As one of the country’s major employers, we are a socially oriented company that relies on the principles of partnership relations with employees and trade unions.
We are focused on:
• Promoting productive employment.
• Providing decent jobs and working conditions.
• Observing labour and human rights.
• Doing business in good faith and not tolerating corruption.
• Promoting development of the society and the regions where we operate.
The main objectives of the initiative are:
• Improving the Company’s corporate culture.
• Increasing the quality of leadership skills among managers.
• Increasing the HR performance.
Principle 1. Human Rights. Businesses should support and respect the protection of internationally proclaimed human rights.
Principle 2. Human Rights. Businesses should make sure that they are not complicit in human rights abuses
Principle 3. Labour. Businesses should uphold the freedom of association and the effective recognition of the right to collective.
Principle 4. Labour. Businesses should uphold the elimination of all forms of forced and compulsory labour.
Principle 5. Labour. Businesses should uphold the effective abolition of child labour.
Principle 6. Labour. Businesses should uphold the elimination of discrimination in respect of employment and occupation.
In this regard, three activities (lines) within the HighPerformance Culture initiative were developed:
• Corporate culture.
• HR competencies.
The following activities were carried out within Corporate Culture:
• Diagnostics of the social stability index and the level of industrial relations.
• Diagnostics of the corporate culture, corporate values and the model of personal and business competencies.
The diagnostics was performed through focus group discussions, interviews, online surveys and questioning. Two inquiries involved some 4,600 participants.
The completed activities are expected to show the findings on the social stability index and the level of industrial relations as well as corporate values, the current condition of the corporate culture and the model of personal and business competencies.
This strategic goal is to be achieved on the basis of three main objectives of the HR function:
1. Setting up a unified HR function and a single HR management model throughout the KMG Group.
2. Improving and increasing the openness of the HR function on an ongoing basis.
3. Developing the corporate culture and improving managers’ skills.
Each objective includes the list of specific tasks that constitute the key areas of the HR policy.
The HR policy concept relies on the following key principles:
1. Balance between the interests of employees and the Company.
2. Uniform HR policy for the whole KMG Group
3. Shifting the administrative supporting role of HR to a strategic one for business.
4. Creating added value for business.
5. Optimal organisational structure and staff size
6. Manpower planning based on business demands and labour market conditions.
7. Continuous improvement of learning and advanced training programmes.
8. Building a self-learning entity based on a 70-20-10 model.
9. Responsibility of managers for personnel management.
10. Creating the culture of staff engagement in the joint achievement of strategic goals.
11. Creating conditions for the employee incentives.
12. Preventing law violations.
The KMG Group employs over 70 thousand people in the country. At the end of 2019, the actual number of employees within the KMG Group was 70,938 people, outsourced employees — 4,168 people.
Considering that the Company’s operations are fraught with hard, hazardous and harmful working conditions, the share of male employees is 82%, female employees — 18%.
The share of operations personnel in the total staff is 90%, of office and management personnel — 10% (in 2018 — 90% and 10%, in 2017 — 89% and 11%, accordingly).
The number of employees who left employment during the reporting period is 4,325 people, including those aged under 30 — 22% (18.2% in 2018, 20.4% in 2017), 31 to 50 — 49% (55% in 2018, 46.4% in 2017), above 50 — 29% (27.7% in 2018, 23.5% in 2017).
The staff turnover rate* for the KMG Group was 7%, which is 6% less compared to the previous year
The performance of 48% of all Company employees was assessed during the reporting period.
Our approach to personnel encouragement provides for decent remuneration, transparency and observance of employee rights. All changes in the remuneration system are made with due regard to opinions and suggestions of stakeholders.
There are no differences in the basic salary and in the bonus system depending on the gender in the KMG Group. The level of salary in the KMG Group companies is tied to a position rather than an employee, i.e. male and female employees occupying similar positions receive equal salaries and other payments provided by the company’s remuneration rules.
The payroll system for the supreme management body and top managers is focused on the performance, incentives, increase in labour productivity and efficiency, and includes the elements of short-term benefits based on the achievement of KPIs. In accordance with the best world practices, the top managers’ performance reflects the economic, environmental and social objectives of the Group.
Exploration and Production companies have a Uniform Payroll System (UPS) in place. The system is to provide a uniform procedure for paying remuneration in all business units and boost employees’ interest in performance results. This system stipulates a number of conditions under which employees are provided compensations, benefits and rewards. One of such criteria is the Regional Coefficient — a ratio of relative increase in salary in order to compensate for extra expenses and increased labour input due to working in regions with severe weather conditions. The highest coefficient is applicable to Mangystau and Atyrau Regions.
The ratio of starting salary rate in the Group to the minimum salary set by the national legislation in 2019 is within the range from 6:1 to 8:1 (in 2018 and 2017 from 6:1 to 8:1, in 2016 — from 5:1 to 10:1, respectively).
The share of top managers who are hired from among the local population within our footprint is 86% (in 2018 — 85%, in 2017 — 72%, in 2016 — 89%).
The share of top management members is 11.3% in the total staff, including female managers — 16.5% (17% in 2018), male managers — 83.5% (83% in 2018).
The incentive system will be further improved as part of the High-Performance Culture initiative through the introduction of the Leadership programme and the Mentorship programme. These programmes imply an ongoing assessment and perfection of leadership skills as well as coaching, training and mentoring skills for further development of direct subordinates and increase of the motivation of colleagues.
The Company strictly complies with the requirements and does not violate the RoK labour law, which states that no one may be subjected to any discrimination in the exercise of their labour rights on the grounds of origin, social, official status and material position, gender, race, nationality, language, religious beliefs, convictions, place of residence, age, physical disability or affiliation with public associations. No facts of discrimination were recorded during the reporting period.
We do not use child labour or forced labour, we acknowledge the equal rights of all employees, irrespective of their race, religion and gender. Each employee of the Company has equal opportunities in exercising their labour rights and freedoms. Moreover, the Company is actively engaged in negotiations with employees for signing or amending the collective bargaining agreement, strictly observes the time limits for negotiations and ensures the functioning of appropriate commissions, provides information necessary to conduct negotiations, strictly fulfils the terms and conditions of the collective bargaining agreement.
In accordance with the labour law, any employee has the right to participate through their representatives in collective negotiations and drafting of the collective bargaining agreement as well as to review the signed collective bargaining agreement.
The Company’s activities imply no restrictions of the rights to freedom of association or holding collective negotiations by types of activities or on an area basis. Being a corporate citizen, we fully support this right and create a favourable environment for the exercise of employees’ rights to freedom of association.
Many production enterprises of the KMG Group have collective bargaining agreements in place.
For the purpose of harmonisation, a model form of the collective bargaining agreement has been drafted, which establishes the uniform principles to arrange for remuneration, social assistance, working conditions, rest and work hours, etc. The model form of the collective bargaining agreement sets forth a step-wise algorithm for solving collective labour disputes, if any. The model requirements for drafting collective bargaining agreements within the KMG Group enable building labour relations with the legal framework, preventing improper increase or decrease in employee benefits, recommending consistent actions in addressing labour disputes in order to prevent conflicts and relieve tensions.
KMG’s 36 production enterprises have collective bargaining agreements in place. In 2019, the collective bargaining agreements covered 58,710 employees of the KMG Group (in 2018 and 2017 — 58,838, in 2016 — 58,658, in 2015 — 54,197).
The collective bargaining agreements of KMG’s enterprises provide for 35 forms of social assistance for employees and their family members as well as retirees.
KMG provides its employees with a guaranteed social package which includes various types of social benefits and compensations: material assistance for health improvement to annual leave, maternity benefits, monthly payments to employees on leave for childcare until children reach the age of 1.5, compensation for termination of employment in case of impossibility to transfer to another job, due to full loss of ability to work, disability, one-time payment in case of death of the employee for funeral, one-time payment to the family of the employee who died as a result of a job-related accident. The Company also provides social securities for voluntary medical insurance in case of illness and organisation of rest for employees’ children in children’s health camps in Kazakhstan.
The number of employees being on unpaid childcare leave as of the end of the reporting period was 1,277 people, with the share of female employees being 96%, male — 4%.
The number of women on maternity leave for the reporting period is 685.
Furthermore, employees are provided with historically formed social assistance. These forms of social assistance are set forth in collective bargaining agreements or internal regulatory documents of the enterprise. Such payments include payments for the anniversary date, marriage, short-term marriage leave, paid leaves for childbirth, death of relatives, for medical care and surgeries in case the costs exceed the insurance limit, to disabled workers, disabled children, large and low-income families of employees and many other.
In case of any change in the working conditions, the Company notifies the employee in writing within fifteen calendar days. The minimum period of notification of considerable changes in the Company’s operations is 4 weeks.
The Company interacts with trade unions on the social partnership basis as established by the labour law at the industrial and regional levels. At the industrial level, basic interaction parameters (social securities, labour organisation, principles of remuneration, employment, gender and youth policy, occupational health and safety, prevention and resolution of labour conflicts, etc.) are set forth in the Sectoral Agreement in Oil & Gas, Oil Refining and Petrochemical Industries of Kazakhstan for 2020– 2022, which was developed with the active involvement of representatives of KMG and its enterprises.
The KMG Group has 40 trade union committees with account of local trade unions that protect the interests of over 55 thousand employees. At the regional level, regional committees for social partnership operate. Apart from regional employment and occupational health issues, these commissions deal with specific collective labour disputes. All KMG companies have functioning grievance committees.
According to the Social Stability Index (SSI) survey conducted by the Social Engagement and Communications Centre of JSC Samruk-Kazyna, KMG’s SSI in 2019 was 72%, which is above the average. According to the SSI survey, action plans for ensuring social stability are developed and updated for all alarm zones within KMG and specific SACs. KMG’s action plan for ensuring social stability cover the identified problems in entities’ operations that affect the social well-being of employees (internal communications, food quality, domestic conditions, provision with PPE, training, career growth, etc.).
A manager engagement and satisfaction survey was conducted in the KMG Group companies, with the result of 62% for the reporting period. Since 2016, all KMG production enterprises have been introducing internal communication tools, according to which performance assessment meetings of CEOs with the staff are consistently held twice a year, meetings of line managers of KMG SACs with the staff and meetings of managers with the trade union are held on a quarterly basis, each employee is capable to contact the management with questions and to timely receive an answer, over 80 performance assessment meetings of CEOs with the staff were held in 2019.
Besides, for the purpose of setting up and maintaining effective mechanisms of direct communications between employers and employees within SACs, timely notification of employees of the objectives and tasks of SAC operations, bringing the current situation in the entity to the notice of employees, forming the positive image of the entity with employees, monitoring the parameters of the social and psychological climate in labour teams, SACs hold meetings of line managers with business unit, site, team, shop employees, unscheduled meetings of the management with the staff to discuss issues that require operational-decision making, the CEOs of SACs receive employees to address their personal issues.
Each SAC has the CEO blog, corporate information site, monitors for video announcements to bring internal corporate information to the staff. Information stands are used to bring prompt announcements and messages to the notice of employees. Employee questioning is conducted annually at SACs to identify issues of concern.
Meetings of the management with the SAC trade union are held to solve urgent issues related to the performance of the collective bargaining agreement, labour discipline, staff appeals handling, occupational health and safety issues, provision of social benefits and compensations and other socially important issues at the enterprise. The internal communication system was updated in 2019, and new types of feedback are being implemented, such as a meeting of the KMG management with the KMG SAC management, a meeting of the KMG SAC CEO with young employees. The KMG Corporate Centre is introducing such types of internal communications as a general meeting of the KMG staff members, news announcement, corporate newspaper, video materials, and internal portal.
As part of development of potential, KMG gives a high profile to the development of human resources, among both operations and office personnel.
KMG provides personnel training and development, implements new approaches and programmes for the development of employees of the KMG Group on an annual basis.
Since 2019, the training concept within the KMG Group is focused on developing operations staff — both managers, engineers and technicians, and skilled workers. The Corporate Centre jointly with KMG Engineering, which is the professional competency development centre for the KMG Group, compiled and approved development programmes for industrial jobs, such as Development Engineer (the programme for 25 employees of production companies, such as JSC Ozenmunaygas, JSC Karazhanbasmunay, JSC Mangistaumunaygas, LLP KMG Engineering, LLP Kazakhoil Aktobe and LLP Kazakhturkmunay, was launched in 2019). The Chief Geologist and Chief Process Engineer programmes are being compiled. These programmes are modular, which in turn impacts on the number of training hours per employee. Projects for introducing the Lean Production system are being implemented within the KMG Group, training programmes for introducing lean production processes are being delivered for subsidiaries and associated companies.
Furthermore, the key line of professional competency development and training is the upgrade of refineries, which in turn induces the need for professional development of employees in this area. Thus, modular training for Pavlodar Refinery employees in IBM Maxima and process management was delivered in 2019. A programme of offsite training in process management was implemented for Pavlodar Refinery, Atyrau Refinery and CASPI BITUM employees in the Petromidia plant (Romania). A programme for the development of Manager Leadership Competencies and HR Competencies within the KMG Group is under development. However, training under compulsory professional development programmes and courses remains the main area of training.
KMG also arranges internships by the invitation of partner companies — JCCP, JOGMEC — for the development of KMG Group employees. These companies annually enrol 10–15 KMG Group employees for training in various areas from production, exploration, refining and marketing to HR and finance management. Training takes from two weeks to two months on the average jointly with representatives of various countries in related areas, which enables sharing experience and knowledge as well. In cooperation with General Electric, employees are sent for training under the Oil and Gas Processes programme to GE Oil & Gas University (Florence, Italy). Seven KMG Group employees have been trained in this area during the cooperation since 2015. The length of training is 5 months.
In 2019, KMG trained 143 thousand persons for the total of 6.5 bln tenge, which is 11% more compared to the last year. The training courses taken are counted towards the number of persons trained (for example, if 1 employee took two training courses, the number of persons trained is 2). The increase in the number of persons trained and expenses is due to the launch and implementation of the above said programmes.
Out of the employees trained, 13% are female, 87% are male. However, female employee training expenses make 21% of the total amount of costs, with the average cost of training for female employees being 73 thous. tenge, male — 41 thous. tenge. Seven percent of persons trained are office and management personnel, 93% are operations personnel. The high percent of operations personnel trained is due to the compulsory training of employees engaged at hazardous production facilities in accordance with the RoK laws.
The annual average number of academic hours per employee is 17.6 (15 hours in 2018, 16.1 hours in 2017), including per male employee — 18 hours (14.9 hours in 2018, 15.8 hours in 2017), per female employee — 15.1 hours (15.6 hours in 2018, 18.3 hours in 2017).
At the same time, it should be noted that employees are trained and developed irrespective of their gender and position taken. KMG cooperates with universities and annually accepts some 25–30 students for pre graduation and production internship. KMG also actively participates in talented youth development projects initiated by Samruk-Kazyna Fund — Zhas Orken and Digital Summer. During the lifetime of the Zhas Orken project, 15 participants were accepted for rotation within the KMG Group, 3 programme graduates from the first batch of the Project were employed by the KMG Group. About 20 participants of the project were accepted for summer internship within the KMG Group under the Digital Summer project, 4 young specialists were employed in 2019 following the internship.
The subsoil use contracts of KMG subsidiaries provide for the allocation of significant funds for the development of the region where they operate and social assistance to populations in need. The companies transfer funds to local executive authorities, who distribute the funds considering the needs of local communities. In 2019, the KMG Group allocated some 7.6 bln tenge under the subsoil use contracts for the development of regions, in particular:
JSC Ozenmunaygas allocated 1.2 bln tenge to the social programmes fund for the development of the Mangystau Region infrastructure. JSC Embamunaygas allocated over 131 mln tenge for the construction of a secondary school for 424 pupils in the Village of Mukyr, Kyzylkoga District, Atyrau Region, in 2019. JSC Mangistaumunaygas provided 3.4 bln tenge as a financial support for the social and economic development of the region and development of the Mangystau Region infrastructure.
LLP MNC KazMunayTeniz contributed 388 mln tenge for the reconstruction of the Atazholy motor road in Mangystau Region. LLP Pavlodar Refinery allocated 447 mln tenge to support specific sports and sports events in Pavlodar. LLP JV Kazgermunai funded 1,465 mln tenge for the construction of the Youth Service Centre in Kyzylorda, the contribution is counted towards the social and economic development for 2018–2019. LLP Kazakhoil Aktobe allocated 120 mln tenge for the Aktobe Region and infrastructure development.
Beyond that, pursuant to the instructions of the Kazakhstan Government, the KMG Group allocated 22.8 bln tenge for the Turkestan City infrastructure development (construction of a stadium for 7,000 seats, congress hall and amphitheatre for 1,000 seats), particularly, KMG — 14 bln tenge, JSC “KazTransOil” — 2.2 bln tenge, JSC “KazTransGas” — 5.7 bln tenge. In 2016, the Board of Directors of JSC Samruk-Kazyna approved the Fund Charity Policy and the Fund Charity Programme, according to which KMG and its subsidiaries are not allowed to plan and provide sponsor and charity support on their own.
According to the Charity Policy, all charity activities of the Fund Group are conducted by Social Projects Development Fund “Samruk-Kazyna Trust”.
The priority areas of the Fund are:
• Assisting people, communities in the social and healthcare sector
• Developing media, cultural community, developing the human potential.
• Strengthening labour relations, inter-ethnic relations, investments in sustainable development of the society.
• Implementation of the regional program of social investments in the regions where the Fund group operates.
• Enhancing the reputation and promotion of the image of the Fund and / or the group of the Fund.
For 20 years, the production enterprises of the KMG Group have been holding a traditional professional excellence contest — Best in Profession, which is designed not only to improve the image of vocational professions but the level of specialists’ skills as well. On an annual basis, the enterprises of the KMG Group offer their employees the opportunities to share experience, meet their colleagues, permanently improve their professional level. Since 2016, the Contest has been held at the level of KMG and has increased in scale combining all contests into one.
During the previous years, the Contest was held at the production premises of KMG’s subsidiaries.
In 2019, the Contest format was changed, the event is now organised in the form of a forum of vocational professions. In order to bring this event up to the international level and to ensure exchange of experience among representatives of vocational professions, master classes in 16 vocational professions with the involvement of 191 representatives from 26 production enterprises of the KMG Group were held at the production premises of PJSC Tatneft.
The master classes were devoted to such professions as operators of oil and gas production, well survey, reservoir pressure maintenance, oil treatment, process units; oilfield equipment and instrumentation technicians; laboratory assistants, electric gas welders, electricians, car drivers, pump truck motor mechanics, turners, process pump and compressor operators.
Once again, a youth forum called “NON-Conference” was held for young professionals of the KMG Group in 2019. The prefix “NON” of the forum title is primarily designed to strengthen horizontal links, share knowledge and experience between the youth of the corporate centre and subsidiaries. The NON-Conference enables the activists of the KMG youth movement to “break conventions”, to clear up the issues of importance for young people in an informal setting — how to be successful, grow as a personality, develop as a professional and, what is particularly important for KMG, how to contribute to the company improvement. The forum was attended by 178 young professionals of 42 companies of the KMG Group from all the regions of Kazakhstan. Well-known young Kazakhstanis — honours to the nation and examples to follow — were invited to act as speakers and business trainers at the forum. The speeches of agemates who made real progress in major international corporations — Azat Murzabayev (Suleyman Demirel University, worked for Twitter, US), Alibek Datbayev (Team Lead at Booking.com, the Netherlands) and many others — were of great interest for NON-Conference participants. The master class for developing leadership skills was delivered by Marat Zhylanbayev, a prominent Kazakhstan super marathon runner — the first and only athlete ever who ran alone the total distance of over 160 thousand kilometres in the largest deserts of Asia, Africa, Australia and America. The “NON-Conference” programme also included sessions symbolically called in Kazakh “NE habar?” (What’s up?), “NE zat?” (What?), “NE aitasyn?” (What do you say?), training sessions in financial literacy, rules of conduct in social networks and communications, own success stories of the forum participants were discussed.
* “NON-Conference” in Russian is “NEkonferentsiya”. In turn, “NE” in Kazakh means “What”.