X5 is a major provider of investment and employment in regions and communities across Russia. The Company employed 68,457 people at the end of 2009, representing a year-on-year increase of almost 8 thousand or 13% compared to 2008. Even during the economic downturn, the Company has continued to open stores and expand operations – we increased overall job opportunities while controlling costs and enhancing productivity.
This year we sharpened the HR function’s focus on the Company’s strategic and operational objectives, establishing clear HR action plans for each area of our business to be implemented in 2010. We also listened to our people, conducting the Company’s first annual employee survey and incorporating key findings into our plans for improvement.
Some 43,000 employees went through X5’s training centres in 2009 versus 26,000 in 2008. We view training and development as a key competitive strength that effectively fosters employee loyalty, productivity and customer orientation. It also strengthens X5’s corporate culture, which is built on our core values of Company pride, business ethics and respect for people.
HR FUNCTIONS MATCHED
TO X5’S STRATEGIC GOALS X5 continues to fine-tune its Human Resources (HR) function to support X5’s business needs and objectives. In 2009, we established a clear delineation between strategic and operational HR management.
Strategic HR is responsible for developing X5’s HR policies to support the Company’s strategic objectives. In addition, it manages issues with respect to attracting, incentivising and developing X5’s executives, working closely with the Supervisory Board’s Nomination and Remuneration Committee to ensure the Company has the right talent to support its long-term success.
Operational HR manages the needs of X5’s large and growing business, supporting the objectives of our retail formats and logistics function. This year was dedicated to diagnosing areas for improvement and developing action plans for 2010:
- Discounters – Talent development and succession planning for key store management positions is an important area of focus due of the stepped-up pace of new store openings. Additionally, operational HR strives to create a higher quality working environment in discounters in a cost-effective way for the Company.
- Supermarkets – The format is focused on improving service quality and increasing average purchase size. HR supports these goals with training and development of store managers and basic personnel, to improve their product knowledge and understanding of customer needs. The performance management system for supermarket employees will be changed correspondingly in 2010 to support the format’s goals for increasing sales.
- Hypermarkets – The format’s key HR achievement was in-store staffing optimisation, which enabled substantial productivity improvements this year following integration of the acquired Karusel chain in the second half of 2008. The plan for 2010 calls for expanding the format’s successor pool, with a special focus on managerial skills training and development for employees.
- Logistics – One of X5’s key priorities is operational excellence in the supply chain, and HR policy in logistics plays a crucial role. In 2009 X5 audited the organisational structure of the logistics function, conducting workflow analysis, job function evaluation and a review of the remuneration system. HR priorities in 2010 are to establish standardised organisational structures and job descriptions, grow the successor pool and implement a new training & development system for key employees and members of the successor pool.
LISTENING TO OUR PEOPLE–
FIRST ANNUAL EMPLOYEE SURVEY In 2009 we introduced the X5 Employee Survey as a powerful new HR tool for evaluating satisfaction levels and engagement in the success of our business. The survey was conducted at the end of 2009 and will become an annual event. Key findings have been incorporated into our HR action plan for 2010. This includes strengthening X5’s social benefits and improving labour conditions in our stores.
Health insurance, staff meals and various social payments are important components of the Company’s compensation and benefits policy. In 2010, X5’s social benefits package will be expanded to include various gift certificates, bonus cards and discounts for shopping with X5 and our partners in non-food products, cleaning services, entertainment and transportation. We have also allocated special funds for employee celebrations of format and store anniversaries and professional milestones. In addition, we are focused on enhancing the quality of the work environment, including renovation of canteens and staff premises, transportation services for night-shift workers and other improvements.
TRAINING & DEVELOPMENT REMAINS
A COMPETITIVE ADVANTAGE The Company has a deep commitment to training and development for executives, managers and staff. Talented leaders and a skilled workforce are essential for driving operational performance and executing strategic projects. We rely on knowledgeable, attentive people to provide quality customer service and increase sales in our stores.
The Company operates 14 regional multi-format training centres for store and logistics personnel. These offer programmes to enhance professional knowledge and skills, and provide employees with career development opportunities. In 2009, we trained almost 43,000 employees in our training centres versus 26,000 in 2008.
X5 is also strengthening the business management skills and operational expertise of midlevel and senior executives. In 2008 we launched X5 Corporate University to provide executive training, with a focus on leadership development, time and conflict management, delegation and communication skills. In 2009 we launched distance- learning to enable managers to develop professional skills at convenient times and in a more cost-effective way for the Company.
To increase new head office employees’ understanding of in-store operations, Corporate University runs an orientation programme with week-long field internships in all three formats. In addition, X5’s “Shopper” programme is an ongoing initiative, whereby each head office employee is assigned to conduct monthly checks of a “sponsored store,” paying special attention to quality, service levels, assortment availability and in-store staff courtesy. Both programmes are mandatory for head office employees, underscoring our top-to-bottom commitment to enhancing retail know-how.
In 2010 we have launched individual development programmes for X5 senior executives, including members of the Executive Board. This focuses on strategic project management, coaching and mentoring. Store personnel training & development programmes in 2010 will focus on customer service and driving sales growth.
CORPORATE CULTURE & CODE OF CONDUCT We are proud of the high standards we set for our people. Since 2008 all Company employees operate in accordance with X5’s Code of Conduct, developed in line with best international standards. Among its main tenets are strict compliance with the law, professional integrity, respect for people, customer orientation and commitment to excellence.
All HR policies and practices support the development of X5’s corporate culture. We select train, develop, promote and retain employees who embrace our corporate values, show respect for colleagues and subordinates in their daily work environment and adhere to corporate rules.
Finally, the Company recognises professional achievements not only through our remuneration policies, but also with corporate awards and prizes. In addition, we actively encourage employees to engage in Company events and to participate in professional and artistic contests.