SPENDING SMARTLY:

1. SPENDING SMARTLY: Providing Tools to Line Managers for effective communication of Reward to Employees Nina Pestova Head of Compensation and Benefits CIS Alcatel-Lucent

2. Our Reality Highly competitive labor market Limited resources at Employer’s disposal Retention and motivation Cost Optimization Employer’s targets

3. Retention of Talents versus Cost control environment HOW can we support motivation and retention of Talents without significant increase of cost? 1) To provide more information to Employees on what we already have 2) To involve Line manager in making compensation decisions and communication How to make this communication effective? • Competent: good knowledge of C&B principles and practices of ALU • Objective: understanding advantages and disadvantages • Reasonable: understanding the cost/budget • Positive C&B INFORMATION SESSION FOR LINE MANAGERS

4. Purposes of C&B Information Session Support of Line Managers in Managing budget Managing retention cases Managing compensation decisions Managing communication to their team members Making effective use of C&B policies, practices and tools for the above mentioned purposes Improve the image of the Company Objective justification of limited resources Respect of available compensation package References to Market practices, Salary Surveys, Recruiting practices Improve the image of HR HR is open HR is ready to support HR policies and practices are market driven

5. How to achieve this goal? HR cannot simply teach Managers the guidelines of effective communication regarding C&B polices and practices Effective communication can only result from estimation of objective advantages, active discussions and business simulations when Managers analyze the reality, take decision, prepare argumentation by themselves and share opinions with their colleagues HR role is to initiate, motivate and facilitate this process

6. Structure of C&B Information Session

7. Structure C&B Information Session Target audience: a group of 6-10 Line Managers Duration is planned as 4 hours Structure of C&B Information Session 1 PART Market Overview and C&B Principles of Alcatel-Lucent Market Movement, Salary Surveys, Salary level positioning, Median, Generally accepted principles of salary management ALU compensation principles: Budgeting, Global grading, Salary ranges, Median salary approach, Promotions, Rotation etc. Business cases, simulations, work in teams (“Yes & No” exercise), group discussions, individual work, sharing opinions, Q&A, making conclusion together RESULTS: Knowledge and better practical understanding due to analysis and discussion Breaking many myths and rumours Improvement of attitude to Company C&B principles HR and Line Managers speak common language Ready argumentation for their further communication to employees

8. Structure C&B Information Session 2 PART Compensation: FIXED PART Application of Global Compensation principles (including budget), Legislation requirements, Managing salary: Salary Increase, Impact of Performance Review, Promotion Business cases, simulations, discussion of frequently asked questions 3 PART Compensation: VARIABLE PART Short overview of ALL applicable Incentive plans Managing Variable compensation: Performance Driven, Impact of Manager’s decision, Making priorities, administrative peculiarities, zones of risk RESULTS: Knowledge of tools and practices for making compensation decisions Understanding Manager’s impact on budget/ compensation / motivation Ready argumentation for their further communication to employees

9. Structure C&B Information Session 4 PART Compensations and Benefits Overview of ALL compensations provided by Alcatel-Lucent to employees Overview of benefits Guaranteed by the State Provided by Alcatel-Lucent RESULTS: Visibility of additional compensations and benefits provided by the Employer Cost Estimation Justification for keeping some provisions within the limits of State Guarantees Ready argumentation of good compensation package/ social protection/ stability as well as possible risks of changing the Employer

10. Question?