TFS Human Resources Deployment Strategy Tonya Miller

2 HR Champion Team Executive Steering CommitteeDaniel Casteel Division HR ChampionTonya Miller ADT HR Representative Mike Esposito SimplexGrinnell HR RepresentativeAnne Liming Tyco Safety Products HR Representative Bob Hetzel TFS – Communication & TrainingLisa Turner

3 HR Champion Fit in Six Sigma Division and Business Unit Consistency Sharing Business Unit Best Practices Key Areas

4  Make policy-setting decisions regarding six sigma deployment throughout the division  Support six sigma deployment across the division  Function as single point of contact for six sigma Human Resources issues and implementations HR Champion Fit in Six Sigma

5 Division and Business Unit Consistency  Selection  Job postings  Forms  Compensation  Reward and Recognition  Communication  Applicant tracking

6 Communicating to employees Office postings Website Recruiting employees Post cards Business Unit website Leverage and share best practices – no need to reinvent the wheel Business Unit Best Practices

SimplexGrinnell Human Resources Deployment Strategy Anne Liming

8 TFSS and Business Unit Consistency Sharing Best Practices Life Cycle of a BB & Professional Development What Happens Next?

9  Selection process  Compensation  Reward and Recognition  LPP TFSS and Business Unit BB Consistency

10 Selection Process Self-select Nomination checklist Resume Essay [Why I want to be a BB] Demographic information Structured interview questions – Lominger competencies Identification of selected BB Notification of personnel not selected Database

11 Competencies and Qualities of the Black Belts Leadership Diplomacy Analytical abilities Trust and Integrity Customer Advocate Deep process knowledge Diverse Work Experience Open-minded Eager to learn new ideas

12 Black Belt Total Rewards Compensation & Benefits Career Progression Training & Development Work/Life Total Rewards Leverage all reward elements in attracting and retaining Black Belts Compensation

13 Objective is to provide Black Belts an increase in total cash compensation compared to existing business role –Delivered through an increased incentive opportunity Black Belt candidates will be selected from a wide range of roles and therefore, may have a wide range of base salary and target incentive opportunity –Variation in pay is acceptable; no attempt to align compensation –Higher compensated Black Belts should demonstrate higher competencies, and should generally focus on larger, more impactful projects

14 Most Black Belts, retain current annual base salary –Eligible for future salary increases in accordance with the company’s merit increase guidelines –Annual salary review conducted by Project Champion In some cases, an equity adjustment may be required. Examples may include: –Selection to Black Belt program is considered a “promotion” for that particular employee –Low base salary relative to internal and external market

15  Guarantee incentive payment equal to the amount Black Belt would have earned had they remained in current position  Black Belt candidates not currently on an annual incentive plan in FY03 will receive an incentive opportunity equal to 10% of their current base salary FY 2003

16 80% - EBIT and FCF of business unit aligned to Six Sigma projects –Provides strong “line of sight” to deployment projects as individuals in Black Belt role will focus on projects closely aligned to existing areas of responsibility –Six Sigma savings and/or profit improvement are reflected in business unit financial measurements 20% - EBIT and FCF of next level up business unit –Supports teamwork across the organization

17 Individual Modifier –Adjustment for individual performance not captured in the financial measurements –Recognizes both superior performance (positive modifier) and underperformance (negative modifier) –Amount of Modifier is discretionary, but reasonable, i.e. +/- 25% –Frequent use to account for direct results of Six Sigma projects

18 Incentives will be paid on an annual basis –No quarterly payments; not consistent with timing of Black Belt contributions Self-Select out or do not close projects –Revert back to original incentive percentage opportunity upon exit from the program –No incentive premium will be paid for the period of time that an employee was in the program

19 Target incentive opportunity increased 10 percentage points compared to FY03 incentive target for current position upon completion of Black Belt Certification Supports importance of role within the company and the impact of their contributions to overall business performance Proration of Target Incentive Percentage – FY 2004 –10 percentage point increase in incentive opportunity will prorated to the time of Black Belt Certification…not acceptance to the program FY 2004

20 Cash Award - $2,500 immediately upon certification –Immediate recognition –Short time horizon to recognize value –Greater alignment to individual results Stock Options –One time special option grant at the time of Black Belt certification (number of shares TBD) –Immediate recognition –Long-term time horizon to recognize value –Greater alignment to Tyco International results Reward & Recognition

21 Black Belt Life Cycle Identification Training Graduation Application Appraisal Certification Ongoing Projects New Assignment

22 LPP & Professional Development LPP – done at the Business Unit Level with review at TFSS Development plan with Project Champions and Deployment Manager

23 Announcement of deployment – conference call with all offices Communicating to employees Office postings Website FAQ’s Recruiting employees Post cards Personal contacts Leverage and share best practices – no need to reinvent the wheel Best Practices

24 What Happens Next? Dedicated HR Mgr: Mike Creed BB Performance Appraisal: after 2 months then 6 months Performance Appraisal – all exempt employees evaluated for the Six Sigma participation/training Training requirements Communication Selection Process Review process to determine best practice Review assessment center/self-assessment addition to process Include recent performance appraisal

25 Black Belt Application Deadline Wednesday, April 2 Interview Notification If Pass to 2 nd Round Monday, April 7 2 nd Round Applicant Interviews Wed/Thurs./Fri, April 9,10,11 Black Belt Candidate Notification Thursday, April 17 BB Training Begins – Wave 1 (13 BB) Tuesday, April 29 BB Training Begins – Wave 2 (15 BB) Tuesday, May 13