How to Slash Your Recruitment Bill by Retaining 90% of Your Trained Workforce in a Highly

Competitive Market

15 Well Kept Secrets to Shared Services Success

19th March 2009

Colin Glynn – Controller – European Finance Service Centre

Key statistics

2

Underlying Sales £9,174m

£55.5m£974m

38,000 50 Countries

What we do

Underlying Group sales 2008 £9,147mOrder book £55.5bn

Defence AerospaceCivil Aerospace Marine Energy

Wide-bodied jets

Narrow-bodied jets

Corporate & Regional

4

Military aircraft

Helicopters

Commercial

Naval

Oil & Gas

Power generation

Power systems for:

How to slash your recruitment bill by retaining 90% of your trained workforce in a Highly Competitive Market.

Mastering Talent Development

Our Competition

Rolls-Royce shared services (HR and Finance) employs approximately 300 people.Other competition

− Egg - 1,000 employees (100m)− Bombardier - 200 employees (500m)− Toyota - 200 employees (4 miles)− Councils - 500 employees (1 mile)− Others− Specsavers (New)

Creation of a “Retention” Culture

The statisticsAttracting the right peopleHow do we retain the people

− Employee Communication - minimum standards− Environment – Workplace experience− Listening− Culture created− Competences and Training− Opportunity to grow

Top 10 Tips for Retention

Manpower History

Virtually all reductions have been at other sites as work is inloaded.Main issue of staff retention is through the changes thus providing the experience required, reducing risk and ensuring a service can be delivered.

Therefore – HOW DO WE TRY AND RETAIN EMPLOYEES. FIRST WHO HAVE WE LOST

Original Target ReductionHeads

2000 - 2003 Original Scope 202.0 92.0 54%

2004 - 2008 Additional Scope 152.0 67.4 56%

Total Position 354.0 159.4 55%

Leavers Analysis 2007, 2008Leavers - to external 2007 2008Start own business 1 -Emigrate 3 1Child Support 1.7 -Retirement 1 1Geographical relocation 1 2Another employment opportunity 2 1Severance programme - 8Discipline 1 -

Leavers - to internalPromotion, enhancement opportunity 10 7

Leavers Total 20.7 20.0

Attracting the People

By recommendation (50%+)By links with local colleges/lecturersBy temp to perm arrangementsBy interview process

− Basic tests− Behaviour assessment

Rolls-Royce.com

1. Employee Communication – Minimum Standards

Monthly stand up brief (Controller, Process Head or Guest)Management meeting every 2 weeks (set agenda)Customer Service Review results every month (to all staff)

− Customer Service performance data (SLA)− Customer/Supplier Incidents− Issues

One to ones for all with Team LeaderBusiness Plan DeploymentHalf year, full year briefsAlways two way

2. Environment – Workplace experience

Open plan for all (access)Hot desking for customers and business partners (service)Standard equipment for all (equality)

− Desk, IT, software, chairs, spaceBright modern offices with environmental features (environment)Flexible working around core hours (flexibility)Simple perks (beverages f.o.c.) (reward)Social Encouragement with subsidy (interaction)Funded Team Building (with development/process improvement theme) (enhancement)Being seen to do the right things, e.g., recycling (environment)Final Salary Pension scheme (reward)Bonus based on total performance (reward)

3. Listening and Feedback

Investors in PeopleEmployee engagement surveyQuarterly employee/union forumsPersonal thank you’sPublic praises and rewardPeople meetings, development cells, honest and robust recorded feedbackEmployee representative teamsAttitude – positive message, e.g.,

“I don’t drop players – I make changes”, Bill Shankley 1913 - 1981

4. Culture Created

Setting Expectations

Opportunities

Rolls-Royce proprietary information Systems

Difficult

DifficultEasy

Bus

ines

s Att

itude

5

10

15

20

5 10 15 20

6 5 34

7

1

2

10

98

FSC strategy review -Blue Sky Suggestions

Setting Expectations

Short term programme vs Long Term ‘blue sky’

Threats –Potential for outsource / offshore

Rolls-Royce proprietary information

Make – Buy applies to services as well

Com

petit

iven

ess

Business Criticality

MakeControl

Buy Protect

‘make’ whilst competitiveOtherwise outsource

Maintain World ClassPerformance

Invest or PartnerOutsource

Non-Core Core

10EFSC Major Programmes year 1 to year 3 Issue : 9.0

Project OC&SLeader Nov Dec Jan Feb Mar April May June July Aug Sept Oct Nov

Accommodation C Glynn J RichardsonPerformace Related Pay/ All Inclusive (PRP) S HallBenchmarking C Glynn N HepkeInterCompany C SeymourNAS Data Transfer S Leach B JohnsonIIP J Richardson J Richardson 5 5 5 5 5 5 5 5 5 5 5,6IFRS in SAP (Other) C SeymourIFRS (FX) in SAP C SeymourConvergence J O'Farrell 6 7 8BCS Hyperion Replacement C Seymour talk to chrisBW & ERP Strategy J O'Farrell colin to talk to geoffNicky to be linked into HubPayroll & Expenses Merger G Castlehow 6 7,8T&E Expanded Scope (Credit Cards) G Castlehow 6,7,8Pensions G CastlehowHR Shared Services G Castlehow C StackhouseOn Line Payslips G CastlehowInternational Payrolls G Castlehow 6Employee Self Service (ESS) G CastlehowCredit Vetting S Hall talk to samDMS into SAP S HallInternet Banking S Hall J RichardsonProject Steam Packet S Hall talk to sam 1,2,3E&T Transfer S Hall 1,2 3,4,5 6 7 8Civil Wave 2 ERP K Connally J Richardson 6 7 8NPNP -JVs G Bates J Richardson G5NPNP - Commercial G Bates J Richardson/N Hepke G5NPNP - Intergroup G Bates J Richardson/N Hepke G5NPNP - Purchasing Coverage G Bates G5EDI Process - 2007 (top 100) G BatesRRD PIP G Bates 123Global PIP G BatesInvoice Solution G BatesRRD 2005 (AP) K Connally N Hepke 8RRD 2005 (AM) K Connally N Hepke 5,6 7 8RRD 2005 (AR,DMS) K Connally N Hepke 8RRD 2006 (Cash) K Connally N Hepke 8RRD 2006/7 (GL) K Connally N HepkeAR&O C Glynn N Hepke 8Submarines C Stackhouse C Stackhouse 4 5 6 7Turbine Surface Tech Ltd JV G Pendlebury N HepkeProject Oberursel C Glynn N Hepke 8N3 C Glynn M Walker 1 2,3 4,5 6 7 8RRSP C Glynn J RichardsonProject Hamburg S Hall 0,1,2 3Project Munich C Glynn C Stackhouse 1,2 3,4 5 6 7 8Project Saxony G Castlehow 1,2 3,4 5 6 7 8Nordics Payroll G Castlehow

Maj

or F

SC

Pro

ject

s

AP

Pay

roll

& E

xpen

ses

Tot

al F

SC

Mig

ratio

ns

Inte

nded

Mig

ratio

ns

January 2007

AR

CM

year 2

FA&

R

year 1

Cha

nge

Rolls-Royce proprietary information

5 10 15 20

4. Culture Created

Setting ExpectationsClear VisionClear StrategyVisual ManagementContinuous Improvement Expectation

5. Competence and Training

Publicly available skills matrix

Skills Matrix

5. Competence and training – Continued

Publicly available skills matrixTraining

− In House− Catalogue of on-line and classroom based training (from Excel

to Spanish)− On the Job

− Formally recognised as “training”− Recorded and monitored

− Professional training− Supported for personal or business enhancement.− Currently 22 supported.− Generous support but with an expectation and a penalty

5. Competence and training – Continued

Professional Training − Various professions supported (IIP, ICM, CIMA, AAT, etc).− Fully funded including

− Membership, Exam fees, Exemption fees, Tuition, Revision courses, Study materials

− Individual released from role (e.g., CIMA)− 4 tuition days (tutored), 3 revision days (tutored), 1 question based day

(tutored), 1 extra revision day (self study), Exam leave− In exchange we expect the employee to “pass first time” or face

penalties− Fund own retakes and leave− If course not completed refund 12 months costs.− Leaving the company refund last 12 months costs (up to £10,000).

5. Competence and training – Continued

Publicly available skills matrixTrainingPersonal Development and Service Centre Tool Set

Personal Development− Individual development plan (owned by individual)− Part of Personal Development Review (6 monthly)

Service Centre Development of tool set

Links back to Individual Development Plan and Skills Matrix

5. Competence and training – Continued

6. Opportunity to Grow

EFSC is seen as stepping stone into higher rolesFinancial Professional Development Structure exists

Finance Professional Development

Finance Roles Finance Resource

Succession Planning

Plan RecruitDefine Measure Improve Promote

Apply Training MaximisePotential

Performance Development

Finance Strategy

Finance Business

Requirements

Review Potential

Qualified Professional

Early Career

Development CellPerformance Development

Review

Finance Support

Finance Professional

Management Accountant

Finance Manager

Finance Controller

Chief Finance Officer

Technical

Systems

Systems

Organisation

Continuous Improvement

Master classes

People

Behavioural

Internal Recruitment

External Recruitment

Trainees

Internship

Competencies Measured

Executive

Leadership

Early Career

FS1 FS2 FS3

Managing Relations

Managing Work

Judgement

Integrity and Trust

Energy and Drive

Performance Development

Review

Finance Director Cell

Americas Cell

Europe Cell

Corporate CellObjective

Setting

Individual development

Plan

Personal Profile

6. Opportunity to Grow

EFSC is seen as stepping stone into higher rolesFinancial Professional Development Structure existsInternal Opportunity to grow

− E.g., Boarding Structure – Internal Opportunity Creation

6. Opportunity to Grow - ContinuedProfessional Growth Structure within Shared Service Centre (and RR Finance)Ability to grow within jobProcess of

− Recommendation by manager− Presentation to two managers− Success leads to promotion and £2,000 plus salary

increaseHigher levels require qualifications, supervisory experience and varied experience.Achieved

− 2007 14 completed− 2008 7 completed− 2009 2 to date

Drives motivation from within a role and encourages movement within the EFSC.Three for one concept

Principal FinanceProfessional

UPS80

Senior FinanceProfessional

UPS70

Senior AccountingTechnician

UPS60

AccountingTechnician

UPS50

Senior AccountingAssistant

UPS40

AccountingAssistant

UPS30

Prof

essi

onal

Supp

ort

AccountingAdministrator

UPS20

Careful recruitmentCommunicate, Communicate, CommunicateLearn to ListenCreate an Enjoyable EnvironmentSet expectationsDevelop everyoneEmpower the individualsCreate opportunityTreat everyone equally and fairlyValue the human asset.

Top 10 Tips for Retention

Questions