1. © 2007 Towers Perrin Does being a Top Employer make a difference in employee engagement? How - And Why - Top Employers Are Building An Oasis for Talent Canada’s Top Employers March 22-23, 2007

2. © 2007 Towers Perrin 2 Why are we all here? A. Public recognition of workplace excellence B. Because the CEO said it was important C. Because people make the difference between success and failure

3. © 2007 Towers Perrin 3 Why be on the list? Easier to attract good candidates Management and shareholder recognition of what your HR programs are all about Shows your current and future employees the kind of workplace you want to be or become A visible sign that helps shape your reputation as a good employer Recognition that your internal employment deal supports your external customer brand

4. © 2007 Towers Perrin 4 Why CEOs are placing Talent Management front and centre A global playing field is heightening competition for business and talent The competition for leadership talent among top companies has intensified, and companies are looking at new ways to attract and retain top talent “People-driven” enterprises are setting themselves apart in terms of overall business performance While the world’s population will continue to grow, demographic projections point to a coming skills shortage in such areas as management, customer service and research

5. © 2007 Towers Perrin 5 Organizations have identified critical gaps — in retaining current leaders and growing future leaders Developing existing leadership talent Attracting the right leadership talent Retaining the right leadership talent Engaging leadership talent Identifying existing leadership talent Deploying existing leadership talent Lack of leadership capability at senior levels Leadership Talent Management Challenges — Current and Future Source: 2006 Towers Perrin Talent Management Survey Future challenge Current challenge

6. © 2007 Towers Perrin 6 The world in numbers… Billions of People Percentage in Developed World 19% 18% 17% 16% 15% 14% 13%

7. © 2007 Towers Perrin 7 People systems and programs Employee behaviour Customer behaviour Financial performance Engagement Values Customer service Productivity/ operational Adaptability Retention Learning Customer satisfaction Customer loyalty Customer value ROI Revenue growth Net earnings Stock performance Staffing Compensation Benefits People development Workforce relations Organizational management Work environment Leading organizations make the critical link between people, programs and results “People systems” should start from and support the organization’s specific performance goals

8. © 2007 Towers Perrin 8 Towers Perrin and Canada’s Top 100 share the view that: Employee engagement is a fundamental metric of company “health” and of the day-to-day work experience Including such a measure as part of the overall assessment of a company as a place to work makes great sense Towers Perrin has a well-tested (externally validated) and relatively simple model for measuring engagement

9. © 2007 Towers Perrin 9 Understanding what engagement means, how it’s measured and what drives it We define engagement as employees’ willingness and ability to contribute to company success, in large part by delivering discretionary effort on a sustained basis We measure it using nine items that capture employees’ emotional and rational connections to work Respondents’ scores across all nine items determine their level of engagement: high, moderate or low We derive the drivers of engagement — the elements of the work environment that influence it — via statistical analysis Employees’ level of engagement Workplace elements that drive engagement up...or down Emotional and rational connections to work

10. © 2007 Towers Perrin 10 Employee engagement is critical in driving the way people behave at work I can positively impact quality I can positively impact costs I can positively impact customer service I can positively impact overall profitability I can positively impact revenue growth Disengaged Moderately Engaged Highly Engaged Key: Source: Towers Perrin Global Workforce Study: Canada

11. © 2007 Towers Perrin 11 More engaged employees are more likely to stay with the organization Highly EngagedDisengagedModerately Engaged No plans to leave Not looking, but would consider another offer Actively looking for another job Made plans to leave current job Plan to retire in the next few years (Canadian data) Source: Towers Perrin Global Workforce Study: Canada

12. © 2007 Towers Perrin 12 Operating Margin With 5%, 10%, 15% Change in Engagement % Change in People Engagement Current 11.4% 5% 11.8% 10% 12.2% 15% 12.6% For a $3B company, that’s $24,000,000* Source: Towers Perrin 2003 Talent Report. Financials are illustrative and do not represent any specific company 10% 14% 18% 22% 26% 30% LOW HIGH Engagement Index Score Revenue Growth Engagement Index Score 62% 64% 66% 68% 70% 72% 74% LOWHIGH Cost of Goods Sold SG&A Note: Employee engagement strongly correlated to intention to stay. Intent to Stay 19% 21% 23% 25% 27% LOWHIGH Employee engagement and financial performance are highly correlated

13. © 2007 Towers Perrin 13 The Top 100 Employers Pilot Engagement Survey - 2006 Six organizations volunteered to join us for the pilot From these organizations, we gathered 1,667 employee responses As a benefit of participation, each organization received a report of their individual results Aggregate results were not released…until now

14. © 2007 Towers Perrin 14 How did they do? Canada WorkforceTop 100 Applicants (Pilot) High (17%)Disengaged (17%) Moderate (66%) High (36%) Disengaged (6%) Moderate (58%)

15. © 2007 Towers Perrin 15 What Drives Engagement in Canada? Canada Workforce vs. Top Employers Pilot 2006 Top 100 Employers Pilot SurveyCanada Workforce Study Senior management interest in employee well-being Improved my skills and capabilities over the last year Reputation of the organization as a good employer Input into decision-making in my department Opportunities to learn and develop new skills Salary determination fair and consistent Organization focus on customer satisfaction Appropriate amount of decision-making authority Employees understand what it takes to satisfy customers In combination with government programs, my benefits meet my needs Favourable Score:

16. © 2007 Towers Perrin 16 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% High Favourability – Higher Impact on Engagement Strength of relationship between item and Employee Engagement % Favourable Prioritizing by relationship to engagement High Favourability – Lower Impact on Engagement 15 28 25 Item 15. Improved my skills and capabilities 28. Reputation as a good employer 21. Salary determination is fair and consistent 10. Senior management has a sincere interest in employees 18. Appropriate amount of decision making authority to do my job 25. Retaining employees with the skills needed for the organization to succeed 39. I have excellent career opportunities at this organization 41. In combination with government programs, my benefits meet my needs 10 39 18 INCREASING Low Favourability – Higher Impact on Engagement Low Favourability – Lower Impact on Engagement 41 21 Best Practice: Diagnosing Engagement

17. © 2007 Towers Perrin 17 Build workforce plans that align with the long-term business growth strategy Workforce required to execute business plan Workforce currently in place and available in the market Workforce Demand Workforce Supply Attraction Engagement Retention Sourcing, deployment, people processes/programs 1 2 3 Identify key drivers to ensure workforce supply and desired behaviours 4 Align talent strategy and optimize processes / programs Analyze business plans to understand required workforce Identify potential workforce gaps Business plan and required capabilities Best Practice: Strategic Workforce Planning

18. © 2007 Towers Perrin 18 Decrease Increase Impact on Cost Impact on Employee Engagement Cost/Benefit Scenarios Decrease Current State: No change to investment; Current employee engagement Increase A B C Understand employee preferences to “optimize” ROI on your total rewards KEY A) Optimal cost savings : The reward mix that maximizes cost reduction with a neutral impact on employee engagement B) Optimal reallocation of current investment: The reward mix that reallocates the current total spend across programs in a way that maximizes employee engagement C) Optimal investment: The reward mix beyond which there are diminishing returns in employee engagement ILLUSTRATIVE Best Practice: Optimizing rewards

19. © 2007 Towers Perrin 19 Learning & Development Programs Career Management Resource Centre Career Ladders/Competency Models Performance Management Process Peer Mentoring Network Define career models, clarify paths and calibrate rewards Best Practice: Improving career framework

20. © 2007 Towers Perrin 20 To truly influence engagement (and workforce effectiveness) you need a holistic approach

21. © 2007 Towers Perrin 21 Sustaining a Top 100 Culture Employee engagement is rapidly emerging as a key indicator of business performance Leading organizations will use engagement metrics, including performance relative to key drivers, as a roadmap for action The road will curve as the drivers of engagement change over time Top employers will keep ahead of the curve by paying close attention to the evolving needs of their employees

22. © 2007 Towers Perrin 22 Questions? Kevin Aselstine kevin.aselstine@towersperrin.com (416) 960-2712 Charlie Watts charlie.watts@towersperrin.com (617) 638-3942