1. „Change to Survive, Change to Win“ Anna Hudáková President of HR Association, Slovakia

2. Introduction  Anna Hudáková President HR Association, since 2003 Consultant Career history:  Historian: Eastern Slovakia Museum, History of Sport After 1989:  Sales Manager Coca Cola Amatil  HR Director Cocal Cola Amatil  HR Director for Czech and Slovak republics, Reemtsma, tobacco  Chief HR Officer, Board member, Slovak Telekom

3. Business Challenges global financial and economic crises efficiency proactivity competition fast changing environment performance improvement talent war / talent management globalisation creativity and preserving value leadership downsizing governance risk industrial relations social partners innovation and technology regulation operation strategy and growth sustainability and climate change

4. There is only one thing constant in business...

5. CHANGE

6. Transition Management Relationship Management Negotiation and Conflict Resolution Leadership and Organizational Development Change CHANGE MANAGEMENT

7. SATISFACTION/ COMPLACEMENT „This has nothing to do with me“ DENIAL/ REJECTION „Why change anyway?“ „I am already doing a good job“ ANGER/ RESISTANCE „I don´t believe in this“ „No one has explained why this is right“ ANGER „I disagree with what is happening“ I have another agenda“ COMMITMENT/ EXCITEMENT „I believe in this“ „I´m living and breathing it“ ENTHUSIASM/ HOPE „I´m making a difference“ „I want to do this“ ACCEPTANCE/ CURIOSITY „I´ve had my challenge to contribute“ „I know my role in this“ „I´ve got the right tools to do it“ UNDERSTANDING/ AMBIVALENCE „I know why it´s happening“ „I´ve seen examples“ AWARENESS „I have been told what this is“ The change curve ANGERENGAGED

8. 8 Set the Change 1. create a sense of urgency 2. pull together the Guiding Team – identification of powerful group – opinion leaders, change ambassadors Decide What To Do 3. develop the change vision and strategy, clarify how future will be different from past, how can you make that future a reality Eight Step Process of Successful Change (Kotter)

9. 02/04 /2009 Author / Presentation title 9 Make it happen 4. communicate the understanding and buy-in-vision and strategy acceptance and understanding 5. empowerment others to act – remove barriers 6. produce short term wins – create visible unambiouguous success as soon as possible 7. don´t let up – press harder and faster after the first success

10. Make it stick 8. Create a new culture – hold on to the new ways of behaving and make sure they succeed until they become strong enough to replace old tradition 10 Eight Step Process of Successful Change (Kotter)

11. Steps After Realisation of Change 02/04 /2009 Author / Presentation title 11 Customers and Shareholders – handling of the reaction to change Thinking in Systems Big System Changes – Pluses and Minuses

12. Changes in Slovenské Telekomunikácie/ Slovak Telecom / Slovak Telekom in Years 2000 - 2008 Strategic partner Deutsche Telecom – 51% share Efficiency and productivity increase:  Y 2000 – 12,345 employees  Y 2002 – 8,075 employees  Y 2004 – 5,659 employees  Y 2006 – 4,016 employees  Y 2008 – 3,704 employees New strategy, vision, values New products & services Liberalization of the telecommunications market, competitive environment, fixed to mobile substitution Customer orientation New strategy of marketing & sales New telecommunications technologies Rebranding - new brand in 2004 and in 2006 NGN implementation Broadband and IPTV Main attribute: CHANGE Reorganization & restructuring – from branches to centralized management Transformation eNGine 2004 - 2006 Save for service 2008 - 2010 12 02/04 /2009

13. Ongoing Transformation of ST A balanced mix of activities with impact on the top line and bottom line have to be accomplished in order to secure ST's transformation Efficiency Improvement  Fault incidence  Provisioning times  Headcount reduction  Automation  Streamlining and simplification Innovation and growth Top-line growth  Revenue stabilization  Boosting broadband penetration  IT solutions  Business solutions  Broadband/NGN implementation  Network optimization  Triple Play Key targets of the transformation 13 02/04 /2009

14. To change thinking A challenge of changing our own view from “inside-out” to “outside-in”: - listen to the Voice Of the Customer (VOC) - translate VOC into our internal activities to align products, services, organization, procedures, people, communication … and remove non-value adding activities To involve people A challenge of involving people in situation when they may not see any reason for a change. How to increase awareness of the need? Who to involve at the beginning and how to develop a network of people willing to cooperate? How to make the transformation meaningful for them? How to make it a part of their daily life? To manage the scope of the program transformation includes all areas of the business: how to integrate and simplify at the same time? How to ensure thorough execution of the projects and strategies? And, at the same time, to maintain and improve the market position, customers, financial results and the key people. Three major challenges of ST transformation 14 02/04 /2009

15. Culture Change Project Scope: Communicate Vision, Mission, Strategy and Values Define, communicate and implement general and specific ST-wide customer behaviour and communication standards, to support the main strategic objective Focused management development according to leadership principles Define, communicate, standardize defined leadership principles Identify Key Players (experts and managers) crucial for ST current and future performance Implementation of Code principles through inter-active activities with Management & employees Start-up the Performance Management system (payment for performance, rewarding for achievements) Define key competencies and follow-up with focused development and retention plans active activities with Management & employees Define, communicate Code of ST employee

16. eNGine for People Major subprojects:  SUPPORT MANAGERS to perform transformation via enlargement of change management portfolio through training, workshops, consulting, different tools and leadership development  Consulting and SUPPORTING EMPLOYEES to become prepared for ST as NGO via introduction and communication of opportunities for new orientation in ST or outplacement, outsourcing and contracting externally and providing them with different targeted options and opportunities to get ready to master this challenges based on eNGine and personal needs.  Establishing PROJECT MANAGEMENT Education & Communication as a tool for new organization and management of ST – to support integrative management approach in ST and support the company by transition from line oriented business to more and more cross- functional, project-oriented business  Set up COMMUNICATION ACTIVITIES via internal communication channels in order to support the understanding of the changes, to increase cooperation and commitment of the managers and employees and to get a proper and objective feedback of the all activities and ensure the right action in the right moment

17. Changes in HR Management VISION, STRATEGY AND VALUES OF ST,. Remuneration Trainings and development Performance management Employee satisfaction Recruiting Retention Communication Organization Exit Management / Outplacement 17 02/04 /2009

18. Vision, strategy and values: Huge ongoing effort in communication of new vision, strategy and values, using all channels of internal communication, meetings, workshops, road-shows. Now new wave – Story Box – managers are communicating Strategy / Brand / Customer service/ Company Values. Remuneration: Unified system of remuneration based on individual and company performance with the aim to be externally competitive and internally fair. Training and Development: New centralized system of T&D – technical, managerial, personal, sales training, INGN competence centre. eLearning, etc 18 02/04 /2009

19. Organization: Centralization, restructuring, reorganization, redesign of processes, organization effectiveness and efficiency improvement, Quality Management. Communication: Critical success factor in time of changes – workshops, meetings, road- shows, offlines, company magazine, intranet, company TV, blog etc. 19 02/04 /2009 Performance Management: Performance Management system based on individual and company performance – all employees, Performance-Potential Review – all managers. Employee Satisfaction: Corporate Culture Change project, regular monitoring of employee satisfaction and feedback from employees – Pulse check (2-3 months) Employee satisfaction survey (2 years)

20. Retention: Key players project – HiPo, (High potentials), HiPro (High Professionals) Recruiting: New system for recruiting, more than 2500 new employees hired from external market, building of attractive employer brand, cooperation with secondary schools and universities, Telekom Day, Conference for technical schools teachers, etc. Exit management: Support leaving employees, counseling information support (booklet), arctive job searching, requalification, etc. 20 02/04 /2009

21. External customers ST Units Headcount Development 2000-2010 S4S Prognosis 21 02 Based on the statistics of Slovak Job Centres – less than 10% of dismissed employees of ST were officaly registered as unemployed

22. External customers  Employees Structure excl. RK by Education (Development 2001-2008, 31.March) 22 02/04 /2009

23. Responsibility Towards Employees ST employee WORK WORK – LIFE BALANCE PROGRAM LEISURE TIME Performance management (remuneration system) Flexible Benefits System Employee development Safety, Health and Protection at Work Health Care, Benefits Puls Check, Satisfaction Surveys Cooperation with schools Code of Conduct T-Spirit Values Social aid: Collective Labour Agreement Help in need Program for mothers/fathers Exit management Children camp Call Centres (Children`s Day, St. Nicholas Day) Benefits (Section - recuperation) Regular Offline parties Christmas party T-Com Beach Olympic Games Education 23 02/04 /2009

24. Employees Reaction: Motivation and engagement  Measured by :Employee Satisfaction Survey (every 2nd year) spirit@telekom – pulse check (4 x a year) - participation around 70 % and more 82 % of ST employee would recommend our products to their friends and  relatives  loyalty index 4 (1 – 5 scale)  89 % of employees like the job in ST  56 % are motivated to work in ST even with more effort as required  63 % are motivated to improve their performance  89 % consider the working tasks in ST as the challenge 24 02/04 /2009

25. Customers Reaction TRI*M Index – Customer Retention Intensity Measured By One KPI TRI*M INDEX 40-70 TRI*M INDEX 40-70 TRI*M INDEX 40-70 TRI*M INDEX 40-70 VIRTUALLY LOST VULNERABLE POSSIBLY VULNERABLE RETAINED European benchmark - average for fixed line operators: 54 54 10 - 40 70 - 100 TRI*M INDEX <10 INDEX >100 TRI*M *M *M HIGHLY RETAINED 25 02/04 /2009

26. Positive TRI*M Development 2001-2007 All Customers European average 54 2002 2003 2004 2005 2006 2007 26 02/04 /2009

27. It is not necessary to change. Survival is not mandatory. W. Edwards Deming 27 02/04 /2009 Thank you for your time and attention