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Human Resources Strategy
Bob Hetzel
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Human Resources Six Sigma Structure Human Resources Six Sigma Structure
Executive Steering Committee Daniel Casteel
Division HR Champion Tonya Miller
ADT HR Champion Mike Esposito
SimplexGrinnell HR Champion Anne Liming
Tyco Safety Products HR Champion Bob Hetzel
TFS – Communication & Training Lisa Turner
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Black Belt Life CycleBlack Belt Life Cycle
Selection
Training
Assigned Projects
Application
Appraisal/Exam
Certification
Ongoing Projects
New Assignment
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Human Resources Support Human Resources Support
Key areas of focus include:
•Recruiting, Screening and Selection
•Certification
•Career development and succession planning
•Early Exit Strategy
•Six Sigma Project Team Support
•Compensation
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• Develop and post Black Belt and Project Champion position descriptions
• Identify high potential BB and PC talent through Leadership Planning Process (LPP)
• Employ behavioral interviewing techniques to screen candidates
• Phase I – Safety Products Training Position Allocation•Wave I – Transactional (5 BBs)•Wave II - Safety Products Mfg. – (30 BBs)•Wave I - Design For Six Sigma – (30 BBs)
Recruiting, Screening & SelectionRecruiting, Screening & Selection
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Black Belt certification is defined as:• Completion training coursework• Completion of required number of projects• Delivery of required financial savings• Passing black belt certification exam
Black Belt CertificationBlack Belt Certification
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• Assess Project Champion/Black Belt needs • Create career development plans• Provide career development coaching, mentoring
and training as necessary• Integrate assignments into Succession Planning
process
• Ensure transition back into a business unit at the end of full time Black Belt and Project Champion assignments
Career Development and Career Development and Succession PlanningSuccession Planning
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Identify appropriate way to handle Black Belts
and Project Champions who:• Self-Select out of program• Fail to satisfy classroom evaluation• Do Not Complete Training• Do not close projects• Do not meet financial hurdles
Early Exit StrategyEarly Exit Strategy
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• Provide HR data, metrics and analysis • Address HR implications of business
process improvements
Support Six Sigma Project TeamsSupport Six Sigma Project Teams
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• Attract and retain high potential talent
• Reward and recognize specific six sigma achievements
Compensation ObjectivesCompensation Objectives
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• Provide BB’s & PC’s an increase in total cash compensation compared to existing business role• Delivered through an increased incentive opportunity
• Candidates will be selected from a wide range of roles and therefore, may have a wide range of base salary and target incentive opportunity• Variation in pay is acceptable; no attempt to align
compensation• Higher compensated Black Belts should demonstrate
higher competencies, and should generally focus on larger, more impactful projects
Compensation StrategyCompensation Strategy
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• Most BB’s & PC’s will retain current annual base salary- Eligible for future salary increases in accordance with the
company’s merit increase guidelines- Annual performance review for BB’s conducted by
Project Champion- Annual performance review for PC’s conducted by BU
Executives and Deployment Champion- HR Champion will ensure performance management
consistency
Annual Base SalaryAnnual Base Salary
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• If a BB equity adjustment is necessary, it should occur following Black Belt Certification - Increase is based on successful completion of the
training program
• Tyco Safety Products HR Champion and BU Executive Steering Committee, will be responsible for approving all BB and PC base salary increases
- Provides equitable and consistent decision process across all business units
Annual Base SalaryAnnual Base Salary
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Full-Time Black Belt• Assigned Six Sigma Black Belt title
Part-Time Black Belt• Retain current position title• May use Six Sigma Black Belt designation
Title AssignmentTitle Assignment
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CertificationCertification Award
• Provide a compensation award upon Black Belt Certification- Amount of award is consistent for all TFS Black Belts; reinforces
team relationship- Fulfillment of Certification requirements determined by Steering
Committee
• Award provides recognition- of their personal achievement and development
- the value of the certification to the company
- the results of projects completed as part of the certification process
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• Cash Award - $2,500 immediately upon certification - Applies to FT and PT Black Belts
- Immediate recognition- Greater alignment to individual results
• Stock Options - Applies to FT and PT Black Belts
- One time special option grant at the time of Black Belt certification (number of shares TBD)
- Immediate recognition- Long-term time commitment to recognize value- Greater alignment to Tyco International results
BB Certification Award
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• Target incentive opportunity increased 10 percentage points compared to FY03 incentive target for current position upon completion of Black Belt Certification
- Applies to FT Black Belts only- Supports importance of role within the company and the impact of
their contributions to overall business performance - Full time Project Champions eligible for 10% increase as well
• Black Belt candidates not currently on an annual incentive plan in FY03 will receive an incentive opportunity equal to 10% of their current base salary - Applies to FT Black Belts only
Incentive Compensation
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• 80% - EBIT and FCF of business unit aligned to Six Sigma projects- Provides a strong association to deployment projects as
individuals in BB & PC roles will most likely focus on projects closely aligned to their business unit
- Six Sigma savings and/or profit improvement are reflected in business unit financial measurements
• 20% - EBIT and FCF of next level up business unit- Supports teamwork across the Safety Products organization
Incentive Measurements
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• Individual Modifier
- Applies to Black Belts and Project Champions
- Adjustment for individual performance goals not captured in the financial measurements
- Recognizes both superior performance (positive modifier) and underperformance (negative modifier)
- Amount of Modifier is discretionary, but reasonable, i.e. +/- 25%
- Used to account for direct results of Six Sigma projects
Incentive Compensation
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• Incentives will be paid on an annual basis - No quarterly payments; not consistent with timing of BB and PC
contributions
• Proration of Target BB and PC Incentive Percentage- 10 percentage point increase in BB incentive opportunity will
prorated to the time of Black Belt Certification…not acceptance to the program
- Full Time Project Champions 10% prorated for time on project
• BB’s and PC’s that self-select out or do not close projects- Revert back to original incentive percentage opportunity upon
exit from the program- No incentive premium will be paid for the period of time that an
employee was in the program
Incentive Compensation
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• Guarantee FY03 incentive target equal to the amount Black Belt and Project Champion would have earned had he/she remained in former role
Incentive Compensation Balance of FY03 Year
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Incentive Payout Example
Region Business Unit
ResultEBIT
40%
FCF
40%
EBIT
10%
FCF
10%
Total Incentive Payment
Ind. Modifier
Final Incentive
Incentive payout % of Base Salary
PIII 18,000 18,000 4,500 4,500 45,000 20% 54,000 54.0%
PII 12,000 12,000 3,000 3,000 30,000 10% 33,000 33.0%
PI 6,000 6,000 1,500 1,500 15,000 -5% 14,250 14.25%
Assumptions: Base salary = $100,000 Original Target Incentive (PII) = 20% of base salary or $20,000 Black Belt Premium = 20% + additional 10% = 30% or 30,000
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Deployment Timeline
Six Sigma Mfg Posting/Selection March 27, 2003
Identify/Select Mfg BB Candidates April 8, 2003
Project Champion Training April 22, 2003
Mfg. BB FAStart Program April 29, 2003
Mfg. BB Training May 5, 2003
DFSS BB Training May 12, 2003
Human Resources Support Human Resources Support