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№ 11 (November 2010)

TNK-BP Optimizes HR Policy

   Despite the lack of highly skilled specialists in the market, the aging industry and an overall drop in quality of practical skills obtained by students at college, TNK-BP has managed to continue hiring the crème of industry pros, reduce the average age of its staff and attract the best young engineers Russian academia can offer.

By Bojan Šoć

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   Out of a 14-million-strong pool of industry workers in Russia, only two million are highly skilled managers and engineers and the hunt for these specialists is only getting tougher, TNK-BP Vice President for Human Resources and Organizational Development Andrei Yanovsky told reporters during the Oct. 12 meeting with the company’s senior HR executives.

   The industry is getting older, too. According to statistics, the average age of oil and gas executives in Russia today stands at 45 years. TNK-BP countered the trend by reducing the age of its top brass to 42 years, while the average age of the company’s nearly 46,000-strong staff was also slashed from 41.7 years in 2003 to 39 years in 2010.

   In recent years, the company has been offloading non-core assets, ultimately slashing its workforce from 60,000 employees to 45,964.
“Companies are focused on the growth of their productivity and efficiency of operations,” Yanovsky explained.

   In recent years, TNK-BP has been steadily topping Russia’s industry averages in terms of labor productivity (see Chart 1), surpassing the $800,000 per employee mark in 2010, while the overall performance across the board barely made it over the $500,000 mark. Following a plunge in the crisis-stricken 2009, TNK-BP rebounded more quickly than most of other players in the market.

Choosing Career at School

   High labor productivity rates cannot be achieved without strong project management skills and recruiting college graduates with those skills today isn’t easy – old textbooks, the lack of practical knowledge and limited experience to work “in the field” are just some of the shortcomings that make it difficult for young engineers to blend in smoothly.

   And still, there are academic institutions in Russia providing the kind of training that fits the highest corporate standards. According to TNK-BP’s Leadership Development director Olga Perekopskaya, the company has identified five such institutions, accounting for 50 percent of new hires among students. These are the Russian State Oil and Gas University in Moscow (Gubkin), the Tyumen State Oil and Gas University, the Samara State Technical University, the Ufa State Oil Technical University and the Irkutsk State Technical University. The synergetic effect of cooperation with these institutions has been further enhanced through the establishment of TNK-BP’s Inter-University Center, which aims to fine-tune the level of training of young specialists entering the company.

   In recruiting young engineers TNK-BP uses a targeted approach, selecting some of the future hires even before they enter college.

   “We have a contractor in Nyagan organizing TNK-BP classes for ninth- and tenth-grade students who are carefully selected and then prepared for entrance exams to enroll at universities. TNK-BP sponsors the training which is conducted by teachers from the Tyumen State Oil and Gas University and other universities. They prepare schoolchildren to enter college and major in those professions that our company is especially interested in,” says Perekopskaya. Ultimately, this approach should steer youngsters toward success in their future careers and minimize the period required for adjustment to corporate policies and standards.

Incentives Are Key to Staff Retention

   The company maintains the industry trend in terms of salary, which has seen a drop from the 16.5-percent annual increase in 2006 to only 3.4 percent last year en route to recovery in 2010 with the rise projected at 8.5 percent (see  Chart 2). The staff is further incentivized by the 25-percent variable pay component. However, TNK-BP’s investments in human resources go far beyond salary payments. “The salary accounts for approximately 75 percent of all funds we spend on our staff,” says TNK-BP’s corporate director for HR operations Andrei Chepurnov. The remainder is spent on providing a safe working environment (13 percent), social benefits and guarantees (5 percent), services recognition program (4 percent), corporate events (2 percent) and training (1 percent).
Other incentives include optional health insurance, trips to spas and health resorts, corporate pension plans and housing programs.

   “Our housing program was launched several years ago and today it involves around 150 employees in the regions. It has a very clear focus, targeting young specialists and social category workers, as well as employees with unique or rare skills in those regions where we need such skills,” Chepurnov said.

Rivals Offer More Than Just Cash

   Skilled managers are appreciated throughout the industry. At a time when competition in the labor market is becoming tougher, it takes quite an effort to keep staff turnover in check. After hitting the 10-percent mark in 2007, the turnover in Russia’s oil and gas industry shrank to 2 percent a year later (see Fig. 3), but has demonstrated new growth in 2010, fueled by the recent recovery. Naturally, in such an environment TNK-BP-trained cadre is often targeted by rival firms and headhunters, but it takes more than just copious cash offers to lure the company’s staff away.  

   “We can compete financially to a certain extent, which we call awareness. The environment we work in clearly understands that TNK-BP is recognized as talent factory, where people are truly cared for and trained to be result-oriented. So it is no wonder that our staff enjoy increased demand in the labor market. We lose employees primarily not because of financial issues, but due to our competitors’ sale of certain perspectives, explains Yanovsky.

   “As a rule, our people are offered posts that are significantly higher than their current ones – it is usually a combination of career opportunities and certain financial incentives. However, I wouldn’t say that we face a gigantic task of keeping the staff. In early 2010, we conducted an analysis which suggested that we polish up our short-term and long-term incentive systems (actually, we are doing this continually), as we focus our attention on the employees’ motivation to work in the company instead of just making efforts to retain them.”

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