Because People Matter –Sustaining A Culture of Service

& Appreciation

Company Overview

Founded in 1905 – Florence Butt

Commitment to hard work & community service

1919 – Howard E. Butt takes over the business

1927 – second store opens in Del Rio

1928 – HQ moves to RGV

1938 – HQ moves to CC

1971 – Charles becomes President; $250 million in sales

1981 – HQ moves to SA

Today – 315 stores in Texas & 36 in Mexico; $15 billion in sales

To effectively connect and engage our Partners in a way that celebrates and enhances our culture both internally

and externally.

Objectives:Partner communication -

• Reinforce our internal brand “Because People Matter” through multiple channels, both digital and print, to ensure message clarity & consistency

• Streamline communications flowing from all Corporate Administrative areas to the stores

• Strategically manage new Partner Portal • Continually educate the business on new and creative ways to communicate key

messages to specific audiences • Measure our results - reinvent and administer Partner engagement survey

Rewards & Recognition—• To honor, acknowledge and celebrate all Partners • Reinforce desired behaviors• Continually make Partners feel valued

Partner Communications & Culture - Our Mission

Bold Promise:

H-E-B Partners taking a stand together to build the Greatest Retailing Company

To improve the lives of our Partners and Customers

Customers:

Service, quality and

Value

Partners:

Great Place to

Work

Business Results:

Sales and Profitability

Communities:

Helping Here

Our Culture: Each and Every Person Counts

Mission

Purpose

Foundation

Strategic Pillars

Our Cultural Foundation

Our Core Values

Compete to Win - DRIVE

Care for People - HEART

Customer Service - SERVICE

Work Ethic - COMMITMENT

Community Service – COMMUNITY

INNOVATION

Our Employer Brand

It’s Different Here Because People Matter:Human Touch, Authentic, Meaningful and Purposeful

Developed through extensive focus groups with Partners throughout the company

Our guide for every action we take and every decision we make

Simple, easy to understand language

Emphasis on REAL people and culture

Tools you can use…Brand Guidelines for Because People Matter

Online Resource Library

Communication calendar

Our Goal

An engaged workforce – our Partners understand the mission & purpose of the organization and their role in achieving it each day.

Believe that H-E-B is a great place to work

Over 70,000 loyal ambassadors of the Brand

Knowledgeable about our products and our business

Passion & enthusiasm = a great shopping experience for our customers

Partner Engagement Defined:

Unlocking Partner Potential to Drive High Performance

The extent to which Partners are motivated to contribute

to organizational success, and are willing to apply

discretionary effort to accomplishing tasks important to

the achievement of H-E-B’s goals

9

Our Objectives

Engage the hearts and minds of our Partners through relevant and meaningful communication

Communicate our higher purpose – “to improve the lives of our Partners and Customers”

Define what it takes to lead The H-E-B Way

Recognize and reward desired behaviors

Measure our results – new Because People Matter survey linked to business results

Focus on three key drivers of engagement –communication, leadership and recognition

Communication

A perfect storm…

Now is the time for clarity & transparency:

Uncertain economic environment

Expense reductions

Aggressive change & growth agenda; complexity of the business

Leadership transitions – new H-E-B President named in January, 2010

Our audience demands and expects itOver 40% of our Partner population is Gen Y (1976-1982)

Influenced by friends & peers more than authority

Highly technological, social, and impatient

2008 Communication Audit

What did we learn?Bold Promise Survey – communication consistently rated as an opportunityStore feedback – push versus pull strategy; too many competing messages and prioritiesCommunication audit - “Tower of Babble” – reliance on e-mail as our only channel (100-150 e-mails per day), multiple web sites, newsletters, etc.EOC Research – our Partners couldn’t find information on the basics, i.e. benefits & career opportunitiesMost powerful form of communication is face to faceCulture – Partner experience varies by work location and leadership Our culture is the one thing about HEB that our Partners would never change…

What action should we take?

Communication Strategy for the Future:

Tell the story:Clear and consistent messaging – “connecting the dots”Emphasis on face to face interactionsFocus on behaviors – what action do we want Partners to take?Hear it Here first mentality“Pull” versus “push”Two-way discussion

Balancing the Conversation

Partners want to know:

What to expect: As an H-E-B Partner

How we’re doing: Company info, strategy & results

What’s in it for me: Career opportunities/job postings, 401K, scholarships, training

How I fit in/alignment with my values: My role, my relationship with customers and leaders, where I am in the organization, why our products are better, how my actions have a direct bearing on results

How can I make a difference?

We want to teach them:Passion for our products and servicesActions needed to drive resultsTheir role in the bigger pictureGreat customer service techniques

The Big Picture

Examples

Application

Think

PartnerNet

What do I want

them to know?

Merchant

Roadmaps,

Promotions,

Contests

Task Manager

What do I

want them to

do?

Build Display,

Complete Survey,

Order Product

E-mail

I want to talk

to you.

Question for UD

or DM at Store

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Now you’re talking…

Multiple channels where Partners can access information

AnnualLeadership Kickoff Meetings

Bi-annualBecause People Matter Meetings at every work location

QuarterlyStrategic updates/financial results; videos from the CFO posted to PartnerNet for leaders

Bi-MonthlyPrinted newsletter distributed to all work locations

Monthly/PeriodRegional Leadership Exchange Sessions (two/month)Partner Exchange/Admin roundtables

Channels Cont’d.

WeeklyE- mail news updates - one page PDF to be printed & posted (database created through Valued Partner Perks)

BenefitsCareer opportunitiesPartner Perks/Own BrandCompany strategy & cost saving

Daily Personalized web portal; ability to access from home E-mail Partner feedback loopLeadership on Location visits

As NeededPinpoint Messages and Text

A Look at the Last Year

Launched in September 2009

50,642 distinct users over the past 30 days

Since launch, we’ve collected feedback from Partners through:

Partner Focus group sessions

User Interface experts

Feedback form on PartnerNet

• Home page (60,001)• Video: Back-To-School (8,898)• Video: Blooms (8,239)• Video: Eat Better (5,531)• Video: Darrell Cost Conscience (5,058)• My Career & Life (2,794)• Video: H-E-Buddy (1,999)• My Career (1,496)• Search (1,492)• My Money (938)• Phone Directory (935)• Partner Search (902)• WGO (895)

Hits in

last 30

days

PartnerCast

Internal video solution –Think YouTube

BlogsVideo RatingsCommentsMost Popular Rankings

Launched June 14th in conjunction with companywide Get Movin’ eventAll Partners can upload videos (approval required prior to appearing on the site)Videos only available on the H-E-B networkGo Live Channels: Produce, GM/Drug, Shelf Edge, Healthy at H-E-B

More Exciting Updates

Text it to Me!

Partner Text Alerts will give Partners the opportunity to connect with H-E-B on various topics such as Valued Partner Perks, Health and Wellness, Crises Communications, Recalls, etc.

Partners can choose the text channels you want to follow!

Launches Sept. 29th

Leadership

Leading the H-E-B Way

Leadership Statement

A Head for Business. We approach our business with an unwavering focus on integrity, innovation, strategic thinking and high standards.

A Heart for People. People are at the heart of everything we do. Every decision we make and every action we take, we do with our Partners in mind. At H-E-B, the individual ideas and contributions of each and every person really do matter.

A Passion for Results.We thrive on setting aggressive goals for ourselves and continually seeking new ways to drive performance, improve efficiencies and achieve results.

Leadership on Location

Objectives:Stay in tune with the business –

“Closer to the Partners, Closer to the Customer”Focus on cultivating relationships, not looking for problems

“There is nothing more inspirational to our Partners than a visit from a Senior Leader.”

Keep an eye out for key talentEmphasis on quality versus quantityListen & Learn - “You have to be involved to make good decisions.”

Culture is perishable, in other words…“Sell it or smell it!”

Who’s job is it to “sell it?” - Each and Every Leader

Our goal - building Partner engagement one conversation at a time

Launched in January, 2009 – over 1600 visits logged to date

Recognition

People Make the Difference

At H-E-B, we want to recognize and celebrate the hard work of every Partner, because just by being part of the H-E-B team, we know they are special.

When Partners achieve milestones, are promoted, go the extra mile, and do extraordinary things, we recognize, reward and celebrate their achievements.

We are the story tellers and the culture builders, as we honor those Partners who best embody the spirit of H-E-B.

Traditional vehicles – Inside HEB, PartnerNet, etc.

New vehicles – Because People Matter blog, Flickr site, videos, etc.

More Frequent – Less Formal

Spot Recognition: All Partners

• Thanks-A-Lotto• Lottery style scratch off cards awarded to Partners in all areas

of the business (Admin, MWT, Central Market, HFD & SAFD)• Prizes are made up of Own Brand items and H-E-B gift cards

• Range in value from $2 - $100• All Redeemed tickets enter the Partner into a regional

quarterly drawing for $2000• High Fives

• Cards sent via email to Partners from other Partners/Leaders• Ideal for Partners with constant access to computers such as

Administrative Support Partners

More Formal - Less Frequent

Formal Recognition: All Partners

• Because People Matter Recognition Awards• Formal awards ceremony held once a year (February)• Awards are based on our Core Values (9 Total)• Partners are nominated by their peers

• Certificates awarded to all nominees• Lapel pins and badge ribbons awarded to all work location winners• All regional winners are invited to attend the ceremony and are

awarded a trophy and check

• Service Awards• Formal awards ceremony held once a year for Partners

with 20+ years of service (May)• At 5 year increments, Partners receive lapel pins and

can select from a catalog of gifts

Results

Over 38,000 Partners

participated in the survey!

Why was it important?

The survey allowed Partners to make their voices heard!

Highlighted the areas where we can improve

What did it measure?

How Partners feel about the Company

How Partners feel about their Leaders

Areas where the Company can do better

Because People Matter Survey Results

Because People Matter Survey Results

H-E-B responses were better than the industry average for all categories!

How Partners feel about H-E-B overall…

82% favorable response!

Survey items included:

• I am proud to work for the Company

• I am satisfied with the Company as a place to work

How Partners feel about their Leaders…

76% favorable response!

Survey items included:

• My immediate supervisor provides me with recognition for good work

• My immediate supervisor listens and responds to my ideas and concerns

How Partners feel about H-E-B’s performance…

80% favorable response!

Survey items included:

• We regularly use Customer feedback to improve our processes

• Partners cooperate to get the job done

A year of celebrations, focused on renewing our commitment to our Culture and tied to our three pillars: Our Partners, Our Customers, and Our Community

105th Anniversary – A Year of Celebrations!

105th Anniversary – A Reason to Celebrate

At a time when other companies are struggling and even failing, H-E-B continues to thrive

That is all thanks to our amazing Partners

It is the perfect time and the perfect platform to say…

Thank You!“It might look like a simple pin. But to customers and fellow Partners, it’s a symbol of how each of us can make a difference every day. So join us as we celebrate 105 years of service. Because of you, we provide a great shopping experience for millions of customers every day. After all, it’s about giving people more than they expect Because People Matter.”

Leadership Swap – January & February, 2010 • 13 Partners from across the company switched places with a Sr. Leader

(Partners entered themselves on PartnerNet)

• Partners enjoyed time with Leaders that they would not ordinarily have the opportunity to meet

Leadership Swap

A Campaign to Engage Hearts and Minds

Draw a clear connection between our Bold Promise and our purpose to improve the lives of the Customers and communities we serve (future/vision)

Remind our Partners that no matter what their job is – they “make a difference” (involvement & belonging)

Demonstrate our appreciation for the work they do

(recognition and rewards)