Human Resources and Social Policy

TMK’s Board of Directors welcomed the implementation results of the TMK HR 2006-2010 Policy, which became the basis for the formation of a new human resources strategy for the period up to 2020.

Goal of our HR Strategy — to ensure that the Company’s human capital is in congruity with strategic business objectives and to create a professional and motivational readiness on the part of employees to achieve these goals, which involves coordination of the HR Strategy with the best international practices, including:

  • ensuring TMK facilities are staffed by qualified employees;
  • qualitative and quantitative optimization of the employee base with the goal of increasing labor productivity and cost efficiency;
  • retention of the company’s key employees;
  • organization of training and advanced training for specialists according to progressive standards;
  • implementation of an effective system of remuneration and incentives conducive to attracting and retaining key employees;
  • development and implementation of corporate HR standards that take into account the specifics of TMK, organization of a system to control their fulfillment.

Our strategic initiative of the new period: among the best employers in the industry, to offer competitive working conditions, social guarantees and opportunities to discover and make use of the potential of employees oriented toward achieving best performance results.

Implementation of the TMK HR Strategy in 2011:
On the basis of the TMK Human Resources Strategy 2020, the company’s facilities have developed and approved staffing policies aimed at addressing key issues of the HR Strategy 2011-2015 and the formation of a single TMK HR space with a common corporate culture.

In the area of HR management

TMK employees

Period 2009 2010 2011 Change 2011/2010, % Change, 2011/2010, individuals
1 The Russian division is understood as such for the structuring of data and also includes facilities in Kazakhstan, TMK Africa, TMK Middle East and TMK Global.
Total individuals, as of December 31 46,016 46,273 45,728 -1.2 -545
including:
Russian Division1 42,100 41850 41,219 -1.5 -631
European Division 2,037 1,946 1,993 2.4 47
American Division 1,876 2,477 2,516 1.6 39

Headcount management is focused on achieving business goals through more effective use of human resources.

In 2011, TMK’s Russian and European divisions continued a program to optimize manufacturing and commercial activity, resulting in the number and qualifications of employees to fall in line with modernized production capabilities and market trends.

During the same period the American division successfully implemented a new employee recruitment system and the ADP HRIS, which allows data on all HR aspects in the context of each TMK IPSCO employee to be recorded.

In the area of employee compensation and incentives

The company guarantees its employees:

  • a competitive level of compensation in labor markets of the countries and regions where it is present;
  • regularity in wage payments;
  • preservation of basic social protections;
  • growth in average wages in accordance with growth in labor productivity.

In 2011, work continued to improve employee incentives aimed at increasing the production of high-tech products, increasing the share of sales, and improving product quality. The American division has successfully implemented a new incentive program aimed at midlevel employees.

During the anniversary year of 2011, plant employees were granted state, industry and corporate awards. The company made special recognition of employees who had worked effectively at TMK over the years. A significant number of employees received bonuses, cars and other valuable gifts.

In the area of employee development and training

In 2011, a program to improve management qualification at TMK facilities was begun. This project aims to form a new qualitative level of company managers, increase the efficiency of the rotating directors, including those between facilities. In 2011, about 100 senior managers of facilities in the Russian division received training under this program.

In 2011, the company’s internship program experienced qualitative development, with the number of interns increasing five times over the level of 2010. An internship program to train students at leading technical universities students in TMK IPSCO facilities began, which should lead to an influx of young skilled professionals to the company.

The TMK Youth Scientific and Technical Conference 2011 took place at a new level and gained international status, including young professionals from TMK IPSCO and Kazakhstan.

In 2011, TMK spent U.S.$ 4.53 million on professional development for employees, which is 25% more than in 2010.

In the Russian and American divisions funds were primarily spent on training and skills development in sales, as well as development of managerial skills for middle managers.

The logical conclusion of training programs for sales managers at facilities in the Russian division was their certification, which for the first time was conducted using modern methods of employee assessment. As a result of certification, recommendations were developed to improve the efficiency experts’ work, as well as identify areas for their development, career planning and incentives.

In the area of management and organizational development

Analysis of business processes continued with the goal of aligning the organizational structure of facilities in a way that maximizes adherence to the company’s divisional structure.

Changes to the employee structure and composition were implemented with the aim of meeting new strategic objectives and the requirements of a developing market. Work continues to expand the network and the geography of sales by optimizing the work of TMK’s foreign branches and representative offices, as well as by establishing new locations outside Russia.

Improving organizational structures was carried out by optimizing the number of administrative units, balancing their work loads, minimizing the time spent on decisionmaking and their transmission from top management to executor. Thus, the “flat structure” scheme was introduced at the Sinarsky Pipe Plant for the first time, which minimized the hierarchical management structure with the aim of maximum transparency.

In the area of social partnerships

Interested parties of social partnership with TMK are:

  • inside TMK — employees and the employer-company and its authorized representatives;
  • in the external environment — the company and external stakeholders: public authorities, public organizations, educational institutions, municipalities, partners and customers.

TMK’s social policy is based on the following principles:

    maintaining a stable balance between the interests of the company and its employees,

    compliance with national legislation,

    human rights, eliminating all forms of discrimination,

    cooperation with trade unions and social organizations at TMK based on annual collective agreements and social programs.

All production facilities of the Russian and European divisions, as well as four facilities in the American division build partnerships on the basis of collective bargaining agreements and meet all obligations as responsible employers. In signing (and renegotiating) collective agreements in connection with their expiration, all benefits and social guarantees continue to remain valid.

One of the key social support programs for employees at the facilities has become the plant housing programs and the construction of a cottage village (120 houses) for employees at the Seversky Tube Works. In this project, TMK acts as an active external social partner for federal, municipal and local governments.

We are confident that the work carried out in 2011 in the field of human resources management will serve as a foundation for TMK in 2012 for implementing the most ambitious business goals, as well as improving its rating as an attractive employer.

Occupational Safety

Modern and safe working conditions for employees have been established at TMK in accordance with national and international law, as well as with collective agreements. All plants are certified and audited annually for compliance with the international standard Occupational Safety and Health Management System OHSAS 18001:2007. Supervisory audits conducted in 2011 confirmed compliance with the standard.

The system of occupational health and safety is under constant control of plants’ administrations and trade union committees, and upcoming events in this area are included in the collective bargaining agreement.

In order to maintain a high level of professional skill, employees systematically trained and certified on their knowledge of and compliance with occupational health and safety requirements.

In 2011, TMK spent U.S.$ 30.6 million to implement health and safety measures, purchase of personal protection equipment and compensation, which is 20% more than in 2010. As a result of improved working conditions, the lost time accident frequency rate fell by more than 16%.

The majority of TMK facilities have received awards for the best safety and production standards in the cities where they operate.

The following awards were given to plants for strong performance in the area of health and safety in 2011:

  • Seversky Tube Works was declared the winner:
    • an industry-wide competition of the Mining and Metallurgical Workers Union of Russia: “Most Socially Effective Plant in the Mining and Metallurgical Industry”;
    • in the Russian national competition: “Most Socially Effective Russian Organization” in the category “Reduction of Workplace Injuries and Illness”.
  • Sinarsky Pipe Plant finished third in a regional competition for manufacturing culture and occupation health and safety (Government Resolution #857 of Sverdlovsk Region from July 5, 2011).
  • TAGMET received a letter of gratitude from the administration of the City of Taganrog for active work with young people in the area of occupational safety.
  • The Orsky Machine-Building Facility was awarded a “First Level” certificate as a manufacturer “For a High Level and Best Organization of Occupational Safety in Orsk in 2010”.
  • TMK-Kaztrubprom was awarded a certificate from the Ministry of Labor and Social Protection of the Republic of Kazakhstan in the competition “Best Collective Agreement in Social Responsibility”.
  • A number of TMK IPSCO facilities were awarded for industrial safety performance in the cities of their presence.

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