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15 Mar 2023

Times of uncertainty, increased turbulence requires the development of systemic measures

Tatyana Terentyeva, Deputy Director General for Human Resources, ROSATOM

In the environmental aspect of the ESG approach, we can see a turn toward social responsibility and the quality of corporate governance. Among other things, this trend seems to have touched the field of human resource management.

We are witnessing a change of focus in the ESG agenda. In terms of environmental aspects, everything is more or less clear; there are national and global environmental standards, monitoring and reporting procedures. Each industry also has its own requirements. For example, in our nuclear industry we spent years to prove to everyone in figures that nuclear generation belongs to clean energy sources. Last year, nuclear power was included in the EU Green Taxonomy. In the sphere of social indicators, things are not cut and dried.

There is no single global social standard. In fact, there is plenty of them. There are about 600 ratings in the world that analyze social indicators, all of them are based on their own calculation models. Even Russia has several rating agencies, development institutes (VEB, Central Bank) have their own procedures, besides, there are many media ratings (Headhunter, Forbes, RBC).

Social domain describes everything related to the quality of human resource management. We understand that in today's knowledge economy, people are the main productive resource of strategic importance, so anything related to the Social agenda is automatically in the front line.

Social domain is the most intricate and complex area of the sustainability agenda, because it covers issues that are traditionally the responsibility of different departments within companies. About 2/3 of indicators from the social block are understandable indicators that HR representatives face in their daily work: the rate of staff turnover, gender differences in salaries, the number of trained personnel, etc. Also, this domain includes issues of occupational health and safety, working with the population in the territories of operation or indigenous peoples, social investment, corporate governance, etc. This requires going beyond functional wells and another, strategic, level of social management. Over the past years, HR professionals have proved more than once to business that they are ready and able to be true partners of executives, ensuring the strategic development and sustainability of the HR system even in very turbulent times.

We also know that the real ESG-transformation of business processes is a systematic and in-depth process that requires the involvement and commitment not only of companies’ top managers, but also each employee. It is not enough to issue fine sustainability reports; it is important that every employee on the shop floor can explain in simple terms what sustainability principles the company adheres to. And here, too, the role of HR professionals is essential.

Our strategic priorities rely on the human-centric approach. ROSATOM's mission to become the best in unlocking employee potential was captured in our Vision 2030 in 2019. But frankly, ROSATOM has historically focused on the human; like any high-tech business, we are very dependent on our ability to attract and retain high-achieving personnel. We are not just making bold statements about the values of the human-centric approach, we are actively seeking to transform all processes to conform to this approach.

Principles underlying the index:

The situation in the labor market is constantly changing; nothing is more stable than change. The human is the only point of stability. Human-centricity is the only possible way to manage an organization based on the understanding that its main value is the human, and the maximum efficiency is achieved by strengthening and revealing his or her potential.

The human-centric approach implies a high degree of maturity of a company in matters of human resource management. This is a high level of digitalization of all processes, which ensures access to HR services for every employee. This is a variety of development programs to provide choices, a customized approach to each employee. It is important that digitalization does not "dehumanize" our work with human resources. The focus should remain on people, not digits.

HR management is at the intersection of science and art; there are no recipes that work for any company in any industry or any country in the world. The truth is, each company can have its own set of tools that match perfectly its business objectives. So, what we mean is not a rating, not a prize for the best, but an index as a convenient practical tool for self-diagnosis of internal and external processes that evaluates well developed areas and those that require focus.

As a consequence, we believe that companies seeking growth need to cooperate, share experience and work together to increase the "talent funnel," often outside their industries. This is what happens in fact on the employee side: they easily change industries, companies, countries. Therefore, apart from the index, we are working to create a common database of best practices that everyone can use.

I’m sure we’re witnessing a global restructuring of the labor market. Once established and efficient human resource mechanisms become ineffective before our eyes, and we keep working in the "employer market" model.

To stay up to date with changes, to have time to develop an adequate response to the challenges of time, ROSATOM has initiated and supported labor market research since 2018. For example, in 2019, together with BCG, we studied the problem of "skills mismatch". We found that there are 1.3 billion employees around the world whose qualifications do not meet the requirements of employers. This is almost half of employees in the labor market (40%).

The reasons for this phenomenon are clear. This is the rapid development of technology and increased demands of employers, the conservatism of traditional educational system, the change in the value preferences of employees which we're witnessing (remote or hybrid work, the search for meaning in work, etc.), the underutilized potential of certain groups of the able-bodied population (young people, women, the disabled).

We began to study what could affect the solution to this "skills mismatch" problem, and developed, together with colleagues from BCG and the Higher School of Economics, a methodology for the companies' human-centricity index. Its goal is to find components, the balance of which ensures the sustainability of business. These are 47 indicators that evaluate the quality of the following processes:

To what extent does the company create conditions to unlock the potential of employees and to what extent do employees take advantage of them? We evaluate the variety and availability of tools for the management of employees at all stages of the personnel cycle (training, development, availability of tools for everyone, etc.). It is important that the personnel cycle begins long before an employee is hired and does not end with termination. Our former employees are our brand ambassadors, so it's important to deal with veterans, for example. This is also relevant in terms of programs for potential employees.

Not only individual competencies of employees are important for the sustainability of business, but also teamwork, the ability to cooperate, and staff mobility. Our methodology is also based on opportunities for cooperation.

We also realize that every employee is not only a member of team, but also a resident of our cities, a concerned citizen, a volunteer, and a carrier of various social roles. We consider the existence of an environment that provides various opportunities for employees to show proactive position, and we assess the extent to which the company is integrated and affects the development of the areas where the business operates.

Finally, we assume that the business environment is changing so rapidly that companies need to be able to live in multiple time horizons, to be two-speed, that is to combine current performance and development objectives. Therefore, the quality of digital environment, the quality of planning tools and the development of competencies is another group of indicators that we think are important.

It's hard to manage what you don't know for sure. So, for us, the index is a tool that helps companies think consciously about how adequately they respond to today's labor market challenges and make the necessary management decisions.

Over 120 companies from Russia, CIS and BRICS, which realize the value of building long-term and human-centric relationships with employees, took part in the study. The questionnaire was answered by HR-directors and managers of companies with different turnover and number of employees. The study had two stages. At the first stage, HR directors, managers and partners of the companies filled out a questionnaire with 47 questions. At the second stage, representatives of the companies participated in expert interviews to identify best practices of the human-centric approach to employees; this was used to develop over 30 cases with real experience of Russian companies.

All questions in the questionnaire can be divided into two topical units.

Internal responsibility: those that assess the company's responsibility towards its employees.

External responsibility: those that assess the company's responsibility towards the communities and residents of the areas where business assets are located.

The initial funnel of companies we worked with was over 1,000 companies. According to our observation, the companies that were able to fill out the questionnaires are really ambassadors for the human-centric approach and are able to show in figures the effectiveness of this approach.

Another important point is that there were no limitations on the number of companies, the scope of activity and economic performance of the business. We believe that every company's processes can be customized with a focus on the employees and communities, where the company operates.

Some conclusions.

Underdevelopment of the ecosystem approach to human resource management, practices of interaction with the education system as a customer. This is essential because the lack of constructive interaction prevents universities and colleges from adapting their educational programs and investing in the necessary laboratory facilities.

Only 21% of companies act as qualified customers of the education system and clearly articulate their demand for competencies.

51% of companies implement joint programs with universities, colleges and schools, but only 6% of vacancies are filled by graduates of partner educational institutions (18% among IT companies).

Underdevelopment of mechanisms for long-term forecasting in future skills and competencies of employees.

79% of respondents said the company had an HR strategy in place, but only 21% of respondents appeared to agree that the company forecasted needs for employee with certain skills for three years or more.

At the same time, 72% of respondents confirmed that when a shortage of skills in employees was identified, their company could adjust its approach to hiring new employees, in fact, companies have to reduce the level of their competence requirements and make additional investments in professional development and retraining.

Underestimated potential for the employment of certain groups in a situation where the employment of the disabled, women, and the elderly would mitigate the effects of a shortage of young professionals.

Only 25% of respondents fully agreed with the statement that the company actually implemented initiatives to ensure a balanced composition of employees (by gender, age, nationality, etc.).

The average percentage of women among senior managers in human-centric companies is 29% (on average, 7-12% in medium and large businesses in Russia).

The unpreparedness of companies to enter the job market of the zoomer generation. The zoomers are characterized by early work socialization, their desire to balance work and personal life, and their desire to learn new trades. Companies should offer opportunities for individual learning and development, and develop hybrid and remote employment formats; measures are insufficient so far.

Only 35% of employees whose work did not involve a physical presence at the workplace had the opportunity to use flexible work formats: remote work, part-time work, etc. (43% in IT, 23% in industry). 68% of respondents agreed that the company had individual career development programs in place, a quarter believe that this is implemented. Companies do not perceive former employees as carriers of the employer brand. Only 10% of companies organize cultural, educational, and sporting events involving former employees. 67% of companies do not implement any initiatives to support former employees.

Companies are building an environment supporting long-term loyalty, development opportunities within the same company. This is essential from the point of view of the zoomers and for industries characterized by high staff mobility, such as IT and retail. The average employment period in respondent companies is 4.3 years (3-4.5 years more than the average market value). The average number of career transitions, both horizontal and vertical, for the entire period of work in the company is 1.7 times. 72% of respondents agreed that the career development system provided career changes for employees once every 2-3 years.

71% of companies use only the practices to protect the rights of employees that are directly stipulated by law; among additional practices, the most common is collective bargaining agreement (24%). Only 9% of respondents noted that companies had dedicated structures, committees to manage infringement complaints of the employees.

Human-centric organizations hear and listen to their employees.

81% of respondents agreed that the company implemented a system of mandatory feedback on work results from subordinates, supervisors and/or colleagues. 75% of respondents consider the mechanism of submitting and accounting for employees' suggestions to improve the efficiency of work processes to be well-functioning.

Human-centric organizations focus on social responsibility to employees and the territories where the company's assets are located. This maintains the level of trust in the company, illustrates the company's concern for environmental and social issues, and increases employees' loyalty.

37% of companies implement any initiatives to support local communities / territories where they operate. Among other things, this includes cultural initiatives, support for local suppliers in the form of priority procurement of goods/services, emergency support, construction, and employment programs.

The share of employees who participate in volunteering and socially important projects is 8% (16% in retail).

The share of social investments in the company's revenue is 1.3% (over 5% in industry).

A variety of corporate support measures for employees, which has a positive impact on productivity levels, employee engagement and mental well-being.

67% of companies implement initiatives to keep employees physically and mentally healthy. Along with voluntary health insurance programs, psychological support programs are actively developing.

53% address issues of employees' meals, 48% address transportation issues; 47% provide financial support for families.

Over the past few years, the world has experienced many social and economic crises. The uncertainty of these processes is only increasing. Meanwhile, in the context of "perfect storm," the only economic actor that people have trusted all these years is employing companies and businesses in general. According to Edelman Trust Barometer, most employees in the world – 78% trust their employer, 66% trust the head of their organization, and 62% trust business in general. The flip side of trust in an employer is forming high expectations. Employees rely on companies to support their economic, mental and social well-being. So, this is up to us to influence the future of the labor market.

Times of uncertainty and higher turbulence require the development of systemic measures, and this is a task we should address together, combining effort, expertise, and knowledge.

All organizations that are willing not only to subscribe to the principles of human-centricity, but also to ensure that these principles are observed in their day-to-day work, will be able to join the alliance.

For companies that truly face with a shortage or turnover of staff, the human-centered approach is an opportunity to critically evaluate their needs and build a systematic work with personnel, considering the expectations of employees. As practice shows, a strategic approach always pays off in the long run. As I said before, there is no universal gold standard, there is the responsibility of each individual employer to be honest in assessing their risks and dealing with them in a systematic way.

Source: Vedomosti newspaper

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