Victoria Petrova is head of UC RUSAL’s HR directorate and is in charge of all HR issues. She was previously head of RUSAL’s HR directorate, prior to which she worked as HR manager and sales efficiency manager at Bristol-Myers Squibb.
Despite being a business “hot topic”, corporate social responsibility (CSR) remains of marginal interest to some in the HR profession. Indeed, a few may argue that HR practitioners ought to steer clear of the issue. So should HR be at the forefront of the CSR debate, or stay in the back seat? UC RUSAL has found that the two are so intertwined that it would be near impossible to separate them.
As the leading aluminium producer in the world, UC RUSAL does not face the obstacles met by smaller or lesser-known companies when searching for personnel. However, its high profile brings with it a specific set of HR challenges, some of which have been tackled through the effective use of CSR.
A change of culture
In the early years of RUSAL (now known as UC RUSAL) the challenge was to create a leading, progressive company from a group of speedily acquired facilities across Russia. Culture was fragmented and uncoordinated, varying from one plant to another. To reach growth goals, management understood that it was fundamental that cohesion be developed and a unified corporate culture cultivated.
Lifetime employment had always existed in the Soviet Union, with many managers and plant workers confident they would be paid simply for arriving at work in the morning. It quickly became obvious that it was crucial to encourage employees to think about their commitment to the company’s strategy and clearly understand its mission in order for it to grow as a unit.
The only way to effect this change was to encourage a two-way dialogue as a platform on which to build trust and cohesion and therefore manage a number of risks inherent to the business. For RUSAL, that is where CSR began. Company involvement in the lives of its operational employees became a route to cohesion and mutual understanding as well as strategic risk management in especially volatile regions.
A strategic tool
Though HR is responsible for many key systems, including recruitment, training and communications, getting the employment relationship right can also be seen as a precondition for establishing effective relationships with external stakeholders. CSR does not change so much as broaden the HR agenda, and it has become an integral part of HR strategy at the company – performing an even greater role in the recently merged enterprise, United Company RUSAL.
As with the rapid growth before it, the merger this year of RUSAL, Sual and Glencore bought with it a new set of unique HR challenges, culturally and logistically. Many of the issues faced by the merged organization are the same as those that faced RUSAL – global expansion, a clash of business cultures and the need to harmonize HR practices. With a workforce of over 100,000 across 17 countries, instilling appropriate and consistent HR practices is a real priority, but not a daunting one due to the work already carried out prior to the merger.
The business benefits of CSR
HR should promote positive behavior and relationships in the workplace that are based on trust, fairness and willingness to deliver. The basic assumption is that, in order to foster unity and motivate employees, employers must employ enlightened management practices in terms of both their employees and their employees’ local areas.
As such, UC RUSAL is utilizing CSR practices to improve both public perception and employees’ loyalty and understanding. CSR has become a strategic issue, crossing departmental boundaries and affecting the way in which the company does business.
Managing risk and trust are key issues for HR practitioners, and UC RUSAL has discovered that CSR can offer a framework for managing both. CSR has become integral to the company’s growth – particularly in terms of supporting successful globalization.
Where geographical diversity is concerned, one size does not fit all; a culturally specific approach to CSR is required.
Thinking globally, acting locally
There must always be a certain degree of unity within an enterprise. It is therefore a very subtle issue when common practices must be introduced throughout production facilities in different countries, and care is needed to ensure respect is shown for local traditions and attitudes. The best strategy in this situation is to think globally and act locally – a now well-known and accepted, but less well-practiced, idea. This is the concept from which many of UC RUSAL’s CSR activities have sprung and one that the company stands by as an essential part of running a global company. Where geographical diversity is concerned, one size does not fit all; a culturally specific approach to CSR is required.
UC RUSAL employs people on five continents and works closely with local communities developing initiatives to try to best tackle the challenges that arise, whether social or political. Even countries that may seem at first to have similar cultural identities can be drastically different. Take Russia, for example, with its communal identity, compared to the individualistic Ukraine across the border. The same approach to HR strategy, and the CSR that fits into it, cannot always be transferred from region to region.
The following three particular initiatives demonstrate to some extent the breadth and diversity of activity implemented by UC RUSAL in this area, each with particular HR implications.
Guinea social program
One example of successful human resources integration into a new geographic area is in Guinea. The country holds a special place in UC RUSAL’s history as home to the company’s first foreign project, when in 2001 it took over management of the Compagnie des Bauxites de Kindia.
UC RUSAL is now the largest employer in Guinea. Several years ago, a short time after entering the local market, the company initiated a series of social investment programs. The driver here was to push forward the development of local communities and create a basis for better mutual understanding, enabling viable communication that benefited both the business itself and the people influenced by its presence in their communities. According to IRIN, the UN Office for the Coordination of Humanitarian Affairs, Guinea’s run-down public infrastructure compares to that of a post-conflict country and is a regular cause of unrest in the nation.
Improving the quality of life
UC RUSAL has taken proactive responsibility for improving the infrastructure of the local communities in which it operates. The measures undertaken by the company serve two major purposes – to bring a higher quality of living to the local residents and to turn the wheels of local economic, social and cultural development by improving the infrastructure through the provision of paved roads and dependable water and power supply.
A number of projects have been initiated that concentrate on the basic needs of the people living in the areas of UC RUSAL’s operations. Using the capacities of the Friguia Refinery, the company delivers a regular supply of drinking water and electricity to the residents of Fria. The local people have virtually no other way of receiving these vital resources.
In 2006, RUSAL supplied 31,840 MW/h of electricity and took care of all the repair works that resulted from the faulty functioning of the city power transmission lines and equipment. The water supply to Fria is facilitated through a water intake plant on the Konkouré River some 11 km from the Friguia Refinery. The daily consumption of water in Fria amounts to 10,000 cubic meters. The city’s waterworks system is about 30 to 40 km for clean water and 10 km for sewage. UC RUSAL maintains approximately 50 percent of the system, as well as a sewage treatment plant.
Helping the people to help themselves
UC RUSAL also has a number of projects in place to address both the issue of education access and the issue of community building and cultural heritage preservation. In 2004 RUSAL built a seven-classroom school in Debele, attended by employees’ children and those from the local community, up to 14 years old. The nearest available school in the area used to be some 12 km away. The company also provides transportation from around the local community and supplies learning materials, water and electricity. The school offers education to more than 360 students and plays a vital role in many employees’ lives. Over 2,500 people have completed schooling at the Debele facility.
In 2006, RUSAL launched a full-term scholarship program for talented children from local communities wishing to obtain higher education in Russia. Five students selected last year are currently enrolled at the Peoples’ Friendship University of Russia. These students spent the first several months on an intensive Russian language course before beginning studies in their chosen fields: mining engineering, energy construction and geology. All five have successfully completed their first year, and this year five additional students have been selected for the scholarship program.
Establishing medical centers
As a company operating in the challenging mining sector in difficult jurisdictions across the world, the health and safety of employees is a priority but also a major challenge for UC RUSAL. On a practical level, preservation of human resources is one of the main tasks for large companies internationally. Though HR professionals develop methods and practices to attract and keep personnel, the challenge of reducing the amount of people unable to work due to health problems is often overlooked. Large manufacturing companies will soon face the problems connected with this if appropriate measures are not taken in the short term.
UC RUSAL was the first company in Russia to conduct a detailed analysis of employee sickness rates. Based on the findings of this study, HR took the decision that improvement and preservation of its employees’ health must be key to overall HR strategy, and in 2005 the company established corporate medical centres. The first branches were set up in the Siberian cities where key production facilities are based. Preparation is currently underway to open new branches at plants in Russia, and in the near future this will be extended to overseas operations.
The company has set clear objectives to be reached by 2009, including a reduction in the annual rate of time lost due to illness among personnel and a reduction in the share of employees taking frequent and long-term sick leave. Efforts are being concentrated on preventative care, and the medical centres carry out the following activities:
- Organization and planning of medical treatment.
- Maintenance of an electronic system for personal medical records.
- Operation of an ambulance service.
- Provision of primary health care (including
therapy services). - Provision of specialized medical aid, including early diagnostics and rehabilitation treatment.
Results of this scheme have been very promising so far. The work of the medical centers resulted in a 16 percent reduction in lost time due to illness by 2005, and a 20 percent reduction by 2006. In 2005/2006, the figure for lost time due to illness at RUSAL’s facilities and offices was at 850 days per 100 employees. It is expected that by 2010 this figure will be no more than six days per employee annually. In addition, at the Siberian plants, the health of employees under medical observation has significantly improved compared to previous years, with the electronic record system showing a dramatic reduction in sickness rates.
By 2008, the RUSAL Medical Centre is planning to become a participant in the federal health program and to comply fully with all the licence requirements imposed on medical centres for the treatment of occupational illnesses.
The corporate ethics code
Key to the overall corporate identity of UC RUSAL, and created with the assistance of employees during the preparation stage, the “Corporate Code of Ethics” has become the basic document to describe the operation and business principles of the company.
At the outset, a “code group” comprising the company’s senior managers was established to prepare a first draft, which was then distributed among employees. Serious concerns that the values chosen by senior management would not be understood or shared by other employees were allayed when over 18,000 amendments and proposals were submitted, showing many common themes.
The senior team is currently developing a second edition of the corporate ethics code, as the creation of UC RUSAL in March 2007 has led to many changes in corporate activity. After the success of the first trial, employees are once again expected to be an integral part of this process.
Developing a brand of social behavior
As a global leader, UC RUSAL takes its commitment to corporate responsibility seriously. Setting that aside, it has also come to recognize that effective CSR can help to tackle very specific HR challenges.
From its beginnings as a swiftly acquisitive, highly fragmented business, to its current status as a newly merged enterprise operating in some of the most challenging jurisdictions in the world, UC RUSAL has been forced to adapt quickly and deftly in order to find ways of tackling the HR pressures it faces.
It is true that the focus and shape of CSR will depend on the scale and identity of the business involved. Particularly in the sector in which it operates, where long-term commitments to communities are common, it is important that UC RUSAL becomes an active participant. The company has endeavoured to do just that, over time becoming an important part of not only the lives of its employees, but also the infrastructure and social fabric of the countries in which it works, developing its own brand of social behavior.
UC RUSAL
United Company RUSAL is the largest producer of aluminium and alumina in the world, with a 12.5 percent share of the global aluminium market. It was formed in March 2007 out of the merger of RUSAL, previously the third-largest global aluminium company, SUAL, one of the world’s top 10 players in the aluminium business, and the alumina assets of Glencore in Switzerland. It employs over 100,000 people in 17 countries on five continents.
CSR practices that drive the business
The pressures on companies to show leadership through CSR are becoming stronger. In the case of UC RUSAL, the community is global and the challenge correspondingly great. CSR must go further than the undertaking of non-commercial activities in the hope that the corporate image will be improved. At UC RUSAL this has driven management to address strategic issues about the aims, purposes and operational methods of the organization – but HR can also give initiatives much-needed credibility by ensuring that they are embedded in an organization’s day-to-day culture.
HR at UC RUSAL will continue to give substance to company aspirations by championing enlightened people management practices and employee involvement and development. Employing intelligent CSR practices alongside this will aid the company in steering itself towards the kinds of strategic behavior that will enhance not only its standing, but more fundamentally, its business.
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