MANAGING PERFORMANCE AND TALENT

MANAGING PERFORMANCE AND TALENT A BUSINESS PROPOSITION I T I S A L L I N T H E E X E C U T I O N

DRIVING BUSINESS RESULTS; WHERE ARE YOUR EFFORTS FOCUSED HR Analytics Performance Talent Engagement LD/OD Coaching and Feedback P&L Impact Activities HRIS Payroll Benefit Administration Talent Attraction Staffing Employment Law Statutory reporting Employee relations HR Ops Compliance HR Functional Model 2

PERFORMANCE AND TALENT MANAGING TO WHAT END? Performance Talent Leader driven processes Assessment Aligned Objectives Calibration 9-Box Leadership Model 4-Box Set parameters for differentiation Output data driven and targeted feedback and coaching to shape future performance(results). 3

GETTING STARTED WHY DO WE DO WHAT WE DO? What is written and communicated about your culture around performance and talent? - FORMAL What is actually done by your leaders and their staff? - INFORMAL Values Organizational Culture Informal culture will win every time! Mission Actual Actions Purpose 4

LEAD FOR GOD S SAKE! Todd Gongwer Author Asks the questions which help understand the reasons leaders perpetuate the formal and informal culture you have. Why we do what we do. Hard to put it down once you open the cover. A life shaper www.leadforgodsake.com 5

PATRICK S CUSTOMER 1 ST PERFORMANCE CULTURE PATRICK LEADERSHIP MODEL (Focus on Performance of our People) 6

IS YOUR BOSS ON BOARD? ARE YOUR STAFF ON BOARD? Performance and Talent are integrated with the business agenda. Organizational Strategic Agenda (OSA) Customer 1 st Deliver the Business Strategic Growth Leadership Development Delivering above and beyond everyday Exceed expectations in financial results Execute the right blend of levers to secure strong sustainable growth Grow our talent and capabilities to meet our customer needs 7

PERFORMANCE MANAGEMENT R A I S I N G T H E B A R

OBJECTIVES LINKED TO OSA Three objective categories 1. Financial 2. Strategic 3. Leadership and Talent Beyond normal job scope All Staff Team Members Cascade top down Link reward to results 9

Delivering Performance through Leadership and Results PLR Leaders Individual Contributors Rating Exceptional Results Exceptional Results Differentiated Performance in peer group Delivers break-through results Consistently exports talent without diluting the pipeline Succeeds in leading a significant major impactful enterprise initiative(s) Leadership clearly lifts performance of others & company Role model for Patrick behaviors and values across the company Very Strong Results Delivers break-through results Significantly enhanced personal capabilities through execution of Development Plan Succeeds in leading a significant major project(s) Leadership clearly lifts performance of others & group Role model for Patrick behaviors and values across the company Very Strong Results 5.0 4.5 Delivers results well beyond objectives Outstanding developer of talent within function/business Succeeds in leading a major initiative(s) Leadership impact positively benefits the company Role model for Patrick s behaviors and values Delivers results well beyond objectives Enhanced personal capabilities through execution of Development Plan Succeeds in leading a major project(s) Leadership impact positively benefits the group Role model for Patrick s behaviors and values 4.4 3.8 Strong Results Strong Results New Baseline: Raising the Bar Meets and/or exceeds objectives Succeeds at addressing talent pipeline, talent development needs and individual personal development Delivers above and beyond job scope Provides consistent & positive leadership & management Consistently lives the Patrick behaviors and values Meets and/or exceeds objectives Clearly meets personal development objectives Delivers above and beyond job scope Provides consistent & positive leadership & management Consistently lives the Patrick behaviors and values 3.7-3.0 Results need to be Improved Results need to be Improved Performance not at baseline; Needs Improvement Meets most objectives Inconsistent in talent pipeline, talent development and individual personal development Inconsistent delivery of job scope Inconsistent leadership & management Lives the Patrick behaviors and values Meets most objectives Inconsistent achievement of personal development objectives Inconsistent delivery of job scope Inconsistent leadership & management Lives the Patrick behaviors and values 2.9-2.0 Unacceptable Results Unacceptable Results Unacceptable Performance Does not meet objectives Does not grow & nourish talent for the company, does not own personal development Does not deliver job scope Leadership and management negatively impacts the company Does not live the Patrick behaviors and values Does not meet objectives Individual does not own their personal development Does not deliver job scope Leadership and management negatively impacts the group/company Does not live the Patrick behaviors and values 1.9 0 10

PLR RATING SCALE INTERPRETATION Rating Title Definition 5.0 4.5 Exceptional Results Sets the pace for performance standards and results within peer group 4.4 3.8 Very Strong Results Drives results significantly beyond expected results 3.7 3.0 Strong Results Delivers expected results as defined in; objectives, leadership model and Patrick values and behaviors 2.9 2.0 Results need to be improved Some results delivered below expectations; achieves most of the time 1.9 0.0 Unacceptable Results Inconsistent or no results delivered 11

Patrick u<lizes a distribu<on guideline for performance ra<ngs across the organiza<on The distribu<on guideline exists to allow Patrick to differen<ate performance recognize top performers, and iden<fy those employees who are not performing and in need of coaching The guideline allows flexibility and variance based on Company performance as determined by Sr. Leaders Variance = +/ 5% Differen<a<on and Rewards Framework ν 12

The process of leaders reaching consensus on individual employee assessment Involves discussion & debate Use fact-based observations of employee performance throughout the calendar year Inputs to calibration include: Initial manager assessment of overall employee performance Review absolute performance against objectives & job scope Review relative performance within a peer group Outcome of calibration is a final performance assessment for each employee Performance Calibration Defined WHAT WHY FACTORS Calibrations are essential to provide fairness to the assessment process Calibration sessions ensure: Supervisors assess employees using the same standard of performance to the criteria Results as opposed to efforts are appropriately rewarded Fact-based, observable performance is discussed Performance is accurately differentiated through results & rewards Sessions are facilitated by HR lead, conducted at the departmental, functional and regional staff level, and includes the appropriate group of leaders Did the employee do the job? ( + 0 - ) Goal degree of difficulty Most difficult; Difficult; Normal; Tailwinds / Headwinds Assessment of results: absolute performance (how the individual did against objectives, job scope, leadership & values) PLR criteria Assessment of results: relative performance (comparison against group of peers, overall leadership, degree of difficulty, BU/functional performance) How were goals achieved (behaviors & values) ν 13

Results validated ratings and feedback without Financials vs. with Financials Staff & Production (without Financials) Target Distribution 0.0-1.9 2.0-2.9 3.0-3.7 3.8-4.4 4.5-5.0 Total # Employees Percentage 5% 10% 60% 20% 5% 633 Number of Employees 32 63 380 127 32 Actual Distribution 0.0-1.9 2.0-2.9 3.0-3.7 3.8-4.4 4.5-5.0 Total # Employees Percentage 0% 7% 63% 26% 4% 633 Number of Employees 1 44 396 167 25 Difference -31-19 16 40-7 w/o Fin w/ Fin Average Rating 3.3 3.1 Staff & Production Target Distribution 0.0-1.9 2.0-2.9 3.0-3.7 3.8-4.4 4.5-5.0 Total # Employees Percentage 5% 10% 60% 20% 5% 663 Number of Employees 33 66 398 133 33 Actual Distribution 0.0-1.9 2.0-2.9 3.0-3.7 3.8-4.4 4.5-5.0 Total # Employees Percentage 0% 8% 62% 25% 3% 663 Number of Employees 0 52 410 168 19 Difference -33-14 12 35-14 Average Rating 3.1 70% 60% 50% 40% 30% 20% 10% 0% Total Company Without Staff Financials 0.0-1.9 2.0-2.9 3.0-3.7 3.8-4.4 4.5-5.0 Target Actual 70% 60% 50% 40% 30% 20% 10% 0% Total Company 0.0-1.9 2.0-2.9 3.0-3.7 3.8-4.4 4.5-5.0 Target Actual 14

TALENT MANAGEMENT K N O W W H O Y O U H A V E A N D N E E D T O W I N

Our People-Our Talent Preparing for Patrick s Future Talent Reviews are simply an organized process to assess, calibrate and diagnose our people-our talent and their future at Patrick The Talent Review outcome leads to Talent Management; the decisions and actions with our people-our talent that will define Patrick s performance now and into the future We leverage the meaning of our culture of Customer 1 st and Performance to guide our actions on talent

Why is Talent Management important for our strategic agenda and ultimate success of Patrick? Customer, Product, Process and People drive our business People (talent) management requires relationships, data and analytics to be most effective in talent decisions The Talent process positions our leadership to: Understand their current talent pool through analytics and subjective judgment Be transparent and accountable for talent assessments and actions Be informed of the organization wide talent pool Enhance communications with their reports on development plans and/or career decision making Highly impact engagement of our high potential and high producing talents Talent Decisions profound impact on our results How do we best fill our talent gaps throughout the organization? Who do we need to focus on right now for critical roles? Who are the next generation talents we need to invest in? Who needs to be moved to a different role to be successful? Who will not be a fit for the Company now and in our planned future state?

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Patrick Leadership Model Customer Champion Performer Strategic Thought Leader Driver of Change Developer of Talent Relationship Builder 5 Exceptional Accelerated Is able to strategically think for the customer, help them see what they don't realize today, leads others to put customers first, fosters innovative thinking, upholds internal/external processes in response to customer demands Consistently delivers breakthrough results, leads others to achieve exceptional results, proactively anticipates obstacles Strong intellectual curiosity, challenges ideas/strategies, 'big picture thinking', recognized as a leader, drives other to higher level of thinking, innovative ideas, creates strategies to drive company growth Leads large and/or complex change initiative, develops leaders into drivers of change. Influences organization, inspires others to see new possibilities for change. Has deep understanding of triggers of change, builds ownership for change practices Inspires, motivates, and involves all individuals to exceed expectations and exceed results, is recognized as a leader for transforming individual talents. For individual contributor, constantly seeks growth and learning opportunities Builds relationships where others have been unsuccessful. Has strong sustainable alliances at all levels, inside and outside organization. Recognizes, affirms and engages people s unique abilities. Creates and fosters opportunities for people to produce results across all levels. Exhibits a superior level of integrity in all areas of responsibility. 4 Proficient Effective Masterful Anticipates the needs/ expectations of customer, proactive, strives to build customer loyalty, creates long term solutions, consistently thinking of ways to serve customer better Delivers results that exceed expectations, creates new performance levels while delivering low cost solutions, ability to influence and navigate Leads change that benefits the organization, engages self and others by navigating and Adds value with thought, engages others for their thoughts, able to think overcoming barriers, has credibility systematically, develops strong ideas, creates sustainable strategy to influence others, anticipates the need for change before it becomes critical Inspires, motivates individuals to succeed in business challenges, assembles and maintains remarkable teams, recognized as a leader. Individual contributors will often seek out growth and learning opportunities Builds relationships with influential people within the organization. Recognizes opportunities to utilize people s abilities. Connects with individuals to help drive results. Follows-thru on all deliverables. Demonstrates a high level of integrity. 3 Base Level Adequate Basic Skilled Identifies and gets to know customer, listen to needs and expectations, understands customer requirements, strives to build long-term customer relationships Strong results, will cooperate and lead with others to drive necessary ideas, recognizes obstacles and barriers Shares thinking, demonstrates intelligence by contributing to ideas/ concepts, adds value in creating potential strategies Actively engaged in change, and participates in completion. Awareness of the need to build credibility to influence those around them, able to see resistance and work towards resolution Inspires those on his/her team Builds necessary relationships to towards good results. Assembles accomplish job responsibilities. teams with potential, will sometimes Recognizes people s abilities who create opportunities and will guide are close to them. Understands the individuals toward their potential. value of connecting people s abilities Individual contributors on occasion to drive results. Follows-thru on most will seek out growth and learning deliverables. Has integrity with opportunities. individuals inside work team. 2 Needs Development Responds to customer requirements, focuses on customer issues, reactive Strong results at times but typically average, could do more to support business goals, has difficulty recognizing obstacles and barriers Recognizes the importance of 'big picture', is able to share thoughts/ suggestions, helps refine existing logic, supports strategies but doesn't create strategy Lack of experience/exposure to driving change, is credible but is not seen as a resource to help drive change, understands the need for change but doesn't know how to approach Understands the importance of helping others see their true potential but lacks the ability and/or desire to initiate development. Individual contributors do not actively seek growth and learning opportunities but will participate if encouraged to do so. Has very few strong relationships with individuals inside the organization. Recognizes only negative abilities in others. Does not see the value in connecting people s abilities to drive results. Seldom follows-thru on promises to others. 1 Inconsistent Below Expectations 19 Does not listen to customer needs, focus is on company without thinking of customer, does not find value in customer contacts Achieves inconsistent and average results, does not support business objectives, struggles to implement and cooperate with actions that drive change Does not consistently add value with thoughts, may creates ideas that are contradictory to company direction Doesn't drive change, stays status quo, lack of credibility, does not attempt to gain support, uses only limited methods to drive change, not sustainable Leadership actions do not inspire others, lack of ability to form effective teams. Does not practice mentor/coaching skills, avoids discussions with underperformers, relies on others to supply talent. Individual contributors refuse to seek growth and development opportunities Fails to build relationships with individuals within the organization. Does not recognize others abilities. Has little integrity in job responsibilities.

Key Talent Indicators (KTIs) Talent Success Attributes 1. Exceptional Results - PM Rating - Consistency over time 2. Customer Champion 3. Change Driver - Challenges status quo 4. Thought Leader - Others look for their input 5. Effective in talent management - Reports - Self Talent Detractors 1. Does not subscribe to Customer 1 st Performance Culture 2. Misaligned to Patrick Values and behaviors 3. Absence of self-confidence 4. Underdeveloped management skills - Follow-up - Attention to detail - Timeliness 5. Arrogance 6. Difficulty working with/in teams 20

Talent Management 9-Box Defined Promotability consideragons: Embodies Patrick Leadership and Values agributes KTI alignment; No talent detractors Is this person a game changer? Does this person embody Customer 1 st? Lateral move only Promotable 1 level Promotable 2 levels P R O M O T A B I L I T Y 6 3 Promotable 2 levels Performance not measured (New hire manage to high performance) 8 Promotable 1 level Inconsistent performance (Evaluate job fit or manage out) Under performing (Manage out) <3.0 3.0 3.7 3.8 5.0 Promotable 2 levels Performance at expecta<ons (Develop and Promote) 5 2 Promotable 1 level Performance at expecta<ons (Manage performance up, then promote) 9 7 4 Lateral moves Performance at expecta<ons (Develop or manage out) 1 Promotable 2 levels Game changing performance (Develop and Promote) Promotable 1 level Consistent high performance (Develop and Promote) Lateral moves Consistent high performance (Retain and Leverage) Delivers less than required Delivers what is expected Exceeds expecta<on over <me PERFORMANCE / CONTRIBUTION Performance viewed over Gme: Consider last 2 PM ra<ngs Consider impact delivered in their role beyond annual objec<ves Does this person consistently exceed raised expecta<ons over <me? 21

4-Box Assessment Criteria Sr. Leaders 1. Game-changer Exceptional contributor Best talent in marketplace Lead organization to next level of performance Exit 2. Proud to have on team Consistently strong contributor Recognized as a strong leader Will help organization get to next level of performance (not lead or define) 3. Average player Solid contributor gets the job done most of the time Follows well Unlikely to lead organization to next level of performance 4. Exit Remove from organization Average Player Game Changer Proud to have on team

Education Background Education/Program Year(s) Major/Degree Talent Profile Jane Doe Director/GM and above only Leadership Model Bachelors Degree- Purdue University Professional in Human Resources-HRCI 1997-2002 Psychology 2006 PHR Certification Professional Experiences up to 3 employers Employer Year(s) Role Patrick Industries 2004-Present HR Director Russell Reynolds Assocs. Personnel Management, Inc. 2003-2004 Staffing Director 2001-2003 HR Coordinator Initiative/Project Year(s) Role Patrick/Adorn integration Performance Ratings Significant initiatives experience PLR (0-5) 4.3 2007 Lead culture development 2009 2008 2007 Key areas of strength 1 HR functional knowledge 2 Responsiveness 3 Teamwork/Attitude Key areas of Development 1 Build strategic capabilities 2 Talent Management 3 Learning to Lead Desired next position HR VP 1-5 1-5 1-5 1-5 1-5 1-5 Customer Champion Performer Mobility (yes/no) Strategic Thought Leader Driver of Change Developer of Talent Area of US - Yes, preference CA, AL Relationship Builder 9-Box 6 3 1 8 5 2 9 7 4 4-Box x Development plan 0-6 months Talent plan 1-2 years Talent plan 3-5 years

TALENT RESULTS I D E N T I F I C AT I O N A N D A C T I O N S

Talent Identifiers facilitates planning process 25

2010 Talent Action Plans (Functional Group) Action Issue that Action Addresses Responsible Timing Current Status Why this is important: Robust action plans that are followed and regularly updated will help your function translate the planning elements of your talent building plan into real benefits

Succession Plans & Critical Positions Please be able to discuss succession nominations of your critical roles 27

Talent Feedback and Actions Feedback driven from the employee profile Leadership Model Calibration Strengths and Development Areas Transparency on 9 and 4 Box Development Plan discussion Action Plans and Decisions Owned by leader Sr. Team; quarterly report out Manage talent through plans

Consolidated Talent Health Metrics Key Metric 12/2009 Current Goal Status % leadership roles filled internally Green = 75-85%, Yellow = 70-75% Red = < 70% and >85% 43% (3/7) % key roles filled by diverse candidates 43% % unwanted attrition G=1-10% Y=10-12% R= >12% # open key positions G= 0 Y=1-3 R= 3+ (3/7) F 9% (2) 60-85% 25% <5% 0 < 1 at any given time Avg. # of days positions are open 30-45 Varies by function* Quality of hire (leadership judgment) G= 90-100% quality Y= 80-90% quality R= Less than 80% quality Key role succession coverage (Key roles with 1 or more unique, ready now successor)/(total # of key roles) G= >60% Y= 40-60% R= Less than 40% 80% 100% 35% 50% Box 1, 2, 3, 4 Talent Rate (# of employees in 9-Box areas 1,2,3,4)/(Total # of employees in 9-Box) G=20-25% Y=10-20% R=Less than 10% 46% 25% *If a key role drives contribution to the bottom line, no open days are acceptable

Consolidated 9-Box All Staff Promotability consideragons: Embodies Patrick Leadership and Values agributes KTI alignment; No talent detractors Is this person a game changer? Does this person embody Customer 1 st? Lateral move only Promotable 1 level Promotable 2 levels P R O M O T A B I L I T Y ******* 7 **** 4 ****** 6 6 3 8 ******* 7 ************* ************* 26 ************* ************ 24 *********** 11 5 2 ************* ************* 25 ************* ************* ****** 32 9 7 4 1 Delivers less than required Delivers what is expected Exceeds expectation over time PERFORMANCE / CONTRIBUTION Performance viewed over Gme: Consider last 2 PM ra<ngs Consider impact delivered in their role beyond annual objec<ves Does this person consistently exceed raised expecta<ons over <me? 30

Leadership Consolidated 4-Box (population = 55) Designation Game Changer 13 Proud to have on team 27 Average Player 12 Exit 3 3

PRESCRIPTIVE PLANS AND RESULTS Data driven decisions on the Company s most valuable assets Performance Leadership Assessment Self and Manager Assessed strengths and development areas Career mapping through development planning Vetted and validated by Sr. Leaders Critical to attain this buy-in Leader accountability to execute talent plans Piece of their objectives/rating/incentive Results in: talent decisions and P&L value added actions 32

Q & A 33