1. Solid Science…Better Results Science Unlocking the Science of Talent Management Predictive Performance Analytics

2. Solid Science…Better Results 2 How Do We Apply Total Quality Management (TQM) and Six Sigma Standards To Create Talent Quality Sales Management (TQSalesM)?

3. Solid Science…Better Results We Need A Change in Mind Set Beyond Benchmarking & Competency Studies to Actuarial Standards Predictive Analytics for Talent Management: 3 3

4. Solid Science…Better Results The “C” Suite Relies on Predictive Analytics TQM focuses on finding sources of error and eliminating them ISO and Six Sigma are modern refinements of TQM The Six Sigma error rate is 3.4 times in every 1 Million Actuarial Science focuses on the “Law of Large Numbers” It is critical for measuring and predicting highly complex issues: Actuarial Research is based on: – Very large samples (100,000+) –Over long periods of time (10-50 years) 4

5. Solid Science…Better Results 5 Sales Example: Applying TQM to Sales: TQSalesM TM Consultants Recommend: Study the techniques of the top 20% and train the middle 60% ABC Company: 200 Salespeople and $200M in Sales* $90 Million $750K/person $104 Million $2.6M/person *Performance averages based on over 900 sales forces evaluated by Chally over 35 years The Traditional Approach to Sales “Benchmarking ”

6. Solid Science…Better Results 6 The Result ABC Company: 200 sales people and $200M in Sales $90 Million $750k/person $104 Million $2.6M/person Improving their performance by a typical 5% each... only produces 2.25% improvement in sales $94.5 Million = $204.5 Million Total Sales ABC Company: 200 Salespeople and $200M in Sales $104 Million $2.6M/person

7. Solid Science…Better Results 7 $90 Million $104 Million $4M/person $90 Million $104 Million = $200 Million Total Sales Reassigning or replacing the bottom 20% with just “average” Applying TQSalesM TM to Selection & Alignment competency levels = $218 Million Total Sales $114 Million will increase production by a minimum of 9% ABC Company: 200 Salespeople and $200M in Sales nowwe get an additional $5.7 Million If we now train the rest of the sales force and get a 5% gain, we get an additional $5.7 Million $119.7 Million = $223.7 Million Total Sales

8. Solid Science…Better Results Applied TQSalesM TM to ABC Company Process and tools used:  Statistical failure analysis of poor performers  Identification of minimum salesperson and manager skill requirements  Predictive selection and alignment system installed  Talent Audit and inventory of potential for all performers across all key skills  Targeted training and manager monitoring and coaching process  Annual gap analysis of actual performance versus potential Process adjustment  Annual statistical and qualitative turnover analysis 8

9. Solid Science…Better Results 9 Results in Millions 30%

10. Solid Science…Better Results What's Different About This New Approach? Today’s Descriptive AnalysisThe Future’s Predictive Analytics Describes the presentPredicts the future Accuracy standard: “Confidence limits” - 5 errors in 100 Accuracy standard: “six sigma” - 3 errors in 10 Million Contaminated by the “placebo effect”Must greatly exceed the “placebo effect” Short timeframe: 1- 2 yearsLong timeframe: 10-50 years Deductive: Theory - Hypothesis - ExperimentEmpirical: Data-based - Continuous Small sampleLaw of very large numbers Simple (often single) dependent variableComplex comprehensive variables Broad (gross) categories/factors (4-20)Specific precise categories/factors (155) 10

11. Solid Science…Better Results 11 AssessmentPredictive Accuracy above Chance ROIEfficiency and ease of use Chally‘s Actuarial Predictive System 30%Average 1000+% High and Easy Assessment Centers & Simulation Slight but realVery lowLow and Very complex Personality or “Style” Test MinimalVery lowLow but Easy Comparison of Descriptive versus Predictive Talent Management Assessment Metrics

12. Solid Science…Better Results TQM Increases Selection Effectiveness and Reducing Turnover Key requirements: 1.Limited focus on identifying and describing successful employees (the logical part) 2.Maximum focus on eliminating sources for selection or promotion failures (the profitable part) 3.Separating “qualifying” criteria from “selection” criteria (another profitable part) 12 Using a TQSalesM TM Statistical Check versus Traditional Descriptive “Competency” Benchmarking

13. Solid Science…Better Results False Leader “Criteria” Found with TQSalesM TM 13 P & L Conscious Detail Oriented X Good Written Communication Skills Politically Astute Organized & Methodical Decision Making Efficiency Practical IQ & Analytic Ability Initiative Willingness to Accept Responsibility Ability to Direct and Control Others Willingness to Learn the Business Good Predictors Present in Many Weak Performers Missing in Many Top Performers Job Requirement X X X X Describing and Finding Winners Feels Logical Identifying & Eliminating Failure is Profitable

14. Solid Science…Better Results The Science: Standardizing Talent Metrics  Sample Enterprise Wide Talent Audit Sample Enterprise Wide Talent Audit 14

15. Solid Science…Better Results Can include as many people across as many skills or positions that are considered critical to manage Any Position can be expanded to analyze individual skills in depth

16. Solid Science…Better Results Talent Audit Applications 1.Identification of high potentials 2.Assessing individual promotability 3.Prioritizing group training needs 4.Succession planning 5.Reorganization 6.Right sizing re-alignment 7.Merger and acquisition planning 8.Training and development investment analysis 9.Team building and development 16

17. Solid Science…Better Results Talent Audit – Lessons Learned  Over 400 sales force audits conducted with organizations representing 65,000+ sales force incumbents Only 19% of effective new business developers are effective at maintaining long-term customers Less than 15% of farmers are comfortable hunting Nearly 65% of salespeople who fail could have succeeded in the right type of sales position for their skills 60% of sales position failures are related to individuals with the wrong skills for the position Less than 15% of superstar salespeople succeed in management Nearly 70% of strong inside service people are effective at maintaining customer relationships 17

18. Solid Science…Better Results Thank You For Your Kind Attention 18