Challenging Times Pose Unique Opportunities for Shared Services

Copyright © 2011 by ScottMadden, Inc. All rights reserved.Copyright © 20101by ScottMadden, Inc. All rights reserved.

Challenging Times Pose Unique

Opportunities for Shared Services

Judy McFarland, VP HR Shared Services,

HR&A Process and Technology Mission Assurance

Samuel T. Poston, SVP, ScottMadden, Inc.

March 1, 2011

Copyright © 2011 by ScottMadden, Inc. All rights reserved.

Judy McFarland

1

Vice President

HR Shared Services, HR&A Process and

Technology, and Enterprise Shared

Services

� More than 30 years HR and operations experience

� 2007 – Stands up HR Service Center for Northrop Grumman

� 2010 – Launches Security Shared Services

� 2010 – Payroll begins using HRSC tools

� Leads HR&A Process and Technology function

2

Evolution of Shared Services Evolution of Shared Services

Within Northrop GrummanWithin Northrop Grumman

Judy McFarlandJudy McFarland

Vice President

HR Shared Services,

HR&A Process and Technology

Mission Assurance

33

CorporateCorporate HeadquartersFalls Church, Va.

UK Headquarters London

Aerospace Systems Redondo Beach, Calif.

Information Systems McLean, Va.

ShipbuildingNewport News, Va.Pascagoula, Miss.

Electronic Systems Linthicum, Md.

Technical Services Herndon, Va.

Our vision is to be the most trusted Our vision is to be the most trusted

provider of systems and technologies provider of systems and technologies

that ensure the security and freedom that ensure the security and freedom

of our nation and its allies. of our nation and its allies.

• Grumman Corporation• Vought Aircraft (Later Sold)1994

• Westinghouse Electronic Systems Group

• Logicon

• Inter-National Research Institute

• California Microwave• Data Procurement Corporation

• Teledyne Ryan Aeronautical

1996

1997

1998

1999

• Navia Aviation• Comptek Research• Federal Data Corporation• Sterling Federal Systems Group

2000

2001 • Litton Industries• Aerojet • Newport News Shipbuilding

2002 • TRW • Fibersense Technology Corporation

2003 • XonTech• Illgen Simulation Technologies

2005 • Integic Corporation

2007 • Essex

2008 • 3001 International, Inc.

Our Road to Shared Services Begins

Northrop Grumman Acquisition HistoryNorthrop Grumman Acquisition History

HEADER / FOOTER INFORMATION (SUCH AS NORTHROP GRUMMAN PRIVATE / PROPRIETARY LEVEL I)

Real EstateReal Estate

IndustrialIndustrial

Security Security

Environmental, Environmental,

Health & SafetyHealth & Safety

Enterprise Enterprise

Resource Resource

PlanningPlanning

Security Shared Security Shared

ServicesServices

HR Service HR Service

CenterCenter

Travel ServicesTravel Services

Procurement Procurement

Shared ServicesShared ServicesFinancial ServiceFinancial Service

CenterCenter

Information Security

Flight Flight

Operations Operations

Corporate Office Corporate Office

AdministrationAdministration

Jan 1, 2000Jan 1, 2000

NGC OpensNGC Opens

1 Service Line1 Service Line

20082008

Legacy ESS EstablishedLegacy ESS Established

4 Service Lines4 Service Lines

20102010

ESS ExpandedESS Expanded

12 Service Lines12 Service Lines

20002000

Leveraging Leveraging

Assets BeginsAssets Begins

Leveraging our talent and resources to provide Leveraging our talent and resources to provide

the best service at the best value to our sector and corporate pthe best service at the best value to our sector and corporate partnersartners

IQPC RecognitionIQPC Recognition••Best New Shared Service Best New Shared Service ––

20032003

••Best Use of Automation Best Use of Automation ––

20052005

IQPC RecognitionIQPC Recognition••Best New Captive Services Best New Captive Services

DeliveryDelivery

–– 20102010


Enterprise Shared Services Enterprise Shared Services is a single, integrated shared service organization focused on improving our company’s operating and financial performance by reducing operating costs,providing operationally focused and high quality services, and developing and executing strategies for continuous improvement.

We leverage our talent and resources to provide the best serviceat the best value to our sector and corporate partners.

Gloria FlachGloria Flach

Corporate Vice Corporate Vice

President & President &

ESS PresidentESS President

Customer Service is our #1 PriorityCustomer Service is our #1 Priority

Customer Intimacy is our CornerstoneCustomer Intimacy is our Cornerstone

Enterprise Shared ServicesEnterprise Shared Services


7

Five Value AreasFive Value AreasA Formula to Improve PerformanceA Formula to Improve Performance


Product, Process & Technology LeadershipProduct, Process & Technology Leadership••Common & IntegratedCommon & Integrated

••SecureSecure

••AffordableAffordable

••greeNGgreeNG

Service ExcellenceService Excellence••ExecutionExecution

••ComplianceCompliance

Culture of EngagementCulture of Engagement••IntegrityIntegrity

••AccountabilityAccountability

••PartnershipPartnership

••Diversity & InclusionDiversity & Inclusion

Culture of PerformanceCulture of Performance

LLee

aaddrreesshhii pp

EE xx cc ee ll ll ee nn ccee

Ennggaaeegg

mmee nntt


Numerator: Numerator:

Value Delivery Value Delivery

Savings + Cost AvoidanceSavings + Cost Avoidance

Denominator: Denominator:

Enterprise OpportunityEnterprise Opportunity

Delivery Cost & Corporate Spend Delivery Cost & Corporate Spend

ESS Value Delivery Formula ESS Value Delivery Formula

Operating Margin %Operating Margin %==

Improving the companyImproving the company’’s operating & financial performance s operating & financial performance

as a single, integrated entity that effectively reduces operatinas a single, integrated entity that effectively reduces operating costsg costs


2010 Performance Scorecard2010 Performance Scorecard

ShareholdersShareholders

Financials

Customers (Internal)Customers (Internal)

Quality

Customer Satisfaction

EmployeesEmployees

Engagement

Diversity


IT SolutionsIT Solutions

• Customer Base: All NGC Employees

• Network

• Mobile Devices, PCs, Servers

• Unified Messaging

• Applications

Procurement Shared ServicesProcurement Shared Services

• Sourcing Customer Base: Enterprise-wide

• Buying Customer Base: OneSource sectors

• Purchasing Transactions

• Enterprise Agreements


12

Financial Service CenterFinancial Service Center

• Customer Base: Corporate, ESS, NGAS,

NGIS, NGTS

• Central Accounting

• Payroll

• Cash Management

• Cost Accounting Travel ServicesTravel Services

• Customer Base: > 53,000 travelers

• Domestic and International Coverage

• Company Travel Card

• Online Booking

Office AdministrationOffice Administration

• Facility services, administration and planning


13

Environmental, Health & SafetyEnvironmental, Health & Safety

• Environmental, health and safety risk mitigation

• NGC environmental impact reduction

• Remediation execution

• Operational audits

• EH&S Leadership Council

Industrial SecurityIndustrial Security

• Emergency preparedness and crisis management

• Badging and physical access control

• Proprietary Information control

• Awareness training

• Corporate Security Council


14

HR Service CenterHR Service Center

Customer Base: 90,000 employees

• Tiered delivery service

• Over 35 harmonized HR policies/processes

• Automated document management

• Administer Leaves of Absences

• Continuous process improvement

Security Shared ServicesSecurity Shared Services

Customer Base: 90,000 employees

• Pre-employment investigations

• Initial security clearance processing

• Periodic reinvestigations

• Security awareness

• Compliance

Enterprise Resource PlanningEnterprise Resource Planning

• Customer base: ~56K SAP system users

• Average 7K concurrent users

• > 17M transactions/month


Focus on HR Shared ServicesFocus on HR Shared Services

Standup

first HR

Service

Center in

Northrop

Grumman

• Move to Texas

• Build the Facility

• Harmonize Core HR

Processes

• Hire-Train Staff

Grand Opening Dec 9

Serving 10,000 Serving 10,000

CustomersCustomers

2008200820072007

• Phase transitions

• Leverage tools &

technologies to

support newly

established Security

Shared Services

Serving 67,000Serving 67,000

CustomersCustomers

20102010

• Phase transitions

• Improve processes

• Enhance tools

• Measure performance

• Satisfy customers

• Manage change


CustomersCustomers

20092009 2011

• Last transition in

January

• Begin functioning

entirely as an

operation


CustomersCustomers


ESS Mission Assurance FocusESS Mission Assurance Focus

Strengthening the Basics . . . Creating a Quality MindsStrengthening the Basics . . . Creating a Quality Mindsetet

StructureStructure

ProcessProcess

Tools Tools

ComplianceCompliance

CULTURECULTURE


• Integrated, consistent

service & solutions

• Risk mitigation

• Measure performance

• Service excellence

Enterprise Shared ServicesEnterprise Shared Services

BENEFITSBENEFITS

• A seat at the corporate

table…ESS is

regarded as a sector

• Stakeholder support

• Customer satisfaction

• Leverage tools and

technologies

ENABLERSENABLERS

• Demonstrate value

• Ensure

competitiveness

• Revalidate existence

• Resistance to change

• Do what we say

CHALLENGESCHALLENGES

Real Estate

IndustrialSecurity

Environmental, Health & Safety

Enterprise Resource Planning

Security Shared Services

HR Service Center

Travel Services

Procurement Shared Services

Financial Service

Center

Information Security

Flight Operations

Corporate Office Administration

ESS Value Delivery Model: Process & Technology Leadership, ESS Value Delivery Model: Process & Technology Leadership,

Culture of Engagement, and Service ExcellenceCulture of Engagement, and Service Excellence

Business

Challenging Times Pose Unique Opportunities for Shared Services