1. Human Resources Strategy
Bob Hetzel

2. Human Resources Six Sigma Structure
Executive Steering Committee Daniel Casteel
Division HR Champion Tonya Miller
ADT HR Champion Mike Esposito
SimplexGrinnell HR Champion Anne Liming
Tyco Safety Products HR Champion Bob Hetzel
TFS – Communication & Training Lisa Turner

3. Black Belt Life Cycle Selection Training Assigned Projects Application
Appraisal/Exam
Certification
Ongoing Projects
New Assignment

4. Human Resources Support
Key areas of focus include:
Recruiting, Screening and Selection
Certification
Career development and succession planning
Early Exit Strategy
Six Sigma Project Team Support
Compensation
Six Sigma changes our approach to work. It focuses on our customer / supplier relationships – internal and external. It’s a different use of metrics.

5. Recruiting, Screening & Selection
Develop and post Black Belt and Project Champion position descriptions
Identify high potential BB and PC talent through Leadership Planning Process (LPP)
Employ behavioral interviewing techniques to screen candidates
Phase I – Safety Products Training Position Allocation
Wave I – Transactional (5 BBs)
Wave II - Safety Products Mfg. – (30 BBs)
Wave I - Design For Six Sigma – (30 BBs)
Six Sigma changes our approach to work. It focuses on our customer / supplier relationships – internal and external. It’s a different use of metrics.

6. Black Belt certification is defined as:
Completion training coursework
Completion of required number of projects
Delivery of required financial savings
Passing black belt certification exam

7. Career Development and
Succession Planning
Assess Project Champion/Black Belt needs
Create career development plans
Provide career development coaching, mentoring and training as necessary
Integrate assignments into Succession Planning process
Ensure transition back into a business unit at the end of full time Black Belt and Project Champion assignments

8. Self-Select out of program Fail to satisfy classroom evaluation
Early Exit Strategy
Identify appropriate way to handle Black Belts and Project Champions who:
Self-Select out of program
Fail to satisfy classroom evaluation
Do Not Complete Training
Do not close projects
Do not meet financial hurdles
Six Sigma changes our approach to work. It focuses on our customer / supplier relationships – internal and external. It’s a different use of metrics.

9. Provide HR data, metrics and analysis
Support Six Sigma Project Teams
Provide HR data, metrics and analysis
Address HR implications of business process improvements

10. Compensation Objectives
Attract and retain high potential talent
Reward and recognize specific six sigma achievements

11. Compensation Strategy
Provide BB’s & PC’s an increase in total cash compensation compared to existing business role
Delivered through an increased incentive opportunity
Candidates will be selected from a wide range of roles and therefore, may have a wide range of base salary and target incentive opportunity
Variation in pay is acceptable; no attempt to align compensation
Higher compensated Black Belts should demonstrate higher competencies, and should generally focus on larger, more impactful projects

12. Most BB’s & PC’s will retain current annual base salary
- Eligible for future salary increases in accordance with the company’s merit increase guidelines
Annual performance review for BB’s conducted by Project Champion
Annual performance review for PC’s conducted by BU Executives and Deployment Champion
HR Champion will ensure performance management consistency

13. Annual Base Salary
If a BB equity adjustment is necessary, it should occur following Black Belt Certification
- Increase is based on successful completion of the training program
Tyco Safety Products HR Champion and BU Executive Steering Committee, will be responsible for approving all BB and PC base salary increases
- Provides equitable and consistent decision process across all business units

14. Title Assignment Full-Time Black Belt Part-Time Black Belt
Assigned Six Sigma Black Belt title
Part-Time Black Belt
Retain current position title
May use Six Sigma Black Belt designation

15. Certification Award
Provide a compensation award upon Black Belt Certification
- Amount of award is consistent for all TFS Black Belts; reinforces team relationship
- Fulfillment of Certification requirements determined by Steering Committee
Award provides recognition
- of their personal achievement and development
- the value of the certification to the company
- the results of projects completed as part of the certification process

16. BB Certification Award
Cash Award - $2,500 immediately upon certification
- Applies to FT and PT Black Belts
- Immediate recognition
- Greater alignment to individual results
Stock Options
- One time special option grant at the time of Black Belt certification (number of shares TBD)
- Long-term time commitment to recognize value
- Greater alignment to Tyco International results

17. Incentive Compensation
Target incentive opportunity increased 10 percentage points compared to FY03 incentive target for current position upon completion of Black Belt Certification
- Applies to FT Black Belts only
Supports importance of role within the company and the impact of their contributions to overall business performance
- Full time Project Champions eligible for 10% increase as well
Black Belt candidates not currently on an annual incentive plan in FY03 will receive an incentive opportunity equal to 10% of their current base salary
- Applies to FT Black Belts only

18. Incentive Measurements
80% - EBIT and FCF of business unit aligned to Six Sigma projects
- Provides a strong association to deployment projects as individuals in BB & PC roles will most likely focus on projects closely aligned to their business unit
- Six Sigma savings and/or profit improvement are reflected in business unit financial measurements
20% - EBIT and FCF of next level up business unit
- Supports teamwork across the Safety Products organization

19. Incentive Compensation
Individual Modifier
- Applies to Black Belts and Project Champions
- Adjustment for individual performance goals not captured in the financial measurements
- Recognizes both superior performance (positive modifier) and underperformance (negative modifier)
- Amount of Modifier is discretionary, but reasonable, i.e. +/- 25%
- Used to account for direct results of Six Sigma projects

20. Incentive Compensation
Incentives will be paid on an annual basis
- No quarterly payments; not consistent with timing of BB and PC
contributions
Proration of Target BB and PC Incentive Percentage
10 percentage point increase in BB incentive opportunity will prorated to the time of Black Belt Certification…not acceptance to the program
- Full Time Project Champions 10% prorated for time on project
BB’s and PC’s that self-select out or do not close projects
- Revert back to original incentive percentage opportunity upon exit from the program
- No incentive premium will be paid for the period of time that an employee was in the program

21. Incentive Compensation Balance of FY03 Year
Guarantee FY03 incentive target equal to the amount Black Belt and Project Champion would have earned had he/she remained in former role

22. Incentive Payout Example
Assumptions:
Base salary = $100,000
Original Target Incentive (PII) = 20% of base salary or $20,000
Black Belt Premium = 20% + additional 10% = 30% or 30,000
Region
Business Unit
Result
EBIT
40%
FCF
10%
Total Incentive Payment
Ind. Modifier
Final Incentive
Incentive payout % of Base Salary
PIII
18,000
4,500
45,000
20%
54,000
54.0%
PII
12,000
3,000
30,000
33,000
33.0% PI
6,000
1,500
15,000
-5%
14,250
14.25%

23. Human Resources Support
Deployment Timeline
Six Sigma Mfg Posting/Selection March 27, 2003
Identify/Select Mfg BB Candidates April 8, 2003
Project Champion Training April 22, 2003
Mfg. BB FAStart Program April 29, 2003
Mfg. BB Training May 5, 2003
DFSS BB Training May 12, 2003