Best Practices – Senior Management Diversity Stu Otts, Director of Employee Relations

1. Best Practices – Senior Management DiversityStu Otts, Director of Employee Relations

2. Eaton Corporation • Founded in 1911 • Chairman and CEO – Alexander M. Cutler • World Headquarters in Cleveland, OH • Regional Headquarters in Shanghai, China, Morges, Switzerland, Mexico City, MX • Customers in more than 150 countries • 70,000+ employees worldwide • Sales: $11.87 Billion • 55% of sales outside the U.S.

3. Electrical Hydraulics Automotive Truck Our Industries Aerospace • A leading diversified power management company • A global leader in: • Electrical systems and components for power quality, distribution and control • Fluid power systems and services for industrial, mobile and aircraft equipment • Intelligent truck drivetrain systems for safety and fuel economy • Automotive engine air management systems, powertrain solutions and specialty controls for performance, fuel economy and safety

4. Best Practice Insights

5. Insight #1 • Success is linked to how tightly diversity and inclusion is integrated into a company’s “way of doing business” • Diversity & Inclusion at Eaton is positioned as an organizational core value that is integral to the business strategy • Diversity & Inclusion within Eaton is driven from the top of the organization • Eaton’s need for a more global and integrated approach emerged over time, evolving from an “HR program” to a critical business activity built into our infrastructure and owned by all Eaton leaders

6. Diversity & Inclusion as an Eaton Value We value individual differences Our success depends on our ability to draw the very best people from the global, cross-cultural talent pool reflecting the diversity of our customers, communities and markets. We foster an inclusive environment that respects individual differences and values the unique perspectives that lead to innovative ideas and better decisions. • “Diversity” – relates to workforce demographics that define the diverse makeup of the employee population • “Inclusion” – relates to the culture/environment that values and respects all unique individual differences

7. Diversity & Inclusion Driven From the Top • Eaton does not have a diversity leadership position • Eaton’s Chairman & CEO holds his senior leadership team accountable • Each senior business leader must measure progress in diversity and inclusion in their respective organizations and report annually to Eaton’s Board of Directors • Cascade accountability and responsibility to all leaders in their respective organizations • Visibly model, support and recognize • No different than other “business” initiatives important to the bottom line – diversity results are weighed equally with all other business practices

8. Diversity & Inclusion as a Leadership Expectation • Talent management, including diversity & inclusion, is “built into” the expectations of every Eaton leader and reinforced through Eaton leadership competencies, performance management, scorecards, compensation, etc...

9. Insight #2 • Diversity, integrated into the succession planning process, enhances Eaton’s ability to identify, develop, and retain future leaders who represent a variety of backgrounds, experiences, and capabilities suited for a changing global workforce and marketplace

10. Organizational Capability Assessment (OCA) • OCA is Eaton’s annual succession management process. Objectives: • Align our long-term talent needs to the organization’s strategic goals • Review and assess our leadership capability and talent bench strength • Provide an enterprise-wide view of our talent capabilities and requirements • Early identification of potential future leaders

11. Insight #3 • Human Resources is responsible for the tools and processes associated with successful succession planning • Senior business and functional leaders own, and are responsible for, the "deliverables" - i.e., they use the OCA process to manage their own talent needs • Reinforces Insight #1

12. Insight #4 • The leadership pipeline does not fill with diverse talent overnight. Incorporating diversity into succession planning requires linkage of a talent strategy to the overall business strategy and priorities – i.e., anticipate business needs, talent gaps, and emerging demographic trends • This link gives succession planning the opportunity to affect and support the corporation's long-term goals and objectives as well as achieve diversity goals

13. Talent Implications of Strategic Plan

14. Talent Implications of Strategic Plan

15. Talent Implications of Strategic Plan - SAMPLE

16. Insight #5 • Ongoing talent reviews supplement annual succession planning by: • Facilitating the continuous identification of future leaders • Providing more opportunities to conduct deep-dive discussions and calibrations of talent • Promoting leadership discussions of top talent, their development, and their career progression opportunities • Ensuring that OCA talent strategies and actions are being implemented effectively • Surfacing high potential candidates for key development opportunities • Providing leadership exposure to diverse early talent

17. Talent Review Calendar

18. Talent Review Dialogue • Key Strengths, Development Needs & Ultimate Potential • What experiences are they missing that we need to provide them? • When are they ready and available for their next move? • What developmental feedback do we need to make sure they receive?

19. Talent Reviews - Benefits • Increases senior leadership accountability for talent development and diversity • Promotes open and honest discussion of talent on a continuous basis – process allows debate of perceptions, which is important to diversity • Enhances the talent development skills of senior leadership teams

20. Summary • Insight #1: • Success is linked to how tightly diversity and inclusion is integrated into a company’s “way of doing business” • Insight #2: • Diversity must be integrated into a company’s succession planning process • Insight #3: • Business and functional leaders own succession planning, not HR • Insight #4 • Incorporating diversity into succession planning requires linkage of a talent strategy to the overall business strategy and priorities • Insight #5 • Ongoing talent reviews should supplement annual succession planning

21. Questions?