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PARMALAT

CASE

“PERFORMALAT”

London, June 2012

Riccardo Sebastiano Piaggi

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• Parmalat Presentation

• Performalat Project Introduction

• Executive Summary

• Performalat: The Business Challenge

• Performalat: Model – Process

• Performalat: Project scope and approach

• Performalat: System - Success Factors

AGENDA

Turnover 2011: more than 4 billion euros

75% net revenues outside Europe

Directly present in 16 countries with 69 factories and also present in 9 countries through

licensing agreements

31 brands (whose 2 global + 5 international)

About 14,000 employees

Parmalat S.p.A. is listed on the Italian Stock Exchange since 2005

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PARMALAT IN A NUTSHELL

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PARMALAT IN THE WORLD

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OUR BRANDS

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Parmalat is controlled by the Lactalis Group since July 15, 2011.

TURNOVER OF 14.7 BILLION EUROS

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STARTING JULY 2011:

PARMALAT GROUP AND LACTALIS GROUP

— 198 Factories in 35 Countries, 21 Sale Offices —

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Parmalat present in 16 countries Lactalis present in 44 countries

STARTING JULY 2011:

PARMALAT GROUP AND LACTALIS GROUP

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Performance evaluation, identification and management of key resources and

succession planning represent the declination of the Mission and Values of

the Group within the Human Resources. These, along with training and

compensation plans, are the main tools used by Parmalat to attract, motivate

and retain valuable resources by providing a common framework, respecting

and taking advantage from cultural diversity and Group Companies.

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FOCUS ON PEOPLE

The Parmalat People Performance Management, Performalat, is going to involve all “white

collars” within the Group. The processes managed by Performalat are:

Performance Management

Reporting

Action Plan

Succession Planning

Through an interactive communication process between Leader and Employee.

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The model has been entirely designed and implemented by using an inclusive approach,

involving and engaging Parmalat Professional Families and it reflects our philosophy.

State of the art: around 1.300 employees belonging to 13 countries within the Group are

completing performance cycle 2011 (the first cycle managed through Performalat).

Starting from 2012, Performalat will be deployed to all white collars employees (around

5.500).

Performalat is enabled by a customized SaaS (Software as a Service) tool provided by

SuccessFactors.

PROJECT INTRODUCTION

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Performalat mainly:

Training needs

Development initiatives

Career development

Reward decisions

Succession planning

Talent Management

Performalat

Action Plan

Provides a global and local overview of the state of our Human Capital – i.e. building people capabilities, identifying potential successors, key people, talents;

Provides a tool to assist leaders in better recognizing and differentiating amongst individuals’ contributions;

Supports the development of adequate reward and succession plans, development tracks and talent management plans.

Provides useful information to Leaders aimed to a define a proper Action Plan for each Employee;

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PROJECT INTRODUCTION

Introduction of a unique Performance Management model

throughout Parmalat group

Enablement of a culture of performance pushing workforce

towards a flexible and competitive mindset

Identify talents that can grow within Parmalat to cover new

responsibilities & higher position

Define appropriate development actions and reward plans

System requirements definition and selection of a suitable

Performance Management tool;

System Implementation (SuccessFactors)

Project & Change management

3 - Project Scope and Approach

Performalat

Model Processes

Implemented in few months

Able to support the entire performance management process

Customizable according to Parmalat needs

User friendly and multi language

Performalat aims at evaluating people by measuring:

Achievements: results and behaviors

Competencies: Core and Technical

4 - System (SuccessFactors)

Performalat consists of three integrated phases. Each phase is an essential part of the process to be performed in order to meet individual and organizational objectives.

Integrated Succession Planning processes have been designed as well

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1 - Business Challenge 2 - Performalat

Performalat support us in the Succession Management providing us features aimed at evaluating people readiness to success, measuring:

Competencies: Core and Technical according to the incumbent role.

Minimum job level requirements according to the incumbent role.

Immediate and Future Potential

Succession Information such as Risk to leave, impact of loss etc.

3Validate the

Readiness Form and Confirm

Succession Plan

1

Identify Potential Successors

Periodically Monitor and Update Succession Plan (HR and Employee’s Manager Responsibilities)

2Confirm /

Integrate Potential Successors list

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Finalize Succession Plan

End of

Performalat cycle

EXECUTIVE SUMMARY

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Consistent and

Objective Evaluation

Group standardized

paperless system

Development and

Coaching Plans

based on actual needs

and requirements

identified in the

evaluation

More precise

alignment of our

compensation and

reward systems

More accurate identification of successors and

talents

Foster a culture

where decisions on

rewards and

recognition are

based on merit

Identification of

individual skills and

abilities

Better understanding

of our Human Capital

PERFORMALAT: BENEFITS FOR BOTH EMPLOYEES AND THE ENTIRE GROUP

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IMPROVEMENT AREAS

Employees’ needs:

Consistent and Objective evaluation

Appropriate rewards

Appropriate development initiatives

Parmalat Group needs:

Standardized approach in People Evaluation

and process

Build adequate rewards and succession plans,

career and development tracks, and talent

management

Simplified Human Capital Assessment and

Management

Simplified talent identification and development

NEEDS AND REASONS FOR CHANGE

Different approaches towards

Performance Management within

Parmalat Group

Difficulties in understanding and

managing Human Capital and Talents

inside and outside OpCos

Some OpCos completely lacked of a

structured Performance Management

system

Parmalat Group in the 2010 launched a program to develop a Performance

Management model & tool for its personnel worldwide, aimed to foster highly

engaged and empowered workforce, in order to outperform the competition.

PERFORMALAT: THE BUSINESS CHALLENGE

1 - Business Challenge

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Competencies

Y - Axis

Parmalat Core Competencies

Technical Competencies

Technical competencies will be

identified for all Parmalat

Professional Families. A subset of

3-5 competencies will be defined for

each role

1. Consistency with Parmalat Values

2. Leadership

3. Strategic Thinking

4. People Management

5. Result Orientation

6. Communication

7. Teamwork

Achievements

X - Axis

What – Objectives (60%)

From 2 to 4 quantitative objectives

will be identified

How – Behaviors (40%)

Evaluation of the employee

performance in the role, i.e. how the

employee “covers” the role.

Specifically this refers to how the

daily tasks, that are essential to the

position and are the reason why the

role exists, must be performed

Performance

Please note: X and Y axis have the same weight.

Com

pe

ten

cie

s

Achievements

Individual Performance is comprised of two main components: Achievements and

Competencies.

PERFORMALAT: THE MODEL – PERFORMANCE MANAGEMENT

2 – Performalat•Model•Process

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• Action Plan Form has been structured in the following 2

sections:

SECTION 1 - People Development:

• Development initiatives

• Training initiatives

SECTION 2 - Career Development and appointments.

Its structure describes the Group approach on the

Performalat Action Planning.

• Action Plan Guidelines offer to Leaders a framework to

enable the process of feedback and the planning of

future development, trainings initiatives, and career

development and appointments for the employee,

according to Performalat results and employee’s level.

• Discussion and sharing between Leader and Employee

on the Action Plan is crucial.

Employee’s Performalat Results Employee’s Action Plan Model

Definition of a detailed and agreed Action Plan for every single employee according to

the Parmalat Group approach.

+

Achievements

Co

mp

ete

ncie

s

Questionable

FitSolid

Learner

Top

Performer

Question

Mark

Above

Expectation

III

II

I Empty

PERFORMALAT: THE MODEL – ACTION PLAN

2 – Performalat•Model•Process

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The Succession Planning Model is managed from every Performance Cycle end, and aimed to find the right employee

to potentially success leaving or retiring people.

Successor should be identified for N, N-1 and N-2 and key positions / critical roles (e.g.. Cheese recipe maker)

The Employee personal info are a valid source of characterization for analyzing the person as a “successor”, so HR should continuously

invite the employee to self fulfill these fields

In order to guarantee a proper Succession Planning process deployment, it is necessary to fulfill the following information into the

Performalat “My Employee File”:

• Mobility

• Risk to Leave

• Reason for Leaving

• Impact of Loss

• Future Potential Rating

• Immediate Potential Rating

HR only is enabled to view and modify these information into the Employee File

The process of Succession Planning starts after the Year end Performance appraisal, when:

• The main dimensions of the employee performance have been evaluated and shared

• The employee Action Plan has been shared.

3Validate the

Readiness Form and Confirm

Succession Plan

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Identify Potential Successors

Periodically Monitor and Update Succession Plan (HR and Employee’s Manager Responsibilities)

2Confirm /

Integrate Potential Successors list

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Finalize Succession Plan

End of

Performalat cycle

PERFORMALAT: THE MODEL – SUCCESSION PLANNING

2 – Performalat•Model•Process

2 – Performalat•Model•Process

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Parmalat Group Performance Management Model is comprised of three

phases (Planning, Reviewing and Appraising) supported by a continuous

process of coaching .

Coaching and Feedback:

On-going process which takes place

throughout the entire Performance

cycle.

2. Performance Review:

In this phase the Employee’s

Achievements and

Competencies are reviewed,

through:

• Employee’s Self-assessment

• Leader’s assessment

• Consolidation

• Action Plan

1. Performance Planning:

This is the phase where the

following elements are defined:

• what is to be accomplished

(objectives)

• how daily tasks must be

carried out (behaviors)

• Technical Competencies

• Parmalat Core Competencies

.

3. Year-End Performance Appraisal:

Leader and Employee review, discuss

and share the performance appraisal

outcome and agree on future steps

Action Plan phase has been

included within the performance

management process

PERFORMALAT: THE PROCESS – PERFORMANCE MANAGEMENT

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Design new Performance Management model and processes

Select the suitable Talent Management suite by a choosing SuccessFactors as selected Software

Analyze, Configure and test the following SuccessFactors modules:

1. Goal management (objective setting)

2. Performance Management (competency and objective form management, workflow,...)

3. Employee Profile (es. organizational chart, employee profile)

4. Calibration (performance calibration activities management)

Four languages implemented: English, Italian, Spanish, French.

2011: Initially roll-out Performalat to Parmalat Group higher job positions (CEO, CEO -1 and CEO n-2)

and just for Corporate and Australia to all the white collars. 1.300 employees and 16 countries

involved.

2012: Extension to 5.500 employees and to Action Plan and Succession Planning modules.

PERFORMALAT: PROJECT SCOPE AND APPROACH

3 - Project Scope and Approach

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SuccessFactors is the system enabling Perfomance Management, Action Plan

and Succession Planning model and processes, by an user friendly interface

and effective features.

PERFORMALAT: THE SYSTEM - SUCCESSFACTORS

4 – System: SuccessFactors

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a

b

c

a

c

b

The Achievements vs Competencies Matrix is a custom report created for Parmalat

purposes. This report enables Leaders to view the cluster distribution of their team. For

each cluster will be able to see:

a) Number of employees belonging to the cluster

b) Percentage

c) Employee’s data.

Compared to other SF

reports, the launch of the

Achievements vs

Competencies Matrix

implies the prior uploading

of the necessary Trend

Data of the Leader’s team

employees.

Once uploaded the Trend

data the Leader will be able

to launch the report and to

see the distribution of his

team members in terms of

last Performance ratings.

PERFORMALAT: SUCCESSFACTORS – REPORTS ACHIEVEMENTS VS COMPETENCIES MATRIX

4 – System: SuccessFactors

4 – System: SuccessFactors

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Performalat Succession Plan Report:

This report is structured in the two

sections containing different information:

• Incumbent Section: This section includes

all the information about the incumbent.

• Nominee Section: This section includes all

the information about the nominee.

Incumbent First Name Incumbent Last Name Incumbent Local Job Role Job Classification Level Incumbent Risk to Leave Incumbent Manager First Name Incumbent Manager Last Name Nominee First Name Nominee Last Name Nominee Local Job Role

CARLO POLESE Group CIO 2b Low PIERLUIGI BONAVITA VINCE CAMPANELLI VP, Information Technology

CARLO POLESE Group CIO 2b Low PIERLUIGI BONAVITA RICCARDO PIAGGI Responsabile Organizzazione Gruppo

CARLO POLESE Group CIO 2b Low PIERLUIGI BONAVITA ENRICO FEREOLI Solution Manager

ANTONELLA RIGOLLI Responsabile Affari Societari 3 PIERLUIGI BONAVITA MONICA STRIZZOLO

ANTONELLA RIGOLLI Responsabile Affari Societari 3 PIERLUIGI BONAVITA TONY CUGLIARI VP, Legal Affairs & General Counsel

ANTONELLA RIGOLLI Responsabile Affari Societari 3 PIERLUIGI BONAVITA DARIA ANGELINI Internal Audit Senior specialist

ANTONELLA RIGOLLI Responsabile Affari Societari 3 PIERLUIGI BONAVITA LUIGI CHIARA

GIOVANNI DELL'AMICO Responsabile Ammnistrazione 3 Medium PIERLUIGI BONAVITA ALESSANDRO MAGNELLI

GIOVANNI DELL'AMICO Responsabile Ammnistrazione 3 Medium PIERLUIGI BONAVITA ROBERTO GUADAGNINI Direttore AFC

GIOVANNI DELL'AMICO Responsabile Ammnistrazione 3 Medium PIERLUIGI BONAVITA GIANNI CERQUETANI

Job Classification Level Date appointed in the local Job Role Nominee Performance Rating Label Nominee Future Potential Rating Nominee Immediate Potential Rating Nominee Risk to Leave Nomination Readiness Succession Initiatives

Executive&VP N/A Not Defined / Pending

3 N/A Medium A Medium Within 12 months kkkkkkkkkkkkkk

3 N/A Medium B Medium Not Defined / Pending kjcbkvwjnok

6 N/A Above Expectation Not Defined / Pending

Executive&VP N/A Within 24 months

5 N/A Low Within 12 months fafafafafafafafafafafaf

5 N/A Immediate

4 N/A Medium B Low Not Defined / Pending XXXXXXXXX

4 N/A Not Defined / Pending

4 N/A Not Defined / Pending

Successor Readiness Assessment Form :

This report contains all the information

needed for the HR representative and for the

Incumbent manager to evaluate the

readiness of the potential successors.

This report will also include

the Succession initiatives

defined for the potential

successor.

PERFORMALAT: SUCCESSFACTORS – SUCCESSION PLANNING

Succession Hierarchy

Employee

Successor Successor

HR

Employee’s

Leader

Role Description

Employee to be succeeded

Leader

Employee to be succeeded

Employee’s potential

Successor

HR Succession Planning User

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Pros

1 - Software as a Service (SaaS) consolidated experience and robust technologies (security,

performance, user friendliness)

2 - High rate of coverage vs Parmalat Performance Management requirements

3 - Quickness in implementing the system; easiness to configure the performance management workflow

and other features; effective project management and change management.

Cons

1 - Some effort to fit Successfactors configuration to Parmalat Performance management model

specificity, anyway everything has been worked out by workarounds.

2 – Managing the configuration Through virtual meetings and call conferences doesn’t guarantee a

quicker and more accurate effectiveness (SuccessFactors standard configuration workbooks

in some case can’t collect effectively specific requirements)

PERFORMALAT & SUCCESSFACTORS: PROS & CONS

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• The Forms

BACKUP

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Employee’s Information and

Introduction Section

Objectives and

Behaviour Section

Technical and Core

Competencies Sections

The Performance Management Form summarizes: Employee’s information, Objectives

and Competencies (Core and Technical) and the related comments. This Form is where the

Leader and the Employee will gather their own evaluations and represents the basis for the

whole Performance Cycle

PERFORMALAT: SUCCESSFACTORS –

PERFORMANCE MANAGEMENT FORM 4 – System:

SuccessFactors

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Employee’s Information and

Introduction Section

SECTION 1 - People Development:

A. Development initiatives

B. Training initiatives

SECTION 2

Career Development and appointments

The Action Plan is collected in a form called “Action Plan Form” which gathers the initiatives

identified for the Employee according to his last year performance overall results and job

level

PERFORMALAT: SUCCESSFACTORS – ACTION PLAN FORM

4 – System: SuccessFactors