6.2 HR POLICY

Federal Grid Company’s HR policy is an integrated system of interacting with personnel to achieve corporate strategic goals, developing and sustaining the technical condition of the electric grids and substations, upgrading the functional reliability of the UNEG objects and realizing the Company’s investment program.

HR policy is aimed at balancing the economic and social effectiveness of personnel usage, obtaining qualified personnel in a timely manner for the Company’s divisions, creating conditions for effectively developing and utilizing human resources, satisfying social and economic expectations and meeting the needs and addressing the interests of employees.

Primary principles of the Company’s HR policy:

  • Ensuring effective organizational design and planning personnel requirements. Managing personnel taking into account external and internal factors;
  • Selecting optimal methods for working with personnel, driven by the Company’s current development stage based on forecasts and strategic production goal accountability, social and demographic, political, economic, legal and other external environmental changes, as well as the impact that they have on the Company’s personnel;
  • Improving the effectiveness of personnel utilization. Engaging in qualitative and quantitative analysis of expenses versus results, including employees’ training and career enhancement;
  • Observing current Russian legislative requirements;
  • Creating and operating a human resources management system that ensures effective and flexible management of corporate human resources;
  • Ensuring that employees across all levels observe (obligatory) human resources policy principles, as well as human resources management system as stipulated by internal normative documents;
  • Designating long-term key corporate principles of human resources management, adhering to these principles occurs under dynamic organizational and economic changes, as well as changes in external conditions;
  • Continually enhancing human resources man gement methods based on modern concepts, taking into account the Company’s characteristics and standards.

Key elements of the Company’s HR policy:

  • Upgrading the organizational and managerial structure and personnel planning;
  • Training and developing personnel;
  • Motivating and remunerating the corporate workforce;
  • Providing social assistance;
  • Managing activity performance;
  • Engaging in labor relations;
  • Providing administrative support;
  • Developing corporate culture and internal communications.

Policy elements may be changed and obtain new significance under the influence of corporate development dynamics or changes in external conditions without interfering with the principle of policy succession.

Headcount and Qualitative Personnel Composition

Federal Grid Company’s total number of personnel stood at 22,623, as of 31 December, 2010.

A significant (89.6%) increase in corporate personnel in 2010 year-on-year is due to transferring the functions for technical servicing and maintenance of electro-technical equipment from Glavsetservis UNEG to Federal Grid Company and the fact that most employees of Glavsetservis UNEG joined Federal Grid Company branches. In 2009, Federal Grid Company personnel increased 6.7% compared with the previous year due to the fulfullment of a program of measures to commission and launch new UNEG objects and staff electro-technical objects received from inter-regional distribution grid companies.

Employees Educational and Age Structure

As a high-technology economic branch, the power sector places high demands on the knowledge and qualification of employees. The Company’s personnel are characterized by a high level of employee education. As of 31 December, 2010, more than 53% of our employees have completed higher education, in addition 23% have a vocational higher education.

The largest percentage of personnel are employees of the most active productive age – up to 40 years old (approximately 54% of personnel). In recent years there has been a trend toward a decline in employees’ age. As of 31 December, 2010, the average age was 39.8 years. Therefore, the Company’s HR structure is characterized by an optimal combination of young employees with initiative and skilled highly professional employees actively sharing their knowledge and skills with the younger generation.

To actively attract younger specialists, the Company conducts a separate program. Within the framework of this program, it actively works with senior high school students and students from profiled universities and founds additional scholarship programs in specialist fields, which are the most highly sought after by the Company, including to attract employees in geographically remote regions. The Company organizes internships and Open Door Days in Federal Grid Company branches, with the aim of ensuring that specialists quickly adapt to the Company’s conditions and work specifics.

More than half of our employees have higher education. The average employee age is 40 years. The Company’s HR composition is characterized by an optimal combination of young employees with skilled professionals.

Qualitative composition of the Company’s personnel, persons

Personnel category Reporting period
2008 2009 2010
Total 11 181 11 933 22 623
Including
Administrative and managerial personnel 3 815 4 640 5 359

Personnel breakdown by activity type, persons.

Operating personnel 10 613 11 418 15 602
Including production and industrial personnelë 6 242 6 900 9 312
Maintenance personnel 44 28 7 021
Mechanization and transportation employees 524 513 0

Personnel Movement

The Company places significant weight on retaining the most skilled and highly professional employees. Within this framework the Company evaluates the employee satisfaction level with labor conditions and analyzes the dynamics and structure of staff turnover.

In 2010, the Company organized a sociological survey of employees, during which personnel loyalty was evaluated and professional and social factors, which were the most important for employees, were outlined. Based on the results of the survey, the Company’s branches developed measures to upgrade employee loyalty.

During recent years, staff turnover indicators have declined steadily, which demonstrates the effectiveness of the implemented HR policy.

Material Incentives for Personnel

An important element of the Company’s HR policy is the system of material incentives for personnel, which ensures that the Company achieves its strategic goals based on establishing connections between the results of corporate operations and the individual input of each employee.

More than half of our employees have higher education. The average employee age is 40 years. The Company’s HR composition is characterized by an optimal combination of young employees with skilled professionals.

In respect to motivation and remuneration, the Company’s main principles are:

  • Ensuring a unified approach toward remuneration for all corporate employees;
  • Motivating employees to achieve corporate goals and aims by improving the effectiveness of individual activities, as well as activities of structural divisions and the Company as a whole;
  • Putting in place competitive compensation packages in the labor market taking into account regional peculiarities and specifics of the business spheres;
  • Considering in an obligatory manner material and non-material needs and interests of the employees when elaborating the labor remuneration and compensation system;
  • Strengthening the Company’s image as a responsible and reliable employer.

The Company utilizes approaches that are unified across all branches for labor remuneration and compensation. Compensation is determined based on evaluating the position of the complexity of activities, qualifications and the impact on the fundamental results of the Company’s operation. A correlation between the fixed and variable portion of compensation is estimated depending on the character of activities and the degree of impact on the result.

Sustaining the deserved level of material well-being for the Company’s personnel contributes to attracting and retaining particularly valuable and highly professional employees, thus forming a solid basis for the Company’s economic effectiveness as a whole.

Awards Policy

With the goal of offering moral and material incentives for employees to achieve strong labor results, Federal Grid Company has implemented a Program to encourage employees with state, departmental, industry and corporate awards.

The awards system in effect decorates employees with State awards, awards from the Russian Government, awards from the Russian Ministry of Energy, from the Industrial Union of Power Industry Employers, as well as with corporate awards – the title of the Honorary Employee of Federal Grid Company of the first and second degree, the award “For Professional Skill,” the award “For the Construction and Reconstruction of Electric Grid Objects,” the Honors Board, the Honorary Certi? cate and Honorable Mention. Employees from the branches of Federal Grid Company, which demonstrated the greatest equipment reliability, achieved better production indicators and the strongest results in implementing and introducing new equipment and technology as of end of the year receive the title of the Best Branch of Federal Grid Company – MES and the Best Enterprise of Federal Grid Company – PMES.

  • In 2010 for services to the State, Vladimir Taskin, Director of Federal Grid Company’s Khakassia PMES branch received the title “Honorary power engineer of the Russian Federation.”
  • 25 Federal Grid Company employees received awards from the Russian Government;
  • For services to the power industry 331 employees received awards from the Russian Ministry of Energy;
  • 52 individuals received awards from the All-Russian Industrial Union of Power Industry Employers;
  • In 2010 for merit and input into the development of Federal Grid Company 12 collectives of contracting organizations received corporate awards from Federal Grid Company;
  • 1,148 employees received corporate awards;
  • For professionalism demonstrated when addressing the accident at the Sayano-Shushenskaya HPP, 16 employees received commendations from RusHydro.

Personnel Training and Development

Each of the Company’s employees is involved in the corporate training system with the aim of upgrading the level of professionalism and the development of employees’ internal potential.

Types of training in 2010:

  • Mandatory training, which is conducted once every three years and provides for employee training in the field of labor protection and industrial safety, as well as other training for production personnel in accordance with requirements and work conditions;
  • Career enhancement, including intensive management training in accordance with innovative programs, conducted based on specialized educational centers;
  • Foreign placement.

In 2010 10,511 persons were involved in various types of training, which is 47.85% of the overall average head count of the Company’s personnel.

During 2010 new training programs were developed and introduced for the following personnel categories:

  1. Training of industrial and production personnel accounts for the largest portion of implemented programs, has a mandatory character and is regulated by the Guidance on working with personnel in power sector organizations. In 2010 8,277 different categories of production personnel from MES branches underwent training, of this number, 1,898 represent dispatch personnel and 3,702 maintenance personnel;
  2. Training under the auspices of the program “Ensuring Environmental Safety by Managers and Specialists of General Economic Management Systems.” The program was implemented in the shortest time possible due to a new training format – the video-conference seminar, which allowed the Company to reach the most distant MES branches. 325 persons participated in video-conference seminars;
  3. Foreign placement in England, Spain, Germany, Denmark and Norway with the goal of familiarizing employees with experience from the operation of power industry complex;
  4. Young Engineer School, a program of educational and practical seminars organized by MES Center together with lecturers of the Moscow Power Engineering Institute, for final-year students of the Moscow Power Engineering Institute and the Ivanovo State Energy Institute; Training substation directors in accordance with the unified system of personnel training and development;
  5. Intensive management training in accordance with innovative programs in 2010 included training all categories of the Company’s executive personnel. The course for junior management, in which 112 employees took part, was aimed at developing basic managerial competencies and skills. Training the Company’s mid-level managers was aimed at upgrading the knowledge level in the subject of “Economy and management of the energy company.” As part of training measures for top executive managers, 89 corporate managers received training in the following areas: Strategic Leadership: Managing Personnel and Teams, Strategic Changes Based on the Skolkovo Moscow Management School;
  6. Creation of a distance educational system for production and managerial personnel organized as part of the implementation of a program of training and career enhancement in a rapidly changing business environment for a geographically spread out company. Distance educational courses were developed in the following areas:
    • Training users in the corporate information management system: working in an automated system of managerial document flow;
    • Liquidating technological breaches at Federal Grid Company’s objects.
  7. Project to create training centers for production personnel in MES branches.

In 2010 in all corporate branches the Company started creating training centers. Federal Grid Company developed its own system of training specialists including training classes and training simulator classes. The Company also conducts seminars and lectures, which are led either by invited specialists or the Company’s in-house experts.

Non-Governmental Pension Provision

With the aim of ensuring an appropriate standard of living for the Company’s employees at pension age, as well as to increase employees’ motivation to work effectively and to attract and retain highly qualified personnel, Federal Grid Company has adopted a Program for the non-governmental pension provision to employees. Its main principles include a unified approach to setting the amount of the non-governmental pension and stimulating employees for the merits of the Company and the power industry, as well as for longstanding and conscientious work.

During the period of activity, the Program of non-governmental pension was granted to 2,760 employees from Federal Grid Company funds. On the whole, in accordance with the norms of the Regulation on non-governmental pension provision to Federal Grid Company employees in 2010, RUR261,626,611 was transferred to the non-governmental pension fund of the power industry.