3M Human Resources Measurement © 3M All Rights Reserved. Karen B. Paul, Ph.D. Benjamin Schneider, Ph.D. Engagement: A Multiyear Affair

3M Human Resources Measurement 2 © 3M All Rights Reserved. Karen B. Paul, Ph.D. Manager, HR Measurement 3M Company Background  Responsible for creation and execution of:  Assessment and testing  Competencies  360’s  Organizational survey research and executive assessment  Presented research for:  ASTD, HRPS, SIOP, APA and APS  Published in professional journals:  Journal of Applied Psychology  Training and Development  Author of chapter in:  Handbook of Employee Selection  Managing Human Resources for Environmental Sustainability Ph.D. Industrial and Organizational Psychology Bowling Green State University

3M Human Resources Measurement 3 © 3M All Rights Reserved. Senior Research Fellow, Valtera & Professor Emeritus, University of Maryland Ph.D. in Industrial and Social Psychology University of Maryland Benjamin Schneider, Ph.D. Background  Responsible for advising on consulting projects, writing research papers, and working with clients.  Special interests in organizational climate and culture, employee engagement, service quality, linking employee survey data to corporate effectiveness, and the role of personality in organizational life.  Published nine books and 150+ professional journal articles and book chapters. The latest book (with W. Macey, K. Barbera, & S. Young is Employee Engagement: Tools for Analysis, Practice and Competitive Advantage (Wiley-Blackwell, 2009).  Taught at the University of Maryland for many years as well as Yale University, Michigan State University and for shorter periods of time at Bar-Ilan University (Israel; on a Fulbiright), and Dartmouth College.  Winner of several awards for his research including SHRM’s 2009 Michael R, Losey Award for his work on service quality.

3M Human Resources Measurement 4 © 3M All Rights Reserved. Little Bit of Background on 3M and Valtera

3M Human Resources Measurement 5 © 3M All Rights Reserved. More Than 35 business Units Organized Into Six Market-Leading Businesses  Consumer and Office  Display and Graphics  Electro and Communications  Health Care  Industrial and Transportation  Safety, Security and Protection Services

3M Human Resources Measurement 6 © 3M All Rights Reserved. Ab Abrasives Bi Biotech Ac Acoustics Ce Ceramics Ad Adhesives Dd Drug Delivery Am Advanced Materials Di Display An Analytical Do Dental & Orthodontic Materials As Application Software Ec Energy Components Em Electronic Materials Fc Flexible Converting & Packaging Fe Flexible Electronics Fs Filtration, Separation, Purification Fi Films Im Imaging Fl Fluoro- materials In Inspection & Measure- ment Is Integrated Systems Design Lm Light Mgmt Md Medical Data Mgmt Me Metal Matrix Composites Mf Mechanical Fasteners Mi Microbial Detection & Control Mo Molding Mr Micro- replication Pe Predictive Engineering & Modeling Nt Nano- technology Nw Nonwoven Materials Rp Radiation Processing Se Sensors Po Porous Materials & Membranes Pm Polymer Melt Processing Wo Wound Mgmt Vp Vapor Processing Su Surface Modification Sm Specialty Materials Op Opto- electronics Pd Particle & Dispersion Processing Pr Process Design & Control Pp Precision Processing Tt Track and Trace We Accelerated Weathering 3M’s Technology Platforms

3M Human Resources Measurement 7 © 3M All Rights Reserved. Sales Worldwide International (63% of total) Earnings Net income R&D Expenditures For Total last 5 years Employees Worldwide United States U.S. Patents Awarded Year-End M Facts $23.1 billion $14.6 billion $3.19 billion $1.29 billion $6.86 billion 74,835 31,513 Where are We?  Sell products in over 200 countries  Operations in more than 65 countries  35 international companies with manufacturing operations, 35 with laboratories  In the United States, operations in 28 states  6700 researchers worldwide; 3,400 in the United States Contributions:  In 2009, donations of cash and products totaled more than $50 million in the U.S. alone

3M Human Resources Measurement 8 © 3M All Rights Reserved. 3M Human Resources HR partners with the business to drive growth through people GOVERNANCE  HR principles  Strategic HR oversight  Policy development and adherence  Compliance BUSINESS HR MANAGERS INFORMATION SERVICES  Benefits  Compensation  Employee relations  Employee services  Measurement and assessment  Mergers, acquisitions and transitions  Talent acquisition  Talent development  Workforce planning and management CENTERS OF EXPERTISE  3M Source  24/7 Information and transactions  HR Contact Center  Resolution and referral services  Leadership team counsel  HR strategy supporting business strategy  Human Capital plans emphasizing identification and development of talent  Brokerage of resources required to meet business HR plans © 3M All Rights Reserved. 8

3M Human Resources Measurement 9 © 3M All Rights Reserved. Grow the current core business Complimentary acquisitions International growth Build new businesses 6. Design compensation and benefits plans to meet evolving business needs 1. Engage employees and strengthen employment brand 2. Enhance ability to acquire and retain the right workforce 3. Enable effective human capital planning and increased workforce productivity 4. Optimize HR administration including global web and call centers 5. Accelerate the development of talent Engaged, Productive and Diverse 3M Employees 3M Strategy Acceleration Through HR Leadership and Expertise 3M Workforce and Organizational Readiness Operational Excellence and Productivity of Global HR Services Protect the Corporation 3M Strategies HR Business Critical Ys HR Vision HR partners with the business to drive growth through people. HR Mission Provide workforce and organizational solutions to accelerate strategy execution and drive operational excellence. HR Strategies Global

3M Human Resources Measurement 10 © 3M All Rights Reserved. About Valtera  Valtera provides premier human capital consulting and technology solutions to organizations worldwide in the following areas: Surveys and Analytics, Employee Engagement, Leadership Assessment, Testing and Selection, and HR Audits and Legal Support.  Valtera was founded in 1977 and has been providing employee survey services globally since that time. Valtera’s long and successful history of providing employee surveys has been built on the basis of our consistently high standard of delivery for some of the world’s leading corporations. Valtera managed the international data warehousing and reporting for the Mayflower global survey consortium from 1992 to 2010 with 100% accuracy.  Valtera corporate leaders are recognized authorities in the field of organizational/industrial psychology and they are intimately involved in the execution of large-scale projects. Their recently published work on the organizational drivers of customer satisfaction was selected as the winner of the 2009 Journal of Service Research Best Article Award sponsored by IBM.  Valtera uses a fully integrated online survey platform to administer paper and web-based, multi- language global surveys for hundreds of thousands of participants in a single wave.  Beyond offices just outside of Chicago Valtera has offices in the Netherlands and the Czech Republic, and working partnership with firms across the world including firms in Europe, China and India.

3M Human Resources Measurement 11 © 3M All Rights Reserved. Everybody wants to have an engaged workforce because it can forge a path to competitive advantage. Yet ask five different people to define engagement and you’ll likely get five different answers ….

3M Human Resources Measurement 12 © 3M All Rights Reserved. What is Engagement? It is all about alignment. 3M’s Definition en●gage●ment (in gājd/ měnt) “an individual’s sense of purpose and focused energy, evident to others in the display of personal initiative, effort and persistence directed toward organizational goals.”

3M Human Resources Measurement 13 © 3M All Rights Reserved. Engaged employees behave:  Persistence at difficult tasks  Helping others  Taking Initiative  Going beyond expectations  And so forth Satisfied employees behave:  Low absenteeism  Low turnover  Low substance abuse Is Satisfaction the Same as Engagement? Behaviors Engaged employees are satisfied too… And demonstrate satisfaction behaviors as well as engagement behaviors © 2006 Valtera Corporation. All Rights Reserved. Why Should We Care?

3M Human Resources Measurement 14 © 3M All Rights Reserved. A Broader Business Case True competitive advantage is indexed between MANY firms, not simply measured within ONE firm. © 2006 Valtera Corporation. All Rights Reserved.

3M Human Resources Measurement 15 © 3M All Rights Reserved. Engagement – Even More Critical in a Tough Economic Climate When the urgency and need are clear, employees deliver! 3M has learned strong leadership “engages employees” in tough economic situations and pulls us through faster than the competition

3M Human Resources Measurement 16 © 3M All Rights Reserved. The Conditions that Yield Engagement Attitudes and Behavior

3M Human Resources Measurement 17 © 3M All Rights Reserved. Conditions For Engagement Attitudes Engagement Behaviors © 2006 Valtera Corporation. All Rights Reserved. Organizational Outcomes The Engagement Model

3M Human Resources Measurement 18 © 3M All Rights Reserved. © 2010 Valtera Corporation. All Rights Reserved. How to Build Conditions for Engagement  Treat people fairly  Accountability and Rewards – metrics, pay, promotions, performance management  Interpersonally – respect, warmth  Procedurally – keep promises, involve people in decision-making, have an operational rhythm, distribute work equitably  Pay attention to the seemingly mundane  Technology  Support  Internal battles  Recognize and celebrate

3M Human Resources Measurement 19 © 3M All Rights Reserved. How Does Trust in Management Impact Engagement?

3M Human Resources Measurement 20 © 3M All Rights Reserved. Engagement Bottom Line Results Trust Work Group Supervision Leadership Based on US 2009 Standard Opinion Survey Results & 2009 US Leadership Survey Communication Growth Resource Allocation Alignment Customer Focus Recognition Values Responsibility Intention To Stay Innovation Change Loyalty Job Satisfaction CommitmentFeedback Performance Management Total Compensation Diversity Safety* Job Demands Career Progress Conditions for Engagement <50% Favorable 50-80% Favorable >=80% Favorable Legend Poor Good Excellent

3M Human Resources Measurement 21 © 3M All Rights Reserved.  We know from our own research at 3M that this is the single best predictor of employee attitudes….  The first lens of how employees view the workplace Data from 3M Poll Trust in Management YES NO Division Management has a high level of personal integrity. Division Management is good at driving the changes needed for growth. 57% 16% M Poll

3M Human Resources Measurement 22 © 3M All Rights Reserved.  Engagement happens when people feel safe to take action on their own initiative  People feel safe when they trust their environment  People trust their environment when they feel fairly treated by it  The key is to create a culture of trust in organizations FairnessTrustFeel SafeEngaged Basic Building Blocks of Engagement

3M Human Resources Measurement 23 © 3M All Rights Reserved. * From Whitener, Brodt, Korsgaard & Werner (1998) Dimensions of Managerial Trust  Managerial consistency  Acting with integrity  Sharing and delegation of control  Openness of communication  Demonstration of concern

3M Human Resources Measurement 24 © 3M All Rights Reserved. Achieving Employee Engagement What are We Doing?

3M Human Resources Measurement 25 © 3M All Rights Reserved. Engagement Objective  Improve employee engagement levels to drive organizational outcomes  Key Components  Corporate-wide: Improve employees’ understanding of 3M’s vision, future and decision-making Increase communication of business goals, plans and achievement Involve employees to help them understand what is engagement and what is the business case  Within Businesses: Provide support to the Big B/Area/Staff Groups to take action on the concepts communicated in and through the corporate-wide components of the strategy Additional areas of focus to address identified gaps

3M Human Resources Measurement 26 © 3M All Rights Reserved. HR Strategy Engage Employees How to make my work challenging and meaningful Align to the big 3M Leadership responsibility to build the environment HR Sub-strategies HR Tactics In Support of Sub-strategies Strategy Summary Global Goal Tree (1 of 4) Career paths project Mentoring Coaching Job rotation 360 Connection to work / life benefits Connecting engagement to employment brand NEO Linking with sustainability Integrate innovation into the story Built into leadership competencies s from CEO Imbedded in leadership programs (GM/MD; ALDP, etc) Messaging of engagement as a leadership responsibility

3M Human Resources Measurement 27 © 3M All Rights Reserved. Corporate Level Intervention Country Level Intervention Business Unit Intervention Train HR WW Built Corporate Tools and Resources Where Are We?  Got most of the pieces in place  Differences in U.S. / international structure require more attention

3M Human Resources Measurement 28 © 3M All Rights Reserved. Our communities, our world. Respect our social and physical environment around the world. Driving a Growth Culture Engaging Every Employee to Serve Our Customers, Shareholders and Communities CustomersEmployeesShareholders BrandEmployment BrandShareholder Promise Innovative products with superior quality, value and service Acquire, retain, value and develop employees’ diverse talents, initiative and leadership Provide attractive returns through sustainable global growth Customer loyalty and share growth Employee engagement, mind share and productivity Growth in 3M stock

3M Human Resources Measurement 29 © 3M All Rights Reserved. Alignment of HR Practices Succession Planning Human Capital Planning Performance Appraisal Consensus Review Tier ReviewsAssessment Development Leadership Attributes

3M Human Resources Measurement 30 © 3M All Rights Reserved. Leadership Attributes  Thinks from outside in  Drives innovation and growth  Develops, teaches and engages others  Makes courageous decisions  Leads with energy, passion and urgency  Lives 3M values Engagement is essentially a leadership responsibility.

3M Human Resources Measurement 31 © 3M All Rights Reserved.  Seeing Worldwide Improvement in Scores  Book on Employee Engagement Came Out  Named by APQC as one of the Best for Rewarding, Engagement, & Retaining Key Talent  Profiled by SHRM, Conference Board and webinar with i4cp  2008 Named by CEO Magazine #1 Best Companies for Leaders  Named by Fortune #16 Global Top Companies for Leaders  Engagement Video Series for Supervisors & Managers Well-Received  Blog In Place  HR Vendor Conference on Engagement  Employment Value Tool was Rolled Out  Great things going on in the businesses and countries 2009 Engagement

Employment Brand Key Messages: Driving 3M’s global leadership Inventing the future with technology Succeeding through collaboration Creating solutions to sustainability challenges Developing diverse talents, building careers © 3M All Rights Reserved. 32 3M Human Resources Measurement

33 © 3M All Rights Reserved. Building a Stronger Brand Employee Engagement Customer Engagement Share of Customer Sales Revenue Start Here

3M Human Resources Measurement 34 © 3M All Rights Reserved. Definitely in Social Media What’s Next Globally? Sales, Lab/TS:  Facebook  Linked In  Twitter  Landing Pages  SEO Pay-Per-Click Campaigns

3M Human Resources Measurement 35 © 3M All Rights Reserved. Employee Engagement A Green 3M Employee Assistance Program Community Giving A Healthier You Taking Care of the Environment Taking Care of Others Taking Care of Our Communities Taking Care of Yourself

3M Human Resources Measurement 36 © 3M All Rights Reserved. 3M Poland Green Week Program June 2009 Program Objectives:  Building and enhancing 3M image (Employment Brand) as a socially responsible company  Creating positive impact on the Employees Engagement and work atmosphere  Ecological education including 3M best practices  Increasing environmental awareness among the Employees Joint program of CMPA, EHS and HR

3M Human Resources Measurement 37 © 3M All Rights Reserved. Monday to Friday Activities Monday: RecyclingWednesday: Switch OffFriday: Make It Green  Presentation of the film: The Inconvenient Truth global warming documentary movie  Collect used paper, cans etc. to gather money in return and donate the money to local ZOO  Mailing – recycling!  Take back event – a small gift for employees  Contest „Green eco-photo” (awards: books, calendar with ecological advices), exhibition of best works  Clean your office (one hour desk cleaning)  Mailing – switch off!  Day with a car (bicycle, car sharing) – small awards for those who arrive first to work on bicycle  Seat trees, sow grass  Bicycle race – options:  For each km 3M pays 1 PLN and donates the money to local ZOO  Training bike on the site.  Mailing – Green Office! Tuesday: SaveThursday: Go On Foot  Contest “Eco-film” (ecological films recorded on mobile phones) – award the best film employees voting  Presentation of 3M ecological and sustainability projects  Calculate the energy you use! – Mailing  Quiz Eco-knowledge on the base of 3M materials and mailing  Voting and selecting the best Eco-film  Event “Exchange or forward”: bring your old books or any products you are not going to use and exchange for other products you might use.  Mailing – go on foot. Economic driving.

3M Human Resources Measurement 38 © 3M All Rights Reserved. 3M Thailand

3M Human Resources Measurement 39 © 3M All Rights Reserved. "Green Touch Campaign" to Enhance the Employee Engagement For Sustainability As one part of Green Touch campaign, Employees' Children Environmental Protection Painting Contest was launched from July to September. Over 60 lovely kids' paintings were collected. Finally 19 paintings won the awards thru online voting and some of them were selected for making 3M China's New Year eCard

3M Human Resources Measurement 40 © 3M All Rights Reserved. Employee Engagement and Sustainability 2010 Need to Be Doing So Much More…  Engagement video for supervisors and managers (Top Ten Things You Should Know about Sustainability)  Video contest  Leadership survey roll-out on January 27th

3M Human Resources Measurement 41 © 3M All Rights Reserved. A Green 3M Employee Assistance Program Community Giving A Healthier You Taking Care of the Environment Taking Care of Others Taking Care of Our Communities Taking Care of Yourself Employee Engagement

3M Human Resources Measurement 42 © 3M All Rights Reserved. Making a Difference: Healthy Living Resources A diversified four-part program designed to: Reduce the demand for costly medical interventions and minimize employee productivity loss Help employees better manage their lives physically, socially and emotionally Other employee objectives: Engagement | Recruitment | Enhance organizational commitment Lower our long-term health care costs and enhance employee productivity

3M Human Resources Measurement 43 © 3M All Rights Reserved. Where We’ve Been: Key Accomplishments to Date  17,899 employees participated and received $100 incentive  Health plan administrators have reached out to at-risk employees and offered coaching classes and additional programs August 2008 Program Launch December 2008 – March 2009 Health Screenings and Assessments

3M Human Resources Measurement 44 © 3M All Rights Reserved. Engagement: Aligning Individual’s Purpose and Energy with Organizational Goals Pride in 3M  Brand ambassador  Community partner  Social responsibility and sustainability  Family appreciation events  Media coverage  External recognition and awards Career Fulfillment  Performance oriented company  Challenge and growth  Career advancement and broadening  Personal career development  Effective supervisor and peer relationships Regular and Open Communication Basic Employee Needs  Safe working conditions  Equitable compensation and benefits  Ethical business practices  HR principles  3M values Employee Engagement: Key Strategy to Growth, Innovation and Retention Active visible leadership is needed to promote stronger levels of engagement.

3M Human Resources Measurement 45 © 3M All Rights Reserved. Engagement as a Leadership Responsibility

3M Human Resources Measurement 46 © 3M All Rights Reserved.  Fundamentals of engagement are universal  The desire for meaning and purpose in the workplace knows no borders  How you capitalize on the fundamentals is local  People have needs  Organizations have needs  How you align these 2 facts can produce engagement and financial success but is context specific Global vs. Local Debate “After all, results from their recent survey showed that 3M Mexico employees boast a 95 percent favorability rating. That feedback”, according to Shivitz, “is the best indicator of future financial success.” Ed Shivitz, Managing Director, 3M Mexico Stemwinder April 23, 2007

3M Human Resources Measurement 47 © 3M All Rights Reserved. Engagement Enthusiastic Work Climate Pursue Development Remain at 3M Adapt to New Ways Take on New Roles & Responsibilities Recommend 3M Excited About Contribution Best Employer 2009 Best Best Places to Work Spain 2008 Best 3M Czech Republic

3M Human Resources Measurement 48 © 3M All Rights Reserved. Quick Hits You Can Do  Focus on the customer  Read a book or journal article together and discuss  Random lunches  Buy 1001 Ways to Energize Employees by Bob Nelson Engagement isn’t just recognition but it is a small start in the right direction.

3M Human Resources Measurement 49 © 3M All Rights Reserved. Innovation and Engagement (What’s the relationship?)

3M Human Resources Measurement 50 © 3M All Rights Reserved. Three Work Areas: With Innovation at the Core Sweet Spot Culture of Innovation Engagement Employment Brand Sustainability Perception of your company In the market place and the Value our employees derive from working here “an individual’s sense of purpose and focused energy, evident to others in the display of personal initiative, effort and persistence directed toward organizational goals.” Triple bottom line: People, Planet and Profit  Social responsibility  Environmental sensitivity  Economic viability

3M Human Resources Measurement 51 © 3M All Rights Reserved. Submit Your Ideas for Products

3M Human Resources Measurement 52 © 3M All Rights Reserved. Gary Hamel The Future of Management  Dramatically accelerating the pace of strategic renewal in organizations large and small  Making innovation everyone’s job, every day  Creating a highly engaging work environment that inspires employees to give the very best of themselves (p.40-41) Formidable Challenges that Confront Companies in this New Century

3M Human Resources Measurement 53 © 3M All Rights Reserved. We Know From Our Own Research Those 3M business labs that are more “engaged” have a more positive view of Innovation and 2 years later were more profitable (r=.56 Innovation and Engagement)

3M Human Resources Measurement 54 © 3M All Rights Reserved. How can we do better? William L. McKnight