1. 1 HR: Leading People, Leading Organizations © 2003 SHRM Society For Human Resource Management December 2003 1 Human Capital Forecast: 2004

2. HR: Leading People, Leading Organizations © 2003 SHRM Survey Methodology 10 minute interactive survey of C-Suite Executives (102), Senior Managers (136), and HR Professionals (124) Field Dates: December 10-18, 2003 Sample drawn using pre-identified online sample of individuals from Insight Express, an affiliate of NFO WorldGroup, Inc. 2

3. HR: Leading People, Leading Organizations © 2003 SHRM Attention to HR is fueled by the perceptions that both general human capital strategy and the successful delivery of HR services are deemed “very” important to the overall success of the organization Additionally, those interviewed feel that aligning employees with the overall business goals of the organization is “very” important 3 Summary of Findings

4. HR: Leading People, Leading Organizations © 2003 SHRM Executive management (EM), senior managers (SM) and HR professionals (HR) differ in their perceptions regarding the importance of documented human capital policies:  Accountability: 94% EM, 95% SM, 92% HR feel a documented policy on accountability is either “very important” or “somewhat important”  Business growth and development: 90% EM, 93% SM, 91% HR feel a documented policy on business growth and development is either “very important” or “somewhat important”  Leadership development: 76% EM, 90% SM, 88% HR feel a documented policy on leadership development is either “very important” or “somewhat important”  Organization structure: 56% EM, 71% SM, 90% HR feel a documented policy on organization structure is either “very important” or “somewhat important” 4 Summary of Findings

5. HR: Leading People, Leading Organizations © 2003 SHRM In evaluating the overall importance of the HR function within business organizations, the majority of respondents agree that HR has the ability to create employee loyalty to impact customer loyalty:  66% of executive management  71% of senior managers  87% of HR professionals 5 Summary of Findings

6. HR: Leading People, Leading Organizations © 2003 SHRM The economic recovery over the past year seems to be impacting human capital management Respondents indicate they will pay increasingly more attention to the following human capital strategies: Employee retention Employee recruitment Aligning compensation and benefits with corporate mission and values Growing complexity of legal compliance 6 Summary of Findings

7. HR: Leading People, Leading Organizations © 2003 SHRM Other 2003 trends will continue to impact human capital management in 2004, although their total impact is anticipated to be slightly less than in 2003: Communication and need to build employee morale Increased productivity using fewer employees Use of technology to communicate with employees Senior managers anticipate the demand for flexible work schedules as a growing trend into 2004 7 Summary of Findings

8. HR: Leading People, Leading Organizations © 2003 SHRM Importance of Human Capital Strategy To Overall Company Success 8

9. HR: Leading People, Leading Organizations © 2003 SHRM Successful Delivery of HR Important To Overall Company Success 9

10. HR: Leading People, Leading Organizations © 2003 SHRM Importance of Employee Alignment to Organization's Business Goals 10

11. HR: Leading People, Leading Organizations © 2003 SHRM Focus on HR Function in Coming Years TotalExecutives Senior Managers HR Professionals More41%30%44%52% Less5556 About the same55655143 11

12. HR: Leading People, Leading Organizations © 2003 SHRM The Role of HR % agree (either completely or somewhat) Executives Senior Managers HR Professionals Able to create employee loyalty to impact customer loyalty 667187 Can help org effectively use resources, keep costs down, increase productivity and retention 646892 Able to align employees with business goals by ensuring each understands contribution to org 627390 Key in ensuring continued business success by identifying future leaders 515788 A trusted advisor and key player in helping organization achieve business goals 555482 12

13. HR: Leading People, Leading Organizations © 2003 SHRM The Role of HR – Perceptions of Executives % agree (either completely or somewhat) Completely Agree Somewhat AgreeTotal Able to create employee loyalty to impact customer loyalty 313566 Can help org effectively use resources, keep costs down, increase productivity and retention 313364 Able to align employees with business goals by ensuring each understands contribution to org 243862 Key in ensuring continued business success by identifying future leaders 193251 A trusted advisor and key player in helping organization achieve business goals 213455 13

14. HR: Leading People, Leading Organizations © 2003 SHRM The Role of HR – Perceptions of Senior Managers % agree (either completely or somewhat) Completely Agree Somewhat AgreeTotal Able to create employee loyalty to impact customer loyalty 383371 Can help org effectively use resources, keep costs down, increase productivity and retention 254368 Able to align employees with business goals by ensuring each understands contribution to org 274673 Key in ensuring continued business success by identifying future leaders 253257 A trusted advisor and key player in helping organization achieve business goals 223254 14

15. HR: Leading People, Leading Organizations © 2003 SHRM The Role of HR – Perceptions of HR Professionals % agree (either completely or somewhat) Completely Agree Somewhat AgreeTotal Able to create employee loyalty to impact customer loyalty 474087 Can help org effectively use resources, keep costs down, increase productivity and retention 514192 Able to align employees with business goals by ensuring each understands contribution to org 484290 Key in ensuring continued business success by identifying future leaders 484088 A trusted advisor and key player in helping organization achieve business goals 493382 15

16. HR: Leading People, Leading Organizations © 2003 SHRM Top Trends Impacting Human Capital Strategy 2003 vs. 2004 16

17. HR: Leading People, Leading Organizations © 2003 SHRM Top Trends Impacting Human Capital Strategy 2003 vs. 2004 by Job Function Executives 20032004 Rise in healthcare costs 78%79% Increase productivity using fewer employees 69%59% Communication and need to build employee morale 55%58% Employee retention 51%61% Growing complexity of legal compliance 50%52% Demand for high vs. low skilled workers 50%47% Employee recruitment 43%50% Use of technology to communicate with employees 48%30% 17

18. HR: Leading People, Leading Organizations © 2003 SHRM Top Trends Impacting Human Capital Strategy 2003 vs. 2004 by Job Function Senior Managers 20032004 Communication and need to build employee morale 75%61 Rise in healthcare costs 7279 Increase productivity using fewer employees 7266 Aligning compensation with corporate values 65 Employee retention 5762 Demand for flexible work schedule 4455 Employee recruitment 4447 Growing complexity of legal compliance 4348 18

19. HR: Leading People, Leading Organizations © 2003 SHRM Top Trends Impacting Human Capital Strategy 2003 vs. 2004 by Job Function HR Professionals 20032004 Communication and need to build employee morale 66% Aligning compensation and benefits with corporate values 53% Rise in healthcare costs 70%65% Employee retention 57%58% Increase productivity using fewer employees 59%67% Growing complexity of legal compliance 51%53% Demand for high vs. low skilled workers 34%35% Need to lay off employees 36%30% Exporting of US jobs to developing countries 32% 19

20. 20 HR: Leading People, Leading Organizations © 2003 SHRM Society For Human Resource Management December 2003 20 Human Capital Forecast: 2004