The High Cost of Low Morale Jason Turner jasont@arcb.com VP – Talent and Growth Initiatives, ArcBest

ArcBest 1923 +13,000 $2.7 billion FOUNDED EMPLOYEES REVENUE IN 2016

Employee Engagement Defined The pride, energy and optimism that fuels employees’ discretionary effort and intent to stay. Discretionary: The power to decide. To win customers – and a bigger share of the marketplace – companies must first win the hearts and minds of their employees. (Gallup CEO) Gallup award winning companies routinely build employee engagement goals into their annual planning process.

Percentage of Employees Indicating High Levels of: Employee Engagement Model CEB ClearAdvantage Engagement Model Engagement Metrics Intent to Stay An employee’s desire to stay with the organization, based on whether he or she intends to look for a new job within a year, frequently thinks of quitting, has actively been looking for a new job, or has taken steps such as placing phone calls and sending out résumés Discretionary Effort Employee willingness to go above and beyond the call of duty, such as helping others with heavy workloads, volunteering for additional duties, and looking for ways to perform the job more efficiently Employee engagement is the combination of an employees’ pride, energy, and optimism that fuels their discretionary effort and intent to stay. Percentage of Employees Indicating High Levels of: Pride Identification with company Recommending the company Energy Sense of urgency Excitement and/or enthusiasm Focus Optimism Confidence in the future Belief in progress © 2017 The Corporate Executive Board Company. All Rights Reserved. -CEB9299017SYN Source: CEB analysis.

Global Trends

Employee Engagement Level of the Firm Why is employee engagement important? Impact of Engagement on Financial Performance Profit Margin2 4% 14% Return on Assets1 9% 3% N = 93 organizations. Higher levels of employee engagement are also associated with higher: Employee performance – Every 10% improvement in engagement can increase an employee’s effort level by 6%, which can improve an employee’s performance by 2%. Employee retention – Every 10% improvement in engagement can decrease an employee’s probability of departure by 9%. Customer satisfaction – Customers of firms with high levels of employee engagement are 9% more satisfied than customers of firms with low levels of employee engagement. Firms with high levels of employee engagement report financial outcomes (i.e., return on assets, profit margin) three times higher than firms with low engagement. Employee Engagement Level of the Firm Bottom quartile Top quartile 1 Return on assets is an indicator of how profitable a company is relative to its total assets, including how efficient a firm is at using its assets to generate earnings. It is calculated by dividing a company's annual earnings by its total assets. It may also be referred to as "return on investment". 2 Profit margin is a ratio of profitability calculated as net income divided by revenues, or net profits divided by sales. It measures how much out of every dollar of sales a company keeps in earnings. © 2017 The Corporate Executive Board Company. All Rights Reserved. -CEB9299017SYN Source: CEB 2014 ClearAdvantage Survey

Lack of Human Capital Development IF WE ARE UNABLE TO ATTRACT AND RETAIN NEW TEAM MEMBERS, INCLUDING SENIOR MANAGEMENT, WE MAY NOT BE ABLE TO ACHIEVE OUR BUSINESS OBJECTIVES.

Current State of Employee Engagement Satisfaction with the Employment Value Proposition Impact of EVP Satisfaction on Employee Engagement Engagement among employees in the United States is above average. The 38 attributes of the employment value proposition fall into five categories. Employees in the United States are least likely to be satisfied with those related to opportunity. Employees in the United States who are satisfied with their EVP are more likely to report high discretionary effort and intent to stay. Most Important EVP Drivers Not all aspects of the EVP are equally important. The attributes below are those most frequently selected by employees in the United States as reasons to join or leave an organization. Rewards • Compensation • Health Benefits • Retirement Benefits • Vacation Opportunity • Stability • Future Career Opportunity Organization • Ethics/Integrity • Respect People • Coworker Quality • Manager Quality • People Management Work • Location • Work-Life Balance © 2017 The Corporate Executive Board Company. All Rights Reserved. -CEB9299017SYN

Top 10 Drivers of Satisfaction & Engagement Job security The work itself Opportunities to use skills and abilities Relationship with co-workers Organization’s financial stability Relationship with immediate supervisor Compensation Contribution of work to business goals Benefits Autonomy and independence Senior management communication Meaningfulness of job Variety of work Recognition of employee performance Overall corporate culture 1 1 2 2 3 3 4 4 5 5 6 6 7 7 8 8 9 9 10 10 Source: Society for Human Resource Management (SHRM) 2011 Employee Job and Satisfaction Survey.

ArcBest Engagement Survey Topics Employee engagement Management style Working relationships Supervision Culture Communications Succession planning

Engagement Survey - Supervision My Supervisor: Sets a good example. Treats me fairly. Is a good coach. Keeps me informed. Gives me performance feedback. Recognizes my achievement.

Engagement Survey - Culture Trust Management trusts employees. Employees trust management. Positive Environment High standards Spirit of cooperation Errors result in education, not punishment Wellness

Engagement Survey - Communication In my department: There is clear communication of job details. I have access to needed work information. I know where to go for answers. Upward communication is encouraged. Across all departments: Well informed about the company. Consistent communications.

Engagement Survey – Succession Planning Performance evaluations Employee is an active participant. Focus on helping employee improve. Discussion of long-term interests. Training & Development Employee receives training necessary to advance. Opportunities Awareness of opportunities.

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