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HR Strategy for Speeding Financial Health

This article discusses the HR strategy and contributions to accelerate the organization's return to financial health through cost reduction, operational focus, and high impact HR initiatives. It also highlights the key areas of focus and the integration of HR processes to optimize employee contributions and maximize shareholder value.

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HR Strategy for Speeding Financial Health

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  1. March, 2002

  2. HR Strategy Agenda ▲ Introduction ▲ HR Contributions to Speed Our Return to Financial Health ▲ HR - Transition and Orientation - Strategic Intent, Drivers, Contribution - Business Alignment ▲ The HR Strategy - 5 Focal Areas/ Strategic Thrusts

  3. Introduction ▲2002 – 2004 Strategy “FIRST TO RECOVER & PLAY TO WIN” Transactional Excellence, HR Strategy & Planning, Attract & Retain, Leadership Supply, Performance Management ▲Strong Operational Focus for 2002 in the Face of: - Economic Uncertainty - Flat Revenues - Dramatic Cost Reduction - Improved Profitability ▲ Underlying Themes: - Simplification and Integration - Cost Competitiveness - Focus (through fierce prioritization) and High Impact

  4. HR Contributions to Speed Our Return to Financial Health Global HR Costs ($000) Total Decrease ($192,561) –40.5% Source: HR Finance, 03/2002 • Definitions: • IBHR • Variable • In-Business HR - Immigration - LLP Tuition • LLP Business Learning Teams - Global Assignment Centers - GTS-Tactical • Services • Security - Government Compliance - GTS Strategic • Rewards - AP Regional Services - GECS • Benefits - EMEA Regional Services - HRIS • Child Care - LA Regional Services - Service Center • LLP Core . HR Strategy - Core Process Redesign • G & A

  5. HR Contributions to Speed Our Return to Financial Health 19.4% Higher Than 2000 Mkt 13.3% Lower Than 2000 Mkt 20.8% Lower Than 2000 Mkt 26.9% Lower Than 2000 Mkt 2001 Saratoga Institute Average HR Expense as a Percent of Operating Expense – Tech / Mfg Sector = 0.72% 2001 Saratoga Institute Average HR Cost per Employee – Technology Sector = $2475 • ▲We Continue to Benchmark “HR Value” • ▲ We Significantly Cut Cost & Continue to • Contribute to the Bottom Line.

  6. HR Contributions to Speed Our Return to Financial Health ▲ Helped Increase the Cash Reserve of the Corporation Through Significant Contributions: • Discontinuation of Milestones: $14M reduction in 2001 Fringe Cost plus a liability reversal of $80M • Restructuring of Officers Life Insurance Plan: One time cash inflow of $62M • Asset sale: $15M of guaranteed payments within 1 year of sale plus future potential payments

  7. HR Contributions to Speed Our Return to Financial Health Total Decrease = 41,367 (28.1%) Total Decrease = 2,163 (46.7%) 1/2001 8/2001 12/2001 2/2002 1/2001 8/2001 12/2001 2/2002 Note: 0.15% Have Resulted in Administrative Charges or Litigation Matters; 0.00% with Adverse Results Sources: TWIN; Corporate Law Dept. 3/2002

  8. Other Key 2001 HR Contributions ▲ Human Asset Strategy Planning System ▲ Leadership Supply ▲ Dramatic Paperless Transactions ▲ Mergers & Acquisitions ▲ HR Global Data System ▲ OneMotorola Functional Strategy ▲ Shareholder & Performance Focused Rewards ▲ Relative Performance Assessment ▲ Exemplary demonstration of treating employees with dignity and respect during downsizing

  9. Transition Integrated Core/ Integrated Services Centers of Excellence HR NO ENTRY Centralized Decentralized Shared Services HR Origins Independent

  10. Orientation Our Evolution from the administrative “Personnel” of the’80s, through “Human Resources” in the ’90’s to the focus on Management and Optimization of Human Talent Today Future Strategic Focus Change Agent Strategic Partner ImplementStrategy Organization Renewal Process Activities People Activities Employee Champion Transactional Expert Efficient Infrastructure Increase Employee Commitment & Capability Strong Operational Focus - D.Ulrich

  11. Strategic Intent HR Solutions Create a High Performance Culture which Optimizes Employee Contributions and Maximizes Shareholder Value

  12. An Integrated Strategy With 5 Critical Thrusts Attract & Retain Performance Management Transactional Excellence Leader. Supply HR Strategy And Planning Simplify/ Integrate Recover First: Core Services/ Regions COE’s IBHR Cost Compe- titiveness, Fo- cus , Impact Play to Win Strategic Needs of the Corporation Business Strategies of Record Human Asset Plans

  13. Areas of Focus Leadership Supply Attract & Retain Performance Management Transactional Excellence HR Strategy & Planning Increase Operating Effectiveness : - Continue InternalPaperlessInitiative - Improve Quality, Speed & Performance of all HR Base Transactions Globally Determine Viability of a “For Profit” Business: - Global Partner for HR Services / Transactions Simplification & Integration Cost Competitiveness Themes Focus & High Impact

  14. Transactional Excellence – Key Gaps ▲Funding Constraints (Expense and Capital) ▲Alternate (Competing) Systems ▲Lack of Integration ▲Systems Sub-optimized Due to Limited / Inconsistent Use of Core Process Redesign ▲Transactions Centers Are Ahead of Manager / Employee Willingness ▲Limited Applications to Leverage Infrastructure

  15. Transactional Excellence Improve Operational Effectiveness: ▲ Complete Global Consolidation of HR Transactions Global Employee Solutions Center ▲Purchase/Develop System to Cover ALL Compensation Transactions ▲ Create Infrastructure/ Integration of Paperless HR Transactions ▲ Use CPR Methodology to Achieve Trans. Excellence ( Integration, Cost Competitiveness)

  16. Transactional Excellence Outsourcing has Proven to NOT be the Panacea Once Imagined.While Initial Costs do Appear to go Down, Future Changes Drive Costs Upward While Strategic Course Correction Ability & Flexibility Suffer Dramatically. Ability to Influence Future Strategy, Change Cost Projections Time Time High High Cost Cost Acceptable Levels of Influence Acceptable Cost $’s Low Low No - - - - - Changes- - - -Many Flexibility Future Year One External Ownership External Ownership Internal Ownership Internal Ownership -R. Charan

  17. Transactional Excellence • Business Partnerships May Offer • Rewarding Solutions: • - Efficiency & Lower Cost • - Retain Control & Strategic Focus • - Possible Revenue Streams • Preliminary Partnership Discussion Indicates That There Is a Significant Market Opportunity That Could Result in a Savings From Reduced Fixed Costs Longer Term

  18. Areas of Focus HR Strategy & Planning Leadership Supply Transactional Excellence Attract & Retain Performance Management Maximize Human Assets & Potential Via the Art & Science of : ▲Creating Human Strategy, ▲ Planning (at World Class Levels), ▲ Deploying and ▲Measuring - Our Workforce in a Way that Provides True, Sustainable, Competitive Advantage. Simplification & Integration Cost Competitiveness Themes Focus & High Impact

  19. HR Strategy and Planning – Key Gaps ▲Differing Perceptions of Human Asset Planning, What It Covers, and What It Can Deliver ▲HAP Not Recognized or Driven As a Core Business Process ▲Workforce Planning Perceived As a Budget and Global Talent Supply Organization Exercise ▲Costly and Unpredicted Variations Occurring in Talent Acquisition / Downsizing

  20. H R Strategy & Planning Why Human Asset Planning? • 1998 Downsized 15,000 ($618M Severance) • 1999 Hired 19,700 ($90M Hiring Cost) • 2000 Hired 26,548 ($105M Hiring Cost) • 2000 Downsized 3,900 ($140M Severance) • 2001 Hired 7,908 YTD ($50M Hiring Cost) • 2001 Downsized 36,800 YTD ($643M Severance) • 2002 Downsized 4,567 YTD ($??? Severance) Does This Cycle Make Sense? Total Cost = $1,646M Hiring: $245M Severance: $1,401M

  21. Areas of Focus Attract & Retain Transactional Excellence HR Strategy & Planning Leadership Supply Performance Management • Retention (Simplification, Integration, • Impact) • Redeployment and internal talent • management (Cost Competitiveness) • Employment Promise that delivers • against the Motorola Brand • (Focus & Impact) Simplification & Integration Cost Competitiveness Themes Focus & High Impact

  22. Attract and Retain – Key Gaps ▲Motorola Brand Promise Is Not Translated Into a Powerful Employment Promise ▲Lack of Clearly Identified and Developed Candidates to Feed Leadership Supply Pipeline (E09 – E14) ▲Most Effective / Critical Skills Losses Are Not Currently a Managed Source of Future Talent to Motorola ▲Most Effective Talent at Risk Where Development and Rewards Don’t Match Performance

  23. Retention and Redeployment 2002 2003 2004 • Continued use of feeder pool as next generation candidates for Leadership Supply positions • Expand pool to include E09 – E11 • Most effective 20% (E09 – E14) used as the feeder pool for open positions E12 – E15 • Institutionalize a Center of Excellence for Talent Management across Motorola. Build a bridge to Leadership Supply & Learning processes. • Refocus on retention & redeployment of most effective 20% and critical skills employees in E12 – E14 • Apply leadership supply processes • Develop retention strategies • Retain 95% of specific target population • Ensure rewards programs support retention of specific target population • Create alumni tracking capability for most effective talent & critical skills employees who leave the company

  24. Employment Promise 2002 2003 2004 • Integrate our efforts to translate the Motorola brand into an employment promise • Define concept & rationale • Develop informational material • Secure Sr. management support (office of CEO, CMO, Corporate Strategy, Kitchen Cabinet etc.) • Develop project plan & obtain sponsorship, including funding, for 2003 implementation • Implement project plan • Continue implementation & evaluate. Conduct internal & external discovery of desired employment promise vs. perceived employment promise

  25. Areas of Focus Leadership Supply Transactional Excellence HR Strategy & Planning Attract & Retain Performance Management • Add Additional “Extraordinary • Apps” • Investigate External Business Simplification & Integration Cost Competitiveness Themes Focus & High Impact

  26. Leadership Supply – Key Gaps ▲Top 100 Most Leveraged Jobs Not All Filled by Most Effective Performers ▲Most Effective Talent at Risk Where Development and Rewards Don’t Match Performance ▲Lack of Diversity in Leadership Supply and Pipeline ▲Leadership Supply Process Is Attracting External Attention Creating a Potential Revenue Opportunity

  27. Leadership Supply - 2001 • Motorola Leadership Supply metrics were tracked on 2001 Global HR Scorecard and achieved the following: 2001 Goals 80% of Top 50 positions held by Most Effective Performers 95% retention of Most Effective Performers (200) 80% transition of Least Effective Performers (100)

  28. Execute “Theme of the 100’s” with “Extraordinary Applications" • Strategic Intent: • 100% Match Between: • 100 Most Effective Leaders • 100 Most Leveraged Positions • & • Reward to ensure 100% Retention • & Exceptional Performance ▲Personal Development 100 -Ensure Advanced Development needs are Met. -Top 100 Attendees from the Initial Executive Institute to be Invited to Phase II. ▲The “Diverse Next 100” Pipeline Identify a Pipeline for the Next 100 Future Leaders, Including Diversity Candidates from Across the Company. ▲ Internal Talent Agent Develop the Business Case for Implementation of anInternal Talent Agent ▲Leader Supply as a Business Build a Business Case for Sale of Leadership Supply Process

  29. ▲Create Intensely Personal Performance Management Experience for ALL Employees ▲Integrate Fact-Based Tools for Mgrs./ Emps. to Discuss, Celebrate, & Confront Individual Performance ▲Energize Tools by Holding Sr. Level Execs. Accountable for Re-building the Performance Culture Areas of Focus Performance Management Transactional Excellence Attract & Retain Leadership Supply HR Strategy & Planning Simplification & Integration Cost Competitiveness Themes Focus & High Impact

  30. Performance Management – Key Gaps ▲Lack of a Consistent High Performance Culture ▲Personal Commitment Viewed As More Developmental Than Performance Management Orientated ▲Consequences Not Aligned / Consistent ▲Insufficient Management Tools and Training on Effective Behaviors ▲Rewards Do Not Differentiate Sufficiently Between Organizational and Individual Performance ▲ Current System Largely Employee Driven

  31. Performance Management Integrate/ Refine Existing Tools ▲Define & Agree:Components of Performance Management. Conduct Best Practices Study, Baseline Motorola System to Findings ▲ Clear Goal Setting – Linked to Next Layer ▲Target Training:Employees & Managers ▲Integrate:PC, Relative Performance, 360 Feedback ▲Tighten Linkageto Rewards & Development (Simplification, Integration, Impact)

  32. Summary Areas of Focus Leadership Supply Transactional Excellence HR Strategy & Planning Attract & Retain Performance Management -Increase Effectiveness/ -Short Term Strategy -Integrated Tools/ -Simplified Goal Setting -HAP Process Strategy -Employment Promise/ CMO Simplification & Integration -“For Profit” Business/ -Long Term Strategy -HAP Process Strategy -Retain -Redeploy -Leadership Supply As Biz -Develop- ment Cost Competitiveness Themes -Sr. Mgmt Accountability -HAP Content/ Process / FutureStrategies • New • Apps. -Employment Promise/ CMO Brand Promise Focus & High Impact -Rewards -Exec. Ownership -100’s

  33. Human Resource Value Proposition Drives Shareholder Value Attract/Develop/Retain Human Asset Plan. Transactional Excellence Cost Effectiveness Leadership Consequences/Rewards Performance Mgt. -and Creates “For Profit” Business Opportunities

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