Lynne Morton President/ Performance Improvement (PI) Solutions, Inc. Best Practices Institute Webcast June 3, 2009

Copyright Performance Improvement (PI) Solutions 2009; all rights reserved2 PI Solutions\`pi `so-lu-tions\ (consulting firm; PI Solutions), [American English] (1) founded in 2000, based on classical training; (2a) pursuing perfection; (2b) progressive and forward-thinking; (3) Economics - focused on profit-oriented (business) goals; (4) Astronomy - reaching for the stars; (5) Gastronomy - tasty and up-to-date. Globally recognized thought leader in talent management… leading companies… numerous publications

I. Understanding potential… defining it II. Identifying potential … finding the “right” people/ who and how III. Aligning potential… harnessing its power Current Thinking… Noteworthy Examples… Ways to Move Forward 3Copyright Performance Improvement (PI) Solutions 2009; all rights reserved

 IBM’s 2008 Human Capital Survey “Unlocking the DNA of the Adaptable Workforce”  75% of respondents – “building leadership talent is a significant challenge”  Only 13% believe they have a clear understanding of the skills they need in the next 3-5 years  Key issue: Leading companies are developing systematic approaches to identifying future leaders from around the world  Organizations must be willing to take responsibility for making selections and then developing leadership talent 4Copyright Performance Improvement (PI) Solutions 2009; all rights reserved

Talent - Individuals with near and long term ability and “value” for the organization - An organization’s strategic differentiator… and advantage Talent Mgmt - The aligned maximization of individual and organizational potential… through… - the integration of the processes and behaviors to find --- develop – keep the ‘right’ people. 5Copyright Performance Improvement (PI) Solutions 2009; all rights reserved Top Talent… Future Leaders… Talent/ Leadership Pipelin e

 Compelling business case for talent value chain… talent’s impact on the organization…Lauri Bassi (McBassi People Index™) and others  Successful execution of talent mgmt has yielded 15.4%+ gain in total shareholder return (CLC)  High Potentials (who are also High Performers) enter the talent pipeline to become future leaders  HiPo mgmt is top priority for CEO’s & HR  75% of execs (CLC) 6Copyright Performance Improvement (PI) Solutions 2009; all rights reserved

7

8 Performance Now Development Individual Aspirations Potential Future Retention Organizational Needs Important factors: Inputs, calibration, accountability, communication Copyright Performance Improvement (PI) Solutions 2009; all rights reserved

9 Change

10 Average people encouraged to do well by ‘can do’ environment High calibre people, high performance culture Low calibre people, low work ethic Capable people, perf. stultified by context Effective Talent Utilization Does your culture support or stifle diverse and high potential talent? CONTEXT CAPABILITY Leadership Values Structure Processes Intellect Knowledge Skills Motivation Experience Copyright Performance Improvement (PI) Solutions 2009; all rights reserved Source: Differentiating Talent Management L.Morton, 2005

Copyright Performance Improvement (PI) Solutions 2009; all rights reserved11 Source: Corporate Leadership Council

 When do you identify?  Who is involved? In Depth Case Study Navistar (International Truck & Engine Corp.) Copyright Performance Improvement (PI) Solutions 2009; all rights reserved12

 Complex internal and external pressures  Impending retirements - 43% of Level 8+ leaders will be eligible to retire in the next five years  Multi-gens in workforce… workforce effectiveness and different aspirations  Retention pressures –  136 people are now in the Talent Pipeline, but retention is key  Turn-over trend; 7-8%, some key leaders  Diversity  Differing BU tools & adaptation of central processes  New strategic directions (globalization, etc.)  Had first cut processes  Total Performance Management (TPM)  Leadership Resources Planning (LRP)  Levels of talent: Talent Pipeline, Tier One, Prime Leaders…  Awareness of business impact  case for change 13Copyright Performance Improvement (PI) Solutions 2009; all rights reserved

 What are we looking for in our talent pipeline?  Is this what we need for organizational success, according to our strategy?  How can I (line manager) get that talent ready for what’s next?  How can I (HR manager) help the line mgrs.? AND… 14Copyright Performance Improvement (PI) Solutions 2009; all rights reserved

 “I know it when I see it”  “the right clay”  “energy, enthusiasm”  “trajectory”  “curious… willing to learn… able to learn quickly”  “positive attitude”  “engaged”  “creative thinker”  “self-starter”  “challenges others”  “decisiveness”  “work ethic”  “leadership ability” 15Copyright Performance Improvement (PI) Solutions 2009; all rights reserved

16 Transparency

Low High Potential (Ability to Learn Grow & Change) Low (1,2 on TPM) Solid (3 on TPM) High (4,5 on TPM) Performance High Professional High Professional Plus Exceptional Performer Solid Professional Low Performer Key Performer Inconsistent Performer Future Exceptional Performer Diamond in the Rough Copyright Performance Improvement (PI) Solutions 2009; all rights reserved

Promotability Copyright Performance Improvement (PI) Solutions 2009; all rights reserved18

19Copyright Performance Improvement (PI) Solutions 2009; all rights reserved

Three Perspectives: 1. Strategic 2. HR/Line 3. Data/Knowledge… using technology Copyright Performance Improvement (PI) Solutions 2009; all rights reserved20

 Cascade goals – HiPos need to be doing “the right things”, as well as “doing things right”  Know difference between Good/Great  Plan along the appropriate horizon  “Build” or “buy”  Simplify processes for easy mgr. involvement  Line mgrs. review performance regularly… plan for dev’t with HiPo’s  360 feedback  HR supports or guides… line mgrs. “own” or administer Copyright Performance Improvement (PI) Solutions 2009; all rights reserved21

Copyright Performance Improvement (PI) Solutions 2009; all rights reserved22 Accountability

Copyright Performance Improvement (PI) Solutions 2009; all rights reserved23

Copyright Performance Improvement (PI) Solutions 2009; all rights reserved24

 Less than half survey respondents had a definition for top talent  More than half confuse Potential with Performance  Greatest potential pay-offs:  Clear definition of talent and potential  Transparent communications  Early identification of talented employees  Continued involvement of managers Source: TCB Research Working Group Leveraging High Potentials Copyright Performance Improvement (PI) Solutions 2009; all rights reserved25

 Understand  Identify  Align  LEVERAGE  Line & HR partner to identify job/learning opportunities  Communicate openly and often  Devote resources to TM initiatives – long term change/ impact HUGE Opportunity for Strategic HR Copyright Performance Improvement (PI) Solutions 2009; all rights reserved26

 Identifying Potential  Aligning Potential to Business Needs  Gaining the Attention of Senior Execs  Maintaining Traction during Tough Times  Others??? Copyright Performance Improvement (PI) Solutions 2009; all rights reserved27

Lynne Morton Performance Improvement (PI) Solutions New York, NY, USA Copyright Performance Improvement (PI) Solutions 2009; all rights reserved28