STEP September 29, 2005

1. STEPSeptember 29, 2005 Performance Alignment Review (PAR) Wayne Hays Shirley Dickson

2. Agenda • Brief Solectron Background • Performance Management Overview • Highlights • Form Overview • Rating Calibration • Lessons Learned

3. Solectron History • Solectron was founded to • Take advantage of the growing need for Electronics Manufacturing Services (EMS) • Accommodate the overflow from manufacturing operations of Original Equipment Manufacturers (OEMs)

4. Milpitas, California From a single manufacturing location (1977)...

5. To a presence in more than 20 countries... Americas Brazil Canada Mexico United States Asia/Pacific Australia China India Indonesia Japan Malaysia Singapore Taiwan United States California Kentucky Massachusetts Michigan North Carolina Oregon Puerto Rico South Carolina Tennessee Texas Europe Belgium France Germany Hungary Netherlands Romania Scotland Sweden Turkey United Kingdom

6. Collaborative Design Lean Manufacturing and Fulfillment Post-Manufacturing Global Services Our Service Offerings • Product Design • Design for Six Sigma and Manufacturability • Product Launch • Product Life Extension • Sustaining Engineering • PCBA and Subsystem Manufacturing • Systems Assembly and Test • Responsive Supplier Network • Product Fulfillment and Logistics • Global Network for Lowest Landed Cost • Repair • Product Logistics • End-of-Life Support • Process Loops for Design and Manufacturing Improvement

7. Brocade CISCO Systems Dell Ericsson Hewlett-Packard IBM Lucent Microsoft Motorola Marconi Nortel Networks Samsung Sony Sun TiVo Customers

8. Recognition Awarded the Malcolm Baldrige National Quality Award for manufacturing in 1991. In 1997, after waiting the required five years, Solectron reapplied for the award and became the first company to win the Award twice in the history of the program. “For more than 25 years, Solectron has received more than 450 customer, quality and community awards.”

9. Performance Alignment Review (PAR)

10. The Case for Change Michael R. CannonPresident and CEO “At Solectron, we are undergoing a major transformation designed to help us better serve our customers, simplify how we do business and improve our financial performance. Instituting standards for aligning and measuring individual performance is a key part of the larger transformation underway.” Kevin O’Connor EVP, Human Resources “Ultimately, our success can be traced back to how we answer two fundamental questions: Do we as a company have the right goals and vision to move forward? And, just as importantly, do each of us – personally and through our teams – understand what we must accomplish and which behaviors we must model to make Solectron’s vision a reality. It is about individual performance and collective progress. It is about building a One Solectron culture that simply outperforms the competition.”

11. What We Found... • Dozens of processes, forms, cycles, approaches used across the corporation • Anecdotal feedback from employees and HR indicating the lack of any performance feedback from managers • Linkage to other critical HR processes weak (compensation, stock awards, promotions, succession, executive selection, etc.) • Behavioral and cultural expectations unclear

12. Performance Management Goals • Create a common performance culture • Enhance individual, team and organizational effectiveness • Align individual performance with business goals • Create a culture of on-going feedback and development • Create a consistent methodology to assess employee contribution • Provide information to help determine • Compensation decisions • Promotions • Rewards & Recognition • Developmental Opportunities

13. Corporate Goal Setting & Alignment $ Rewards Goals Flow Down Organization Goals, Priorities, Imperatives, Behaviors Final Review Setting Expectations Next Level Mgr Development Process HR Mgr Perform, Monitor, Feedback Mgr Mgr Ratings Calibration Meeting Mid-Year Review Performance Cycle

14. Jn-Aug Sept-Nov Dec-Feb Mar-May Jn-Aug Sept-Oct Q4 Q1 Q2 Q3 Q4 Goal setting & alignment Perform, monitor, feedback Mid-year review Final review Performance Review Tempo

15. One Solectron Behaviors Organization Goals, Priorities, Imperatives, Behaviors We must create a “One Solectron” culture through demonstration of the right behaviors… To accomplish our Business Priorities… Sustained Profitability: Reduce operating expenses; strengthen balance sheet; eliminate duplicate structures; improve effectiveness and efficiency Asset Velocity: Increase inventory turns; improve cash-to-cash cycle Execution Excellence: Reduce complexity; common repeatable processes; improve overall quality and responsiveness; collaborate better with each other; streamline our organization Revenue Growth: Continue to win new business; secure follow-on business Restore Employee Morale: Themes include change; flexibility; creating an environment of open & honest feedback; learning quickly; accepting new challenges • Integrity • Team Player • Champion Change • Coach Others • Continuously Learn

16. Business Priorities & Behaviors Equal Emphasis on Results & Behaviors Results What work is accomplished Behaviors How work is accomplished Integrity Team Player Coach Others Champion Change Continuously Learn Performance to Expectations Business Contributions

17. Sample Behavioral Description Team Player Work effectively and cooperatively with others; establish and maintain good working relationships; cultivate an active network of relationships; identify opportunities and take action to build strategic relationships.

18. Performance Concept Behavior Issue Balance Meet Performance Results Issue Results & Behavior Issue Didn’t Meet Didn’t Meet Meet Behaviors A00-04050117

19. Overall Rating Guide 5 Exceptional 4 Commendable Performance 3 Fully Effective Needs Improvement 2 Unacceptable 1 1 2 3 4 5 Behaviors

20. Rating Distribution • Managers have the flexibility to adjust distributions within guidance. Total distribution must equal 100%. • Distribution is to be applied when population sizes reach 100 or more. Small departments are not expected to meet the distribution. • Managers can include employees that have been managed out of the organization during the review period. These situations are limited to performance issues – not employees who have left in good standing.

21. Form Demonstration

22. Rating Calibration

23. Calibration Concept • The purpose is to create a review process that establishes a more consistent, equitable, and accurate performance evaluation and feedback environment across manager groups within functions. • The process facilitates a common understanding and method to arrive at final ratings • Distribution of ratings is not the goal

24. Meeting Participation • Next Level Review • All “manager of managers” participate with their direct manager (peer group) • Matrix reporting relationships not included, only direct reporting relationships • Organization structure will drive number of meetings required • Sequence of meetings not important (e.g., “top down” vs. “bottom up”) EVP VP Director Manager Supervisor Individual Contributor

25. Function Leader Calibration Meeting Direct Report Direct Report Direct Report Calibration Meeting Next Level Leader Direct Report Direct Report Direct Report Etc… Participation Example Important: Functional reviews; not site or region!

26. Rating Profiles – Optional Resource • EXCEPTIONAL • Top 10% of performers. Clearly stands out from others; exceeds all expectations, measures and targets against established objectives and/or standards • Self starter who takes initiative and works independently with minimum supervision; produces high quality products with very little rework required; always delivers on commitments • Proactively assumes additional responsibilities; willingly works outside of job scope for the good of Solectron; consistently surprises with level of effort, quality work, improvement suggestions • Proactive problem solver; looks for improvement opportunities with customers and/or process; recognizes what needs to be done and generates creative solutions • Clearly understands and supports organization strategy and priorities; understands how own work contributes to the success of Solectron • Recognized expertise; others seek out this person for guidance and counsel • Works across functions and organization boundaries to build strategic relationships; valued team player who builds effective partnerships • Considered a change champion; always open to new ideas and stimulates others to embrace change; model of flexibility, accepts changes and redirection as improvement opportunities • Openly shares information with others for the good of Solectron • Builds trusting relationships; provides constructive and honest feedback to help others succeed; accepts feedback from others and acts on the feedback for self-improvement • Willingly takes on new challenges; stretches current capabilities; seeks new learning opportunities 1 = Unacceptable 2 = Needs Improvement 3 = Fully Effective 4 = Commendable 5 = Exceptional

27. Rating Calibration Tool – Data Entry

28. Rating Calibration Tool – Distribution

29. Lessons Learned • Change management is under rated • There is no such thing as over communicating • Sweat the small stuff • Intensive “boot camp” for HR field partners