HR policy

ACHIEVING LEADERSHIP THROUGH EFFICIENCY

To ensure sustainable development and maximise the Company’s business value over the long term MegaFon is building a management system that will both drive the achievement of the Company’s short-term goals (for the current financial year) and support its long-term sustainable growth.

Our efforts to implement transparent and efficient business processes for improved speed and quality of decision-making, enhanced cross-functional cooperation and better performance remain as important and relevant as before.

We standardise and streamline internal business processes at MegaFon, focusing on launching federal-level service centres to offer higher levels of service to both external and internal customers. Specifically, in 2015, we started the “federalisation” of MegaFon’s second line customer support. This initiative is expected to increase the customer service quality while maintaining optimal cost levels.

We “federalise” routine operations focusing on core business competencies. In 2015, we initiated the creation of our Shared Services Centre, which is scheduled to be launched on 1 June 2016 and start operating at full capacity by the end of 2017. In its cooperation with subsidiaries, MegaFon is also focused on gaining maximum savings from the automation and scalability of routine back-office operations while retaining core competencies.

Several major IT and business projects offering significant potential efficiency gains in the future are now under way (implementation of the unified billing system, SAP re-engineering, etc.).

In 2015, MegaFon initiated the integration of all Moscow offices in one location, which will improve the quality of interaction between the head office, the Moscow branch and subsidiaries, and speed up decision-making. A similar initiative to co-locate MegaFon’s offices and operations has already been implemented in most Russian regions.

We are developing a goal-setting framework to ensure that each employee understands his or her role and their individual contribution to the achievement of MegaFon’s overall goals. A transparent bonus system is linked directly to employees’ individual performance.

We continue our efforts to drive performance both through unification and automation of operations and through enhancement of our employees’ professional skills and competencies. A special focus is made on the development of the KPI management framework.

HR management policy

Our HR management policy is based on the following principles:

Efficiency: We strive to achieve more with fewer resources, developing the Company’s talent pool and relying on internal expertise.

Flexibility: We promptly respond to changes and new tasks set by the business.

Transparency: We make Company information accessible and easy to use, and we standardise communication channels across the Company.

Innovation: We aim to ensure timely responses to the challenges of our times, embracing the most advanced services and procedures in training, HR management and internal communications.

VISION: LEADERSHIP IN EFFICIENT GROWTH

THE COMPANY’S ORGANISATIONAL STRUCTURE

MegaFon’s organisational structure has been streamlined over the past few years: the number of management levels has been reduced, with positions standardised. As a result, the Company’s manageability has increased.

In 2015, we adopted a new innovative approach to HR management: we switched from a territorial to a function-based approach. Teams were set up within a number of business areas that were not attached to a particular region, but operated together as separate virtual groups (“clouds”) based on common business objectives or involvement in specific projects.

Modern technologies enable us to recruit highly-skilled professionals from all over the country and arrange for their remote collaboration from different locations.

The labour market experiences a shortage of professionals in certain areas (e.g. technical specialists). The ability to extend the search beyond one city gives us access to talented and highly qualified professionals located across the country. Each of them contributes their unique experience and skills to the team, with a positive effect on performance. Employees get an opportunity to join MegaFon’s exciting projects at the federal level without having to relocate their families.

Parallel operation of the traditional and function-based organisational structures has proved a challenge to the existing HR accounting and recruitment processes, as well as the setting of goals and the remuneration system. We had to modify the HR accounting system and procedures, to develop methods for the teams’ interaction (regular video conferencing, portals for information sharing), and for ensuring data security, etc. Experience gained in practical operation helped us identify and develop the skills required by employees when working in virtual groups.

We are confident that these new structural arrangements will drive our successful growth in a number of MegaFon’s business segments across the country, improve operational efficiency, and help attract and retain the best talent by offering career building opportunities and exciting projects to get involved in.

MEGAFON’S TEAM AT A GLANCE (PERSONNEL STRUCTURE IN 2015)

1  The headcount has been increased through organic business growth and new acquisitions.
2  Number of employees includes full-time and temporary employees, excluding maternity leave and outsourced employees, and represents the annual time average.

SAFE WORKING CONDITIONS AND CARE FOR EMPLOYEES’ HEALTH

With a headcount of over 30,000 people, MegaFon is fully aware of its responsibilities to its employees, making their health and safety one of its top priorities. To implement its health and safety policy, the Company has developed and adopted the regulation on MegaFon’s Occupational Safety Management System, a specific set of guiding principles. These principles were drafted in line with GOST 12.0.230-2007, Occupational safety standards system. Occupational safety management systems. General requirements.

To meet the tough health and safety requirements, in 2015, MegaFon promulgated instructions providing employees with detailed explanations of workplace precautions and safety rules concerning, in particular, the use of PCs and office appliances, as well as emergency procedures. All employees of the Company must study these instructions and undergo an induction training before they start working.

Key occupational safety initiative in 2015 included:

• Internal training and development of employees’ knowledge of occupational and fire safety.
• Training for employees whose job duties involve extra hazards (work at height, electrical equipment operation, safe operation of lifting equipment, etc.) at specialised training centres.
• Scheduled and unscheduled monitoring of occupational health status across the Company, and specific assessment of working conditions for compliance with occupational safety standards.
• Medical examination of employees (at the start of employment and on a regular basis for certain activities).
• Purchasing, distribution and accounting for workwear and other personal protective equipment for employees.
• Recording and investigating occupational accidents.

MegaFon’s expenses on occupational safety in 2015 amounted to RUB 49.8 m.

EMPLOYEE MOTIVATION AND TRUST

Employee motivation is one of the key investments in the Company’s future. MegaFon acknowledges that its employees require fair remuneration, support and encouragement from the employer.

Monetary remuneration system

MegaFon has created a balanced remuneration system, underpinned by the principle of internal and external fairness:

To define the salary level for each position we take into account the specifics of the regional labour market, the conditions of the industry, and comparable seniority and skill levels. MegaFon applies a standardised approaches to remuneration:

In 2015, the average salary at MegaFon increased by around 4% year-on-year.

In addition to the fixed part of the salary, there is also a variable part which accounts for a significant part of employees’ remuneration – flexible bonus schemes have been developed for different functions based on business goals and individual targets:

To define the salary level for each position we take into account the specifics of the regional labour market, the conditions of the industry, and comparable seniority and skill levels. MegaFon applies a standardised approach to remuneration:

In 2015, the average salary at MegaFon increased by around 4% year-on-year.

In addition to the fixed part of the salary, there is also a variable part which accounts for a significant part of employees’ remuneration – flexible bonus schemes have been developed for different functions based on business goals and individual targets:

Goal setting

In 2015, for the first time in its history, MegaFon made the process of setting annual targets applicable to all employees. Individual targets for each employee (from directors to specialists) were published on the corporate portal following a discussion in functional groups and approval by the respective managers. They were then made publicly available within the Company. Knowing the focus of the efforts of employees in other divisions promotes cooperation to achieve targets and improve performance. The transparent process also gives managers more responsibility for the quality of targets.

Compensation and benefits

Along with a decent salary, the Company aims to provide its employees with opportunities to lead a healthy and active life, maintain their welfare, and focus on business goals and results as best they can.

MegaFon offers its employees a range of social benefits and guarantees:

• Voluntary health insurance (VHI) policies – the Company’s employees are entitled to high-quality healthcare (including clinical services, dentistry, ambulance services and emergency hospitalisation); special VHI benefits are offered to employees’ family members.
• Employees’ accident insurance reduces the risk of the loss of income and/or provides for the reimbursement of expenses to employees or their families.
• Partial reimbursement for employees’ expenditures on sports or fitness classes. Employees are free to choose a fitness or sports club at their own discretion.
• Temporary disability payment above the statutory minimum – in case of temporary disability up to 14 calendar days per year in the aggregate, the Company tops up the payment to 100% of the salary.
• Lump sum allowances to employees and their family members in difficult life situations.
• Comprehensive support to employees relocating to a new place of work in a different region: the Company covers travel and transportation expenses of employees and their family members, as well as the cost of finding accommodation (hotel accommodation may be provided in the interim); a lump sum of RUB 25,000 is paid to help employees settle in at the new place of residence; the Company also provides relocated employees with information and organisational support for up to months after relocation.
• Compensation for mobile phone expenses – to be on equal terms with the Company’s customers, all employees of MegaFon pay for mobile phone usage at standard commercial rates.

However, employees get reimbursed for their mobile phone expenses up to certain monthly limits.

In 2015, MegaFon spent approximately RUB 569 m on social benefits for its employees.

We value our employees and do our best to recognise their success and inspire them to new achievements. With this in mind, we are actively developing our employee recognition scheme. MegaFon uses non-material forms of recognition, such as certificates of appreciation, letters of gratitude, MegaFon-branded souvenirs, etc. The scheme is designed to recognise both the individual contribution of our employees and their team work. We reward employees for delivering strong performance and for behaviour reflecting the Company’s values. In 2015, over 1,000 employees received recognition at the federal level.

TRAINING AND DEVELOPMENT

The Company runs a successful employee training and development system developed in-house. The Company’s training and development priorities include:

• Induction programmes for new hires
• Advanced training for employees
• Knowledge accumulation and sharing within the Company
• The Company’s talent pool build-up.

We use the most advanced approaches and training techniques to make sure that our programmes meet our business needs.

In 2015, MegaAcademy, our corporate university, celebrated its fifth anniversary. The considerable popularity of MegaAcademy’s programmes among employees is due to the high effectiveness and practical focus of the courses they offer. Our managers are increasingly likely to favour our internal programmes over anything else. Statistical data for 2015 show that a milestone of over 120,000 man/courses was achieved, i.e. one employee completes on average around four MegaAcademy’s training programmes per year.

In 2015, our distance training courses increased in popularitу – currently, virtually all of the Company’s employees are active users of the corporate distance training system. MegaFon’s employees see this modern training format as a most effective and convenient tool.

The Company also offers a wide range of other distance training options, including an e-library offering a collection of professional and business literature, video lectures from some of the leading business schools, and webinars.

At MegaFon, we are conscious of the need to provide development and career opportunities to our people; therefore, we use an open job-posting system.

We successfully run a corporate Talent Pool programme. In 2015, 11% of those enrolled in our Talent Pool programme were promoted. Overall, during 2015, 178 management vacancies across the Company’s operations (17% of the total) were filled by programme participants.

CORPORATE CULTURE AND INTERNAL COMMUNICATIONS

We see it as essential that our employees are proud to be a part of the Company and are actively involved in its corporate life. All MegaFon employees can access internal communication channels where they can read news about the Company’s most recent activities. Additionally, our enhanced internal communications greatly facilitate coordination between employees who may be thousands of kilometres apart.

We believe in the transparency of our internal corporate processes for all members of staff and also in easy and unified access to the Company information. For internal communications, we use a wide range of electronic channels: the MegaNet corporate portal, the Our MegaFon web-magazine, news digests, websites and blogs, corporate mailings, presentations, and videos.

We focus on online communications as the most convenient, as well as business- and staff-oriented means of coordination. During the year, MegaFon introduced new services and advanced internal communications formats.

Today, MegaNet is hosting key business applications that accumulate data on the Company’s core workstreams and major projects (e.g. the Unified Billing System). In addition to obtaining required project data and status updates, this helps employees engage in team discussions. To support top-priority projects, MegaNet developed websites to exchange big data and work in a single space. A new MegaNet web page was launched for newcomers to communicate information on the Company’s values, approach to remuneration and incentives, training and development, etc. Thus new employees can receive faster and easier access to information.

HR administration services such as MegaHelp and SAP HR also moved online.

In 2015, the Our MegaFon corporate magazine adopted an innovative long-read format on a regular basis. The magazine platform enables implementation of the state-of-the-art presentation formats and adaptation of data to specific business needs.

In 2015, one of our internal communication KPIs was to ensure a personalised approach to each target audience, and more targeted communications and flexibility. We launched a weekly mailing digest for B2B, which is integrated with the corporate portal and enables employees stationed across the country to operate in a single information space. To disseminate data on business drivers and performance, MegaFon launched a new communication channel reporting on the Company’s financial and operating results, providing media presentations where internal financial experts comment on economic performance in an easy-to-digest way.

In 2015, we focused in particular on the Unified Billing System, our top priority initiative. The project’s scale required providing consistent information support throughout the year, as well as the introduction of a whole range of new communication and incentive levers, including gamification in the form of the intellectual game show “What? Where? When?”.

Various events organised by MegaFon for its employees throughout the year helped strengthen our corporate culture and enhance team spirit. We organised winter and summer events to promote the physical and intellectual development of our employees. The Company’s traditional celebrations included Men’s Day (23 February), Women’s Day (8 March), Maslenitsa (Pancake Week), Communications Workers’ Day, MegaFon’s Birthday, Company Day, Last Day of Summer, Children’s New Year, and Corporate New Year.

Employee engagement

It is important for us to maintain a regular dialogue with our employees and get their feedback. Once every four years, MegaFon conducts an employee engagement survey. The survey results reflect the overall level of employees’ satisfaction with every aspect of life in the Company, enabling us to assess their engagement in achieving the Company’s goals. The survey is completely anonymous, and only summary results are disclosed to ensure the participants’ maximum honesty and openness. Based on the survey results, we develop initiatives to support and enhance employees engagement. In 2015, 18,500 people took part in the survey (60% of MegaFon’s total headcount). Employees stressed their commitment to the Company’s goals and values, and stated that they are proud to work here and are aware of their contribution to the overall result. We benefit significantly from our strong team spirit and communication between managers and employees. However, employees also indicated a number of areas for further improvement, specifically in terms of processes and organisation of work in the Company.

Following the assessments conducted in 2015, MegaFon once again made it to the top list of companies with the highest level of employee engagement, having improved on its 2012 results in a majority of areas.