Accelerating Your Success™11 Accelerating Your Success™

Steve ChurchPresident, Avnet Integrated Resources

Chief Corporate Business Development & Planning Officer

Growing Service SolutionsBusiness Marketing AssociationJanuary 17, 2012

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Session Agenda

• Avnet Overview• Historical Context• Employee

Engagement • Customer Loyalty • From Service to

Services• Lessons Learned Avnet Museum

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A Little About Me

• Board member – Texas A&M University’s

Industrial Distribution Program– ASU’s Center for Services

Leadership, W. P. Carey School of Business

• Bachelor of Science from Cal Poly Pomona

• Three kids, two cats • Avid golfer, Red Sox fan,

and grandfather

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Forget about that, it’s all about my Grandson!

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Avnet Overview

• Founded in 1921• 50 years on the NYSE• No. 132 on 2011 Fortune 500• Fortune’s Most Admired for

Technology Distribution: 2009, 2010, 2011

• FY ’11 Revenue = $26.5B• 300+ locations in over 70 countries• 300 suppliers/100,000 customers• 72 acquisitions since 1991• 17,000+ employees worldwide

EMEA32%

Asia25% Amer

43%

TS43%

EM57%

FY’11 - $26.5B

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Avnet’s Strategic Framework

1. Integrity 2. Customer Service 3. Accountability 4. Teamwork 5. Innovation

Performance- and Values-based Culture of Excellence

Be the preferred partner to our

customers and suppliers

Profitable Growth

Attract, engage, develop and reward the best employees

People Development

Enhance efficiency, productivity and the customer experience

Operational Excellence

Deliver Industry-leading Economic Profits

Premier Technology Marketing, Distribution and Services Company, Globally

Historical Context

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About Change Management Practices

• It is always easier to implement major change initiatives when a “Burning Platform” exists

• I didn’t say it was pleasant, just easier

• 2001-2003 tech implosion was our burning platform

• Are employees in or out?

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Change…

Everything is Changing.Everything is Changing.It always will. It always will.

Winners recognize patterns using the fewest number Winners recognize patterns using the fewest number of dots.of dots.

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Where Our Journey Began

• Tech Implosion of 2001• Cataclysmic revenue decline

– 60% of WW semi sales– 40% AVT Inc. revenues

• Aggressive remedial actions for 8 quarters– Reduction of 35% of global workforce– Reduction of $2B WC and debt

Rev

enue

& E

xpen

ses

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Post Bubble Outcome

• Emerged stronger – Balance sheet– Operating leverage– Talent– Resolve– But what about

declining margins?– Shareholder Value

Creation?

1212

Avnet Launched Two Major Initiatives

• Value-based Management– Most successful change

management initiative in Avnet history

• Services and solutions– Took years to realize

• Why the difference?– VBM was an extension of our

core business– Services/solutions was not

Driving Value+ Driving Growth= Premier Faster!

Employee Engagement

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The Service Value Chain

Smart people management leads to a more productive and engaged workforce, a more loyal customer base

and higher shareholder returns

“Putting the Service-Profit Chain to Work,” Heskett, et al., – Harvard Business Review

People PracticesPeople

PracticesEmployee

Engagement and

Organizational Climate

Employee

Engagement and

Organizational Climate

External Service Value

External Service Value

Customer Satisfaction

Customer Satisfaction

Customer Loyalty

Customer Loyalty

ProfitabilityProfitability

RevenueRevenue

Employee Retention

Employee Retention

Employee Productivity

Employee Productivity

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The Engaged Employee

• Commitment:Commitment: Motivation, Emotional Bond

• Line of Sight:Line of Sight: Employees understand where the company is going and what their role is in helping the company get there

Commitment + Line of Sight = EngagementCommitment + Line of Sight = Engagement

What is an engaged employee?What is an engaged employee?

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• They become engaged because:– They believe their work is meaningful– They trust and respect senior management– They have a healthy working relationship

with their supervisor based on goals and feedback

– They are proud of their company’s brand– They believe they are receiving the training

& development needed for their current job & the future

Engaged Employees

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Why it Matters

• They have an emotional connection to the company

• They are willing to go above and beyond because they want to, not because they have to

• They are our best recruiters• They are invested in making

the company better• They are loyal• They believe in the mission of

the company and live the core values every day

Engagement

Performance

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Employee Priorities shifted during the Great Recession: Employers and employees are out of sync

Ranking* Employer View Employee View

1 Competitive base pay Competitive base pay

2 Reputation of the organization as a great place to work Challenging work

3 Challenging work Convenient work location

4 The business/industry of the organization Opportunities for career advancement

5 Opportunities to learn new skills Vacation/holiday/paid time off

6 Opportunities for career advancement Reputation of the organization as a great place to work

7 Organization’s financial health Flexible Schedule

* Ranking represents the frequency the item was selected as one of the top five reasons an employee would join their firm, from a list of 26 items. Employee data come from the 2010 Towers Watson Global Workforce Study.

This presents an opportunity!This presents an opportunity!

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Winner of the “It’s Not My Job” Award

Customer Engagement

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Customer Service Week

• Employees say “Thank You” throughout month of October

• Avnet celebrates Customer Service Week globally– For customers and employees

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The Key to Customer Success

From Service to Services

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Service is Foundational

“If our company delivers poor service on the basics (i.e. processing line item transactions),

how likely are our customers to purchase sophisticated services and solutions from

us?”

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Awareness:• What is the change?• Why are we doing it?• What happens if we do not do it?• Why now?Desire:• What is in it for meKnowledge: • Training & EducationAbility:• Applying the trainingReinforcement:• Practice• Feedback, metrics and compensation

The ADKAR® Model

The five building blocks for The five building blocks for successful successful PERSONAL changePERSONAL change

Awareness

Desire

Knowledge

Ability

Reinforcement

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What is in a CHANGE PLAN?

1. Communications (time phased, targeted & specific)

2. Training (specific to the new way)

3. Coaching (to sponsors & managers)

4. Resistance Management (manage inevitable resistance)

5. Sponsorship (build the coalition by assessing the field)

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Action Items for Marketers

• Understand your companies path for becoming a customer service company

• Transition marketing strategies from products to solutions and services

• Marketing/communications is critical for successful change management

• Keep in mind that successfulchange management initiativesbegin and end with solid communications

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Employee Engagement / Enterprise Performance

*Towers Watson and WorldatWork 2009/2010 U.S. Strategic Rewards survey

Avn

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Em

plo

yee

Eng

agem

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Avn

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EP

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Total Employees 9,900 9,800 10,900 11,700 12,800 12,900 14,200 17,600

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Thank You!

Steve Church

President, Avnet Integrated Resources Chief Corporate

Business Development & Planning Officer

Avnet, Inc.

(480) 643-7412

steve.church@avnet.com