Annual Report & Accounts 2012

Corporate responsibility

The NLMK Group recognizes the importance of HR management as a key factor in its successful development.

Performance in 2012

More than 62,500 people work for the Company around the world

47,000 employees have received professional training (+10% y-o-y)*

Productivity is 239 tonnes of steel per employee (KPI) (+20% y-o-y)

The average salary at the Russian facilities is RUB 35,500 (+12%)*

About US$ 3.5 million was earmarked for financing voluntary medical insurance for employees*

About US$ 5 million was earmarked for financing private pensions for employees*

Key projects in 2012

Headcount optimization in accordance with international best practice

Improvement of the employee motivation scheme

Living conditions for 169 employees at Novolipetsk were improved as part of the “Housing for Young Steelmakers” programme

2013 goals

Increase in productivity

Increase in employee qualifications

* Data for NLMK Russia

NLMK’s HR policy is based on the following principles:

Partnership between employees and employer.

Mutual responsibility for results.

Provision of safe working conditions.

Remuneration in accordance with results achieved.

Equal opportunities for all employees.

Maintenance of social benefits and guarantees.

Implementation of additional corporate social programmes.

While strictly observing these principles, the Company is systematically implementing programmes designed to motivate staff to achieve high levels of productivity, encouraging this by increasing wages, providing further training, offering career development opportunities for top performers, attracting talented young workers to the Company and retaining experienced, qualified professionals.

Performance in 2012

In 2012, the Group continued to implement headcount optimization programmes in order to bring the structure of its companies in line with international standards. The average headcount of the Group in 2012 was 62,500.

At the parent company, the headcount in 2012 increased slightly compared with 2011 due to the recruitment of employees for new facilities (the Blast Furnace # 7 complex), bringing the total to 30,000.

In 2012, NLMK continued to improve its remuneration system in order to encourage highly skilled professionals, to attract young people and to motivate employees to increase productivity and produce quality products. The average employee salary in 2012 at NLMK’s Russian sites increased to RUB 35,500, which is equivalent to US$ 1,142. The Company’s main HR priority is to create the conditions that will promote high levels of productivity and the manufacture of high value added products.

The Company sees investment in professional training as a prerequisite for securing its long-term competitiveness and dynamic growth, raising the value of human capital and, ultimately, increasing Group capitalization. High-quality professional training not only creates the necessary skill levels to solve production problems but it also promotes increased employee commitment to the Company, creates a favourable social and psychological climate among the workforce and has a direct impact on the development of the corporate culture.

The main aspects of the professional training system include:

An acclimatization programme and initial professional training.

Training workers in second (related) professions.

Improving the qualifications of Group employees in all areas of professional activity.

Educating the talent pool.

Professional development of senior management.

Training freelance teachers and industrial instructors.

Mentor training.

In 2012, around 47,000 employees underwent professional training at the Group’s companies.

NLMK is also implementing a number of programmes to improve the lives of its employees through mandatory and voluntary medical insurance, participation in non-state pension insurance and through improvements in employee living conditions.

Strategic priorities for 2013:

Improving material and moral incentives for employees

Developing HR procedures at subsidiaries to bring them up to the same corporate standard

Continuing the practice of collective bargaining in the Group’s companies

Ensuring compliance with collective agreements

Trudy Rombold talks about the working conditions at NLMK Pennsylvania

Working conditions at NLMK Indiana

“As someone who has been with the company for 13 years, I feel that the quality of our work environment and the opportunities for professional development are the key aspects to my employment with NLMK. For me it has been, among other things, the opportunity for advancement where work ethic, attendance and attitude are a key part of the evaluation process and seniority is only one factor. Another key point is that the leadership’s open door policy makes it easy to communicate.

NLMK has done a great job with improvements that make our employees more comfortable, productive and safe. I’m really looking forward to seeing what the future holds for us at NLMK.”

Pam Wagner

Roughing Mill Operator, NLMK Indiana

'Young Leader' competition

“Young Leader” competition

The annual “Young Leader” corporate competition has once again been held at the NLMK Group enterprises – Novolipetsk, Altai-Koks and VIZ-Steel – as part of the Group’s youth policy. The aim of the competition is to uncover the leadership and creative skills of employees under the age of 35 and, as a result, to create an ambitious talent pool within the Group.

In 2012, approximately 800 of the Group’s employees competed in the Young Leader contest and 141 of them were entered into the database of promising employees.

The “Leaders 2020” programme holds a special place in the Group’s staff training system. It aims to establish a team of young leaders who will be capable of taking on senior management positions in the near future. The programme offers more than 800 hours of engaging classes with world-class instructors and well-known representatives from Russian and international businesses. In 2012, 27 NLMK Group employees participated in this programme.

Mentorship as an important staff training and development tool

Mentoring as an important staff training and development tool

The effective training of young professionals at NLMK is facilitated by a proven mentoring system. Mentoring is not only an important part of helping young employees adapt to working life; it is also the most efficient way for new employees to gain the necessary knowledge, abilities, and professional skills. Currently, NLMK has over 3,000 mentors. These are highly qualified workers who have lots of experience and a solid knowledge of advanced technologies. Every year, they train around 1,000 newly recruited young co-workers. According to Roman Velikansky, Head of Professional Development at NLMK, “Mentoring is an important staff training and development tool that improves productivity. It helps employees to adapt quickly to their new job and to start working as efficiently as possible.”

Engineer of the Year 2012 at NLMK

A competition for NLMK engineers has been held annually since 2004 as part of the Group’s vocational training programme. It provides engineering professionals with opportunities to realize their ideas in actual production. A total of 431 employees have taken part in the competition, with nine of them recognized as winners at the national level.

The competition covers “Professional Engineers” and “Engineering for Young People”, and includes the following categories: Steelmaking, Energy and Resource-Saving Technologies, Machine Building, Information Technology, and Ecology and Environmental Monitoring. An expert panel comprising senior managers and chief engineers from the Group evaluates the projects in terms of complexity, relevance, originality, the likelihood of their implementation in production and the results of implementation.