns reviewed •Budgeting undertaken •Review Business Management System •Complete Employee Handbook, Policies & Procedures, supporting form ms, and automate through HRIS, or web‐based solutions •Define current & future labor requirements (including attrition) •Formalize Recruiting metrics •Hiring Manager (HM) completes Req. •HR & HM complete Recruiting Plan, screening criteria, selection criteria j b d i HR & HM l t R iti Pl i it i l ti it ia, job design, job description, FLSA status, comp, j bd i ti FLSA t t Supervisor, Dept., target start‐date •Job Design & Descriptions completed •Confirm status (whether headcount will be RFT, fixed duration, temp, o or 1099) •Opportunities for M&A and divestiture evaluated •Resolve Org structure and reporting responsibilities •Resolve Org structure and reporting responsibilities •Vendor relationships, business partnerships evaluated 29 © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Recruiting Engaging Developing Re Talent Management: Recruiting, Engaging, Developing, Re etaining & Sustaining Your Workforce, and etaining & Sustaining Your Workforce and Enabling Human Resources Core Competencies in Support ofof Customer and Shareholder Value Creation ‐‐ Talent Pipeline (Note: Steps need to be confirmed, and sequenced d based on business needs) Engaging, Talent Managinng Recruitment On boarding Training, Retaining Sustaining Planning Performan nce Developing Recruitment •HR & HM confirm selection criteria, timelines •HR & HM confirm sourcing methods, criteria, timeli ines •HR administers application, testing •HR performs phone screens for top 5‐10 candidates p •HR and HM review and select top 3 ‐5 candidates fo or interviews •HM schedules interviews per recruiting plan •Interview top 3‐5 candidates •Interview feedback provided to HM •Final candidates interview with HM & HR •HR communicates with candidate regarding pre‐hire e status •HR or HM completes reference checks •HR coordinates required pre‐hire screening (backgro ound, physical, drug, references) •Hiring decision made by HM, with input from HR •HR declines other candidates •HR prepares offer letter; HR or HM presents offer let t HR ff l tt HR HM t ff l tt tter to candidate t did t •Recruiting Plan completed •Req “closed” 30 © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Recruiting Engaging Developing Re Talent Management: Recruiting, Engaging, Developing, Re etaining & Sustaining Your Workforce, and etaining & Sustaining Your Workforce and Enabling Human Resources Core Competencies in Support ofof Customer and Shareholder Value Creation ‐‐ Talent Pipeline (Note: Steps need to be confirmed, and sequenced d based on business needs) Engaging, Talent Managinng Recruitment On boarding Training, Retaining Sustaining Planning Performan nce Developing On boarding •“Success” criteria reviewed •1st Week Onboard Schedule; revview of team, dept., Co. goals (HM) HM, HR) •90 day & 6 month goal setting (H •Company culture, and team inte egration •New Employee Essentials, New Employee Orientation (Day 1) •New Employee Essentials New Employee Orientation (Day 1) •On‐Boarding Process (Supervisor, Team, Technology, Leadership, Sales) •Operational review •Review of key systems, process, Mission, Vision, Values, business strategy, framework for execution •Technology, process, workflow r Technology, process, workflow rreview •Total Rewards: Compensation & & Benefits s Program •Values Based Benefits / Wellness 31 © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Recruiting Engaging Developing Re Talent Management: Recruiting, Engaging, Developing, Re etaining & Sustaining Your Workforce, and etaining & Sustaining Your Workforce and Enabling Human Resources Core Competencies in Support ofof Customer and Shareholder Value Creation ‐‐ Talent Pipeline (Note: Steps need to be confirmed, and sequenced d based on business needs) Engaging, Talent Managinng Recruitment On boarding Training, Retaining Sustaining Planning Performan nce Developing Managinng Performan nce •Coaching & & Development (Development Planner, Development Plan, 360) ng (90 day; bi‐annual; annual) •Goal settin •Metrics (quuantitative, qualitative) •Performan nce dimensions: individual, team, company p y •Performan nce Improvement (specific conversation, progressive corrective a action) •Performan nce Management Process (90 day; Mid‐year, Year‐end) •Separationn Process •Understan nding and managing gaps in skill versus performance •Weekly 1:11 (performance goals, resources) 32 © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Recruiting Engaging Developing Re Talent Management: Recruiting, Engaging, Developing, Re etaining & Sustaining Your Workforce, and etaining & Sustaining Your Workforce and Enabling Human Resources Core Competencies in Support ofof Customer and Shareholder Value Creation ‐‐ Talent Pipeline (Note: Steps need to be confirmed, and sequenced d based on business needs) Engaging, Talent Managinng Recruitment On boarding Training, Retaining Sustaining Planning Performan nce Developing Engaging, Training, Developing •“Informal” attributes of engagement •360s, Dev. Plan, Feedback planner •Annual employee engagement survey •Career‐ladder discussion •Change Management •Compensation review •Development Plan created, with agreed‐upon timelines, and trend assessment •Employee Competencies measured against agreed‐upon competencies for specific role •Compliance Training •Gallup Q12 engagement criteria J b ifi & d t t ll i d id tifi d l ti •Job‐specific & departmental learning needs identified, solutions implemented •Leadership Development (eg, 64 Lominger competencies, career stallers and stoppers) •Quarterly development 1:1 (short, medium, and long term) •Succession Planning •Team Building •Team Building •Technical Skills Development •Training assessment, instructional design, delivery, evaluation •Quarterly 1:1 (development goals) 33 © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Recruiting Engaging Developing Re Talent Management: Recruiting, Engaging, Developing, Re etaining & Sustaining Your Workforce, and etaining & Sustaining Your Workforce and Enabling Human Resources Core Competencies in Support ofof Customer and Shareholder Value Creation ‐‐ Talent Pipeline (Note: Steps need to be confirmed, and sequenced d based on business needs) Engaging, Talent Managinng Recruitment On boarding Training, Retaining Sustaining Planning Performan nce Developing Retaining •Career Ladder development (short, medium, long‐term) Education and Training commitments determined •E •Employee Alternatiive Dispute Resolution (ADR), Complaint Process •Reward & Recognitionn system (Employee & Sales person of the Quarter; Employee & Salesperson of f the Year; Chairman’s Award; anniversary award) R t i t •Resource constraints process Engagement survey, and implement top 3‐5 issues •Review results of Employee E that drive employee engagement •Succession Planning •Supervisor/subordinate relationships 34 © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Recruiting Engaging Developing Re Talent Management: Recruiting, Engaging, Developing, Re etaining & Sustaining Your Workforce, and etaining & Sustaining Your Workforce and Enabling Human Resources Core Competencies in Support ofof Customer and Shareholder Value Creation ‐‐ Talent Pipeline (Note: Steps need to be confirmed, and sequenced d based on business needs) Engaging, Talent Managinng Recruitment On boarding Training, Retaining Sustaining Planning Performan nce Developing Sustaining •Continuous Improvement DMAIC Six Sigma Lean Kaizen SWOT Baldridge CAPE) 35 © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Recruiting Engaging Developing Re Talent Management: Recruiting, Engaging, Developing, Re etaining & Sustaining Your Workforce, and etaining & Sustaining Your Workforce and Enabling Human Resources Core Competencies in Support ofof Customer and Shareholder Value Creation ‐‐ Guidelines that Align Pay & Performance (7) What tools and in systems will sustai the use of rewards (1) What are our  No single compensation as a performance FOCUS goals as a component in isolation (e.g., p ( g, i po e e improvement tool? oo ? business? (2) What business (2) What business increases to base pay, drivers will we bonuses, recognition or emphasize to promotions) makes an BUSINESS achieve our goals? impact on Company business DRIVERS results ENGAGEMEN NT  Overall program and (3) What competencies do component plans and we need to develop programs must be aligned ENTERPRISE (leadership, technical, and managed systematically PERFORMANCE values, job‐specific)? to engage Employees to make MANAGEMENT a difference (6) How can we (6) Ho a e align rewards (4) How can we (periodic increases, RE EWARDS LEARNING set individual incentives, goals and promotions, and MEASURE WEIGHT PERFORMANNCE PAYOUT encourage Check‐ Check‐in Efficiency Target 20% $550 40% $700 recognition) with Service Quality 15% $100 behaviors that are behaviors that are 25% $450 Custome $1800 r Wait Time our key objectives, Operation al Efficiency aligned with key  Incentive Design e.g., reward for business drivers?  Mgmt, Sales, Staff, competency  Technical development, (5) What does the workforce  Pay Delivery Guidelines results only, need to know and do to behaviors or a behaviors or a achieve our goals? hi l ? combination of all? 36 © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Recruiting Engaging Developing Re Talent Management: Recruiting, Engaging, Developing, Re etaining & Sustaining Your Workforce, and etaining & Sustaining Your Workforce and Enabling Human Resources Core Competencies in Support ofof Customer and Shareholder Value Creation ‐‐ Guidelines that Align Pay & Performance 37 © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Recruiting Engaging Developing Re Talent Management: Recruiting, Engaging, Developing, Re etaining & Sustaining Your Workforce, and etaining & Sustaining Your Workforce and Enabling Human Resources Core Competencies in Support ofof Customer and Shareholder Value Creation ‐‐ Guidelines that Align Pay & Performance “Employment Value “E l tV l Proposition” Our employees create value through innovative p products and services in support of our competitive advantage: serving our customers, and supporting our shareholders Talent Management Talent Management Strategy, Talent Management Program, Enabling Core Competencies, Alignment of Organizational Culture, Strategy, Execution, and St t E ti d Continuous Improvement focused on recruiting, engaging, developing, retaining & sustaining p y employees 38 © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Recruiting Engaging Developing Re Talent Management: Recruiting, Engaging, Developing, Re etaining & Sustaining Your Workforce, and etaining & Sustaining Your Workforce and Enabling Human Resources Core Competencies in Support ofof Customer and Shareholder Value Creation ‐‐ Guidelines that Align Pay & Performance 39 © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Recruiting Engaging Developing Re Talent Management: Recruiting, Engaging, Developing, Re etaining & Sustaining Your Workforce, and etaining & Sustaining Your Workforce and Enabling Human Resources Core Competencies in Support ofof Customer and Shareholder Value Creation ‐‐ Values Based Benefits: Total Value, Total Return To increase health and productivity, new healthcare strategies have evolved to improve bottom line results, increase Employee productivity, enhance Employee satisfaction and improve retention. AA value‐based design approach centered around wellness has emerged, focusing on optimizing Employee health benefits for a health hier and more productive workforce. With value‐based design, there are three fundamental sources of succe and seven core principles. The three fundamental sources ess, are a healthy corporation, a healthy work environment and persona responsibility. How these three sources contribute to the al success of the value‐based design is illustrated below. The Seven Core Principles of the Value‐Based Design: (1) the health of your organization begins with your people; (2) to realize total The Seven Core Principles of the Value Based Design: (1) the health of your organization begins with your people; (2) to realize total value, you must understand total cost; (3) higher costs don’t always me ean higher value; (4) health begins and ends with the individual; (5) avoid barriers to effective treatment; (6) carrots are valu ued over sticks; and (7) total value demands total teamwork. Value‐Based Design A Multi‐Faceted Wellness Model Cultural Spiritual Emotional Environ E io Social mental Total Wellness Physical Financial 36 40 © 2010 Richard d Swartzbaugh Intellectual Occupational

‐‐ Talent Management: Recruiting Engaging Developing Re Talent Management: Recruiting, Engaging, Developing, Re etaining & Sustaining Your Workforce, and etaining & Sustaining Your Workforce and Enabling Human Resources Core Competencies in Support ofof Customer and Shareholder Value Creation ‐‐ Values Based Benefits: Total Value, Total Return Outcomes & Interdependencies Execution F Framework Health Plan/Provider Total Value, Total Return Appropriate Enhanced Appropriate Services Organizational and Care Individual Health Centered Around Wellness: •Profitability •Sustainability p g •Competitive Advantage •Employability Employer Employee Appropriate Behavior 41 © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Recruiting Engaging Developing Re Talent Management: Recruiting, Engaging, Developing, Re etaining & Sustaining Your Workforce, and etaining & Sustaining Your Workforce and Enabling Human Resources Core Competencies in Support ofof Customer and Shareholder Value Creation ‐‐ Senior Job Structure Framework – High Level Manager Career Map Examples Senior E Expert Group Manager Manager Expert Team Consulting Support Leader Manager Specia alist Expert Senior g Manager Lead L d Caree er Career © 2010 Manager Richard Senior Lead yee Employ Employee Swartzbaugh Intermediate Advanced Entry y Entry Supervisor S i Entry Intermediate Entry Professional Managers Individual Contributors © 2008 - Richard Swa artzbaugh 38 42 Continuously improve the mechanisms that enable the workforce to advance (e.g., “teach them m to fish v handing them fish.”) thru: (a) career path; (b) career development process; (c) evaluation competencies (leadership, technical, values‐based, job‐specific), (d) eval © 2010 Richard luation form & rating scale; (e) skill guidelines by Dept/function; (f) skills grid; (g) d Swartzbaugh timeline; (h) summary spreadsheet; (i) development plan; (j) self‐evaluation form; (k) learning needs: 101, 201, 301, 401.

‐‐ Talent Management: Recruiting Engaging Developing Re Talent Management: Recruiting, Engaging, Developing, Re etaining & Sustaining Your Workforce, and etaining & Sustaining Your Workforce and Enabling Human Resources Core Competencies in Support ofof Customer and Shareholder Value Creation ‐‐ Key Steps to Producing Lasting Change &Transition, and Building a Learning Organization John Kotter. “The Heart of Change.” Harvard Business School Press, (2002). 43 © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Recruiting Engaging Developing Re Talent Management: Recruiting, Engaging, Developing, Re etaining & Sustaining Your Workforce, and etaining & Sustaining Your Workforce and Enabling Human Resources Core Competencies in Support ofof Customer and Shareholder Value Creation ‐‐ Key Steps to Producing Lasting Change &Transition, and Building a Learning Organization 44 © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Recruiting Engaging Developing Re Talent Management: Recruiting, Engaging, Developing, Re etaining & Sustaining Your Workforce, and etaining & Sustaining Your Workforce and Enabling Human Resources Core Competencies in Support ofof Customer and Shareholder Value Creation ‐‐ A Model of Organizational Development, and Employee Relation ns Partnership: The top left‐hand side of the External Regulation: The upper right‐hand model emphasizes a “partnership” approach, side of the model emphasizes a “leadership” and typically benefits from more internal model; designated organizational leaders regulation, a collaborative and consultative guide, coach , and collaborate. Increased work environment, higher levels of employee engagement typically occurs through a engagement, and less external involvement engagement and less external involvement reduced dependence or perceived need for reduced dependence or perceived need for in ER. The partnership model is common in unions, or third‐party intervention. organizations with “strategic business Sustainable high performance typically partners,” higher organizational occurs through mutual goal setting, pay‐for‐ effectiveness, and is more prevalent in those performance compensation systems, and industries with knowledge workers (e.g., team‐based problem solving & continuous Biotech, Pharma, Life Sciences, Higher Ed., Biotech, Pharma, Life Sciences, Higher Ed., improvement efforts, higher organizational improvement efforts higher organizational Healthcare , high tech, professional services). effectiveness, and is more prevalent in those industries with knowledge workers (e.g., Biotech, Pharma, Life Sciences, Higher Ed., and Healthcare , high tech, professional Bargaining: The bottom left‐hand side of the services). model emphasizes a “bargaining” model and third‐party involvement, and typically third party involvement and typically experiences a higher‐level of union Bureaucracy: The bottom right‐hand side of organizing, administrative agencies, the model emphasizes a “bureaucracy” mediation, arbitration, and ADR. Until model; more formal and informal mutual benefits can be established and committees, and processes are involved to developed, ER can be more adversarial than manage change. These organizations tend to consultative. This model is less prevalent in consultative This model is less prevalent in have less “trust” and more “process” to help p p the Biotech, Pharma, Life Sciences, but is ensure that individual rights are protected, more prevalent in Healthcare industries, the and lower organizational effectiveness. This government sector, and “blue‐collar” model is more prevalent in the government industries. Higher Ed. Staff & guild sector, and less prevalent in those industries functions may have a higher prevalence of with knowledge workers (e.g., Biotech, bargaining. K‐12 & trade guilds are more g g g Pharma, Life Sciences, and Healthcare , high uniformly represented. An “issue free” tech, professional services). An “issue free” engagement & ER model is especially engagement & ER model is especially attractive in this setting, especially in light of attractive in this setting, especially in light of 45 pending legislation (EFCA, RESPECT), and pending legislation (EFCA, RESPECT), and recent appointments to the bench, and the © 2010 Richard d Swartzbaugh recent appointments to the bench, and the NLRB. NLRB.

‐‐ Talent Management: Recruiting Engaging Developing Re Talent Management: Recruiting, Engaging, Developing, Re etaining & Sustaining Your Workforce, and etaining & Sustaining Your Workforce and Enabling Human Resources Core Competencies in Support ofof Customer and Shareholder Value Creation ‐‐ Sample Employee Relations Taxonomy 46 © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Recruiting Engaging Developing Re Talent Management: Recruiting, Engaging, Developing, Re etaining & Sustaining Your Workforce, and etaining & Sustaining Your Workforce and Enabling Human Resources Core Competencies in Support ofof Customer and Shareholder Value Creation ‐‐ Sample Employee Relations & Labor Management Relations Metr rics ER metrics (specific, measurable, actionable, results oriented, and time bound) ten ER metrics (specific, measurable, actionable, results‐oriented, and time‐bound) ten to have the most benefit when they focus on key outcomes supporting the nd to have the most benefit when they focus on key outcomes supporting the nd talent strategy, and the talent management program. While metrics vary organiza ation to organization, many metrics tend to focus on: time away from work, the delivery of products or services, measurements of engagement, commitment, and retention, quality of work, quantity of work, service levels, time, and cost. Absenteeism Quality Time & Cost Absence Rate % of workforce scoring in key performance Grievance Cost Factor by Reason PTO Utilization appraisal dimensions %95thh, 90th) Grievance Time by Reason Sick Leave Utilization Sick Leave Utilization External Customer Satisfac External Customer Satisfacction Index ction Index Grievance Time to Resolve (Days) Grievance Time to Resolve (Days) Unscheduled Absence Rate Internal Customer Satisfac ction Index Internal Compensation Ration (aka ʺequity ratioʺ) Market Compensation Ratio (aka ʺcompa‐ratioʺ) Delivery Quantity Operating Cost per FTE Top 3 industry benchmarks ution (ADR) Success Rate Overtime Expense per FTE Alternative Dispute Resolu Top 3 measures from Managementʹs perspective External Complaint Factor r (compensation, contract Percentage of claims going to ADR, agencies, Top 3 measures from the Workforceʹs perspective dispute, corporate, discrimin Top 3 measures from the Workforce s perspective dispute, corporate, discrimin nation, exempt v non nation, exempt v non‐ mediation, arbitration, litigation mediation, arbitration, litigation exempt, harassment, managger dispute, customer Engagement, Commitment, Retention dispute, vendor dispute) Other % of workforce completing key timeframes (90 day Grievance Rate ULP Employers – Section 8 (a) introductory period, 1, 3, 5, 10 yrs) ULP Employees – Section 8 (b) Department Head Satisfaction Index Grievance Reason Rate Objectionable conduct by Employer Employee Commitment Index p y Percent of Grievances Resoolved Without 3rd Party Objectionable conduct by Employees y j y p y Employee Engagement Index (Gallup Q12; Great Intervention Objectionable conduct by Labor Union Place to Work Index; % scoring very highly satisfied; Percent of Grievances Resoolved Without Monetary Injunctive relief % scoring highly satisfied) Settlement(s) Disciplinary actions Employee Retention Index Employee Satisfaction with Business Unit, Service Leadership, Supervisor % of Service Level Agreem ments (SLAʹs) achieved Facilitated Separation Rate (resignation in lieu of   Mean time between custom mer request, customer termination) acknowledgement, and cust tomer solution (by Involuntary Separation Rate category) Manager Quality Index Total Rewards Satisfaction Index Voluntary Separation Rate 47 © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Recruiting Engaging Developing Re Talent Management: Recruiting, Engaging, Developing, Re etaining & Sustaining Your Workforce, and etaining & Sustaining Your Workforce and Enabling Human Resources Core Competencies in Support ofof Customer and Shareholder Value Creation ‐‐ Sample Employee Relations Dashboard 48 © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Recruiting Engaging Developing Re Talent Management: Recruiting, Engaging, Developing, Re etaining & Sustaining Your Workforce, and etaining & Sustaining Your Workforce and Enabling Human Resources Core Competencies in Support ofof Customer and Shareholder Value Creation ‐‐ Performance Management and Appraisal Process • 2010-2012 • 2010-2012 Succession & Dev. Planning Performance Appraisals Strategic Performance Compensation Training 49 © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Recruiting Engaging Developing Re Talent Management: Recruiting, Engaging, Developing, Re etaining & Sustaining Your Workforce, and etaining & Sustaining Your Workforce and Enabling Human Resources Core Competencies in Support ofof Customer and Shareholder Value Creation ‐‐ ‐‐ M&A Fund damentals ‐‐ Mergers & Acquisition Models, Deal Flow Models g q Personal experience, Deloitte, and Mercer In the collaboration model both parties strive to employ diplomacy, goodwill, and negotiating finesse in striking a deal that represents a fair exchange, mutual respect, and a strong interest in ongoing business relations for mutual benefit. J&J is an excellent industry business relations for mutual benefit J&J is an excellent industry example of successful use of the collaboration model. The incline of resistance demonstrates (1) the intensity of oppositions to the other party’s merger objectives, and (2) the amount of resources (time, energy, money) expended on integration. amount of resources (time energy money) expended on integration Source: UCLA, Anderson School of Business The risk curve is lower for collaboration. 50 © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Recruiting Engaging Developing Re Talent Management: Recruiting, Engaging, Developing, Re etaining & Sustaining Your Workforce, and etaining & Sustaining Your Workforce and Enabling Human Resources Core Competencies in Support ofof Customer and Shareholder Value Creation ‐‐ ‐‐ Attributes of Effective M&A, M&A Integration ‐‐ Four Areas of Critical Business Value for M&A Integration Planning I t ti Pl i Target Evaluation  We understand, have identified, and allocated full‐time internal Deal breakers and red flags are capabilities (team, and individual) understood. to manage the “deal” and “integration ” integration. Competencies required to deliver on its business strategy ? Our people programs are have been defined. competitive in today’s marketplace?. We’ve designed & deployed talent management processes to talent management processes to We have identified the parts of We have identified the parts of ensure that we have the best the organization that high people and talent ready and in engagement most critical. place when the right opportunity arrives. We’ve created our MADO Plan. Due Diligence Sources: Towers Perrin & personal experience Implementation We have a clear understanding We are prepared for the people of the transaction’s full cost — and culture challenges that including all of the hidden costs of accompany an M&A. pension, labor‐management relations, FLSA classification Our senior leaders articulated a issues, health care, retiree issues health care retiree mission and vision, and made it programs and other transaction‐ clear and meaningful to related costs. employees. Effective enterprise risk Our current training approach is assessments (analyses, and delivering an adequate ROI, both potential remedies) have been potential remedies) have been for our employees and the undertaken. organization. Enterprise technology Source: Jossey-Bass 51 assessment (knowledge management, IT, IS). © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Recruiting Engaging Developing Re Talent Management: Recruiting, Engaging, Developing, Re etaining & Sustaining Your Workforce, and etaining & Sustaining Your Workforce and Enabling Human Resources Core Competencies in Support ofof Customer and Shareholder Value Creation ‐‐ ‐‐ Attributes of Effective M&A, M&A Integration ‐‐ Seven Areas of Critical HR Value for M&A (1) LEADERSHIP. During pg periods of organization transition and disruption, our employees look first to leaders for guidance, p g p p y g motivation and focus. Leade ership becomes the most important driver of employee engagement as companies transform. (8) ENTERPRISE RISK MANAGEMENT. We have created a process s to identify those leaders whose skills and mindset best match the organization’s current and We have an effective ERM process across all risk categories, future business needs. implement effective enterprise risk minimization steps, including cultural attributes that contribute to creating a risk management (2) CULTURE. Whether you are culture, and ERM is “everyone’s job.” undertaking a merger or acquisition, it’s critical to align cultures and values, and (7) HR SERVICE DELIVERY. Throughout (7) HR SERVICE DELIVERY Throughout ensure company leaders share a common the integration process, ensuring seamless mission and vision. HR service delivery, with minimal disruptions, can positively impact We have built and sustained a corporate workforce engagement and productivity. culture that reinforces the new business strategy rewards desired behaviors, We have defined and designed the future developed change management and structure of HR service delivery, assessed, communication strategies for the g selected, and integrated HR technology l t d di t t d HR t h l conversion and aligned those activities systems to support the needs of the new with other integration work streams for a organization. smooth transformation. (6) TOTAL REWARDS. Total rewards represents an area of immediate concern to (3) COMMUNICATION. Clear and employees. Aligning employee reward compelling communication is critical programs with overall business objectives during any corporate transition. is critical to both the short‐ and long term is critical to both the short and long term success of the transformation. We have created a communication and messaging framework that supports We have designed & implemented Sources: Towers Perrin & employee engagement, maintains focus on reward programs that will drive key personal experience driving business performance. leadership and employee retention, encourage new attitudes and behaviors, We have prepared the right and increase productivity through communication strategy, materials and workforce engagement. kf processes — from pre‐deal through processes from pre deal through integration — to address all organizational stakeholders. (5) STAFFING AND SELECTION. People‐related issues are among the most often cited reasons for M&A failures. (4) WORK KFORCE DEPLOYMENT. Companies often fail to realize that growth is driven not only by the business strategy but through the ability and willingness of the workforce to execute it. We have designed & deployed staffing and selection requirements for the new organization and recommend employee retention programs (financial We have e translated our business strategy into a detailed workforce plan that projects the number, mix, skills and and nonfinancial) to identify and retain key talent The employee selection and nonfinancial) to identify and retain “key” talent. The employee selection cost of emp y mployees needed to meet business objectives. j criteria are based on an assessment of the importance of skills and the ability to attract and retain needed talent. We have e benchmarked our current workforce against normative data to identify areas for improvement, analyzed t the composition, flow and cost of the current workforce to project future changes, and identify actions to close work kforce gaps. 52 © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Recruiting Engaging Developing Re Talent Management: Recruiting, Engaging, Developing, Re etaining & Sustaining Your Workforce, and etaining & Sustaining Your Workforce and Enabling Human Resources Core Competencies in Support ofof Customer and Shareholder Value Creation ‐‐ ‐‐ Attributes of Effective M&A, M&A Integration, and Execution Tools ‐‐ Culture Integration & Change Management: CEO’s Need to Creat g g g te a New Vision for the Combined Company, Enable Trust, p y Teamwork, Communicate, and Create a “Best of Both World ds” Based on Common Mission‐Critical Business Drivers, Vision, Core Values, and Operating Principles! Change Management Focus Business Impacts Bus Driver Bus Driver #3 ABC XYZ #1 Bus D Driver #2 # Strategy & Business Plan Core Value Vision Bus Bus Bus #3 Driver #1 Driver #2 Driver #3 Core Vaalue #4 Technical, People Core Value Core Value Vision Process Impacts #3 #4 Impacts Operating Bus Driver Operating Principle #2 #4 Principle #1 Bus Focus on Mission‐Critical Truths! Operating Driver #4 ??? 1. Focus on mission critical aspects of culture – Principle #2 business drivers (commitments to shareholders, customers, employees) & values (integrity, innovation) Core Value 1. Be loyal to the organization, respect the culture #2 Core C Operating Core 2. Treat equilibrium like a danger zone Value #1 Principle #1 Value #2 ?? ?? 3. Help shape culture @ the local level 4. Accept personal accountability for culture change 5. Protect the organization’s operating results 6. Push for speed in the change process Core Value 7. Don’t be surprised when culture “counter attacks” 7 Do ’t be u i ed he ultu e “ ou te atta k ” #1 8. Expect the situation to get worse before it gets better. 9. Be thankful for corporate cultural diversity. 53 10. One last thought – Some things will remain the same, and some will change © 2010 Richard d Swartzbaugh Price Pritchett

‐‐ Talent Management: Recruiting Engaging Developing Re Talent Management: Recruiting, Engaging, Developing, Re etaining & Sustaining Your Workforce, and etaining & Sustaining Your Workforce and Enabling Human Resources Core Competencies in Support ofof Customer and Shareholder Value Creation ‐‐ An Integrated Information, Technology, and Knowledge Managem ment Approach HRIS Automated Time & Attendance System 54 © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Recruiting Engaging Developing Re Talent Management: Recruiting, Engaging, Developing, Re etaining & Sustaining Your Workforce, and etaining & Sustaining Your Workforce and Enabling Human Resources Core Competencies in Support ofof Customer and Shareholder Value Creation ‐‐ An Integrated Information, Technology, and Knowledge Managem ment Approach Enterprise TMS Integrated Self Service (Applicant, Employee, Manager) Front End Front End LOA Training & Administration GL tie‐in Invoice Management Development ork Managed Netwo Provider Automated Time & Benefits Open Services Scheduler Attendance Payroll Enrollment Analytical Processing, P o e ii l Analytical A l Applicant Performance Tracking HRIS Query, Processing, Management HRIS System (ATS) Query, Reporting System Reporting Interoperability Integrated I t t d Consolidated Enterprise, BU Report ting Back End and Reporting Third Party 55 © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Recruiting Engaging Developing Re Talent Management: Recruiting, Engaging, Developing, Re etaining & Sustaining Your Workforce, and etaining & Sustaining Your Workforce and Enabling Human Resources Core Competencies in Support ofof Customer and Shareholder Value Creation ‐‐ An Integrated Information, Technology, and Knowledge Managem ment Approach E d its a n d I n t e rn e t A u d it R e p o rt s A u d it S u p e rv i s o rs T im e & A t t e n d a n c e A p p lic a t io n R e p o rt s T im e s h e e t P ro f e s s i o n a l C a lc u la t e s T im e & P a y R u le s A p p lie d A u d it R e p o r t s B e n e f it A c c r u a ls ( s u b m is s io n , a p p r o v a l & m a in t e n a n c e ) T em p A g e n c ie s P a y D a ta N e w H ir e s A tte n d a n c e D a ta AD P R e p o r tS m i th M is c R p ts B e n e f it s A d m in is t r a t io n EEO A p p l i c a n t T r$ a c k i n g T r a in in g , S k ills & C e r t if ic a t io n W rk C o m p C o m p e n s a t i o n B ana n a g e m e n t M k E m p lo ye e OS H A I n f o rm a t i o n S e l fS e r v i c e I n s u ra n c e O n l i n e B e n e f i t s E n ro l l m e n t A c c e ss to P a y H i sto ry , W -4 i n f o , E t c . YT D A D A c c u m u l a t o rs P C h e c kD e ta il File s L o c a l A D P P ro c e s s i n g C e n te r P a y ro l l , R e p o rt S m i t h , a n d H / R P ro f i l e T ra i n i n g C l a s s e s M a s te r I n s u ra n c e P a y G a rn i s h m e n t 4 0 1 (k) G e n e ra l W o rk e rs C o m p C o n t ro l N e w H i re t o $ R e p o rt s T a xD e p o s its R e p o rt s F ile L e d g e rR e p o rt R e p o rt S t a t S u m m a ry R e p o rti n g C h e c ks & V o u c h e rs L a b o r D i s t r i b 't n C hec k Q u a rt e rl y G rea S i g n e d , S o rt e d Filin g G a rn i s h m e n t R e g i s te r C o b ra & S tu ffe d s P ro c e s s i n g & P lt in a & A d m i n i s t ra t i o n A n n u a lF ilin g S p l i tW ra p R e m i tta n c e S u m m a ry R p t s Fin a n c e F i d e li ty4 0 1 K Mo d u le S ta te E m p l o ym e n tD i vi s i o n s W 2 's C D D i re c t D e p o s i t (F S D D R om ) $ U n e m p lo ym e n t C o m p e n s a tio n Managem ent A D P B ank 56 © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Recruiting Engaging Developing Re Talent Management: Recruiting, Engaging, Developing, Re etaining & Sustaining Your Workforce, and etaining & Sustaining Your Workforce and Enabling Human Resources Core Competencies in Support ofof Customer and Shareholder Value Creation ‐‐ An Illustrated Integrated Workflow Approach Employee interaction: Punches, time reporting RULES ENGINE: PTO requests Hours and d pay code calcs Scheduling requests Vacation, Sick, M Meal Period Violation Enterprise Payroll Shift swaps & requests Missin ng Punches Authorization of Time Sched S hedduling rules duli ule Can Trig gger Actions: Email nnotifications Wo orkflow Reeporting Letters/NNotifications Manager Views: Schedules Schedule template Employee preferences Employee preferences Corporate and/or Payroll: Corporate and/or Payroll: Call on/call off lists Receive automated notifications Actual to schedules Triggered off of actions System can send email notification, reporting Real time information on all aspects LOA Hours/ Pay code Exceptions Meal Violations, Missed Punches Meal Violations, Missed Punches 57 © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Recruiting Engaging Developing Re Talent Management: Recruiting, Engaging, Developing, Re etaining & Sustaining Your Workforce, and etaining & Sustaining Your Workforce and Enabling Human Resources Core Competencies in Support ofof Customer and Shareholder Value Creation ‐‐ 58 © 2010 Richard d Swartzbaugh

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Talent Strategy, Talent Management Program, Enabling Human Resources Core Competencies

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