HRM Initiative April 25, 2009

2 HRM Initiative Goals: Work with factory partners to strengthen HR systems through capacity building and sharing of HR best practices Integrate HRM with NOS / Lean – creating a culture of empowered workers producing high quality, low cost, and on time products Increase factory ownership of compliance and reduce compliance-related issues Approach:  Employee satisfaction survey  Two-week “HRM for Lean Manufacturing” workshop  Learning Community meetings  HRM KPIs  Alignment with future CR rating philosophy HRM Initiative – Overview

3 Employee Satisfaction Survey Objectives:  Gain a better understanding of worker perspectives  Enable factories to develop the right programs to promote employee retention and improve perception of working environment  Measure improvements in "mutual trust and respect" over time Methodology:  Group administered survey conducted by 3rd party service provider  Results reported confidentially to factory  Data analysis techniques discussed during HRM workshop

4 HRM for Lean Manufacturing Workshop Objectives:  Develop understanding of Lean principles  Build awareness of HRM best practices  Develop A3 strategy for HRM system improvement  Create community to support learning

5 Lean Overview NOS/Lean Concepts PDCA Problem Solving A3 Strategy Reports HRM Model Culture of Empowerment Model Attracting Quality People Recruiting & Selection Orientation Developing Capable Workers Skills Training Job Instruction Flexible Workforce Empowering & Inspiring Teams Employee Retention Community & Environment Health & Safety Physical Safety Psychological Safety Worker-Management Communication Formal/Informal Communication Mature Industrial Relations Grievance Procedures Workforce Management Human Resources Planning Strong HR Supports Fair Policies & Practices Leveraging HR Data HR Function/Organization Compensation/Performance Management Compensation Principles Performance Evaluation Corrective Action HRM for Lean Manufacturing Workshop Topics :

6 Learning Community Meetings Objectives: Create community to support learning and sharing of HRM best practices Approach:  Training on key HRM topics  Factory best practice sharing  A3 strategy coaching and follow up  Graduation ceremony to mark 6 month milestone

7 Factory Participation HR Manager CR Manager NOS Lead Sensei Participate in HRM workshop (2 weeks) Attend Learning Community events (1 day duration, every two months) Partner to implement A3 strategy/HR process improvements Leadership Support implementation of HR process improvements

8 Inputs Philosophy of mutual trust and respect & continuous improvement Daily Management Leadership Worker-Management Communication Safety and Health Teamwork / Workteams Human Resources Management Compensation / Performance Management Strong HR Support Workforce Management Valued workers contribute to the company success though continuous improvement Outputs A culture of empowered workers producing high quality, low cost, and on time products Attract Develop Empower Recruiting Selection Orientation Job Instruction Employee Development Flexible Workforce Engagement & Retention Community Environment People Value Stream Adopted from Liker & Hoseus, “Toyota Culture” (2008) Culture of Empowerment Model