Х5 is a major investor in the development of the Russian economy. We do our best to promote social well-being by introducing modern retail stores, investing in infrastructure projects and implementing social programmes. The Company is also one of the largest employers in the country. Together with the 13,000 new emloyees from the acquired Kopeyka chain Х5 employed almost 90,000 people at the end of 2010.
In 2010, over 63,000 employees were trained in our regional multiformat training centres, as compared to 43,000 employees in 2009. The Company pays significant attention to staff education and development, to enhance staff loyalty, efficiency and customer service.
Corporate Culture
As our corporate culture has evolved, we have updated our Mission, Vision and Values to better reflect changes at the Company. Our updated philosophy is designed to encourage greater employee involvement in achieving the Company’s strategic goals.
Our Mission: “Satisfied Customers” – This reflects our belief that knowledge and satisfaction of customer needs is a key requirement for building customer loyalty and is critical to our long-term business success. Each strategic decision we make should be aimed at achieving customer satisfaction.
Our Vision: “Best-in-Class” – Each employee’s commitment to excellence is a prerequisite for professional success and critical to the success of the Company as a whole.
Our Values: “Integrity, Effectiveness and Partnership” – These are the fundamental principles that dictate how we operate and ensure the success of our long-term relationships.
Managing Toward Corporate Goals
We understand that managers on all levels play a key role in the implementation of proposed corporate changes. They are the main driver behind the development of our business. To effectively inspire and lead a team, a manager has to share the Company’s corporate values and be an active participant in achieving its strategic goals. In early 2011, a project aimed at aligning our managers with the Company’s goals and values was launched.
In 2009, we introduced the X5 Employee Survey as a powerful new HR tool for evaluating employee satisfaction and engagement in driving the Company’s success. The inaugural survey was such a success that it is now done on an annual basis. To take this a step further, in 2011 we will conduct the first poll aimed exclusively at managers. Its results will help us identify the potential for increasing managers’ involvement and make decisions about implementing change.
HR Support for X5’s Strategic Goals
We are updating our HR policies to support the Company’s strategic goals. We launched a number of important projects this year, facilitated by the introduction of SAP for HR.
Recruitment
X5’s pool of candidates for store manager positions is quickly absorbed by our rapid growth. At the same time, store directors and deputy directors are difficult to find in the market and command significant compensation packages. As a result, Х5 expanded its external pool of candidates by scouting and attracting talented college graduates. Through strategic agreements with colleges, X5 can select the best undergraduate students, train them to hold managerial positions in stores and prepare them to become store directors. We also recruit cooks, bakers and confectioners. In October 2010, this programme was launched in four Russian cities: Yekaterinburg, Yaroslavl, Tver and Nizhni Novgorod. In 2011-2012 we plan to expand this programme for implementation in all our branches.
Personnel Training and Development
X5 places great importance on the training and professional development of managers and personnel working in our stores and distribution centres (“DC”).
The talent of our top managers and expertise of our in-store employees are fundamental to the Company’s operating success and achievement of its strategic objectives. Educated and well-trained employees are best equipped to ensure the appropriate level of customer service and sales growth in our stores.
Modernisation of Training Centers. The Company operates 15 regional multi-format training centres and runs a number of training programmes that offer opportunities for professional development. In 2010, over 63,000 employees were trained in our training centres, as compared to 43,000 employees in 2009. We began actively updating our training centres in 2010 to meet the requirements of our fast-growing business. We are upgrading infrastructure and attracting new training specialists to keep up with increasing enrollment. An important part of our training centre development will be updated programming for in-store employees, aimed at reducing shrinkage, ensuring our continued growth and raising the quality of customer service.
In-Store Training. In October 2010, we began providing basic personnel training in our stores. We will continue to expand “training stores” in all formats and regions and develop post-training support for new employees in stores and DCs. In-store training of personnel ensures a more efficient transfer of knowledge and skills thanks to on-site supervision by store directors and managers. We have developed a new approach to training personnel as we expand into new regions. One in every five stores in each new region will function as a “training store” which will be fully equipped to train new employees.
DC Employee Training. As we continue to develop our logistical infrastructure and make improvements to our supply chain management, HR continues to grow in importance. In 2010, we launched a training and development programme for managers of logistics divisions and implemented professional training for DC employees. In 2011, we are planning to operate training classes at distribution centres in order to train personnel on site.
Remuneration System
The Company made significant progress in creating a more efficient compensation system in 2010. In the summer, we reviewed employees’ salaries based on comprehensive market data and individual performance evaluations. We continually monitor the market for independent salary reviews to help better inform our decisions. In order to ensure competitive levels of compensation, we use the market mid-point as a benchmark when choosing base salaries for the majority of employees.
At the same time, we see potential for improvement in our existing compensation and benefits system. In 2010, we evaluated our compensation system to identify the main areas for improvement. These were as follows:
- Further development of fixed-payment systems based on a grading system, including modeling of base-pay ranges.
- Improvement of short-term incentives to reward success in achieving aggressive 2011 targets; more consistent and transparent rules for disbursement of premium payments.
- In 2010, X5’s social benefits package was 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, store anniversaries and professional milestones. In addition, we are enhancing the quality of the work environment, including renovation of canteens and staff rooms and providing transportation services for night-shift workers, among other improvements.