1. Connecting the Dots “Manufacturing Processes...... People Processes”

2. Task Force 2-4 Cavalry Tactical Operations Center Team Feb 21, 1991 Northern Saudi Arabia Karl Joe

3. 2 nd Squadron 4 th Cavalry Squadron Staff March 22, 1991 Joe Karl

4. Agenda & Reminders Welcome Speaker Introduction Handouts Connecting the Dots “People Powered Lean” –Building a Case –Case Study –Look at the “Process” Gaining Engagement, On Boarding, Production Skills, Leader Development –Q&A

5. Hypothesis If we can create Ownership and Engagement from the “Start” (On Boarding) and we have Engaged Leaders... We can positively influence 1.*Increased Employee Satisfaction 2.*Increased Employee Engagement 3.Increased Customer Satisfaction 4.*Decrease Production Costs 5.Increased First Pass Yield 6.*Increased Employee Skills 7.*Increase Production Capacity 8.*Decrease Cycle Times 9.*Decreased Turnover 10.Increased Revenue 11.*Decrease Cost 12.*Increasing Profit All Are Measurable Events

6. Building a Case for Engagement (CEO... Hourly)

7. 7 “The most important process in your organization is the process that describes the relationship between the leader and their people. It is the only process that matters.” Mike Petters President, Northrop Grumman Newport News October 21, 2006

8. “Ownership & Engagement” Thru the Lean Journey People Equipment Materials Process Ownership Engagement The goal of People Powered Lean (PPL) is to support the plant’s Lean Manufacturing Improvement initiative by synchronizing and integrating the People side of the business with manufacturing. People Powered Lean Overall Goal

9. Gallup Business Success Productivity, Profitability, Retention, Customer Satisfaction Sustainable Growth Sustainable Growth Engaged Employees Engaged Employees Engaged Customers Engaged Customers The Right Fit The Right Fit Identify Individual Strengths Identify Individual Strengths Real Profit Increase Real Profit Increase Great Leaders Great Leaders Stock Increase Stock Increase On Boarding

10. 10 Gallup Engagement Hierarchy What do I get? What do I give? Do I belong? How can we grow? Ownership 2) I have materials and equipment I need to do my work right 1) I know what is expected of me at work 6) Someone at work encourages my dev. 5) My Supervisor/Someone at work cares 4) I received recognition last seven days 3) I do what I do best every day 10) I have a best friend at work 9) Coworkers committed to quality 8) Mission/Purpose of company 7) At work, my opinions seem to count 12) Opportunities to learn and grow 11) Progress in last six months Growth Teamwork Management Support Basic Needs Copyright © 1992-1999 The Gallup Organization, Princeton, NJ. All rights reserved.

11. Gallup Study Only 26% are Engaged (loyal and productive) 55% are not engaged (just putting in time) 19% are actively disengaged (unhappy and spreading their discontent) $350 billion per year in lost productivity Each employer is wasting approximately 10% of their payroll dollars on lost productivity due to disengagement

12. Signs of Engaged Employees Psychologically committed to company Consistent levels of High Performance Innovative and drive for efficiency Intentionally build supported relationships Clear about role outcomes expected Passionate, high energy, and enthusiastic Never run out of things to do Loyal to workgroup and company Broaden what they do and build on it Positive constructive criticism

13. Signs of Not Engaged Employees Meeting the Basics Confusion or inability to act with confidence Low risk response No real sense of achievement Making up their own game Not always committed Show negativity but not underground

14. Signs of Actively Disengaged Physically present but psychologically absent “What can I take” rather than “what can I give” Share unhappiness about work with peers “I’m OK but everyone else is not” Service prevention rather than service provision Not productive but always has excuses Inability to move from problem to solution Normal reaction starts with resistance Low commitment to company Might sabotage or manipulate solutions Isolation, low trust

15. Three Business/Social Groups in Every Organization In Group –High Trust –Good Communications –“Let ‘em Run” Goal Setting –Low Task Definition Needs –High Relationship Needs Led(O) Leader Led(I)Led(M) Out Group –Low Trust –Stressful Communications –“By the Numbers” Goal Setting –High Task Definition Needs –Low Relationship Needs

16. Strategic Goal For High Performing Unit Facts: –Little movement from Out to In –More movement from In to Out due to Leaders breaking the Goal Alignment Contract/Agreement

17. Middle Group The Key to Success New Employees make a decision within first 48 - 72 hours from introduction to immediate supervisor. Strategy 1.Focus on New Hires Immediately –On Boarding, Production Skills, and Leader Development 2.Focus on the Middle Group: Move them into the In Group as quickly as possible –Production Skills & Leader Development

18. System Solutions Systems Include On Boarding Organizational Scheme Leader Development Production Skills/Career Path Development Systems Include On Boarding Organizational Scheme Leader Development Production Skills/Career Path Development Powered Lean “PPL”

19. Connecting the Dots “Manufacturing Processes.... People Processes” Connecting the Dots “Manufacturing Processes.... People Processes” Integrating labor requirements with the hiring, orientation, and training programs into a seamless Lean Support Program. People Powered Lean “PPL” Providing Leaders with the right people in the right numbers, in the right skills, at the right time and cost to meet business demands.

20. Case Study ESCO Covington, a heavy manufacturing plant located in Covington, KY Produces heavy steel “Buckets” Need: “Build more quality steel products faster to improve market share and increase profit” Situation: High attrition and issues filling jobs at the speed of business ESCO Covington, a heavy manufacturing plant located in Covington, KY Produces heavy steel “Buckets” Need: “Build more quality steel products faster to improve market share and increase profit” Situation: High attrition and issues filling jobs at the speed of business

21. ESCO Covington People Powered Lean Over 300 Employees 10.3 Weeks Hiring Process Production Skills Process On Boarding Process Where to Start?

22. ESCO Modernization Program Results: Improved production efficiency by 23% (29.42 hours/product to 23.98 hours/product) representing a 1 st year direct cost reduction of $285,600 Reduced the time to hire from 10.3 weeks to 1 week Reduced the cost of hire from $2008 per hire to less than $500 per hire Decreased 1 st year attrition rate from 59% to 6% Reduced overall attrition by 31% Results: Improved production efficiency by 23% (29.42 hours/product to 23.98 hours/product) representing a 1 st year direct cost reduction of $285,600 Reduced the time to hire from 10.3 weeks to 1 week Reduced the cost of hire from $2008 per hire to less than $500 per hire Decreased 1 st year attrition rate from 59% to 6% Reduced overall attrition by 31% In six months, the project team analyzed, designed, developed, and piloted a modernized teammate acquisition program named People Powered Lean (PPL). Components: Modernized hiring process Scenario based interview/skills assessment “World class” first day Common skills training program; Production cell training program First 90 day coaching and feedback process PPL management system focused on reducing the new Team Mates time to competency in their first job and reducing 1 st year attrition. Components: Modernized hiring process Scenario based interview/skills assessment “World class” first day Common skills training program; Production cell training program First 90 day coaching and feedback process PPL management system focused on reducing the new Team Mates time to competency in their first job and reducing 1 st year attrition. The overarching goal was to create new Team mate engagement from first contact leading to improved business performance.

23. On Boarding Building People Pipelines to Attract, Hire, and Retain the Right People, in the Right Numbers, in the Right Skills, at the Right Time, at the Right Cost… “Getting The Right People on the Bus” Recruiting - - - Trying Out - - - Making the Team “Getting The Right People on the Bus” Recruiting - - - Trying Out - - - Making the Team Are You Forecasting Your Labor as you Forecast Your Business How far out are you looking? What skills will you require? Lead time from labor requirement to competency? Who manages this process? Are You Forecasting Your Labor as you Forecast Your Business How far out are you looking? What skills will you require? Lead time from labor requirement to competency? Who manages this process? Building Pipelines: Orient, Screen, Identify Interview & Assess Skills Common Skills Training 1 st Job Skills Development Building Pipelines: Orient, Screen, Identify Interview & Assess Skills Common Skills Training 1 st Job Skills Development Decrease Cost of Hiring, Reduce Attrition, Reduce Hiring Cycle Time, Decrease Time to Competency, Improve New Hire Performance

24. Production Identifies Requirement HR Posts Requisition HR Receives Applications HR Schedules Interviews Skills Test Hiring Decision Drug Screen and Physical Applicant Given Report Date HR Admin Inprocessing Admin In-Processing & Video Based OSHA Training OJT Training Example Hiring Process: July 2004 Offer Sent Production Interviews Cycle Time: 10.3 Weeks Cost: $2,008 per new hire (Labor costs only)

25. Production Identifies Requirement HR Posts Requisition & Sends to OET OET Screening HR Receives Applications HR Schedules Interviews Conducted; Welding Test Hiring Decision Drug Screen and Physical Applicant Given Report Date HR Admin Inprocessing Plant Manager Meeting Shift Supervisor OSHA Training Process/ Quality Training Example Hiring Process: October 2004 Offer; New Hire Packet Sent Cell Training Structured Orientation and Training Process Cycle Time: 5.8 Weeks - 43.7% reduction Cost: $1,420 per new hire (Labor costs only) – 29.3% reduction

26. In Order to Attract, Hire, and Retain... Ask Yourself Are you forecasting your labor as you forecast your business? –Are your labor forecast driven by your production needs –What is the Minimum and Maximum required –Are competitors/new companies expected to enter into the market –What are the recruitment differentiators (conditions, environment, pay, stability, schedule, parking, overtime, etc.) How far out are you looking? –Do you expect increased/decreased production –What are the Pipeline Capacities What skills will you require? Current or New? –What does your candidate profile look like? –What does the job look like (RJP) –Is there a skills assessment; if so who administers it Lead Time from labor requirement to competency? –What are the in processing procedures Who is responsible for managing it? –Who does orientation and screening –Who conducts the interviews What options do you have? –What and where are the pipelines –What are their capacities

27. College Transfers Adult Education Current Employees Community Colleges High SchoolsCommon Skills Training Tech Schools Orient, Screen & Identify Candidates Business Metrics: - Decrease Cost of Hiring - Reduce Attrition (pre- and post- hiring) - Reduce Hiring Cycle Time - Improve New Hire Integration - Improve New Hire Job Performance - Decrease New Hire Time to Competency Military State Employment Offices Temp Agencies Other Companies Interview & Assess Skills Generate Labor Req’s Hiring Decision Increase CostDecrease Cost 1 st Job Skills Development Should Be Tracked

28. Example Pipeline Capacity Analysis 2. Adult Education 1. Community Colleges 4.Tech Schools 3. Other Companies (VEC) Community Colleges (65 identified) –Tidewater (50) –Paul D. Camp (15) Adult Education (108 identified) –Norfolk Tech (12) –New Horizons (20) –Pruden (1) –Richmond Tech (75) Local Companies Laying Off Workers (50 Identified) –Information from Virginia Employment Commission Technical High Schools (56 identified) –New Horizons (20), Pruden (4), Norfolk Tech (10), Virginia Beach (16), Chesapeake (6), Badger (0) Total Identified as of 5/11/2005: 279

29. Example Orientation and Screening Conduct Initial Orientation by providing Realistic Job Preview to each interested person. www.vasteemer.com Candidates passing minimal screening criteria are provided applications. Validates Pre-Requisite Experience as required and provides copy of skills assessment/test. Ensure application completion Classifies Candidate Sheet Provide Candidate with Hiring Process/Cycle Time Information and Tracking Sheet Orient, Screen & Identify Candidates

30. Example Realistic Job Preview Link to full RJP

31. Example Candidate Classifications 1.Hire Now: Exceeds All Criteria 2.Hire: Meets All Criteria 3.Near Hire: Will meet All Criteria within 30 days with self-directed development 4.Far Hire: Will meet All Criteria within 120-180 days with self-directed development 5.No Hire: Will not meet minimum criteria for at least 6 months 6.Best Athlete 7.Has unique skills outside of current Job Search Requirements

32. Example Interview and Skills Assessment Goal: Create a situation where the employee and the company can determine if the new employee has the skills and attitudes to be successful Features: 1.Plant Tour 2.Skills Assessment 3.Attitude Assessment 4.Hiring Decision 5.New Teammate Skills Development Plan Interview & Skills Assessment

33. Example Skill Assessment Classification Fully Qualified: –Passes Skills Assessment 1 st Time –Good attitude Qualified: –Fails part of Skills Assessment –Good attitude –Can pass with minimal re-training… –Company provides training on the spot Minimally Qualified: –Fails most of Skills Assessment –Good attitude –Requires significant training either pre- or post hiring Unqualified: –Fails all of Skills Assessment –Good attitude –Refer to Local Training Facility/School for skills development

34. In Process & Common Skills Training Example In Processing and Common Skills Training Goal: Efficiently in-process and bring new teammates to competency on all Common Tasks prior to assignment to work area or cell.

35. Example “World Class First Day” Goal: –New Team Mate leaves after first day thinking: Wow! These guys really know what they are doing. I’ve talked to the Plant Manager and my Boss. I understand what we do here and how I fit in. I know the how to work safely. I know what I need to do to be successful in this company I have a hard hat and a locker with my name on it I know I will get paid. I know what I need to do tomorrow. Let’s go to work! Experiences... Beliefs... Actions... Results

36. Example World Class 1 st Day Thursday’s 9:30 AM: Arrive at Plant Met by Production Manager Turn HR New Hire Packet to HR Rep Issued Locker with Name on it Issued Helmet with Name on it Digital Picture taken Issued Equipment Check Employee provided PPE 9:45 AM: Plant Tour and Safety Training with Production Manager OSHA Safety Training Checklist Completed and placed in Employee Training File 11:45 AM: Meet Plant Manager Lunch or Office Call Introduction to company and general information about the corporation, history, products, markets, and facilities Expose the new employee to Culture, Values, what the company does, how the company makes money, and where the employee fits in the bigger picture

37. World Class 1 st Day Thursday’s 1:00 PM: Quality Overview Plant Tour with Quality Manager General training on quality Individual expectations, metrics, quality control, quality process 2:00 PM: Process Overview Plant Tour with Continuous Improvement Manager; Walks the Value Stream; Sees the Big Picture Introduction to Lean Training. Continuous Improvement Responsibilities 4:00 PM: Administrative Questions and Answers Verification of In-processing with HR Manager

38. Example Common Skills Training Tailored Individual Development Plan developed at the Interview and Skills Assessment. Example Learner Based Training Lesson Outline: 1.Message From the GM 2.Safety/OSHA 3.Production Terms and Language 4.Use of Personal Protective Equipment (PPE) 5.Reading Measurements to the 1/16” Detail 6.Blueprints and Weld Symbols 7.Quality Assurance NOTE: A Web Based Platform so that New Hires can review and pre- train prior to Interview. Can be used as a post hiring support tool. Skills every individual must know prior to starting Cell Training

39. Example Cell Training 1 st Job Skills Development Goal: Seamlessly integrate new Hire into the production line and reduce “Time to Competency” Sequence List: 1.New Hire meets with 1 st Line Supervisors/Cell Trainers 2.1 st Line Supervisor uses Skills Assessment Record to develop Cell Training Program 3.Supervisors use 30-60-90 day Feedback System to assess performance and update skills development record. 4.New Team Mate and 1 st Line Supervisor conduct a Goal Alignment session and agree on initial Career Path and Production Skills Training Plan.

40. # Interested 10497+7 # of Apps Received 8581+4 # of Screened Candidates Scheduled for Test/Interview 6559+6 # Tested & Interviewed 5853+5 Classifications And Assessments Fully Qualified 77- Qualified (Less than 2 weeks) 17 - Minimally Qualified (2-4 weeks) 2622+4 Unqualified (More than 4 weeks) 87+1 Awaiting Weld Test Results (Bend) 00- Applicant Flow Applicant Flow: Page 1 of 2 Dec. 12 Nov. 7 Delta

41. # Failed Interview 1312+1 # that Voluntarily Withdrew 99- # Awaiting Hiring Decision or Offer Pending 01 # of Active Applicants 56 # Offered and Accepted Employment 3431+3 # of Offers Declined or Rescinded 33- # Started 3230+2 # Terminated 75+2 Applicant Flow Applicant Flow: Page 2 of 2 Dec. 12 Nov. 7 Delta

42. Hiring Cycle Times - All Cycle Times measured in Calendar Days - Cycle Time IntervalDays Application Date to Test/Interview Date 18.55 Test /Interview Date to Offer Date 5.05 Offer Date to Acceptance 2.64 Acceptance to Start Date 10.50 Total Application Date to Start Date 42.41 Changes since Nov. 7th Program Review -1.96

43. Hiring Cycle Attrition Hiring Cycle Phase# Attrited Pre-Application 19 App Date to Weld Test 21 Weld Test to Interview 8 Post-Interview 15 Drug Test 0 Offer Declined 2 Post-Hire (In-Training) 7 Total Hiring Cycle Attrition: 72 of 104 Candidates

44. Post-Hire Attrition Name Termination Date Termination Reason Days on the Job (Liebherr Work Days) 7/25/2005 Discharged from Welding Training. Poor work habits and slow progression given as primary reasons. 10 10/4/2005 Unable to complete the Welding School within 7 weeks. Liebherr liked Dorian’s Work Ethic and offered him positions in Assembly/Paint. Dorian refused to work on 2 nd Shift and thus was dismissed. 44 8/26/2005 Discharged from Welding School. Dismissed for ‘cheating’ on his vertical Weld Test. Albert laid his test plate flat after receiving warning from Bob. 15 8/8/2005 Discharged from Welding School. Poor work habits and slow progression given as primary reasons. 11 10/10/2005 Unacceptable progress in Welding School and unwillingness to brake old habits. Needs more experience than our training can provide. 11 11/18/2005 Discharged for falsifying application with regards to educational background (HS Graduation). 31 12/2/2005 Discharged for falsifying application with regards to educational background (HS Graduation). 45

45. Failed Interview Results Name Interview Date Hire CategoryReason for Failed Interview 12/7/2005Minimally Qualified Poor Weld Test Performance & Interview revealed troubling history. Expelled from school with 3 months left. Criminal charges pending, with January court date. Date Range: Nov. 7 th – Dec 12th Total Failed Interviews (since 5/24/05): 15

46. Production Skills Development Components: Labor Category Analysis Skill Paths Development Common Skills Training Program (All) Cell/Basic Skills Training Program (1 st Job, 30/60/90) Intermediate Skills Training Program (Increase Competency, 2 nd /3 rd Job) Advance Skills Training Program (Training for Masters) Master’s Program Development Depth Chart Identifying Skill Gaps Components: Labor Category Analysis Skill Paths Development Common Skills Training Program (All) Cell/Basic Skills Training Program (1 st Job, 30/60/90) Intermediate Skills Training Program (Increase Competency, 2 nd /3 rd Job) Advance Skills Training Program (Training for Masters) Master’s Program Development Depth Chart Identifying Skill Gaps What is Your Plan to Move Your People Along the Correct Developmental/Career Path? Training Management System How Are You Building Your Future Leaders “Building Bench Strength”

47. Right Person/Right Job Move the Employee in the Right Direction High Quantity Low Quality Quantity of Work Quality of Work Low Quantity High Quality Low Quantity Low Quality High Quantity High Quality New Person Go To Person What is our plan to move our people along the correct developmental path?

48. Environment to Succeed It is the companies responsibility to create an environment where the employee can succeed Most Mission Statements, Vision and/or Culture Statements will address “People” “Best Athletes” want to know what the next 12 years look like. Skills... Place... Time

49. Soft Skills Development Career Complex Tasks Life Cycle Skills Development Program Management Skills Basic Skills Intermediate Skills Supervisor Development Training Supervisor Practical Application/ Evaluation Advanced Skills Initial Entry Skills Training I Mentor Skills V Competency Level Experienced Personnel Employment Skills Skills Evaluation Basic Training Practical Application Coaching/ Evaluation III II Intermediate Training Advanced Training IV Pre-Employment VI

50. Time of Service: 30 Year Career Joe 1 Joe 4Joe 3Joe 2 High Quality/ High Quantity Low Quality/ Low Quantity Most Productive Years Lower Skills/ Experience Conscious Effort to Move “Joe Four” into Mentor Role ShopsShipsMentors Lower Physical Abilities High Skills Take Advantage of these Talents… To Shorten this time period

51. Machine Operator Example Life Cycle Management - Current State Pre-HireMaster Molder Cross Training First 8 Weeks Orientation Spherion Orient MeOJT – Ad Hoc Requisition Generation 5 Hrs HR Touch Time 48 Hrs Cycle Time Required Training SPIRIT Team ISO Paulson/ NCP 40-50% Attrition No Formal Cross Training No Formal Master Program Safety Training Tracking Training – Skills to Job

52. Life Cycle Management – Future State Pre-HireMaster Molder Cross Training First 8 Weeks Orientation Spherion Orient Me Structured OJT Based on ISO Procedures Requisition Generation 5 Hrs HR Touch Time 48 Hrs Cycle Time Required Training SPIRIT Team ISO Paulson/ NCP Master Molder Program Safety Training Automated Training Tracking – Skills to Job Math and Reading Competency World Class First Day Realistic Job Preview Depth Chart 30-60-90 Day Evaluation Team Based Initial Training Formal Cross Training Leader Development Program Centers of Excellence Hip Pocket Training Production Teams Competency Check

53. Example Life Cycle Training Cycle 1.Requisition Generation from Production for New Employee 2.Notice to Spherion by HR 3.Spherion Results from HR to Production 4.Realistic Job Preview by Applicant 5.Interview Applicants by Production 6.Math and Reading Competency Test by HR 7.Orient Me! 8.World Class First Day by Production Team 9.Initial ISO Training from Orient Me! and Team Members 10.Structured OJT Based on Job Requirements – ISO driven Standards 11.Required Training Based on Position (Lock out/Tag out, etc.) 12.30-60-90 Day New Employee Evaluations by supervisor 13.Safety Training from Team 14.Team Based Initial Training – training to work on the Team (SPIRIT Based) 15.Hip Pocket Training from Team Leader 16.Paulson Training 17.NCP Training 18.Formal Cross Training by Teammates 19.Master Molder Program 20.Leader Development Program 21.Center Of Excellence Program Management Tools: –Depth Chart –Automated Tracking System

54. Motivational Depth Chart Visual Employee Management Tool –Employee Name and Picture –Skills they have demonstrated –Cell they are assigned too and qualified to work in. –Cell they are cross-trained in (Self Motivated Training) –Backed up by Web Based Tracking System

55. Entry Level Skills Advanced Skills Basic Skills Qualifying Skills Task Complexity and Criticality to the Yard Simple/ Less Critical Tasks Complex/ Critical Tasks How do we Identify Skills Gaps? Required Skills Current Skill Levels Mentor Skills Skill Gap

56. Building the Tool Kit Subject Matter Experts CustomizedCourses Commercial Off The Shelf Courses AccessProcedures,Manuals,References Tips and Best Practices Coaches On the Job DevelopmentalAssignments Scenarios GoalAlignmentSession IndependentStudy Medium Cost Low Cost High Cost The Business of the Organization Specific Task

57. Leader Development “The leading indicator of Business Success is the Performance of Current Leaders” Perfect State Systematic Approach to Leader Development Manager’s are the Primary Trainers with the right tool kit to develop their Supervisors Manager’s are responsible to tailor skill development to each individual supervisor and each operational area. Leader Skills are developed using “I Know”, “I Can Do”, “I Can Apply” blended development strategy Leader Development Programs mapped directly to Performance Review System Current State Leader Development conducted informally or not at all. Usually best operators promoted to Supervisors Experience gained over time Many training courses available but not mapped to critical tasks. Undocumented program that is dependent on individual Management On the Job Training is ad hoc with few Training Materials available on the Job Site.

58. Leader Development Program Current State Leader Development conducted informally or not at all. Usually best operators promoted to Supervisors Experience gained over time Many training courses available but not mapped to critical tasks. Undocumented program that is dependent on individual Management On the Job Training is ad hoc with few Training Materials available on the Job Site. Perfect State Systematic Approach to Leader Development Manager’s are the Primary Trainers with the right tool kit to develop their Supervisors Manager’s are responsible to tailor skill development to each individual supervisor and each operational area. Leader Skills are developed using “I Know”, “I Can Do”, “I Can Apply” blended development strategy Leader Development Programs mapped directly to Performance Review System

59. Atmosphere of Ownership Leader Must Provide... Clear direction: –Q1: Do I know what is expected of me? Appropriate Resources –Q2: Do I have the materials, equipment, and skills I need to do my work right? Feedback and Coaching –Q11: In the last six months, someone at work has talked to me about my progress? Growth Opportunities –Q3:Do I have the opportunity to do what I do best everyday? –Q7: The mission or purpose of my company makes me feel my job is important? –Q12: This last year, I have had opportunities at work to learn and grow? Reward and Praise –Q4: In the last seven days, have I received recognition or praise for good work? –Q6: Is there someone that encourages my development? –Q5: Does my Supervisor, or someone at work, seem to care about me as a person? Fair Treatment –Q8: At work, my opinions seem to count? –Q9: My associates or fellow employees are committed to doing quality work? –Q10: I have a best friend at work?

60. Atmosphere of Ownership... Led Will Treat the company like their own Hold each other accountable for doing the right thing Give early warning of problems Have the courage to ask questions

61. Organizational Goals –Cost –Schedule –Quality –Safety Individual Goals –Compensation –Opportunities –Responsibility –Work Environment –Recognition Communication Awareness Goal Alignment Led Leader to Led Linkage Can only occur when there is a conversation between the Leader and the Led about the Led! Authentic Communication Leader

62. If We Fully Implement PPL... 1.Increased Employee Satisfaction 2.Increased Employee Engagement 3.Increased Customer Satisfaction 4.Decrease Production Costs 5.Increased First Pass Yield 6.Increased Employee Skills 7.Decrease Cycle Times 8.Increase Production Capacity 9.Decreased Turnover/Increase Retention 10.Increased Revenue 11.Decrease Cost to Produce 12.Increasing Profit All Are Measurable Events

63. 63 Turnover Costs IndustryVol. QuitsRetireFired Total Turnover Rate Replacement Costs Industry Standard Annual Turnover Costs for 300 Worker Site All Private22.0%2.5%0.5%25.0%$12,000$900,000 Construction25.5%2.5%1.0%29.0%$14,000$1,218,000 Manufacturing14.0%2.0%1.0%17.0%$14,000$714,000 Wholesale Trade15.0%3.0%1.0%19.0%$10,000$570,000 Retail Trade30.0%3.3%0.7%34.0%$8,000$816,000 Transportation15.0%3.5%0.5%19.0%$13,000$741000 Leisure and Hospitality44.0%2.5%0.5%47.0%$6,000$846,000

64. Manufacturing Breakout 82.4% of Turnover Costs are in the Voluntary Quits Category 11.8% of Turnover Costs are in the Retirement Category 5.8% of Turnover Costs are in the Fired Category Manufacturing Total Turnover Rate Vol. QuitsRetireFired Replacement Costs Industry Standard Annual Turnover Costs for 300 Worker Site Total 17.0%14.0%2.0%1.0%$14,000$714,000 Vol. Quits 14.0%$14,000$588,000 Retire 2.0%$14,000$84,000 Fired 1.0%$14,000$42,000

65. Voluntary Quits Costs IndustryVol. Quits Total Turnover rate Replacement Costs Industry Standard Annual Voluntary Quits Costs for 300 Worker Site All Private22.0%25.0%$12,000$792,000 Construction25.5%29.0%$14,000$1.071,000 Manufacturing14.0%17.0%$14,000$588,000 Wholesale Trade15.0%19.0%$10,000$450,000 Retail Trade30.0%34.0%$8,000$720,000 Transportation15.0%19.0%$13,000$585,000 Leisure and Hospitality44.0%47.0%$6,000$792,000

66. Retirement Costs IndustryRetire Total Turnover rate Replacement Costs Industry Standard Annual Retirements Costs for 300 Worker Site All Private2.5%25.0%$12,000$90,000 Construction2.5%29.0%$14,000$105,000 Manufacturing2.0%17.0%$14,000$84,000 Wholesale Trade3.0%19.0%$10,000$90,000 Retail Trade3.3%34.0%$8,000$79,200 Transportation3.5%19.0%$13,000$136,500 Leisure and Hospitality2.5%47.0%$6,000$45,000

67. Fired IndustryFired Total Turnover rate Replacement Costs Industry Standard Annual Fired Costs for 300 Worker Site All Private0.5%25.0%$12,000$18,000 Construction1.0%29.0%$14,000$42,000 Manufacturing1.0%17.0%$14,000$42,000 Wholesale Trade1.0%19.0%$10,000$30,000 Retail Trade0.7%34.0%$8,000$16,800 Transportation0.5%19.0%$13,000$19,500 Leisure and Hospitality0.5%47.0%$6,000$9,000

68. Where Should I Start? 100 Employees 1,000 Employees 10,000 Employees $196,000$1,960,000$19,600,000

69. PPL Challenges 1.No silver bullet…Big Problem with a lot of moving parts in a dynamic business environment 2.Focused effort based upon real analysis…not a “Good Idea of the Day” approach. 3.Recommendations must make good business sense 4.Design Executable Programs and be good Program Managers (Cost, Schedule, Quality) 5.Be realistic in execution and “eat the elephant” one bite at a time. 6.Requires long range thinking… People are multi-year projects-- if fact Life Long Projects

70. PPL Things to Attack Organizational Scheme On Boarding Leader Development – Current and Future Production Skills Training Lean Training

71. Questions & Answers