READ ME FIRST – THEN DELETE THE SLIDE

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XNAIS Managing Absenteeism

Define Measure Analyze Improve Control

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October 28, 2008

Lean Six Sigma is the Way We Work

 Lean Six Sigma is a statistics based and data driven approach to process improvement that delivers financial benefit to Xerox.  Once a project is completed and the solution validated to be working, the improved “process” is handed off (back) to the process owner. The process owner is now responsible to sustain the improvement using a Control Plan.

 Black Belts (BB) lead strategic or cross-functional projects for the enterprise or business unit.  Black Belt Certification is achieved through a rigorous 5 week DMAIC Black Belt curriculum and by completing a BB portfolio of (2-3) projects which achieve cumulatively $800,000 in Profit before Tax (PBT) for Xerox.  The Black Belt also provides Lean Six Sigma Page 2 BB M. Carten mentorship and coaching to through to certification of Green Belt candidates.

Lean Six Sigma Road Map

Define Measure Analyze Improve Control

Activities • Identify Problem • Complete Charter • Develop SIPOC Map • Map Business Process • Map Value Stream • Gather Voice of the Customer & Voice of the • Business Develop CCR’s & CBR’s • Finalize Project Focus • Identify Key Input, Process and Output Metrics • Develop Operational Definitions • Develop Data Collection Plan • Validate Measurement System • Collect Baseline Data • Determine Process Performance/Capability • Validate Business Opportunity • • Propose Critical X’s Prioritize Critical X’s • Conduct Root Cause • Analysis on Critical X’s Validate Critical X’s • Estimate the Impact of Each X on Y • Quantify the Opportunity • Prioritize Root Causes Tools • Pareto Charts • Project Selection Tools • PIP Management Process • Value Stream Map • Various Financial Analysis • Charter Form • Stakeholder Analysis • Communication Plan • SIPOC Map • High-Level Process Map • Non-Value Added Analysis • VOC and Kano Analysis • RACI and Quad Charts Page 3 • SIPOC Map • Operational Definitions • Data Collection Plan • Statistical Sampling • Measurement System Analysis (MSA), Gage R&R • Constraint Identification • Setup Reduction • Generic Pull • Kaizen • TPM • Control Charts • Process Capability, Cp & Cpk BB M. Carten • Pareto Charts • C&E Matrix • C&E/Fishbone Diagrams • • Brainstorming Detailed ‘As-Is’ Process Maps • Basic Statistical Tools • SupplyChainAccelerator Analysis • Non Value-Added Analysis • Hypothesis Testing • FMEA • Box Plots • Interaction Plots • Simple & Multiple Regression • ANOVA • • • • • • • • • • Develop Potential Solutions • Develop Evaluation Criteria & Select Best Solutions • Evaluate Solution for Risk • • Optimize Solution Develop ‘To-Be’ Process Map(s) and High-Level Implementation Plan • Develop Pilot Plan & Pilot Solution Brainstorming Benchmarking Process Improvement Techniques Line Balancing Process Flow Improvement Replenishment Pull Purchasing and Sales Strategy Poka-Yoke FMEA • • Solution Selection Matrix ‘To-Be’ Process Maps • Piloting and Simulation • Develop SOP’s, Training Plan & Process Control System • Implement Process Changes and Controls • Monitor & Stabilize Process • Transition Project to Process Owner • Identify Project Replication Opportunities • Calculate Financial • • Standard Operating Procedures (SOP’s) • Training Plan • Communication Plan • Implementation Plan • Visual Process Control • Process Control Plans • Project Commissioning • Project Replication • Plan-Do-Check-Act Cycle

Business Opportunity

Business Impact Statement: Absenteeism is costly for any business. For our customers, absenteeism means less efficiency and higher wait times. For Xerox it can create missed opportunities to generate revenue. For Xerox employees, it creates a heavier workload when their

Specific Opportunity or Problem Statement:

colleagues are absent and therefore impacts employee Business Opportunity: XNAIS requires clear objectives and process guidelines for managing absenteeism. The inconsistent management of unplanned occasional absence can create the perception of employee favoritism. This impacts retention, employee morale and employee productivity. Opportunity to return results to benchmark levels (2.5% of Workdays (Vacations removed/absence includes short term disability) Page 4 BB M. Carten

Project Goals/ Y=f (X)

Y= Project Goal Decrease XNAIS % Absenteeism to Benchmark Levels by impacting results for unplanned occasional absence X=Critical Factors affecting Y Uncover and address prioritized root causal (s) that drive inconsistencies in the ability to manage absenteeism  practices  Eliminate inconsistencies in current management Set targets based on research and benchmarking  Develop solutions, training and communication processes to support objectives  Ease of use ability to report on and to monitor results  Create process visibility for VP, Ops, Managers and Employees  Protect Employee Confidentiality

Project Intent

Project was not aimed at eliminating valid occasional unplanned absence. The intent is to eliminate the sense of entitlement to being absent X days per year.

Xerox has excellent policies in place for those employees who have valid reasons for being absence. Our policy does not provide employees with X days per month but is there for employees who truly have a valid reason to be absent.

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Operational Definitions For Absence

The focus of project was managing the unplanned absence. Unplanned absence increases workplace stress, decreases productivity and decreases morale as remaining employees are stretched thin to cover for absent co-workers. -Key Groupings For Absence -Planned Absence -Vacation, Floaters, Mat/Adoption leave, Jury Duty, Military Leave/ Personal Leave/ Day of Sharing -Unplanned Absence Care, Other Absence -Sick Days/ Family Emergency, Compassionate Bereavement, Late Arrival/Leave Early, -Approved Medical Leave -Short Term -Long Term -Absence Without Approval BB M. Carten

Contact Center Industry Drives Higher Trends

Web Research findings..

“Employees in call center operations can be four times more likely than the other employees to miss work for psychiatric conditions such as stress or depression,” notes Dr. Ronald Leopold, vice president and national medical director, MetLife Disability.

By Michelle R. Tiedeman, FLMI, PCS, AIRC, ARA, Senior Associate, LOMA

High-volume call centers are characterized by the most stress, short-term disability claims, FML absences and high turnover. Incidences for Family and Medical Leave (FML) ….are three times higher than MetLife’s book of business for FML in non-call centers. Page 8 BB M. Carten

Canadian Benchmark Findings

(Source Co-operators Group Benefit News 2004) -Employee illness estimated to cost Canadian Companies $16B each year* -Rate of absence for Fulltime Canadian workers 7.5 days per year** -Average employee illness by Province in Canada** -Nova Scotia – 9.1

-New Brunswick -8.0

-Pockets of Xerox Contact Center mirrored provincial statistics -Rates vary by industry/ professional scientific and technical average 5.6 days -Staying at Work 2002/2003 building on Management , Watson Wyatt Worldwide* -Statistics Canada, 2004 Days Lost per Worker by Cause by Provinces** Page 9 BB M. Carten

Leading Reasons for Absenteeism

Reasons Provided • Family Issues (24 percent) • • Personal Needs (21 percent) (Keeping people at home nearly twice as often in 2002 vs 2001) Stress accounted for 12 percent of employee absences • • Entitlement Mentality 10 percent in 2002 Call in sick at the last minute has more to do with a personal issue than physical illness. Personal Illness was the leading single reason for unscheduled absences (33 percent) Two out of three absences were for other reasons.

Number One Reason-Management Style

The number one reason employees are stressed has to do with their relationship with their manager/supervisor.

Management styles that are too authoritarian tend to promote high levels of absenteeism among employees. By Gary Vikesland, MA LP CEAP • • • • • Poor listening skills Set unreachable goals Poor communication skills Inflexible Authoritarian managers tend to produce high absenteeism Team compared Employee Satisfaction scores 2005 to absence by team and this showed strong correlation for our Inside Sales environment Management on a regular basis would have no visibility to this correlation Page 11 BB M. Carten

Critical Drivers? Address Process Issues Focus Not People!

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Xerox Critical Findings

Root Causal(s)

 Inconsistent Definitions for Policy Guidelines  Unclear on Boundaries for Managers  Incomplete Awareness of current policies  Inconsistent policy implementation  Inconsistent tracking  No closed loop process Page 13 BB M. Carten

Project Critical Xs

 Consistent Management Policy Interpretation  Understand Discretionary Boundaries  Provide tools for Education and Training  Coaching For PIP/PEP  Revise Tracking Process/Centralized Process Owner/ Timing/ Coding/ Confidential/ Operational Definitions  Trend Reports  SLT Closed Loop Review Process

Solutions

-Process Owner selected -Management Grid to support HR Training and consistent coding for absence -FAQ document to support additional policy explanations -Access data base for tracking absence -Employee confidentiality protected -Targets established -Reporting responsibilities assigned and reports generated monthly to VP Inside Sales and all Operation Managers -Closed loop process with Operations Managers and their Sales Managers -Inspect for results -Deep dive on trends Page 14 -Reliability Expectations communicated to employees

Control and Realization

 Created consistent tracking  Consistent methodology for training  Consistent monthly summary reports  Results visible to Senior Leadership Team  Regular checkpoints to access progress/continuous improvement  Absence results now measure between 2-2.5% of all available workdays which is benchmark for industry  Target at 3.9 days per employee per year. Achieved in Saint John and heading in right direction for Halifax.  Employee receives consistent experience regardless of assignment and employee complaints in this area have declined  Employee records move with employee to new assignment/ Only current Management/ HR and select process enablers have access Page 15 BB M. Carten

Questions and Answers

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