HOW TO CREATE AND SUSTAIN ORGANIZATIONAL ALINGMENT TO IMPROVE RESULTS

1. HOW TO CREATE AND SUSTAIN ORGANIZATIONAL ALINGMENT TO IMPROVE RESULTS Mate Precision Tooling and our Baldrige Journey

2. PRESENTATION OVERVIEW • Background • Discuss/define alignment • Delivering a consistent theme • Common understanding of purpose and goals, Balanced Scorecard • Timely updates on progress to goals • Effective leadership system • Philosophical alignment • Examples of aligned goals

3. KEVIN NICHOLSON • VP Mfg, Mate Precision Tooling • Undergrad Engineering Degree, University of Notre Dame • MMSE Degree, UST (1994) • Student in ETLS 551, Strategic Quality Management, Fall of 2001 • UST School of Engineering: IAB member, Board of Governors member, SEAC member • Industrial experience: 25 years in engineering and operations management

4. MATE PRECISION TOOLING • Mission Statement: To be the world’s leading supplier of precision tooling for CNC punch presses • Sold in over 60 countries • Long, 40 year+ history • Strong technical expertise, large product breadth

6. BALDRIGE JOURNEY • First internal application completed in 2002 • Launched 19 projects to address some of the opportunities for improvement • Completed strategic planning sessions in early 2004 • Completed second Baldrige application in March of 2005, and submitted this for the MQA process • Recipient of the Achievement Level in the 2005 Minnesota Quality Award

7. BALDRIGE OVERVIEW • Holistic view of the business, 7 categories • Asks 110+ multi dimensional questions • Limited to a 50 page application • A journey of introspection and discovery • Feedback report is key output of the process

8. ALIGNMENT • Consistency of plans, processes, information, resource decisions, actions, results and analysis to support key organization-wide goals • Effective integration is the next step on the journey, past alignment. Achieved when the individual components of a performance management system operate as a fully interconnected unit.

9. DELIVERING A CONSISTENT MESSAGE • Mission statement – no change in 11+ years • Logical, consistent themes. No flavor of the month. • 2002-2003: Recovery, focus on what we can do internally • 2004-2005: Reaping the benefits of our hard work, stay the course • 2006+: Time to grow sales • Consistent communication of Baldrige

10. ENSURING A COMMON UNDERSTANDING OF PURPOSE AND GOALS • Balanced Scorecard (BSC) – created in 2002 • BSC is key vehicle for communicating goals • BSC communication - “leap of faith” in 2002 • Annual Goals and Objectives “flowdown” from BSC goals – BSC to VP to manager to foremen/team • Annual goal setting process, with VP review & approval at foremen/team level

11. BALANCED SCORECARD

12. BALANCED SCORECARD

13. ENSURING A COMMON UNDERSTANDING OF PURPOSE AND GOALS • Integrated system of meetings helps send consistent message • All Company Meeting (ACM) 2x/yr and All Hands Manufacturing Meetings (2X/yr) • MEM to MMM to MTM (every month) • Weekly staff meetings • Reinforce direction, purpose, goals

14. TIMELY UPDATES OF PERFORMANCE TO GOALS • Monthly communication of BSC, all other key metrics for all levels of the company - via system of meetings (MEM, MMM and MTM) • Weekly communication of key productivity, quality and delivery metrics (plant and team level) – posted Tuesday for previous week • Daily communication of sales, overdue totals • Instant communication of overdue items

15. EFFECTIVE LEADERSHIP SYSTEM KEY ELEMENTS • System of meetings • Annual budgeting process • Annual G&O setting process • Performance appraisal & development system • Action plan development for key projects • Strategic planning process

16. LEADERSHIP SYSTEM - BUDGETING • Completed in October and November • Usually two cycles, to make sure we hit required targets • Sharing of financial information has expanded over the last 4 years • Supported with manager training in 2003, “Managerial Accounting 101”

17. LEADERSHIP SYSTEM – GOALS & OBJECTIVES • Supports annual budgeting process • Supports longer term BSC goals • Supports Baldrige focus. Example, target a business process to improve or invent. • Complete in January • VP and/or manager approval required • Supported with manager training in 2004, “Performance Management”

18. PERFORMANCE APPRAISL & DEVELOPMENT • Annual business process for managers, foremen and a few others • New hires evaluated at 30, 60 and 90 days • Will expand process to other employee groups in 2006 • VP and/or manager approval required • Supported with manager training in 2004, “Performance Management”

19. LEADERSHIP SYSTEM – ACTION PLANS • Action plan required for all key initiatives • Plan for all Baldrige projects presented to executive team in January for critique • Updates to plan provided monthly at MEM • Supported with manager training: Project Management (2003), Business Writing (2004) and Lean Manufacturing (2005)

20. LEADERSHIP SYSTEM – STRATEGIC PLANNING • Typically conducted every other year • Alternates with Baldrige application development • Output typically are some major initiatives • Externally facilitated

21. LEADERSHIP SYSTEM – OTHER ELEMENTS • Each leader responsible for certain BSC elements • No second agendas, leaders very accessible • Good leadership participation at all employee events • Baldrige focus is central, helps tie elements together

22. PHILOSOPHICAL ALIGNMENT • Central Baldrige focus helps ensure alignment • Baldrige is the Brains, Lean is the Muscle • “Good to Great” became the “brand” - helped us place our Baldrige effort in context • Second Baldrige application development process helped improve understanding and commitment

23. OTHER ELEMENTS THAT HELPED • Company size: Less than 400 people and less than 300,000 square feet • Cooperative culture. Good sharing of information. • Open door policy, management by walking around practiced • G&O review by supervisor/mgr, performance appraisal review by supervisor/manager • Project selection helps maintain alignment

24. EXAMPLES OF ALIGNED GOALS • BSC/Corporate level = On Time Delivery % Team level = $ Overdue Work Center level = # of Items Overdue • BSC/Corporate level = COQ % Team level = $ Scrap (detail be work center) Work Center level = $ Scrap (and item) • BSC/Corp level = $ shipped/machinists hours Team level = $ produced/machinists hours WC level = $ produced/machinists hours

25. HOW TO ENSURE ALIGNMENT • Deliver consistent message • Ensure a common understanding of purpose and goals: BSC, G&O, system of meetings • Timely updates of performance to goals • Development of effective leadership system • Philosophical alignment • Company size and culture a Mate advantage

26. BALDRIGE VISION • Mate Precision Tooling is committed to the Baldrige National Quality Program as a means of achieving our mission to be the world’s leading supplier of precision tooling for CNC punch presses • We will achieve world-class performance and become a model business enterprise through a thorough understanding and willingness to practice and follow-through on the Baldrige Criteria for Performance Excellence