Management Meeting November 2-3, 2004 Cologne, Germany

Management MeetingNovember 2-3, 2004 • Cologne, Germany

Blue Sky

Denise Zutz Vice President, Strategy, Investor Relationsand Communication

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A program focused on our employees and

the environment to benefit our communities.

Blue Sky

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Why Blue Sky?

Aligned with expectations for sustainability

Builds recognition of good works

Provides a strategic approach to community involvement and philanthropic efforts while furthering business goals

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Blue Sky Objectives

Enhance the company image and brand with customers, employees and communities

Provide differentiation from our competitors

Increase employee morale and loyalty

Reinforce global corporate values

Help define and document a culture of leadership

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Where we can make an impact, track our results and actively involve employees

Blue Sky Development

Ranked potential “global cause” issues

Input from global leadership– Alignment with our businesses– Level of global involvement– Existing investments and programs– Uniqueness– Likely employee interest

Output: Focus on two areas– Environment– Leadership

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Blue Sky Focus

Environment Strong alignment with

businesses and values

Many existing activities

Globally applicable

Wide range of external organizations for alliances

Broad potential for employee involvement

Leaders Strong alignment with values

Develops future leaders to support business growth

Helps improve our communities

Launched May 2004

Niche: Resource efficiency (resulting in reduced air and water pollution and reduced waste)

Niche: Leadership skills development, ethics, training, diversity, work experience and community involvement

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Blue Sky Leaders

Leader development strategy– Develop by doing– Take charge– Seek support

Increase visibility of leadership activities

– Communication, public relations

As we develop leaders, we help the community

– Employees give their time and expertise

– Employees gain new skills through volunteerism and community leadership activities

Management roll-out starts today

– Communicate message to your leadership teams

All employee rollout Jan/Feb 2005

– Meetings/open houses– Employees to articulate their

development, past and future

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Partnerships under consideration Big Brothers / Big Sisters Mobile Creches Hope School Special Olympics

Blue Sky Involve

Community partnerships – Locations of employees– Ability for participation and volunteerism

Corporate funding of charitable organizations and activities globally

– Funding via Johnson Controls Foundation limited by law to the United States

– Establishment of new funding mechanism reflects increasing globalization

– Considering options

Launch: Spring 2005

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Blue Sky Advisory Council

Human Resources / Leadership Development Darrell Middleton – CG, North America Christer Bergstroem – AG, Europe Bob Ellis – AG, North America

Environment Paul von Paumgartten – CG, North America Guido Leunens – AG, Europe

Marketing / Sales /Customer Relations Michael Su – CG, Asia Garry Cardwell – AG, Asia Bill Nonnamaker – Battery, North America John Fiori – Europe

Legal Patrick Nettesheim – Battery, Europe

Leadership from across the businesses and the globe

Rebecca Andrew,Manager, Blue Sky

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Blue Sky Success

Launches are just the beginning

Expect leadership to promote and support program and its objectives

More to come as expectations of global companies continue to increase

Objectives• Enhance the company image and brand

with customers, employees and communities• Provide differentiation from our competitors• Increase employee morale and loyalty• Reinforce global corporate values• Help define and document a culture of leadership

Your leadership is essential!

Make a difference; improve our environment and the lives of our people and our communities

Stronger Leaders, Stronger CompanyGlobal Leadership for Growth

Susan Davis Vice President, Human Resources

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JCI Growth

$1.4B $6.1B

$26.5B

1984 1994 2004

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Global Presence

30+ countries

500+ locations

Johnson Controls Worldwide Locations

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Session Objectives

Involve you

Explore Leader Development as a Strategic Initiative

Review results of the Johnson Controls Leadership Research

Use the Leader Expectations Model

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JCI Growth

$26.5B

$41.5B

2004 2010

Senior Leaders 225 350

470

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Options: Hire or Develop

Fortune 500

Inside

Outside

Traditional succession plans force organizations to find 75% of successors from outside the organization

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Options: Hire or Develop

Johnson Controls

Inside

Outside

JC finds 75% of successors from inside the organization

Fortune 500

Inside

Outside

Traditional succession plans force organizations to find 75% of successors from outside the organization

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Outside Hiring Constraints

Scarcity of outside talent– Not willing to relocate– Promises re: future– Don’t meet our standards

Expensive to hire outsiders– 2 X first year salary

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Inside Availability Constraints

Johnson Controls success means our people are recruiting targets

Anticipated retirements for experienced senior leaders

Work / Life Balance

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Sales Tell Us Where We Need to Hire

Americas55%

Europe39%

Asia6%

$26.5BSales

2004

Americas56%

Europe31%

Asia13%

$41.5B

2010 Projected

Projected area of greatest global growth

Projected area of greatest global growth

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Strategic Summary

Our growth path means we need to develop more leaders

We have established our leader goal for 2010

We are forecasting a need for 470 leaders to fill 350 positions

Develop more leadersGROWTH

Develop diverse leaders capable of handling increasingly complex jobs

GLOBAL

Commitment

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Blue Sky Leader Development Strategy

DEVELOP BY DOING

TAKE CHARGE

SEEK SUPPORT

DEVELOP BY DOING

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“The illiterate of the future are not those who

can’t read or write but those who cannot learn,

unlearn and relearn.”

- Alvin Toffler, author Future Shock

DEVELOP BY DOING

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Global Leader Challenges

Today

We recruit global leaders in the countries where we do business

– 47 of top 120 are non US citizens

Senior leaders have expat experiences

– 40 of top 120 senior leaders have been or are currently expats

We require all global leaders to travel and spend significant time around the world

In the past…

Globalization meant training Americans to be global thinkers

DEVELOP BY DOING

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Global Leader Opportunities

Transfers…-between Groups and

-between Groups and Corporate

Benefits...-sharing best practices-first hand knowledge-energizes careers

Results in...-more leader development and a stronger company

Requires...-a new mindset

DEVELOP BY DOING

TAKE CHARGE

“Do what you can, with what

you have, where you are.”Theodore Roosevelt

SEEK SUPPORT

FeedbackCoaching and mentoringResources and training

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We All Need Support

Of Top 120 at Johnson Controls 66% in current job under 2 years 33% have NO identified successor who is “ready now” 78% have 5 to 35 years of experience

SEEK SUPPORT

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Leader to Leader Exchange

Share / example– DEVELOP BY DOING– TAKE CHARGE– SEEK SUPPORT

…that had a positive impact on you at Johnson Controls

Reciprocal and balanced Begin with person with longest tenure

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Blue Sky Leader Development Strategy

DEVELOP BY DOING

TAKE CHARGE

SEEK SUPPORT

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eXtreme Learning Program Talent Focus

National Origin of Participants

Total 37US 20UK 3German 3Singapore 1Mexico 1Spain 1China 4Czech Republic 1Italy 2France 1

Job Changes to Date 14

leaders capable of moving

global enterprise-wide representation

Expatriates 11

high potentials

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Leaders with … Greater knowledge of

company New skills and perspectives Expanded network Experience with a tough cross-

company project

Company with … Development for senior high potentials Increased knowledge of high potentials Pool of ready now high potentials Renewed commitment to leaders

developing leaders

Global Leader Development

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Key XLP Program Elements

Personal Assessment & Development

Solving Real Business Problems

Practical Leadership Skills

Business Knowledge & Exposure

Peer Networking

Team Building

Organization & Presentation of Ideas

Manfred Rotterdam

Interiors - Europe

Jose-Miguel Lopez-Ascaso

Battery - Europe

Guy Holden

Controls - Europe

Developing a Model for Global Leadership

How we built it

What we found

Research

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Project Goals

Clarify expected leadership behaviors Identify the key success factors/behaviors that define

outstanding performance Use Johnson Controls wording to describe both

current and future behavior requirements Involve senior global leaders in the

data collection process

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What do Johnson Controls best leaders do?

The Johnson Controls

profile

Develop Johnson Controls

Leader Expectations

Model


Leader Expectations

Model

Project Steps

Interview Senior Leaders


On-line Survey Senior Leaders


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Research Findings

Demonstrates Integrity

Drives Accountability

Focuses on Customer

Shows Respect for Others

Develops Employees

Inspires Others

Builds Teams

Influences Others

Thinks Analytically

Thinks Strategically

Drives for Results

JOHNSON CONTROLS INTERVIEW & SURVEY

Most Frequently Needed

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What do Johnson Controls best leaders do?

What do other world-class leaders do?

The Johnson Controls

profile


Leader Expectations

Model


Leader Expectations

Model

Project Steps

Global Leader Profiles

Global Leader Profiles





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Research Findings


Drives Accountability Focuses on Customer Shows Respect for Others Develops Employees Inspires Others Builds Teams Influences Others Thinks Analytically Thinks Strategically Drives for Results Organizational Awareness

Information Seeking

Self Confidence

Initiative

JOHNSON CONTROLS INTERVIEW & SURVEY

GLOBAL FORTUNE 500 COMPANIES Most Frequently Needed

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Research Findings

Johnson Controls leaders value UNIQUE behaviors that are not observed frequently in other global companies

Demonstrates Integrity“Doing the right thing”

Shows Respect for OthersShowing humility and treating others with dignity

Drives AccountabilityTaking personal ownership and creating a discipline in others to do the same

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Research Findings

Johnson Controls leaders value the following behaviors STRONGER than other global leaders

Drive for ResultsGetting energized by the challenge and getting the job done personally

Builds TeamsEnlisting others in the quest for solutions

Thinks AnalyticallyAttacking problems and looking for ways to improve performance

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Research Findings

Johnson Controls leaders value these leadership behaviors LESS FREQUENTLY than other global leaders

Thinks StrategicallyTaking a long-term, multi-functional, multi-geographic perspective to business challenges

Influences OthersInfluences Others without direct authority – demonstrating the ability to work across a global matrix

Develops EmployeesHaving a sense of urgency to develop bench strength and devote significant time and energy to mentoring/coaching others

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JCI Leaders Share Common Experiences

Stretch assignments

Mentors and role models

Trust in senior management

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Overall Themes

Outstanding leadership

Demonstrates integrity

Shows respect

Drives accountability

Customer oriented

Leadership Expectations ModelA product of our current leaders

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Leader Expectations Model


Susan Davis

Drives Accountability

John Barth

Focuses on Customer

Susan Davis

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“Radical innovation is innovation that has the power to change customers expectations,

alter industry economics and redefine the basis for competitive advantage.”

- Leading the Revolution by Gary Hamel

Shows Respect for OthersJohn Kennedy

Develops EmployeesSteve Roell

Builds TeamsSusan Davis

Thinks StrategicallyKeith Wandell

Leader to Leader ExchangeWith a Partner; Disclose and Discuss

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How Will We Use It?

Succession planning

Selection

Development planning

Performance management

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Leaders Developing Leaders P R E V I E W

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Feedback

Stronger Leaders, Stronger CompanyGlobal Leadership for Growth


Break


Documents

Management Meeting November 2-3, 2004 Cologne, Germany