Employer of Choice The Next Generation

1. Employer of Choice The Next Generation Presentation to the HR Strategic Issues Council Meeting New York City September 5-6, 2002

2. Project Origins • In late calendar 2000 Bill Parrett, Americas Managing Partner, and the U.S. Operating Committee, made the following a priority because of the strategic business need for D&T to create a further competitive advantage through its people: • - Reinvigorating “the Compensation Function” • - Initiating a special project – focusing on creating a competitive advantage for D&T through meeting the career/reward/recognition needs of staff members • Project named “Creative Career and Compensation Solutions”

3. The Evolution of Strategic Project Purpose: • Establish a strong commitment relationship with staff which creates a competitive advantage for D&T and meets the unique needs of each staff member • Leverage the intersection of partnership and employees’ needs by establishing a strong commitment relationship with our people and creating a competitive advantage for Deloitte & Touche • Demonstrate how we will attract and retain the best from a diminished pool of talent by going to a new level as an Employer of Choice…project renamed “Employer of Choice – Next Generation”

4. EOC-NG Resources • Comprehensive background report • 70+ interviews with D&T Leaders • Sounding Board (13) • Steering Team (9) • HR Advisory Team (13) • Focus Groups w/ 200+ professionals • External/Internal Research • Outside consultants (4) • Human Capital consultants (6)

5. Project Phases EOC-NG…What really happened? Phase I Phase II Phase III Phase IV Phase V FY '03 - FY '04 FY ‘02/'03 (1/02 - 9/02) FY '01 (1/01 - 6/01) FY '02 (7/01 - 9/01) FY '02 (09/01 - 1/02) Refocus Phase Recommendations for Action • Benchmark w/other companies • Draft preliminary recommendations based on input from Phase I & HR/ Firm leaders • Present recommendations to Bill Parrett & Sounding Board • Conduct additional research including focus groups and make necessary changes Data Gathering • Assemble advisory teams • Conduct research & interviews • Define/refine business case • Create white paper • Assemble project teams Design, Building & Testing Phase • Develop high level implementation plan & communication strategy • Begin change management & communication process • Begin work on recruiting area of opportunity • Build out re: Pay for Performance, Career Mgt. & Performance Mgt. actions Implementation Phase (Initial) • Roll out phase 1 of compensation solutions FY03 • Roll out GPS in A’s & Tax FY03 • Pilot enhanced GPS for other functions in FY03 with FY04 roll out • Implement Deloitte Career Planning and Placement & Shared Services Career Levels • Complete work on Recruiting and make recommendations during FY03 • Adapt recommendations to changing economic circumstances • Present amended recommendations to Executive Committee and gain endorsement

6. EOC – NG Areas of Opportunity • Provide more attractive & rewarding career opportunities • Increase flexibility and choice • Reward & recognize value & performance • Improve interaction with immediate managers • Recruit & select with commitment in mind • Personalize the value package

7. The Value Chain & Employer of Choice VALUE PROPOSITION COMMITMENT PRODUCTIVITY CLIENT SATISFACTION BUSINESS IMPACT • WHAT WE OFFER • WHAT WE EXPECT PEOPLE ALIGN WITH STRATEGY & MAKE EXTRA EFFORT • PERFORMANCE • LEARNING • GROWING • INNOVATION • RETENTION OF RIGHT PEOPLE • ACCESS TO TALENT WITH: • RIGHT SKILLS • CLIENT SUCCESS FOCUS • COMMITMENT TO STAY • GROWTH IN: • REVENUES • PROFITS • MARKET PENETRATION • BRAND/MARKETREPUTATION • SUCCESS IN: • GLOBALIZING • NEW VENTURES

8. Reasons to Act Now Strategic • Two of the six measures of success speak to doubling revenue and profits in the next few years. To accomplish this, we: • Need to focus on excellence in the 3Ds so that, • many more of the right people will stay longer than has traditionally been the case • we take steps to be “an even better place to work” in order to move more of our professionals to the highly committed category • Experience and research show that committed people make for more satisfied clients and better financial results • We have a strategic opportunity to stay out in front of our competitors (who increasingly imitate our current programs) while they are preoccupied with business challenges • We want to win – to dominate - and be acknowledged as the best - not just stay in the game

9. Reasons to Act Now Demographic • Demographic factors remain unchanged; there is still a short supply of highly talented people, which will continue for the next 5-10 years • This shortage will be acute again when the economy recovers • The best talent always have options regardless Cultural • We have done little to address the concerns of our professionals expressed in the last GPCS • While the economic slowdown and 9/11-related events could be expected to have some impact, there are no data to date suggesting that these concerns have materially changed • We want our people to stay with us because this is the place they want to work not because they may have few alternatives • And…our people and our culture require us to move to a completely new level of Employer of Choice

10. What We’ve Heard From Our People • Allow me to change jobs without leaving the firm • Allow me to set my work schedule and workplace and ultimately be successful • Pay for performance • Deliver on firm’s promise to have a real performance management process, which will guide my career within Deloitte

11. Outcomes We Can Expect • Overall voluntary turnover level of 5% reduced from current level of 17% (vs. industry norm of 25%) • Reduced • Recruiting costs • Retraining costs • Cost to deliver services • Accelerated • Speed of development • Growth in revenue & profits • Preserved & enhanced firm intellectual capital • Enhanced innovation • Increased difficulty and cost for competitors to “copy cat” • Reinforced external branding as Employer of Choice

12. What we offer Deployment to strategic roles Ability to “change jobs” within D&T with no barriers Richer data sources on career options & tools to help people build a unique career within the Firm Opportunity to be a part of a Firm that values the uniqueness of each individual, e.g., setting his/her own schedule, rewards the role each plays in the Firm’s success and provides resources & assistance to those who leave What we expect Greater willingness to take on challenging roles especially those requiring relocation Far fewer people leaving D&T to take jobs or find working arrangements they could have had here Managers utilizing tools available to enhance their skills to provide performance/career related advice; being held/holding themselves accountable for development, strategic deployment and retention of talent Mutually valuable relationship with alumni Career Management: “Allow me to change jobs without leaving the firm & allow me to set my own schedule”

13. Employer of Choice – Next Generation • Consists of 3 segments • Executive Committee approved initiatives: • Deloitte Career Planning & Placement Center • Pay for performance • Performance management • Recruiting with commitment in mind • Ongoing research to anticipate demographic & workforce attitude trends & propose possible solutions • Flexibility & Choice • Focal point for what was previously called Work/Life programs • Formal FWAs/Virtual work/Informal flexibility • Dependent Care (ABC and back up child care) • Resource and referral programs

14. Deloitte Career Planning & Placement Center • Endorsed at January EC meeting as part of Career Management solution to staff requests for barrier-free movement within the Firm and flexibility and choice re: all aspects how, when and where work is done. • Designed as a virtual capability with three elements: • Deployment • host a “career hot line” re: strategic needs and post these openings in a data base with descriptions and who to contact for more information • answer questions confidentially • work with appropriate individuals to facilitate candidate consideration

15. Deloitte Career Planning & Placement Center (Cont’d) • On-line career management resources • Expand use of Creative Work Alternatives (CWAs) • Externally hosted Website with links to PSNWeb • Provide tips on how to enhance the effectiveness of FWAs and virtual work relationships to both supervisors and supervisees • Offer on-line networking capability for all those on CWAs • Career advice & counsel • Advice to feedback providers and receivers to support face to-face discussions • In-depth career counseling resources to Senior Managers and above

16. Deloitte Career Planning & Placement Center (Cont’d) • Outplacement services • Internal Redeployment Guidance/Support • Personalized Career Transition Coaching • Exclusive Client Career Opportunities • Introductions to Potential Employers • Deloitte Placement Assistance Guide

17. Deloitte Career Planning & Placement Center (Cont’d) • Benefits of Career Center • Further reinforces “employer of choice” status • Enhances retention • Reduces salary and benefits continuation costs • Provides greater opportunities for rehires • Creates stronger client relationships and new business • Allows us to retain/redeploy experienced hiring talent during reduced recruiting cycles

18. What we offer More compensation if metrics are attained On the spot recognition for special achievement Potential to share in Firm wide results – a piece of the action What we expect Better business results Greater alignment with firm strategy Higher levels of motivation, willingness & commitment to make the extra effort to attain or exceed the metrics Pay for Performance

19. Compensation Philosophy • Deloitte & Touche will recognize and reward people for results and actions that achieve the Firm’s vision, strategic priorities and goals

20. Compensation Components – Business Purpose

21. Performance Management – Plans for FY03 • Great Performances System (GPS), piloted primarily in TriState and Northern California, is being rolled out in FY03 for all functions except Solutions • Implementation has begun

22. Value Proposition of GPS • High Value • Defines performance clients value, by job level • Defines for our professionals what is expected • Reports compliance • Reports results to support decisions • Reduces manpower requirements • Low Cost • Zero training to deploy • Extremely low maintenance- we own the code and GPS has dynamic programming • D&T owns the GPS- we made it for >$500K

23. What we offer Defines performance that clients value, by job level Defines for our professionals what is expected Identifies development gaps & offers help in filling them Reports results to support decisions Reduces administrative requirements Easy to understand and use What we expect 100% compliance by Partners & Professionals Use of all elements of GPS such as goal setting & counseling GPCS ratings indicating that performance management is no longer an “area of improvement” Professionals will know where they stand re: skill gaps, the actions required to close them and will commit to closing the gaps Doing your individual best all the time Performance Management

24. Possible Metrics for Success • FWAs - % of total employees • Better GPCS results in all areas • Career Plans – 100% (everyone has one) • CareerCenter website • # of hits on website • # of individuals seeking advice from career coaches • # who complete a formal career assessment process • # of career changes facilitated • # of outplaced indivduals who complete the program • Client satisfaction ratings

25. Employer of Choice – What the Future Holds

26. Employer of Choice – What the Future Holds

27. What’s Next? • Partner champion appointed for each action – done • Mike Fucci – Career Management • Pete Nachtwey – Performance Management • Larry Hilsheimer – Pay for Performance • HR team to develop around each action - done • Work begun on Career Center with mid-September roll out of website and annoucement firmwide • Pay for Performance approaches • Discuss with EC with decisions by end of October • Performance management • Implementation underway • Deloitte Career Levels program announced in September and implemented by March, 2003

28. What’s Next? (Contd) • Proposals on Recruiting made to EC by end of December • Change Management actions: • Implementation plan including • Internal selling process • Communications plan • Game plan back to EC • Establish metrics and report to EC • Status report to EC in November, 2002