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The Strategic HR Summit London, June 23, 2005

HR AS A MEANS TO RE-ENGINEER A RUSSIAN INDUSTRIAL GIANT Victoria Petrova Deputy General Director for Human Resources. The Strategic HR Summit London, June 23, 2005. A global leader, from Russia. Top 3 producer of aluminium and alloys globally 2.7 million tonnes of aluminium produced in 2004

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The Strategic HR Summit London, June 23, 2005

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  1. HR AS A MEANS TO RE-ENGINEERA RUSSIAN INDUSTRIAL GIANTVictoria PetrovaDeputy General Director forHuman Resources The Strategic HR Summit London, June 23, 2005

  2. A global leader, from Russia • Top 3 producer of aluminium and alloys globally • 2.7 million tonnes of aluminium produced in 2004 • Over USD5.4 billion in annual sales in 2004 • Today, 63% of products sold directly to end-users • Production development and expansion investments exceeded USD534 million in 2004 • Over 47,000 employees

  3. RUSAL Rostar RUSAL Dmitrov RUSAL Mosmek RUSAL Achinsk RUSAL Krasnoyarsk RUSAL Rostar-Vsevolozsk RUSAL Bratsk RUSAL Boksitogorsk Moscow Headquarters * RUSAL Germany (Dusseldorf) * RUSAL Sayanogorsk RUSAL Sayanal * RUSAL Construction Profiles * RUSAL Novokuznetsk * RUSAL America Corp. (New York) RUSAL China (Beijing) RUSAL Japan (Tokyo) BCGI (Guyana) RUSAL Singapore * ACG (Friguia) Nikolayev Refinery CBK RUSAL Armenal Queensland Alumina Ltd. * RUSAL Australia Mining and Refining Fabrication Smelting * Office From Siberia to the World • We operate in 7 Russian regions and 11 other countries, plus we sell to customers throughout the world

  4. We started just five years ago! • March 2000: Sibirsky Aluminium and Sibneft create RUSAL, Russia’s largest aluminium producer • USD4,078 billion revenue (2001 results) • 9.9% of global aluminium production • 72.3% of Russia’s aluminium output • An enormous post-Soviet organisation

  5. An extraordinary challenge: Soviet heritage • Role of “township-forming” enterprises • Rampant overstaffing • Number of production unit employees – four times higher than in the west* • Number of management and service units staff – nine times higher than in the west* ________________________________ *According to Accenture research commissioned by RUSAL, 2000

  6. An extraordinary challenge: Soviet heritage • Employee mindset • “Work is not a wolf, it can’t be scared off into the woods” – job is a social entitlement • There is no Russian word for “performance” !! • “The slower you go, the farther you’ll get” – process-oriented, not result-focused • Little or no motivation • Process-driven not goal-oriented • No competition • Nepotism • Corruption and even plain stealing

  7. Understanding and developing our people for the first time • Independent corporate culture research, Dec. 2003 • Questionnaires and focus groups at two production units and headquarters, 1,059 total participants • 15% of employees disloyal and not ready for change • Disloyal group aged 30-40 • RUSAL employee profile • Dynamic • Motivated • Loyal • Result-oriented • Willing and able to learn and enhance skills

  8. Involving employees in culture change Our first Corporate Ethics Code • Grassroots development • 18,000 employees suggested amendments; • 4,000 participants in roundtable discussions and training sessions as part of the Code approval process • Launch • 40 ombudsmen • Central ethics committee • Code published in corporate weekly and posted on Intranet (planned) • Copies distributed throughout the company (planned)

  9. A new people-centred system • Mentor vs. Warden • Employee groups managed by foremen • Ample authority over evaluation, reward and reprimand • Performance assessment • Grade-based annual employee evaluation through individual meetings • Clearly set strategic goals and tactical objectives, development planning • Self-assessment • Salary increase and bonuses based on evaluation

  10. Introducing new information tools • Corporate communication tools structured by target audiences • Information days • Vestinik RUSALa, weekly newspaper in Russian with a circulation of 26,500 – main source of information for 82.4% of employees * • La Voix de RUSAL – bimonthly newspaper in French, for Guinea workers • Quarterly full color magazine with 10,000 copies in circulation • Corporate radio station – key source for 23.7% of employees* • Intranet news wire _____________________________________ *According to recent corporate polling results (December 2004)

  11. Modernising conditions • Corporate labour protection and industrial safety policy • Conditions for higher labor efficiency • Workplace standardization

  12. Spotting and nurturing talent The RUSAL Golden Reserve • Unique managerial staff bank • Intensive training and career planning program • Open call, higher education – only requirement • 700 responded, 221 participated • 15-25% promoted annually as a resultof participation

  13. Reinventing training Russia’s first e-learning programs • Cost effective personnel development program • Introduced December 2000 • Easy access from any corporate computer • 96 training courses • 4,000 hours of planned training time • Over 5,700 certificates of completion issued to date

  14. Motivating and rewarding stars A new award scheme • Incentive contest for production employees and line managers • 21 categories • Self-nomination and by direct managers • Coverage: 14 plants and 1,200 individual participants in 2004 • Professional knowledge, skills and personal efficiency – key criteria • 87 prize winners • Over USD135,000 in valuable prizes and cash awards

  15. Results: A surge in productivity

  16. Driving towards our vision To make RUSAL the employer of choice by creating a partnership between the company and its employees, where expectations and responsibilities are shared.

  17. What next? • Labour conditions exceeding highest Russian standards • Enhanced career opportunities • Wider spectrum of professional development tools • Social package which includes: • Healthcare services and medical insurance • Retirement benefits • Sports facilities • Entertainment events

  18. Results: A truly global player • Top 3 aluminium industry leader • Working to grow our share in today’s global markets

  19. Instinct for Growth PetrovaVA@rusal.ru www.rusal.com Phone:+7095-720-5170 Fax:+7095-728-4912

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