Murray Easton Engineering and Construction

Nov08/MS A Complex Leadership Challenge Quality of Performance and Product

Nov08/MS Leadership is about capacity – the capacity of leaders to listen and observe, to use their expertise as a starting point to encourage dialogue between all levels of decision making, to establish processes and transparency in decision making; to articulate their own values and visions clearly, but not impose them – initiating change that makes for substantive improvement rather than managing change Live safety and quality – zero compromise Leadership Safely Delivering Affordable Together Capability

Nov08/MS My background 3

Nov08/MS The Product 4

Submarine Solutions Business Units Barrow-in-Furness (4427) Farnborough (82) Weymouth (50) Filton (13) Ash Vale (38) Total Employees – c (numbers excl of apprentices, graduates)

Nov08/MS /05-MS Barrow Shipyard

Nov08/MS Historical View – The Challenges Safely Delivering Affordable Together Capability Cost plus contracts, behaviours and mentality, high quality/low productivity Monopoly – Trident Then.... Astute, a fixed price development prime contract arrangement – 3.5yrs late, £760M loss. monster of the deep wreaks havoc

Nov08/MS Historical View Safely Delivering Affordable Together Capability Difficult to compete when you havent been playing regularly! 10 year gap design 10 year gap like-for-like production skills Headcount Astute Class Vanguard Class Upholder Trafalgar Successor Workforce engaged in Submarine building Other

Nov08/MS Business Improvement – If you could turn back time! Safely Delivering Affordable Together Capability Headcount Astute Class Vanguard Class Upholder Trafalgar Successor Workforce engaged in Submarine building Other Could have managed the same with approx 7000 employees!

Abolish the PCO Flatter organisation structure Re-baseline schedule Change contract to target costs, incentive fee Address behaviours and culture Less hierarchical Increased employee engagement and teamwork The Immediate Response Safely Delivering Affordable Together Capability

Attitude + Behaviour = Performance Safely Delivering Affordable Together Capability Processes People

Nov08/MS years ago Boat 4 was becoming increasingly unaffordable - threat to seven boat programme. Our team responded to the Affordability challenge through performance, innovation and determination We did not have control of some external influences Response - Affordability Boat Cost 30 % Overhead Reduced Cost Conscious Culture Supplier Performance Management 20 % Material Reduced 30 % Labour Reduced Productivity Safely Delivering Affordable Together Capability

Nov08/MS Leadership drove a tenacious ZBB programme (Zero Based Budgeting) Questioned affordability of all non-essential expenditure Cost consciousness Overhead Costs Safely Delivering Affordable Together Capability

Nov08/MS Change of build strategy. EB/Vertical Outfit. Modules vs stick build Productivity and Lean manufacturing. Pipeshop V1 Pipeshop V2 Safety culture Responsible behaviours (Organisation Development) Sickness absence Motivation Reward and recognition (financial and non-financial) Mature working arrangements (breaks, etc) Etc Labour Costs & Innovation 8 Safely Delivering Affordable Together Capability

Nov08/MS Lean Engineering Principles 16

Nov08/MS Major work improvements DDH – Service Towers plugged in tools, QC, Planning, Leadership, etc. Kitting – 100% kitted; 2 weeks supply on one pallet Value stream mapping Recruitment, attitude focus Coaching Collective and individual responsibility – One Team Peer group pressure Challenge and be challenged – trust and respect agenda Response – Labour & Innovation

Nov08/MS Embraced genuine 2 way communication philosophy. End to end comms process redesign; consistent themes, language and media. Regular face to face employee briefings by leadership. Employee forums. Team briefs. Visual management (supported). PRIDE – generating innovation and providing recognition. Internal Communication, Engagement and Motivation Nov08/MS Safely Delivering Affordable Together Capability

Nov08/MS Culture and Behavioural Improvement The Change Wheel Performance Management Organisation Focus and Clarity Leadership Development Reward and Recognition Teamwork Communication & Involvement Behaviours to Succeed Safely Delivering Affordable Together Capability

Nov08/MS Performance Management Organisation Focus and Clarity Build strategy Logistics (kitting) & Supply Chain Monthly performance and development reviews Performance improvement plans (PIPs) Visual Management (Lean) Behavioural Performance Feedback (BPF) Objective deployment Common and Functional clarity Fixed people manager objectives (safety, quality and performance management) Culture Change

Nov08/MS Leadership Development Reward and Recognition Development centres Coaching Conferences (engagement) Grading structure All employee bonus (aligned to Exec bonus) PRIDE (recognising innovation) Culture Change

Nov08/MS Teamwork Communication & Involvement Natural Work Teams (Psychologists) Transactional Analysis (how we work together) Employee opinion surveys (39% - to – 80%) External comms Internal comms Trade Union partnership working Community newsletter Celebrating success Work, Life, Barrow Culture Change

Nov08/MS Absence waste = cost of those absent + cost of disruption in the business. Sickness Absence Performance recognised via national HR awards. If you need medical help - you got it. We need you healthy – and we need you at work! Down over two thirds ! Reduced to per annum 9%+9% per annum 2.5%2.5% Safely Delivering Affordable Together Capability

Safety First Think Safe, Act Safe, Be Safe. 10 RIDDORS 350 Accidents 42 Incidents 1566 Near Misses 118 RIDDORS 1323 Accidents 21 Incidents 9 Near Misses 2003 Jan-Dec 2008 Jan-Jul Safety First The threat of a serious accident always remains. Risks must be avoided, there is always more to be done. Point of Work Risk Assessments Ensure all assess own work area. Look after workmates/ colleagues and those around you. You have to ask, what are you going to do to take care?

Nov08/MS Safely Safety The next phase of the Safety First campaign includes: Behaviour and personal responsibility SHE - Safety, Health and Environment Product Safety Nuclear Safety We are no longer a shipbuilder that builds nuclear vessels, we are a nuclear facility that builds submarines Delivering Affordable Together Capability All of usContractorsApprenticesNew starts

Nov08/MS Supply Chain Key supplier forum CAD accuracy + Optimised Manufacturing Processes = Material cost saving through reduced waste E.g. Pipework Response – Material Safely Delivering Affordable Together Capability

Nov08/MS SAFELY DELIVERING AFFORDABLE CAPABILITY TOGETHER

Nov08/MS Individual and company ownership of quality and safety to the extent that the regulator was prepared to reduce his oversight with the confidence that we were managing our own safety and quality, sharing identical values. Complete transparency to any external regulation and open invitation to external inspectors to participate in management meetings about quality and safety. Red-team reviews, objective and transparent evaluation of project performance on an annual basis, including active participation of senior NII personnel. Mutual trust and respect. A Learning Company - NII Safely Delivering Affordable Together Capability

Nov08/MS My Learning Observations of Leadership Credibility Capability Courage Commitment Communication Caring (and a large dose of emotional intelligence throughout management)....and FUN ! (aka COMEDY, for those of you that need CONFORMITY)!!!!!

Nov08/MS QUESTIONS?