1. + Strong Values + Small Business = Big Rewards The Auburn Manufacturing Story Johnna Major, SPHR President, Cornerstone HR Kathie Leonard CEO, Auburn Manufacturing Inc.

2. + Compensation System Changes Employee Satisfaction Survey Employees didn’t feel they were paid fairly for the work they did Concern about rewards not recognizing performance Lack of understanding of pay system Compensation Program Redesign Compensation Philosophy Benchmarking Ranges established for each job Lump sum payout approach

3. + New Compensation System Pay increases are based on two things: 1. Overall performance review score that equally weights values and job performance 2. Placement in the salary range Calibration process 1. Consistency of process 2. Rewarding top performers 3. Budget Job Range $$ MinimumMedian Maximum Needs Improvement/ Growing Meeting Expectations Exceeding Expectations

4. + Recognition Program Recognition program tied to Values Co-worker nominated Recognition committee review Recognition at plant meetings

5. + Recruiting Develop Values-Based Interview Questions Ask all candidates: What Values best describe you?

6. + Values-Based InterviewQuestions

7. + Progress Report 2014 Satisfaction Survey Results – Change Takes Time Overall satisfaction stayed the same Recommend AMI as a good place to work increased from 75 to 88% of employees Increases in scores on change communication, company recognition, room to advance “Wait and See” reflected in ‘pay is fair for work that I perform question Performance Reviews/Salary Planning –Tools Created Alignment Self Reviews Great opportunity to give feedback and have a performance – focused conversation Gave managers ‘language’ to have constructive conversations Calibration process ensured managers on the same page with evaluation and scoring

8. + Progress Report Turnover Slight increase Replacing with “A Players” Alignment and agreement on values among managers Move faster and people are empowered to do their jobs based on our values More confidence taking risks based on values as the framework for decisions

9. + Lessons Learned Impact on hiring and firing Initial resistance when people realize how high the bar was being raised Skepticism about values-based interviewing Change takes time – be prepared for the unexpected, but stay the course Don’t settle – you need to have the right team of “A Players” to grow and also weather the storm “I should have done it sooner”

10. + What’s Next for AMI Enhanced recruitment process for all positions Orientation program Expanded recognition program Training based on performance review results Update AMI website with Values based information Managers will read Zappos book Breathing life into the Values (simplify, catchy phrase for each value)

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