PEOPLE MANAGEMENT PRACTICES: Displays to Accompany Survey Findings July, 2000

1. PEOPLE MANAGEMENT PRACTICES:Displays to AccompanySurvey FindingsJuly, 2000

2. Today’s Objectives • Understand the business case for people management • Examine newspaper survey results—I3 • Inform (findings and patterns) • Insight • Implications • Build your confidence, conviction and capability to inform others • Ensure that you know how to “read” the various reports • Address some of your most important questions • Provide a near-term path for moving forward

3. Premise Challenge “Our employees are our most valuable resource… “Prove it, and therefore, the management or else stop of people makes a significant talking about it!” difference to company performance.” The Mega-Study

4. Overall Business Impact Economic Factors • Relative market share • Company size • Industry profitability People Factors • Core drivers • High-impact practices • Specific actions • Constructive culture 33% 67%

5. Correlational Studies Real World Applications Determine “what” organizations should do Describe “what” world-class companies do and “how” they do it Business Case Was Built in Two Ways

6. Empirical Validity CustomerSatisfaction& Retention Selection Very Strong Leadership Compensation Change Management Creativity &Innovation Strength of Practice-Performance Relationship* Culture EmployeeSatisfaction& Retention Development PerformanceManagement Total number of organizational units: » 21,304 Strong 500 1,000 1,500 2,000 2,500 ³3,000 Number of Organizational Units Included in Research © 2001 Readership Institute

7. Returns to Shareholders • Profitability • Growth • Productivity READERSHIP? Customer Satisfactionand Retention Employee Satisfactionand Retention 3 CULTURE ChangeManagement Creativity &Innovation Selection 2 Compensation PerformanceManagement CULTURE CULTURE 1 Development Leadership KnowledgeManagement CULTURE People Management Model © 2001 Readership Institute

8. Five Strata Examined Strata I II III IV V Circulation Ranges 0 – 25,000 25,001 – 50,000 50,001 – 100,000 100,001 – 200,000 200,001+ © 2001 Readership Institute

9. Level 1 DRIVERS (4 + 1 sections of the survey) “What to focus on” Level 2 HIGH IMPACT PRACTICES (17 Best Practices Derived from Mega-Study) “What you should strive to achieve” Level 3 SPECIFIC ACTIONS (90 Survey Questions) “What you can do” Three Levels of Analysis © 2001 Readership Institute

10. Selection • Selection criteria and processes have consistent structure • Selection skills are a key leadership attribute • Seek to fill positions internally 18-20 Development • Promote integration and corporate glue • Significant leadership responsibility • Commitment is balanced between organization and individual • Effective succession planning and talent pool processes 22-25 Performance Management • Clear mutual expectations • Stretch objectives with meaningful measures • Ongoing coaching and feedback 26-27 Compensation • Market-based compensation • Performance-driven rewards and recognition • Alignment of employee and shareholder interests 28-30 Employee Retention* • Latitude and authority for determining how best to execute job accountabilities, particularly to meet customer needs • Quality and sustainability of highly effective leadership, particularly employee’s immediate supervisor • Extent to which employees possess the knowledge and skills to contribute – plus – the opportunity to grow and advance • Customer satisfaction is a high priority and is balanced with “making the numbers”—plus—rewards are provided for contributions 33 Overview Level 1 and Level 2 Drivers (Level 1) High-Impact Practices (Level 2) Pre-Reading Pages * Note: Employee Retention is an Intermediate Outcome. © 2001 Readership Institute

11. Newspaper Results—Emerging Themes • Very low scores! • Performance management “highest” • Development “lowest” • Amazingly flat! • More effective at and inclined to manage “vertically” versus “ horizontally”

12. 20% 40% 60% 80% 100% Emerging Theme #1: Very Low Scores! All Newspaper Respondents—“Best Practices Are in Effect” LEVEL 1 ANALYSIS Strongly Agree Agree Disagree Strongly Disagree Strongly Agree plus Agree 31% 29% 18% 13% 9% Disagree plus Strongly Disagree 69% 71% 82% 87% 91% © 2001 Readership Institute

13. 20% 40% 60% 80% 100% Emerging Theme #1: Very Low Scores! All Newspaper Respondents—“Best Practices Are in Effect” LEVEL 2 ANALYSIS “X1” denotes the Driver’s High-Impact Practice in the order it appears in your reports Strongly Agree Agree Disagree Strongly Disagree 64 61 59 55 Strongly Agree plus Agree 49 45 44 31 27 23 24 18 18 17 14 12 10 35 39 Disagree plus Strongly Disagree 41 45 51 55 56 69 73 76 65 81 82 83 85 88 90 Selection Development Performance Management Compensation Employee Retention Relevant Page in “Consolidated” Report 8 17 28 37 46 © 2001 Readership Institute

14. Emerging Theme #1: Very Low Scores • May reflect the newspaper industry’s historical “oligopolistic” structure and behavior of the industry • Newspaper industry might be inwardly not externally focused • Newspaper industry, on average, is likely stuck in the “Ingredients Era” of people management practices Why?

15. “Cogs” “Ingredients” “Enablers” “Differentiators” People were thought of as part of the machinery People management activities are: • Discrete • Inconsistent • Contradictory • Not aligned People management activities are: • Systematic • Consistent • Aligned • Integrated People management activities are: • Core to business strategy • Key to differentiation • Source of competitive advantage Eras of People Management Practices © 2001 Readership Institute

16. Typically the most advanced Driver in “stable” or “static” industries that have undergone little change • Other Drivers are characteristically brought into play more strongly as companies and industries are confronted by major change Performance Management is highest! Development is lowest!* • Typically viewed to be the “softest” Driver • Is the most complex Driver of all Newspaper Results Findings Insights & Implications *Assuming we ignore Compensation

17. Emerging Theme #4: Amazingly Flat Results LEVEL 1 ANALYSIS Disagree plus Strongly Disagree Selection Development Performance Management Compensation Employee Retention © 2001 Readership Institute

18. Emerging Theme #4: Amazingly Flat Results LEVEL 2 ANALYSIS—By Department © 2001 Readership Institute

19. Emerging Theme #4: Amazingly Flat Results LEVEL 2 ANALYSIS—By Circulation Strata © 2001 Readership Institute

20. Emerging Theme #4: Amazingly Flat Results LEVEL 2 ANALYSIS—By Strata by Department © 2001 Readership Institute

21. Relative StrengthRelative Weakness Emerging Theme #4: Amazingly Flat Results LEVEL 3 ANALYSIS—Selection © 2001 Readership Institute

22. Emerging Theme #4: Amazingly Flat Results! • Industry has very homogeneous practices • May be “implied or accepted standards” • External changes may not have yet stimulated aggressive adoption • Newspaper industry may be currently trapped in “transformational no man’s land” Why?

23. Industry Transformation High Successful Change “Today” Performance Newspapers? “Triggers”: • Competitors • Changing needs • Technology • Economics • Demographics Change unrecognized or not acted upon Low Time © 2001 Readership Institute

24. The standards we use for selecting internal candidates for open positions are set at relatively high levels The selection standards we use for outside hires are set at relatively high levels Selection of qualified people for position vacancies is a top priority of our newspaper's leaders We encourage self-nomination to open positions Our selection process is efficient (i.e. provides us with qualified people quickly) When we consider candidates from outside the newspaper to fill job openings, the size and quality of our external applicant pool is strong (i.e., we consistently choose among many qualified candidates) Our leaders are held accountable for attracting and selecting high-caliber candidates from outside the industry Emerging Theme #5: Newspapers are more effective at and inclined to manage “vertically” versus “horizontally” Driver “Top Strengths” “Greatest Weaknesses” Selection Development • Our newspaper's leaders place a high priority on developing people • Managers generally help their subordinates meet their career aspirations • Qualified employees generally demonstrate sufficient initiative in developing their own skills • Our newspaper possesses and continuously updates a newspaper-wide database that keeps track of competencies and skills individuals need to succeed in their positions • Attending training programs for at least 35 hours a year is strongly encouraged by our newspaper • Our organization systematically and regularly reviews its talent pools frequently (i.e. at least twice a year) Performance Management • We believe that one of the primary purposes of performance management in our newspaper is to support the execution of our business strategy • Performance evaluations entail a discussion of an employee's performance, including the manager's own perspective on the employee's performance • Performance evaluation discussions focus both on recent performance and identifying development needs • Our strategies and strategic plans are regularly communicated so that all employees understand how their performance expectations are linked to them • Each person's performance evaluation incorporates input from people within the company who are impacted by their work • Performance evaluations incorporate input from the employee's peers/ team © 2001 Readership Institute

25. Emerging Theme #5: Newspapers are more effective at and inclined to manage “vertically” versus “horizontally” Driver “Top Strengths” “Greatest Weaknesses” Compensation • Performance is the key determinant in establishing variable compensation (i.e., incentive) levels • Our newspaper effectively recognizes (formally and informally) performance that supports our goal • Change in overall job accountabilities is a key determinant in reviewing fixed (i.e., base salary) levels • Our newspaper's compensation programs enable us to attract and retain required talent • Change in external market pay levels is a key determinant in reviewing fixed ( base salary) levels • Our compensation programs support the philosophy of providing superior rewards for superior performance • Share-based compensation (e.g., employee share ownership plans, profit-sharing) for employees is a means of providing a single shared objective that binds together the various entities across our newspaper • Employee share ownership is encouraged in our newspaper through our compensation plans Employee Retention • On average, our employees exhibit a high level of attendance on the job • Employees possess a clear understanding of the limits within which they are permitted to act • Achieving high levels of customer satisfaction is a high priority with my superior • Employees possess a clear sense of how they personally contribute to meeting customer needs • Employees are energized by the newspaper's culture and work environment • Our managers spend unusually large amounts of time coaching and developing their subordinates • Employees receive appropriate recognition and rewards for their contributions © 2001 Readership Institute

26. Why Should I Really Care About This People Stuff? High Levels of Employee Satisfaction & Retention Are Associated with Greater Customer Satisfaction & Retention... …which create a powerful way to move the needle “The Zone of Affection” “The Royalty of Loyalty” 100% • 48% defected! • Satisfied ≠ Loyal High 80% • • • • • • • • • • Customer Retention • 60% • • • Customer Satisfaction & Retention • • • • • • • 40% • • • • • • • • • • • 20% Low 3.0 4.0 Low High Employee Satisfaction & Retention 1 Extremely Dissatisfied 2SomewhatDissatisfied 3 Slightly Dissatisfied 4Satisfied 5VerySatisfied Customer Satisfaction Measure Source: RNW Research Source: Harvard Business School; Heskett, et. al. © 2001 Readership Institute

27. Four Key Factors of Employee Retention 98.0% 100% 13.6% 90 84.4% 14.0% 80 70.4% 70 14.6% 55.8% 60 Authority 19.2% Explanatory Power* 50 36.6% 40 Latitude 36.6% 30 20 10 0 Leadershipand Culture Capability and Development Recognition, Rewards and Focus on Customer Satisfaction *Represents the proportion of the total R2 explained by each determinant. © 2001 Readership Institute

28. Employee Satisfaction & Retention Agent tenure 200% longer than industry average Agent productivity 150% higher than industry average 7% employee turnover rate Two-thirds lower than industry average Most productive organization reflected by home office cost per $1,000 of face value premiums sold Customer Satisfaction & Retention 93% customer retention 98% customer retention in auto 95% customer retention Real Effect of Employee Retention Company State Farm USAA Northwestern Mutual Life © 2001 Readership Institute

29. So, what can/should you... • Do • Not do …when you return home? © 2001 Readership Institute

30. Ready, aim, fire! • Don’t jump in and fix it—go slow to go fast • For now, ask more questions than give answers • Take the time to really create understanding and insight • Then…create strong alignment in terms of your desired end state • Set expectations carefully • This is a technical and a political challenge; i.e., a formidable change management challenge Guiding Principles • Get under the survey to gain clarity and commitment to the real issue(s) and their root causes • Come back in October with the issues and their root causes—the data that is ready then will help you set priorities and begin to act Objectives Between Now and Our Next Meeting © 2001 Readership Institute

31. Set expectations for objectives and time commitment • Provide clear directional guidance for what you really want to discover. • Describe specific outcomes and deliverables that you want them to produce High-powered committed team and create a “charter” • What specific factors have resulted in our current situation? Why? • Build understanding through focus groups and one-on-one interviews. • What has been (is still) the impact on our organization? How do we know? • What is our desired future state? Why? • If we are successful, what specific differences/impacts would we expect to see become visible? • What decisions must we make and what actions must we take, to close gaps? • Who needs to be involved in making the above happen—based on expertise, political considerations and the need for the change? Strive forinsight and understanding Between Now and Our Next Meeting © 2001 Readership Institute