Thoughts on Leadership in Today's US Labor Market

Carlyle Proprietary & Confidential R-0 R-85 G-101 G-67 B-179 B-113

R-0 R-118 G-161 G-92 B-224 B-150

R-145 R-163 G-213 G-143 B-242 B-187

R-189 R-154 G-230 G-155 B-247 Thoughts on Leadership in Today’s US Labor Market B-156 Implications for Talent Management & Retention R-43 G-131 R-219 B-35 G-217 B-217

R-61 White G-175 March 2019 R-255 B-46 G-255 B-255 Colors Text R-145 Dark Blue G-229 R-0 B-0 G-74 B-136

R-156 Blue G-226 R-0 B-146 G-161 B-224 Carlyle Proprietary & Confidential R-0 R-85 G-101 G-67 B-179 US Unemployment Effectively Below Full Employment Rate (NAIRU) B-113

R-0 But, over 100M Americans are not working … R-118 G-161 G-92 B-224 US Unemployment & Labor Force Participation B-150

R-145 R-163 G-213 G-143 B-242 B-187

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R-43 G-131 R-219 B-35 G-217 B-217

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R-156 Blue G-226 Source: US BLS December Employment Situation Report 01/04/19; St Louis Fed, seasonally adjusted. R-0 B-146 2 G-161 B-224 Carlyle Proprietary & Confidential R-0 R-85 G-101 G-67 B-179 Fewer Options To Consider From The Available Labor Force B-113

R-0 …with number of unemployed individuals per job opening at its lowest since 2000 R-118 G-161 G-92 B-224 B-150 Number of Unemployed Persons per Job Opening R-145 R-163 G-213 G-143 B-242 B-187

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R-156 Blue G-226 BLS, Current Employment Statistics & Job Openings & Labor Turnover Survey for December 2018, dtd 2/12/2019 R-0 B-146 3 G-161 B-224 Carlyle Proprietary & Confidential R-0 R-85 G-101 G-67 B-179 Fewer Options To Consider From The Available Labor Force - Continued B-113

R-0 … and since early 2014, Growth in Job Openings is outpacing Employment R-118 G-161 G-92 B-224 Job Openings, Hires, & Quits B-150

R-145 R-163 G-213 G-143 B-242 B-187

R-189 R-154 G-230 G-155 B-247 B-156

R-43 G-131 R-219 B-35 G-217 B-217

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R-145 Dark Blue G-229 R-0 B-0 G-74 B-136

R-156 Blue G-226 BLS, Current Employment Statistics & Job Openings & Labor Turnover Survey for December 2018, dtd 2/12/2019 R-0 B-146 4 G-161 B-224 R-0 R-85 G-101 G-67 B-179 State of the American Workplace – Overall Employee Engagement B-113

R-0 In addition to the challenges finding talent, employers are becoming increasingly R-118 G-161 aware of high employee expectations regarding engagement G-92 B-224 B-150

R-145 R-163 G-213 G-143 B-242 51% B-187 Of US employees are actively R-189 looking for a new job or watching for R-154 G-230 openings G-155 B-247 30% 30% B-156 Of US employees strongly Of US employees strongly R-43 agree they have received agree their fellow workers G-131 positive employer R-219 are committed to doing B-35 reinforcement in the past six G-217 quality work months B-217

R-61 White G-175 R-255 B-46 G-255 • 22% of US employees strongly agree their leadership has B-255 clear direction for their org Colors Text R-145 • 15% of US employees strongly agree their leadership Dark Blue G-229 makes them enthusiastic about the future R-0 B-0 • 13% of US employees strong agree their leadership G-74 effective communicates with the rest of their organization B-136

R-156 Blue G-226 R-0 B-146 G-161 Feb 2017, survey from over 195,600 U.S. employees, plus Q12 database with 31million respondents B-224 R-0 R-85 G-101 G-67 B-179 Employee Engagement - Continued B-113

R-0 Recent BLS data supports this “disengagement” trend as well R-118 G-161 G-92 B-224 B-150 Layoffs & Discharges vs. Quits

R-145 R-163 G-213 • Layoffs and G-143 B-242 discharges have B-187

R-189 remained relatively R-154 G-230 static over the past G-155 B-247 10 years … B-156 R-43 G-131 R-219 B-35 • …while “Quits” G-217 have more than B-217 R-61 doubled since White G-175 R-255 B-46 2011 G-255 B-255 Colors Text

R-145 Dark Blue G-229 R-0 B-0 G-74 B-136

R-156 Blue G-226 BLS, Current Employment Statistics & Job Openings & Labor Turnover Survey for December 2018, dtd 2/12/2019 R-0 B-146 6 G-161 B-224 Carlyle Proprietary & Confidential R-0 R-85 G-101 G-67 B-179 Sector Perspective: Specific Labor Challenges B-113

R-0 The skills required for Information Technology (IT) jobs are some of the most difficult R-118 G-161 to recruit and retain in today’s employment marketplace G-92 B-224 B-150 • Behind skilled trades, IT skills are the R-145 R-163 G-213 second most difficult* to find and retain G-143 B-242 B-187 • Business intelligence / Analytics, process R-189 automation, and Cyber Security R-154 G-230 requirements are driving increased G-155 B-247 demand, but slack labor does not exist in IT B-156

R-43 sector G-131 • Thus, IT employment lags & wages R-219 B-35 G-217 B-217 skyrocketEmployment Wages JOLT Quits 2013 2018 2013 2018 2018 2018 R-61 White G-175 Total (million) 144.7 156.9 $24.17 $27.48 7.34 3.48 R-255 B-46 CAGR% 2.1% 3.2% 47.4% G-255 B-255 Colors Text

R-145 U3 6.29 Dark Blue G-229 U/Open 0.86 R-0 B-0 G-74 B-136 IT (million) 2.68 2.76 $33.43 $41.02 0.129 0.055 R-156 CAGR% 0.7% 5.2% 42.6% Blue G-226 R-0 B-146 7 G-161 *2016-2017 Manpower Group Talent Shortage Survey B-224 R-0 R-85 G-101 G-67 B-179 State of the American Workplace –The Costs of Churn B-113

R-0 Wages, benefits, training, development and retention costs combine to make the R-118 G-161 total cost of churn a significant concern G-92 B-224 B-150 Costs of Churn R-145 R-163 G-213 G-143 B-242 Employee B-187 Recruiting Most Companies cannot Stays grow, without more R-189 R-154 G-230 Labor… G-155 B-247 Training / B-156 onboarding Big R-43 Decisio G-131 R-219 n G-217 B-35 Lost Wages & B-217 Productivity Benefits R-61 …but 35% of employees* White G-175 R-255 B-46 have changed jobs within G-255 Employee Replacement B-255 Retention Colors Text the last three years… Goes Cost R-145 Programs Dark Blue G-229 R-0 B-0 G-74 B-136 . . .and 91% of Millennials don’t plan to stay at a job for more than 3 years** R-156 Blue *Source: Gallup State of the American Workplace, 2017, p.24 R-0 G-226 **Source: Forbes, Job Hopping is the New Normal for Millennials, 8/14/12 B-146 G-161 B-224 Carlyle Proprietary & Confidential R-0 R-85 G-101 G-67 B-179 Approaches To Address Labor Market Dynamics B-113

R-0 Faced with a tight labor market, where competition for talent is fierce, R-118 G-161 companies can consider a range of solutions to attract and retain workers G-92 B-224 B-150

R-145 R-163 G-213 Training, G-143 B-242 To support retention of the staff you have B-187 Development & on-board and recruit into your company R-189 Mentorship R-154 G-230 G-155 B-247 B-156 Networks of To drive engagement and effectiveness of R-43 G-131 Teams resources and expertise across silos R-219 B-35 G-217 B-217 To open alternative avenues for securing needed R-61 The “Gig” White G-175 expertise, capabilities and knowledge (outside R-255 B-46 Economy G-255 the traditional employee approach) B-255 Colors Text

R-145 Dark Blue G-229 R-0 B-0 G-74 B-136 . . . and more effective leadership . . . R-156 Blue G-226 R-0 B-146 9 G-161 B-224 Building High Performance Teams: Heartbeat Leaders First

Joseph C. Barto, III Founder & President TMG, Inc. A Member of the Carlyle Group Leveraged Purchasing Forum

March 7, 2019 8:00 – 12:00 10 Agenda

• High Performance Teams: “What does Right Look Like?” • Break • Team Performance Improvement Program Best Practice Example • HR’s Role & Making the Case for TPI Investment • “The Courage to Lead”

11 Best and Worst

Blue Slip

12 Our Business

Lead/Order Value Stream Invoice

Business People Process Performance

Alignment

13 Core Beliefs

• Start with the end in mind! …take a Systems Approach

• Be in the business of making hard things easy…not easy things hard.

• People are good and want to do the right thing

• It is the organization’s responsibility to create an environment for its people to be successful not encourage them to fail.

• If you believe the workers can only be as good as their leader then you also believe leaders can only be as good as their leaders

• Every organization has an un-limited bandwidth for change

• Culture vs. Change and Leading

• Change Requires Trust

• Turf, Ego, and $$$ and the end of the day it is about…

14 2018 actual / 2019 plan $150 / $170 Million (Total Revenue) Mission First

$80 / $___ Million (Total Cost of Materials)

$40 / $___ Million (Total Cost of Labor) People Always Army Basketball Team 1976-1977

Trust and Commitment 16 Task Force 2-4 Cavalry Tactical Operations Center Team Feb 21, 1990 - Northern Saudi Arabia

17 Business is a Team Sport

• Think Hard: Are we organized for success and doing the right things? – Right Plays – Right Rules – Right Positions

• Work Hard: Are we executing the plays? – Putting the right people with the right skills in the game to run the plays – Motivating them to produce and Win!

• Talk: Communicate – Everything is constantly changing – Providing Aggressive Leadership 18 Big Picture Thinking

Lead/Order Value Stream Invoice

Business People Process Performance

Alignment

Goal: Consistent Perfect Performance

19 Dream Teams seek True North

The Journey to Perfection

Defined by WHO?

20 Customer Focus 1st, Last, Always

21 Big Picture Thinking

Lead/Order Value Stream Invoice

Business People Process Performance Alignment

Goal: Consistent Perfect Performance

22 Customer Focus 1st, Last, Always

High Performing Teams are the journey to consistent,

near PERFECTION. How good can we be?

23 Is Perfect Possible? 270 (45x6)

25 Can an Individual Be Perfect?

26 Can a Team Be Perfect?

27 If the Leader believes PERFECT is possible and is seeking PERFECTION in every activity, everyday.

28 Video: OK is NOT OK…

Building High Performance Teams: Heartbeat Leaders First

TMG Experience . . .

30 Trends and Observations

• “Tribal Knowledge” vs. “Data Driven” Decision Making • Team do not know the Score • Overtime Out of Control • Over Reliance on Temps • Increased Out Sourcing resulting in higher Supply Chain pressure • Increased Dysfunctional Workforce Churn – More External Opportunities – Voluntary Retirements due to Aging of the Workforce – Missing Generation of Leaders (Baby Boomers – Millennials) – “Retired on the Job” driving Labor Costs Up and stifling High Potential Advancement with decreasing productivity and engagement – Lack of People related data and analysis causing Employer • Arrogance • Ignorance • Significant Increase in Customer Demands • More Projects than Time, People and Resources Available • Senior Leadership Tactical focus creating Leader “Compression” • “Heroic Efforts” creating exhausted, de-moralized, and under performing Heartbeat Leaders 31

Temp to Perm: Current State Process Results May 2016 – June 2017

Time to Conversion After 90 Days • Total Number of Temps Offered: 137 12 10 • Total Number of Offers Rescinded or Turned Down: 8 8 • Total Number of Temps Converted to FTE: 27 6 – Average time to conversion: 195 Days 4 2 – Longest time to conversion: 289 Days 0 – Shortest time to conversion: 98 Days 1-30 Days 30 - 60 Days 60 - 120 Days 120+ Days • Total Number Separated: 44 Time to Separation – Average Time to Separation: 72 Days 14 – Longest Time to Separation: 195 Days 12 – Shortest Time to Separation: 9 Days 10 8 • Total Number Employed as Temps: 66 6 4 • Current Temp to Perm Conversion Rate: 20% 2 • Total Cost of Temp Labor: $2,579,561.96 0 1-15 Days 15-45 Days 45-90 Days 90+ Days

• $95,539/New Employee 32

Leader Compression

• When more than one Leader level is working the same problem simultaneously. • The Boss always Wins! • The Subordinate Leader Loses… • The Team is confused • We are killing alligators at a high rate of speed! • But…Who is draining the swamp?

33 Can you be a Good Leader on a Bad Team?

34 High Performance Team Hypothesis If we align the organization and improve leader behaviors, then we will increase team engagement and improve business performance.

35 Team Performance Assessment

Alignment: 1. Every teammate understands what we do and how we make money. (Business 101)

2. We are an aligned, self-disciplining team from the Senior Leadership Team to the 1st Line Supervisors where we know our responsibilities and the responsibilities of our teammates. (Roles and Responsibilities)

Leadership: 3. All of our Leaders are High Performing or are on a deliberate path to High Performance. (Current Leaders – Current Responsibility Performance Improvement)

High Performing (Consistent Best Leaders) ____% Developmental (Moving in the Right Direction) ____% Dysfunctional (Should not be in the position) ____%

4. We have a solid “Bench” of future leaders who are ready to step into leadership positions with minimal preparation and low risk to business performance? (Future Leader Identification, Training, and Development System)

Team Performance Assessment

Team Engagement: 5. The Engagement Distribution of our Team is: (Team Engagement Improvement System)

Engaged (Go To Teammates) ___% Disengaged (Getting a paycheck) ___% Actively Disengaged (Doing positive harm) ___%

6. Our Talent Acquisition and Retention System process produces New Teammates who are delivered to their first supervisor ready to become Engaged? : (Talent Acquisition and Retention System)

Business Performance: 7. Our Team knows the score and what they have to do everyday to Win? (Daily Operations)

8. How good can we be? If our Team was PERFECT Team how much better would our business be in terms of increased productivity and earnings? 37

2018 actual / 2019 plan $150 / $170 Million (Total Revenue) Mission First

$80 / $___ Million (Total Cost of Materials)

$40 / $___ Million (Total Cost of Labor) People Always The Big Picture Strategy Normal

Lead/Order Value Stream Invoice

Business People Process Performance

Alignment Abnormal = Problems Heartbeat Leaders Daily Problem Solving: See; Stop; Fix; Share; Lead to WIN!

The Senior Leader Tool Kit Systemic Challenges

Lean & CAPEX New Products/ TEAMS Six Sigma Services

39 Organizational Scheme

Order Invoice VP

DO DO DO

MGR MGR VP: Vice President DO: Director of Operations MGR: Manager SUP SUP SUP SUP: Supervisor Target Dyad TL: Team Leader TL TL TL E: Employees NE: New Employees E E E E

NE NE NE

Train Together: TL/SUP Pairs

Vertical Dyad Linkage 40 Team Character

• Competing: Playing to Win! – We Own the Business – Maniacal Customer Focus – How good can we be?

• Participating: Playing – You Own the Business – Boss Focus; Customer Irrelevant – We are doing fine, “Why Change?”

• Blaming: Watching others Play – I am Entitled – Boss, Customer, and Team are the Enemy – You OWE me

41 Who are your Heartbeat Leaders? Operations, Sales, Procurement, Engineering, Quality,

Which Leader is Responsible for their performance, training, and development? Do you want your Heartbeat Leaders to have a Perfect Day?

Then it is the Organizations Responsibility to define, teach, and coach Heartbeat Leaders to have a Perfect Day.

43 Peyton Manning

What does “Right” Look Like? Peyton Manning

44 Engagement

45 Vertical Dyad Linkage Theory The Linkage Power Depends On…

1. Leaders Managing Personal Relationships – Vertical Dyad: Leader Led x number of direct reports – Employee performance, productivity, and engagement depend on their relationship with their IMMEDIATE Supervisor

2. Leader and Led continuously Creating Shared Mutually Supportive Goals – The Employee’s Goals and Needs – The Organization’s Goals and Needs as articulated by the Leader – Requires continuous Goal Alignment within Developmental Plans and continuous Feedback

46 Leader to Led Linkage

Authenc Communicaon Leader Led

Communicaon Goal Awareness Alignment

Organizational Goals Individual Goals – Cost – Compensation – Schedule – Opportunities – Quality – Responsibility – Work – Safety Environment – Recognition

Can only occur when there is a conversaon between the Leader and the Led about the Led! 47 Signs of Engaged Relationships

• High Trust • Low Task Definition Needs • High Relationship Needs • Psychologically committed to the company • Consistent levels of High Performance • Innovative and a drive for efficiency • Intentionally build supportive relationships • Clear about role outcomes expected • Passionate, high energy, and enthusiastic • Never run out of things to do • Loyal to workgroup and company • Broaden what they do and build on it • Positive constructive criticism

48 Signs of Actively Disengaged Relationships

• Low Trust • High Task Definition Needs • Low Relationship Needs • Physically present but psychologically absent • “What can I take” rather than “what can I give” • Share unhappiness about work with peers • “I’m OK but everyone else is not” • Service prevention rather than service provision • Not productive but always has excuses • Inability to move from problem to solution • Normal reaction starts with resistance • Low commitment to company • Might sabotage or manipulate solutions • Isolation, low trust

49 Signs of Dis-Engaged Relationships

• Meeting the Basics • Confusion or inability to act with confidence • Low risk response • No real sense of achievement • Making up their own game • Not always committed • Show negativity but not underground • Situationally Engaged

50 This is the behavior of what type Relationship?

1. Engaged 2. Disengaged 3. Actively Disengaged

51 Leader Tool

Circles Chart

52 Team:______

Leader:______TEAM ROSTER Date:______

(Led) ______Actively Engaged ______Disengaged ______

Disengaged

53 Leader Tool

Leader to Led (L2) Power 9 Guide

54 L2 Power 9 Guide

1. I am your Leader clarity 2. I Trust You 3. You understand what we do and how we make money 4. You know what to do at work everyday 5. You have the materials, tools, and equipment to do your work correctly 6. You know how to do the work correctly the first time 7. You know your role, the roles of your teammates and how you work together as a team 8. My team and I know the score and we play to win everyday 9. My leader cares about me as a person and wants to help me be successful

If you can answer all 9 what do you have?

56 TRUST

The Foundation of Engagement

57 58 Is Trust Earned or Given?

59 Engagement

What is the #1 Reason a High Performing/Engaged teammate stays or leaves an organization?

60 Shifting from Talent Acquisition to Talent Retention

… it is not about how many we hire it is all about how many we keep as productive/engaged teammates!

61 Are you Engaged?

62 Can we ever allow a Leader to be Disengaged or Actively Disengaged?

63 HBL 5th Metric Scorecard

Month: Leader:

Team Metric Snapshot

Metric Value

Total Headcount Start Number from the End of Last Month - Minus the Number of Teammates Who Departed + Plus the Number of New Teammates Total Head Count End Engagement Numbers Should Equal Your End Headcount E: D: A: Number of Unscheduled /Unplanned Absentee Events Number of Open Positions

Number Out on Disability / FMLA (included in Disengaged, not helping or hurting the team)

Expectations & Names of Teammates Who Names of New 1on1 Teammates on Departed Date/Reason Teammates complete? Start Date Disability/FMLA

Revenue $66.5M $74.6M +$8.1M

Profit -$3.3M (Loss) $1.8M (Gain) +$5.1M

Labor $9.4M $8.6M -$.8M

Engagement 3.05 3.45 +.40

65 TMG Services

Value Stream

Business People Process Performance

Alignment

Performance Improvement Connuous Improvement Increased Team Engagement

Team Stabilizaon Lean & Six Sigma Increased Customer Sasfacon Decrease Producon Costs Talent Heartbeat Project Support Increased First Pass Yield Acquisition Leaders and Increased Employee Skills and Proﬁciency Retention ASQ Certification Decreased Cycle Times Increased Producon Capacity Decreased Turnover Strategic Planning and Execution Increased Revenue Executive Coaching Decreased Cost Increased Proﬁt Team Performance Improvement Services

• Executive Education and Planning Session (Carlyle LPF) • Organizational Physical • Team Performance Improvement – Executive Team Performance Improvement – Heartbeat Leader Current Leader – Current Role Tool Kit Development and Implementation – Future Leader Identification, Training, and Development Systems – Talent Acquisition & Retention Performance Improvement Systems

67 Lean Six Sigma Services

• Strategic Planning & Hoshin Kanri development • Six Sigma Training, Project Support, & ASQ Certification • Lean Bronze Belt Training and Project Support • Daily Problem Solving Training and Project Support • Lean 101 White Belt Training and Project Support

68 Are you running the business? or Is the business running you?

69 Because…

• Simon Sinek. Leaders Eat Last video

70 Do you WANT to be a Leader?

71 BREAK

72 “Coach K” Mike Krzyzewski

Coach K and West Point 1st of 1,000 Wins

Video

Arconic Engines

Best Pracce Example

74 The Back Story

• 1990’s: Current Senior Leaders benefit from huge investment in Leader Development Programs • 2000’s: 9/11 and Recession create Survival mode + M&A • 2010’s: Growth • 2011: Plant Manager promoted to VP, Engineering • 2012: 1st Plant BU Sponsored & Funded Six Sigma Green Belt Class • 2013/2014: 2 then 4 Plants BU Sponsored & Funded Six Sigma Green Belt Class’s • 2015: Focus Shift from VP, Engineering to Plant Managers BU Funded

75 Six Sigma Green Belt Program Mission

Support the Arconic Engine Plant Managers DI and Cost Reduction programs by leveraging previously trained Six Sigma Green Belts to complete more projects using the DMAIC tool set as a how we do our work… and …train, coach, and program manage a new set of Six Sigma Green Belts to increase the Plant Manager’s capacity and capability to plan and execute DI and Cost Reduction projects.

76 DI Support (Six Sigma Green Belt) since 2012 • Trained and certified ~340 employees (~75 ASQ certifications) • Supported execution of ~650 projects in support of Plant DIs • Projects produced ~ $200M in cost savings • Locations: Whitehall, Hampton, Dover, LaPorte, Morristown, Wichita Falls, Rancho Cucamonga, Fontana, Rochester, Verdi, Savannah, Exeter U.K and Sheffield, U.K.

D2: 77 DMAIC Problem-Solving Roadmap

IDENTIFY OPPORTUNITY DEFINE

DESCRIBE AS-IS CONDITION MEASURE

IDENTIFY KEY CAUSES ANALYZE

PROPOSE & IMPLEMENT SOLUTIONS IMPROVE

SUSTAIN THE GAIN CONTROL

Validate & Replicate Changes

78 Strategic Objectives 1. Improve Arconic Leaders ability to do their daily work better by reducing “tribal knowledge” and increasing use of the “DMAIC data driven” problem solving tool set into our daily work processes. 2. Realize the Return on 1st Project & Training Investment by becoming more proficient with the DMAIC Tool Set as more projects are completed “year over year”. 3. 2015: Identify and Develop Current and Future Arconic Engine Leaders. 4. 2018: Improve Plant and Middle Manager Education and Execution Ownership

79 2018 Roll-up 23 Plant Managers; 332 Projects; $61 Million Cost Savings

2018 Six Sigma Program Roll-Up 10/26/18 Total Projected Cost Arconic Mentor/ Q1/Q2 Q3/Q4 ASQ ASQ Owner Participant Cost Avoidance Certified Manager Projects Projects GB BB s Savings Projects Plant Manager 8 1 7 5 2 $300,000 4 3 0 Plant Manager 42 1 41 33 1 $11,291,517 0 3 8 Plant Manager 7 1 7 6 0 $373,918 0 3 0 Plant Manager 16 2 16 14 9 $2,504,000 0 0 1 Plant Manager 4 0 4 4 0 $146,600 0 0 0 Plant Manager 14 1 22 13 9 $3,038,150 2 8 0 Plant Manager 4 3 13 0 9 $1,258,504 0 4 0 Plant Manager 23 1 22 21 17 $3,915,472 1 4 4 Plant Manager 2 1 2 1 1 $50,000 0 0 0 Plant Manager 8 2 13 6 7 $2,795,012 0 3 0 Plant Manager 5 1 5 3 0 $242,000 0 1 0 Plant Manager 20 1 26 18 12 $2,670,500 0 4 0 Plant Manager 3 1 5 2 3 $86,000 0 2 0 Plant Manager 46 1 45 45 35 $18,325,693 3 6 7 Plant Manager 2 0 10 0 10 $1,114,870 0 0 0 Plant Manager 0 0 4 0 4 $342,000 0 0 0 Plant Manager 0 0 3 0 3 $114,000 0 0 0 Plant Manager 0 0 3 0 3 $929,500 0 0 0 Plant Manager 0 0 4 0 4 $390,000 0 0 0 Plant Manager 0 0 2 0 2 $859,300 0 0 0 Plant Manager 0 0 3 0 3 $735,800 0 0 0 Plant Manager 12 0 12 12 12 $635,700 0 0 0 80 Plant Manager 2 0 2 2 0 $20,000 0 0 0 $52,138,53

218 17 272 185 147 6 10 41 20 The Rest of the Story

2015: Hampton IGT & Dover Alloy Plant Managers realize that Six Sigma Green Belt without Engaged Teams led by High Performing Heartbeat Leaders throttles true savings/growth opportunities. TPI Pilots begin.

2016/2017: 3rd TPI Plant Dover Castings

2018: 4th TPI Plant Savannah BU VP Human Resources budgets for Future Leader Program using the Six Sigma Green Belt Model

2019: 5th TPI & 1st (Pilot) Future Leader Plant Rancho Cucamonga 6th TPI & 2nd Future Leader Plant Rochester

81 Human Resources & Team Performance Improvement (TPI)

Mike Malady Senior Executive HR Strategist TMG, Inc. 82 The Rest of the Story

2016/2017: 3rd TPI Plant Dover Castings

2018: 4th TPI Plant Savannah BU VP Human Resources budgets for Future Leader Program using the Six Sigma Green Belt Model

2019: 5th TPI & 1st (Pilot) Future Leader Plant Rancho Cucamonga 6th TPI & 2nd Future Leader Plant Rochester

83 DISCUSSION:

Where DO HR Leaders spend their time and effort today?

Where SHOULD HR Leaders spend their time and effort? Should HR be involved in these areas?

EMPLOYEE ENGAGEMENT TEAM ENGAGEMENT

HIGH PERFORMING TEAMS

TALENT ACQUISITION & RETENTION COMMUNCATION

BEING A LEADER

TRUST RESOLVING CONFLICT

DEVELOPING FUTURE LEADERS

FEEDBACK AND COACHING

FUTURE LEADER BENCH STRENGTH COURAGE TO LEAD 85

ENGAGED, DISENGAGED, ACTIVELY DISENGAGED EMPLOYEES

HR Role in TPI • Be actively involved in the process from day 1 – participate in planning sessions, updates etc. – be part of the decision making process – ensure planned changes fit with local practices and norms • Understand, support and use TPI tools – 5th Metric Scorecard, – Perfect Day, – Goal alignment – Etc. • Prepare your location to eventually assume responsibility for ensuring ongoing, effective use of tools • Turn the Tools into Business Impact and keep your seat at the Leadership Table 86 Benefits of HR’s Involvement in TPI

• Supports short and long term success of the program • Positive HR presence in day to day activities • Aware of problems early allows quick resolution (proactive vs reactive) • See performance, attendance, retention and other issues first hand • Helps to establish (earn) trust at all levels of the organization • Link to people development and succession planning • Regular, direct contact with the HB Leaders • It’s Fun!

87 Making the Case for TPI Investment

88 2018 Roll-up 23 Plant Managers; 332 Projects; $52 Million Cost Savings

218 17 272 185 147 6 10 41 20 High Performance Team Hypothesis

If we align the organization and improve leader behaviors then we will increase team engagement and improve business performance.

90 Gallop 2017 State of the American Workforce

State of the American Workplace | 04 The Competitive Advantage of Engaging Employees

Business or work units that score in the top quartile of their organization in employee engagement have nearly double the odds of success (based on a composite of ﬁnancial, customer, retention, safety, quality, shrinkage and absenteeism metrics) when compared with those in the bottom quartile. Those at the 99th percentile have four times the success rate of those at the ﬁrst percentile.

WHEN COMPARED WITH BUSINESS UNITS IN THE BOTTOM QUARTILE OF ENGAGEMENT, THOSE IN THE TOP QUARTILE REALIZE IMPROVEMENTS IN THE FOLLOWING ARE AS:

41% 24% 59% 28% LOWER LOWER LOWER LESS Absenteeism Turnover Turnover Shrinkage (High-Turnover (Low-Turnover Organizations) Organizations)

70% 58% 40% 10% FEWER FEWER FEWER HIGHER Employee Patient Safety Quality Incidents Customer Safety Incidents (Defects) Metrics Incidents

17% 20% 21% HIGHER HIGHER HIGHER Productivity Sales Profitability

Revenue $66.5M $74.6M +$8.1M

Profit -$3.3M (Loss) $1.8M (Gain) +$5.1M

Labor $9.4M $8.6M -$.8M

Engagement 3.05 3.45 +.40

92 Additional Positive Impacts of TPI

• Union Avoidance • Regular communication with employees • Reduces turnover and hiring demand • Identifies high potential employees • Eliminates actively disengaged relationships

93 Dealing with Actively Disengaged Relationships and Poor Performers

GOAL IS TO FIX THE PERFORMANCE CONCERNS. IF POOR PERFORMANCE CONTINUES, THEN:

• Document, Document, Document • Follow Company Policies and Procedures (i.e. progressive discipline, PIP’s) • Give Regular, Clear Feedback • Investigate….Two Sides to Every Story. Listen!! • Be Consistent • Termination Meeting

MANAGERIAL COURAGE BEST LEADERS DO HARD THINGS WELL The Letter “F” Exercise

FINISHED FILES ARE THE RE- SULT OF YEARS OF SCIENTIF- IC STUDY COMBINED WITH THE EXPERIENCE OF MANY YEARS. Note from a Heartbeat Leader

“Sir. First and foremost thank you for your service. Sappers Forward! Fight to Win! Secondly I would like to personally thank you for your teams professionalism and commitment to our growth. I have been worried the four years that I have been here about the realistic future of this plant, and the culture of this team. I can honestly say that I am not only excited, but I am proud as hell to be a part of the change. Thank you.”

96 Leader Tool

Team Performance Assessment

Results

97 Dream Team Hypothesis

If we align the organization and improve leader behaviors then we will increase team engagement and improve business performance.

Example Results

98 Team Performance Assessment Results NOVEMBER 6, 2018

# ASSESSMENTS: 51 Alignment

1. Every teammate understands what we do and how we make money. (Business 101) SD(3) D(19) A(25) SA(4)

2. We are an aligned, self-disciplining team from the Plant Management to the 1st Line Supervisors where we know our responsibilities and the responsibilities of our teammates. (Roles and Responsibilities)

SD(4) D(17) A(26) SA(4)

100 Leadership

3. What percentage of your current leadership structure fall in the following categories (Current Leaders – Current Responsibility Performance Improvement)

High Performing (Consistent Best Leaders) 39%

Developmental (Moving in the Right Direction) 43%

Dysfunctional (Should not be in the position) 18%

4. . We have a solid “Bench” of future leaders who are ready to step into leadership positions with minimal preparation and low risk to business performance? (Future Leader Identification, Training, and Development System)

SD(5) D(28) A(17) SA(1)

101 Team Engagement

5. The Engagement Distribution of our organization is: (Team Engagement Improvement System)

Engaged (Go To Teammates) 51% Disengaged (Getting a paycheck) 35% Actively Disengaged (Doing positive harm) 14%

6. Our Talent Acquisition and Retention System process produces New Teammates who are delivered to their first supervisor ready to become Engaged?

SD(7) D(22) A(20) SA(2)

102

Business Performance

(Return on Investment: Process or People)

7. Does the Team know the score and what they have to do everyday to Win?

SD(2) D(18) A(24) SA(7)

8. How good can you be? If you ran a perfect plant how much better could you be in terms of increased productivity and earnings?

51%

103 2018 actual / 2019 plan

$150 / $170 Million (Total Revenue)

$80 / $___ Million (Total Cost of Materials)

$40 / $___ Million (Total Cost of Labor)

2018/2019/ 2020

$46/$64/$87 Million (Total Revenue) $12.3/$16.3/$22.1Million (Total Cost of Materials) $14/$20.6/$28 Million Headcount 177/208/283 (Total Cost of Labor) 2018 EBITDA: $6.3M/13.7% vs. Plan of $5.1M/13%

The Courage to Lead

106 Army Basketball Team 1975-1976

FEAR & READY TO PLAY! 107 Task Force 2-4 Cavalry Tactical Operations Center Team Feb 21, 1990 - Northern Saudi Arabia

108 FEAR FEAR

109 Leader Courage

• Your people know you and understand your personal commitment to get better and you need to see their commitment in their eyes and they yours. • I have near perfect situational awareness. • I know what the plan and goal is and how to measure progress. • I know where the risk is and I will lead from that spot. • I know what I am doing and what right looks like. • I trust my leadership has a plan and knows what they are doing. • I trust my team to do what I tell them to do. • I know who will help me when I can’t solve the problem myself. • My Leader is doing everything they can to help me Win!

110 The Bottom Line…

Turf, Ego, and Money and at the end of the day…

111 Golden Rule of Leadership

they Treat your subordinates how you would like to be treated …1 at a time!

112 The Organization Takes on the Personality of its Leaders!

Character

113

Is this Heartbeat Leader leading a high performance team?

114

Is this Heartbeat Leader leading a high performance team? 115 The Warrior Ethos I will always place the mission first I will never accept defeat I will never quit I will never leave a fallen comrade

116 NOT TODAY!! 117 118 Lean Leader

Value Stream

Business People Process Performance

Alignment

Performance Improvement Connuous Improvement Increased Team Engagement Team Engagement Lean Increased Customer Sasfacon Decrease Producon Costs Easy or Right Rapid Just Do Increased First Pass Yield Imp Projects Leaders Led Its Events Increased Employee Skills

Proﬁciency Decrease Cycle Times Increase Producon Capacity Decreased Turnover Increase Revenue Decrease Cost 119 Increase Proﬁt The greatest form of respect we can give our PEOPLE is a Leader who… 1. Wants to Lead 2. Will be held Accountable 3. Is Engaged 4. Knows what Right Looks Like 5. Has a Leader who will help them become a High Performing Leader 6. Plays to Win Everyday!

120 Focus on WHO before WHAT

October 1975 November 2011

121 Blue Slip The TMG “Why”

TMG helps Leaders who want to lead;

LEAD High Performance Teams!

TMG gives Leaders the “Courage to Lead”

122 My Name is Barto

I am a Leader

My Team Plays to Win!

Business People Process Performance Alignment

Attrition Data Analysis

CAO REPORT Measure YTD Goal 2018 YTD Comments Cultivate an Engaged Workforce Agency Trailing 12 Month Turnover Rate 40%-42% 42.9% DGR turnover on steady decline since March

Trailing Twelve-Months Employment Termination Reason Retail Contracts WFD SS Total Advancement Opportunity 30 31 4 3 68 Return to school 5 5 1 11 Higher Pay 28 17 45

Disagree with Supervisor/Mgr 4 4 Acons being taken to improve retail retenon Disliked work environment 15 6 1 22 •Early risk idenﬁcaon – Job Coach/Case Job Abandonment 57 22 1 80 Management intervenon Family or other personal circumst 128 66 9 7 210 •Orientaon Educaon – Kevin and HR Health (mine/someone else's) 29 14 1 44 •NCNS Process Changes – Taking addional steps Policy Violation 64 16 3 1 84 before ﬁnalizing Unsatisfactory Attendance 5 6 11 •Addional Retail Leadership & Management Unsatisfactory Performance 4 3 1 8 Grand Total 369 186 17 15 587 •Job/Life Coach program expanding in Retail

% with tenure under 90 days 24% 29% 0% 13% 24% •Exploring changes to hiring criteria % with tenure under 6 months 41% 42% 6% 13% 40% % with tenure under 1 year 68% 58% 6% 33% 62%

Good Turnover as % of total TTTM 17.1% 28.5% 29.4% 20.0% 21.1% Bad Turnover as % of TTTM 20.6% 15.1% 0.0% 13.3% 18.1% Family/Health turnover as % of TTTM 42.5% 43.0% 52.9% 53.3% 43.3% Involuntary Turnover as % of TTTM 19.8% 13.4% 17.6% 13.3% 17.5%