Building Leaders for a Bright Future

American Association of Blacks in EnergyMay 20, 2010

Genevieve (Gen) Tuchow VP, Human Resources

American Electric Power

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Focus for Today How AEP is building it’s future leadership talent

bench

Evolving talent planning from reactionary succession planning to more proactive talent development

Engaging leadership in identifying and developing future leadership talent

Accelerating the development of a leadership talent pool

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Company Overview 5.2 million customers in 11 states Industry-leading size and scale of assets:

Coal & transportation assets◦ Control over 9,000 railcars◦ Own/lease and operate over 2,900 barges &

80 towboats◦ Coal handling terminal with 20 million tons

of capacity Over 21,000 employees

AEP Generation Portfolio

Coal Gas Nuclear Hydro Wind

68% 23% 6% 2% 1%

Source: Company research

Asset Size

IndustryRank

Domestic Generation ~37,700 MW # 2

Transmission ~39,000 miles # 1

Distribution ~213,000 miles # 1

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Leadership Talent Planning

Purpose - Provide AEP a sustainable supply of quality leaders at all levels to meet challenges today and tomorrow

Overall …◦ Create shared understanding and development of talent at AEP◦ Foster the diversity of AEP’s talent pool◦ Embed structure, support and accountability for talent

development

Do we have the leadership talent needed to execute AEP’s

strategies today and in the future?

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AEP’s Leadership Talent Pool

TargetedDevelopment

Current year’s Current year’s considerations considerations

LeadershipTalentPool

Past Performance & Past Performance & Leadership Potential FactorsLeadership Potential Factors

All AEPEmployees

• Contains approximately 15% of AEP population• Individuals highly regarded and believed to have

the ability to be successful in a leadership position at least one level higher than current position

• Replacement Planning used to further develop / prepare these individuals

• Contains all AEP employees• Performance Management Review, Individual

Development Plans, etc. used to further develop these individuals

• Once a year a subset of the leadership talent pool selected to participate in Targeted Development

• Nominated by business unit leaders and confirmed by senior executives

• Individuals believed to have the ability to be successful in a leadership position at least two levels higher and in other business units

• Special assessments, mentoring, stretch assignments, etc. used to develop these individuals

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Building Leaders at all Levels

Emerging Mid-Level Leaders

Emerging Bus. Unit Leaders

Emerging Senior

Executives

Emerging Front-line Leader

• Ind. Contributors

• Professionals

• Non-exempt leaders

Selected From

Preparing For

• Superintendent

• First Level Manager

• Supervisor

• Superintendent

• First Level Manager

• Supervisor

• Director

• Manager

• Director

• Manager

• Senior VP

• President

• Vice President

• Senior VP

• President

• Vice President

• Chairman

• EVP, Senior VP

• Other EC Roles

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Targeted Development Process

Success Profile

Talent Review andNomination

Individual Career Discussions

SuccessProfileSuccessProfile

Assessment

Create Development Plan

ProgramOrientation & Kick-off

1HR Strategy & Development

MENTORING MENTORING PROGRAMPROGRAM

Kick-Off Meeting

Participant selection and mentor assignment.

Participate in Development Activities

Track ProgressMonthly – Mentor reviews

Quarterly – Talent Board UpdatesAnnually – Process metrics

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Talent Boards

Ensure ongoing quality of leadership Success Profiles (e.g., future focus, clarity, relevance, etc.)

Select a given year’s participants Guide mentor matches Match development opportunities across the organization to

development priorities of pool members Review the development plans of pool members for a higher

level perspective Monitor and reinforce development progress of pool

members Champion the process and talent with other organization

leaders

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Overall Results Increasing supply of leaders.

Jump-started organization’s developmental focus.

Talent development as key responsibility vs. “nice to do.”

Shaping a development culture (e.g., candid career discussions, ownership of development, selection criteria, etc.).

Adapting process within operating units for those expected to rise only within their group.

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Talent Scorecard

Emerging Sr. Executive: x 71% 64% 21%Emerging Business Unit Leader: x 58% 35% 23%Emerging Mid-level Leader: x 66% 16% 16%Emerging Frontline Leader: x 12% 0% 8%

Leadership Level Retention

Job Moves (lateral/promotions)

Achieved Level

Cross-unit moves

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Executive Comments "We've seen a remarkable increase in the self-awareness of

[targeted development participants]."

"This has been an excellent start in our challenge to build our future leaders."

"The structure has helped."

“There is an observable difference in many of our participants.”

"We've all gotten exposure to individuals that we otherwise would not have had."

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Key Take Aways Key benefits include the "softer" aspects: visibility of talent, relationships

among pool members, interaction with senior leaders, etc.

Executive involvement key.

Participant selection is a work in progress.

Selection of the “right” mentors and coaches essential.

It can be done.

It’s never over!