1. The Evolution of the Human Resources Field GVFHRA April 21, 2009 Kathy Gubanich hr Hr HR hr

2. Agenda: Answer three questions As it relates to the field of Human Resources… Where have we been? 1 Where are we now? 2 Do we have what it takes to be successful in the future? 3

3. A Vanguard lens Vanguard background/history The Journey Any implications to the HR field? Are we ready for what is ahead?

4. Vanguard: client-owned Source: Vanguard Own Vanguard Services to fund shareholders are provided at cost, maximizing value for fund shareholders Fund shareholdersVanguard mutual funds Own Controls Typical mutual fund organization Fees paid by fund shareholders provide profits for management company owners, maximizing value for company owners Fund shareholders Management company Public/private ownersTypical mutual fund Own

5. Vanguard’s corporate mission Proven Industry Experience Wellington ™ Fund—1929 The Vanguard Group—1975 $1.1 trillion under management worldwide More than 12,500 crew members Global Investment Platform More than 200 portfolios Equity, fixed income, and short-term reserves Index, enhanced equity, and active Unwavering Focus on Clients Client-owned organization Protection of client interests Commitment to transparency and candor Exceptional Value Cost efficiencies History of long-term performance consistency Source: Vanguard As of December 31, 2008 $1.1 trillion $588 billion More than 5,800 institutional relationships $544 billion More than 23 million shareholder accounts “To help clients reach their financial goals by being the world’s highest- value provider of investment products and services.”

6. Vanguard assets: a historical view 199119921993199419951996199719981999200020012002200320042005 2006200720082009 Asset Management and Planning Services Vanguard Online ETFs One Step Auto Pilot $100 Billion in International Assets Recession  Tech Bubble  Global Financial Crisis  400 200 1,000 800 600 1,200 1,400 Assets $ Billions Year VGI FTEs 4000 2000 10,000 8000 6000 12,000 14,000

7. Vanguard: Human Resource staff Vanguard University Year 199119921993199419951996199719981999200020012002200320042005 2006200720082009 100 50 250 200 150 300 350 HR FTEs 400 Recession  Tech Bubble  Global Financial Crisis 

8. A traditional view of the evolution of HR Business Partner Applicant Tracking, HR Portal, Compensation Mgmt., Learning Mgmt. Strategic Partner Performance Mgmt., Succession Planning, Competency Mgmt., Integrated Talent Mgmt. Business Function Payroll function, Time & Attendance Personnel Administration Payroll Benefits Recruiting L&D Organization Design Total Compensation Communication Talent Management Performance Management Competency Management Succession Planning Source: Tushar Bhatia, President, Saigun Technologies.

9. Another view Transaction, administrative work Transformation, strategic work Employee support work Time and resources 100% 0% Amount of attention or work PastFuturePresent Time Source: HR Value Proposition Ulrick & Brockbank

10. Another view: A more iterative process Source: HR Value Proposition Ulrick & Brockbank Earned accountability Transaction, administrative work Transformation, strategic work Employee support work Time and resources 100% 0% Amount of attention or work

11. Roles within Human Resources Consultant Change agent Business expert How do you build this capability? Employee advocate/champion Functional expert Strategic Partner

12. Building business capability Retrain Replace Rotate Regroup

13. Talent Oversight Team (TOT) Comp Advisory Group Benefits Committee Diversity Leadership Team (DLT) Vanguard University Advisory Board Leadership Advisory Council Regroup…with the business Human Resources Relationship Management Talent Acquisition and Development Vanguard University Diversity Benefits Compensation

14. Business Advisory Groups Appointed by CEO Sponsored by Sr. Staff Led by Sr. Executives Committee of key officers Designed as a working group Results oriented

15. Business Advisory Group Deliverables Leadership Advisory Council (LAC) Accelerated Development Programs Back to Basics Benefits Committee New benefits design “3 in 1” Compensation Advisory Board Overhaul of compensation system New training curriculum Talent Oversight Team (TOT) Overhaul of compensation system New training curriculum Vanguard University Advisory Board University Structure Adjunct Faculty Diversity Leadership Team (DLT) Management Representation Management Accountability

16. Where do we go from here? Demands of HR are GREATER But… HR work can’t begin with HR …it begins in and with the business. HR needs to be less of a function …more of a lens. HR must become a destination job for successful business leaders.

17. Agree? Questions? Disagree? or