PERSONNEL GUIDELINES - SECTION FOUR

Key Assumptions:

1.         The more people-intensive (and less fixed asset-intensive) businesses have the following:

a.               Maximum potential flexibility to change, but also

b.               The biggest problem of keeping employees focused.

c.               Intangible, service products which sell both slowly and as a result of consistently good service interactions and good customer testimonials.

2.         Consistently superior service is produced by: superior caliber people who receive superior training and work in a superior, motivating environment receiving super wages from a company that can still make superior profits. These elements are not mutually exclusive but rather inter-dependent.

3.         A company�s environment and coaches (manager) drive behavior. 2�s and 3�s can turn into 8�s. Get hobby energy on the job.

Guidelines:

1.         Work to achieve a quadruple-win pay policy for which employees earn 150% of the average metro-market wage for a given commodity job, but produce 165%(+) of the output of an average worker.

a.               Fewer people; better quality; strip out inspectors and supervisors, achieve zero errors and 120% input effort.

b.               Pay a lot, expect a lot: pay for results, week for lack of results; post numbers for quality, quantity and department �PPR� for individuals and team.

c.               Achieve caring, service excellence which primes the stakeholder cycle and allows management and salesmen to grow business vs. react and protect.

2.         Hiring is the most important decision a manager makes.

a.               Advertise premium wage range for measurable, proven tract record with references for a generic type job.

b.               Don�t be distracted by specific industry knowledge of applicants.

c.               Use multiple screening process; call and check references; insure team ownership and chemistry.

3.         Equal pay is unequal.

a.               Penetrators and peak performers deserve more and greater raises than steadies (weed coasters).

b.               Only penetrators may be potentially motivated by incentives.

c.               Incentive programs are over-rated, over-used and under-managed (the health analogy).

d.               Criteria for person for whom an incentive might work:

01.   Will they change behavior for an incentive?

02.   Can they afford at-risk pay vs. a raise?

03.   Difference between serious and fun incentives?

04.   Can they cope with cyclical and external shocks to the pay plan?

05.   Can they re-negotiate plans with a long-term win-win outlook?

06.   Can they explain and self-administer progress scoring frequently?

4.         Balance the mix of penetrators with peak performers for innovation vs. maintenance. Seek a constant level of tiger-power that is geared to the company�s growth rate; the team needs one heart-beat and pace.

5.         Create an environment that induces employees to turn on and work hard, smart and enthusiastically. You can�t run companies anymore.

a.               The entrepreneurial - wanabee, new-value employee.

b.               Decentralizing DB information and power.

c.               Elements of the high performance environment:

01.   Reference - providing big picture orientation and training.

02.   Make employees responsible for growing productivity or GP$/employee; GPS/total people costs.

03.   Lots of growth expectations - on-going education and personal development for all.

04.   Lots of positive feed-back on all progress and well-intended efforts.

05.   Keep pushing stretch responsibility that will allow only small, learning mistakes and tuitional expense.

06.   Structural discipline and motivation of posted numbers and commitment to service excellence standards.

07.   Team building, awareness and celebrations. Hooplah!

08.   A sense of family to replace the traditional family and community support which is declining.

09.   Make the job an enabling or growing experience.

10.   Promote a sense of ownership in the job, department, branch and company at least as a stakeholders; perhaps someday as a shareholder.

11.   Teach all to be capitalists who work to insure the company�s profits to provide growth and development capital for:

�          Stakeholders� future growth.

�          And perhaps year-end profit-sharing business.

�          Vs myopic, selfish, adversarial, static-pie philosophy of get more and do less.

12.   Have one class of employees, o excessive perks, titles and formalities.

13.   Give everyone credit and responsibility for knowing the most about their job. Consult on changes involving them and make sure they sign-off and up for any such changes.

14.   Measure monthly, year-to-date and annual rates of: turnover, sickness and lateness quietly and then publicly if it become a source of pride, an indicator of a �we like it here, you can count on me� attitude.

15.   Jazz up the learning environment by getting everyone involved in teaching at least a weekly, group, show-and-tell session.

16.   Does everyone have a chance to conform and belong as well as a chance to stick out and feel important.

6.         Everyone�s motives and sources of motivation are different. Survey what motivates them; how motivated they currently are and what can they, as well as the company, do to achieve or maintain a high level of motivation.

7.         Maintain first-day enthusiasm and motivation of all new employees.

a.               Assign a sponsor to teach orientation lessons.

b.               Lay out a learn-and-earn, cross-training certification program.

c.               Turn osmosis OTJ training into a science. Drill, test, measure and pay.

8.         Create strong, positive work norms; they self-perpetrate themselves and provide the most powerful, relentless incentive of all - keep up with your peers or feel the heat.

9.         Informally practice full employment planning and then formally announce the policy assuming a person maintains quality and quantity standards.

a.               P.R.I.C.E. and write-up someone three times before weeding.

b.               Make sure other stakeholders� perceive the treatment fair.

c.               Practice work-sharing in tough times.

10.      For unions:

a.               Treat them like every other partner, stakeholders.

b.               Invest trust to get trust.

c.               Don�t try to humiliate or embarrass the institution.

d.               Find successful union shop role models and examples.

e.               Negotiate with measurable, objective standards (PAR example).

f.                Put in upside individual and team bonuses to put peer pressure on the coasters.

11.      Summarize employees �bill of rights� and their responsibilities; they should both increase together as well as decrease if abused.

a.               High wages; high responsibility, flexibility, reliability and standards.

b.               Everyone is responsible to contribute to a high performance environment.

c.               Future raises? Every one must work to lift GP$/employee.

d.               Either part of the solutions or part of the problems. No free riders.

12.      On-going personal education and development requires among other things:

a.               1 - 3 goals; each of which is written-up on one page.

b.               A one-page job description including how to measure good performance for which employee and manager have 100% agreement.

c.               Everyone must understand, believe and practice the rule of 5 - 7 and 1 - 10 if progress is to occur. (First-time teachers vs. fist-time students.)

d.               Everyone must forward invest some of their time into themselves.

e.               Personal initiative before someone else has to tell you what to do.

13.      Promote:

a.               From within to give others positive expectations.

b.               To underscore new company values and directions; not to reward seniority and out-dated values.

c.               Only after the fact: leaders have followers; you can�t command others to do things; power-seekers and users are outmoded.

d.               Fewer people as managers and inspectors are eliminated and the numbers, the standards and the guidelines allow more self-governing.

e.               Pro-actively form bench strength. Chose today�s hires to grow into tomorrows responsibilities.

Personnel Guidelines - SECTION FOUR