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Changes in HR management in the new business environment American Chamber of Commerce

Changes in HR management in the new business environment American Chamber of Commerce. Ekaterina Ukhova 17 March 2009. Current economic environment in Russia. Gross domestic product: – 2.2% decrease - forecast of the Ministry of Economic Development and Trade for 2009 Inflation rate:

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Changes in HR management in the new business environment American Chamber of Commerce

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  1. Changes in HR management in the new business environmentAmerican Chamber of Commerce Ekaterina Ukhova 17 March 2009

  2. Current economic environment in Russia • Gross domestic product: • – 2.2% decrease - forecast of the Ministry of Economic Development and Trade for 2009 • Inflation rate: • - 14% (the initial forecast 13%)* decrease (official forecast for 2009) • Slowdown in production: • -7,4%* decrease (evolution of forecast -3,2%, -5,7%) • Investment capital: • -14%* decrease (evolution of forecast +1,4%, -1,7%) • Unemployment: • up to 10 million people - forecast of Social Policy Center, Institute of the Russian Academy of Sciences * forecast of Ministry of Economic Development and Trade

  3. Ernst & Young compensation & benefits survey – February 2009 100 companies • 25% with annual sales volume over USD 1 billion • 17% with headcount over 5 000 employees in Russia Characteristics of the participants

  4. Cost cutting policy 54%of respondents are planning to cut personnel related costs in 2009

  5. HR areas subject to cost cutting • Training • 45% of companies have reduced training budget in 2008 • 64% of companies plan to reduce training budget in 2009 • Business travel policy • 54% of companies plan to reduce per diems, change class of hotels and flights in 2009 • Corporate events • 73% of companies plan to cut corporate events cost in 2009 • Staff promotion policy • 22% of companies plan to revise the promotion policy in 2009 • Remuneration policy • Bonus policy • Benefits policy • Headcount optimization

  6. Currency regulations in salary arrangements • NONE of the respondents plan to switch to a foreign currency • NONE of the respondents plan to compensate employees for the exchange rate related loss of salary’s purchasing power

  7. Remuneration policy Over 40% of respondents either have not made a decision whether to review the base salary or do not plan to review the base salary in 2009 Plans for 2009 as of February 2009 (% of respondents)

  8. Production personnel: relative base pay levelsin February 2009 (market median)

  9. Bonus policy 31%of respondents plan to review bonus policy in 2009 Actual bonus size dynamics

  10. Optimization of employees’ benefits packages • 17% plan to review medical insurance policy • out of which 37% plan to change annual medical insurance contribution • 10% plan to review corporate car policy • 20% plan to review corporate mobile phone policy Changes in benefits policy will also affect: • Sponsored meals • Sponsored sport activities • Sponsored vacations / sanatorium - resort therapy • Additional insurance

  11. Headcount optimization Popular measures of headcount optimization: • Formal headcount / staff reduction • Paid / partly paid vacation • Unpaid vacation • Shortened workday / week 31% have reduced / are planning to reduce HR staff in 2009

  12. Please address your questions on HR management to ourHuman Capital team: +7 495 755 9675 Zhanna.Dobritskaya@ru.ey.com +7 495 641 2932 Ekaterina.Ukhova@ru.ey.com

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