Creating Conditions for the Development of Human Capital

Federal Grid Company’s HR Policy is a comprehensive system of relationships with employees. It is aimed at ensuring the achievement of the Company’s strategic goals, development and maintenance of the technical condition of electric grids and substations, enhancement of reliable functioning of UNEG facilities, and implementation of the corporate investment programme.

The aim of our HR policy is to maintain a balance between economic and social effectiveness in using the human resources; provide highly qualified staff members to the Company’s departments; establish the necessary conditions for efficient development and employment of human resources; and meet our employees’ needs, expectations and interests. We take the utmost efforts to create the conditions for the best use of talents and strengthening our corporate culture, effective motivation and professional development of employees.

Headcount and Personnel Structure

A priority in the Company’s personnel management policy in 2015 was performance management at the unit and employee level by raising labour productivity (this was also part of implementation of directives Nos. 2454p-P13 dated 23.04.2014, 7389p-P13 dated 31.10.2014 and 2303p-P13 dated 16.04.2015 issued by the Government of the Russian Federation).

This priority envisions the following approaches:

• Optimise the Company’s organisational and functional structure, reduce the number of management levels, expand the span of control, and reduce the administrative and managerial staff
  
• Optimise schemes for service maintenance of energy facilities with regard of the Company’s priorities in improving reliability, safety and effectiveness of the grid system and, consequently, reduce the process staff

The following actions were completed in 2015:

• Project “Audit and Optimisation of Federal Grid Company’s Organisational and Functional Structure”
• Centralisation of functions by management levels
• Reduction in operational service costs
• Optimisation of administrative and managerial staff size

In the reporting year, staff optimisation actions resulted in higher labour productivity in physical terms (c. u. /man) by 12.6% relative to 2014.

In the reporting year, staff optimisation actions resulted in higher labour productivity in physical terms (c. u. /man) by 12.6% relative to 2014.

The employee turnover rate was 8.6%. The staffing level in the Company remains high at 97.2% as of year-end 2015, which is 0.5 percentage points above the 2014 level.

One of the priority areas is to renew and maintain the number and quality of employees in order to ensure reliable operations and development of Federal Grid Company.

The Company sets high standards for employee education and qualification. Its employees have a sufficiently high qualification level: more than 94% of employees have professional education. This measure is on the upward trend because it increased by 2 percentage points over the past three years.

The average age of the Company’s employees is 40.9 years (as compared to 39.3 years in 2014). Most employees (59%) are under 40; this is the most active age in economic and social terms. Thus, the Company has achieved an optimal balance of young, enthusiastic employees and experienced, highly qualified staff members who ensure the continuity of generations and the transfer of professional knowledge and skills.

Material incentives

A compensation system in Federal Grid Company takes into account the position categories, performance results of the Company branches and structural divisions, specifics of regional labour markets and individual contribution of each employee. Executive performance is assessed against key performance indicators (KPIs) that are approved by the Board of Directors.

2015 Employee Headcount by Branch

Salary differentiation is based on the level of complexity and responsibility in a given job position, the employee’s qualification and his/her impact on the Company’s fundamentals.

Remuneration to employees is based on the time and bonuses. The basic wage (wage rate) is consistent with the staffing table and a list of basic wages. Wage rates (basic wages) to workers are based on the minimum monthly wage rate of a grade 1 employee, which is established by the Tariff Agreement for the Electricity Industry of the Russian Federation.

In 2015, the Company revised the frequency of indexation of basic wages and took a decision about semi-annual indexation of wages (wage rates) in accordance with the provisions of the Electricity Industry Tariff Agreement for 2013–2015 which was extended for 2016–2018 (the Company used to index wages quarterly in the previous years).

Succession Pool

Federal Grid Company pays much attention to the talent development. It conducts educational programmes that open up professional growth opportunities for the young people and attracts talents to the Company.

In 2015, the Company hired 1,185 young specialists under 30, including 213 graduates of higher and secondary educational institutions.

Employees from MES branches were trained under the federal programme «Training and Retraining of Management Pool.” Young specialists from the Federal Grid Company’s succession pool took part in the Round Table for Young Professionals which PJSC Rosseti organised at the St. Petersburg International Economic Forum.

Educational programmes “Director of Substation” and “Director of a Backbone Electric Grid Enterprise” were developed and conducted at the Personnel Training Centres for employees included in Federal Grid Company’s succession pool.

Personnel Training and Development

Federal Grid Company implements a policy which is aimed at raising the professional level of its employees and talent development. In 2015,

15,093 employees (64% of total headcount) were involved in various types of training, retraining and professional development.

Improvement of employees’ technical competencies remains a priority task for the Company.

In the reporting year, 9,084 employees improved their skills in 9 licensed Personnel Training Centres of Federal Grid Company. Educational programmes for operating personnel in Federal Grid Company’s training centres focus on the training of practical skills. These centres have training simulators, laboratories with relay protection and emergency automatic equipment, and electric grid training areas equipped with advanced technical training aids and prototype equipment. The simulation classes allow us to organise realistic drills and emergency response exercises.

Control Centre (MGCC) and Grid Control Centres at MES and PMES. Since the opening of training centres in 2011, the Company had 1,127 training sessions in 2011–2015.

The Company is continuously upgrading its computerised training simulators to make them consistent with changes in substation schemes.

The Personnel Training Centres are the main platform where professional skill competitions are held.

Share of Employees Trained in 2015, and training costs/salary budget ratio, %

In 2015, the Company held 28 such competitions.

At the request of the Ministry of Labour and Social Protection, Federal Grid Company’s training centre in the Moscow Oblast hosted the federal-level stage of “The Best Professional,” a Russian national competition of professional skills, in the nomination for “The Best Electrical Lineman (high-voltage lines) award.

Federal Grid Company’s Personnel Training Centre received the “Chrystal Pyramid” award in 2015 in the category “Corporate University” for a special contribution in human capital management. The award gives its winners the image of a leader and reputation of a reliable employer.

In accordance with the objectives that had been set by the Council for Professional Qualifications in the Electricity Sector at the Russian Ministry of Energy, Federal Grid Company actively participated in the development and adaptation of industry professional standards for the electric grid complex.

In 2015, Federal Grid Company continued to co-operate with institutions of higher education in all regions where the Company operates. The co-operation programmes covered professional retraining and skills development of the operating personnel, involved specialists from the industryspecific higher-education institutions in R&D, and organised on-the-job practice and training for the would-be power engineers at the Company’s facilities.

The Company employees took part in the retraining and skills development programmes that were run by institutions of higher education, including the industry-wide targeted programme “Skills Development of Engineers and Technicians.”

As part of its co-operation with the youth panel of CIGRE Russian National Committee, Federal Grid Company actively participated in actions that helped to promote the development of the Company and the entire electricity sector, such as the forum “Electricity Industry Through the Eyes of the Young People,” International Academic Competition in the Electricity Industry held at Ivanovo Power Engineering University, conference “Dispatch Control and Management in the Electricity Sector” held for young people at Kazan State Power Engineering University, and 2015 ENES International Forum.

A team of Federal Grid Company’s young specialists made a project on power transformer heat extraction and utilisation for subsequent use in heating of substation buildings and structures. It was recognised as the best project in the panel “Heat and Electric Power Engineering and Young Leaders” at the 2015 ENES International Forum and was awarded a diploma by the Ministry of Energy.

The Company’s specialists became members of a new youth association – the Russian National Union of Young Engineers of Commodities and Power Complexes.

Awards Policy

In order to raise motivation for effective performance and provide moral and financial awards for high results the Company has been successfully implementing a programme of giving state awards, awards by the Government and Ministry of Energy of the Russian Federation, Russian National Association of Electricity Sector Employers (RaEL), PJSC Rosseti and corporate awards to its employees.

According to this programme, employees are entitled to awards if they have rendered great service to the State, to the fuel and power industry or to the Company, and if they demonstrate high production efficiency and management competencies, or achieve great results in the operation, construction and re-construction of electric grid facilities, or in the development and implementation of new equipment and technologies, or implemented advanced forms of labour organisation, or demonstrated professionalism in the prevention or liquidation of accidents, restoration of power facilities, or have the authority and respect in their teams, promote corporate values and perform in accordance with these values.

The teams of Federal Grid Company’s branches that have ensured reliable operation of equipment, achieved the best performance indicators, and demonstrated good results in the mastering and introduction of new equipment and technologies are awarded the title “Best Branch of Federal Grid Company – MES” and “Best Enterprise of Federal Grid Company – PMES.”