Human Asset Performance Improvement Model HAPI

Human Asset Productivity Improvement (HAPI): The Challenges In our experience, clients face numerous challenges when they attempt to improve the productivity of their business units. Here are a critical few: Understanding the concept of “Value Add vs. Non Value Add activity. It’s surprising how many people lack a clear understanding of whether the work they perform truly adds value to the business Knowing what to measure, then developing the data to accurately portray what their current productivity performance is. i.e. What’s the baseline against which improvement will be measured? Management understanding of what they should expect of their employees & what their employees should be held accountable for. Job descriptions, Roles & Responsibilities documents and Job Performance Reviews (JPRs) rarely reflect what employees actually should be paid for. Analytic rigor. Asking “WHY” enough times to get at the root cause of an issue, rather than the symptom. It’s tough to dig deep. Underestimating the size of the productivity improvement opportunity. It’s usually a lot bigger than most people think. 2

HAPI: The Challenges Engaging people (who actually do the work) in the analytic process. When people “see” the opportunities for improvement by participating in the process, they’re more likely to engage in the development of the solution. Too often, management relies solely on the consultant to conduct the assessment. The discipline of execution. Implementing productivity improvement is tough, even when employees are engaged. Management has to stay the course in the face of the inevitable resistance they will encounter. Frontline management & supervision (FLS) capabilities. Ask yourself: 1) How well are your Management Training & Development efforts supporting the execution of your company’s strategy? 2) Are your investments in Management Training & Development paying off – are they delivering your expected business outcomes? Sustainability. Improvements and results erode over time. The design & implementation of a Performance Management System and the supporting management processes are critical. And, the system must be developed in conjunction with the people who are going to be most directly impacted by it – the people who perform the work. 3

Improvement Model Analysis Ownership Implementation Sustainability Develop a willingness to “Learn to See” - take the time to look at operations, processes and work activity, objectively and without bias Develop a Continuous Improvement mindset – appreciate that there is no perfect system or process Conviction: Accept operating principles on faith until time & results prove them Belief: Understand that all people want to succeed Develop a willingness to “Learn to See” - take the time to look at operations, processes and work activity, objectively and without bias Develop a Continuous Improvement mindset – appreciate that there is no perfect system or process Conviction: Accept operating principles on faith until time & results prove them Belief: Understand that all people want to succeed Understand how to link people, strategy, and operations, the three core processes of any organization. Once the people & strategy are in place, link both to an operating process that results in the implementation of specific programs and actions and that assigns accountability. Success ultimately results from how deeply employees are engaged in the process, and the stake they have in implementation outcomes. Understand how to link people, strategy, and operations, the three core processes of any organization. Once the people & strategy are in place, link both to an operating process that results in the implementation of specific programs and actions and that assigns accountability. Success ultimately results from how deeply employees are engaged in the process, and the stake they have in implementation outcomes. Conduct a fact based, data driven assessment of an organization’s current state Define the gaps between its current & desired state, i.e. client expectations or “best in class” Describe the underlying root causes impacting the organization’s ability to close these gaps Develop an understanding of the values & the culture of the organization Make education and communication a priority Align compensation and recognition with Business Unit objectives. Make continuous improvement part of everyone’s performance and training. Modify job descriptions to better reflect the Business Unit’s focus and requirements. Cultivate an organization of learning, improvement, and innovation. Provide employees with the tools they need Focus on the success of the organization and its people as your most critical success factor to sustainability 4

Human Capital Analysis : Value Add vs. Non Value Add Employee A : Employee B: Employee C: Client sets the expectation on how much of the gap they want to close Bench mark against “best in class” KCB’s experience is that clients can recover a minimum of 50% of the Non Value Add activity Opportunity 5

Human Capital Analysis: Value Add vs. Non Value Add Supervisory Study Typical “Day-in-the-Life 6