Andrei Karunos

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vrazHolding` s Social Board, which started to be formed in 2002 based on principles of parity with the Russian ore mining and smelting trade union, has been the first and until now has been the only industry` s experience in finding a comprehensive and relatively effective solution to social problems resulting from restructuring the mining and smelting complex.

A similar board set up at Kuznetsk Iron&Steel Works (now known as Novokuznetsk Iron&Steel Works) during a period of its reconstruction served a prototype for EvrazHolding` s Social Board. That time EvrazHolding` s management, which took control over the company, besides a multilevel task to maneuver the company out of the crisis i.e. to restore its production potential and solvency faced even more acute social problems which got accumulated for decades.
According to Otary Arshbi, a deputy of the RF State Duma (Russian Parliament) and the chairman of EvrazHolding` s Social Board, a typical approach of the former management of enterprises with regard to personnel related issues could be reduced to a simplified formula: "Development of the plant is the top priority now. We will handle your problems later." Though the crisis situation appeared to be a real excuse to put aside personnel related issues, the procrastination resulted in building up social contradictions and grudges on the part of workers. With the restructuring in progress, it was necessary to keep a balance between the level of business and living standard of people involved in it.
"A solution to that difficult issue was directly linked to the vision of EvrazHolding` s management, - says Otary Arshbi, - Its essence was boiled down to simple things: sure, profit generation is the key priority, but its is people who generate it. If there is no constant dialogue with the generators, I mean workers, there is no perspective for the future." Thus, Kuznetsk Iron & Steel Works (KMK) formed a body made up of spokespersons for the Kemerovo region administration on which territory KMK operated, representatives of the town of Novokuznetsk, managers from EvrazHolding managing company, trade union members, members of the council of war and labour veterans, women` s council and other NGOs. It was agreed that as the changing situation brings problems new and unusual for many people, the board should become a sort of an expert centre to assess all the decisions relating to restructuring the plant and manoeuvring it out from the crisis.
"It was very important to get people involved in decision making, - continues Otary Arshbi, - as KMK was responsible not only for 35 thousand employees and their families but also for a significant share of the population of the town of Novokuznetsk, a home to half a million residents".
To consider the issues an assessment procedure was accepted as follows: a proposal put forward by the board of creditors was submitted to the social board for consideration; the social board offered its recommendations on the proposal with the recommendations actually becoming a must for the board of creditors. Thus, in the opinion of the holding` s vice president, such a method actually permitted to smoothen a number of acute issues arising in the course of restructuring the company, including problems associated with optimizing the number of personnel and transferring employees to new places of work.
What is more important it made possible to remove the nervous abeyance. Our employees actually saw that new managers, who took control over the company, had pretty serious intentions and set long-term targets. "We did not have either to invent or launch any PR campaign, - notes Otary Arshbi,- People themselves shared good news with their families, friends and acquaintances creating a favorable environment for the changes which were happening at the plant".
The key advantage of a bankruptcy proceeding at KMK was transparency and openness of the process. In the course of the "mild" restructuring the company` s employees were not laid off, as it usually happens, but were transferred to newly established companies that was a real know-how of EvrazHolding.
With the help of the Social Board a program was worked out for social adaptation of the employees who were actually dismissed from KMK in the course of restructuring. Thus, for example, if an employee voluntarily leaved the company for retiring on a pension, the company at its own expenses granted the person a lump-sum compensation equal up to six monthly salaries of the person. "So, we managed to keep the company and our personnel. Today the method we applied to maneuver KMK out of the crisis is studded not only in Russia. The International Labor Organization got interested in out method too,"- summarize Otary Arshbi.
The experience gained at KMK gave an impetus to forming a social board in the framework of the whole holding. Today the Social Board of the holding supervises not only over its iron and steel works, but also over its ore and coal mining departments as well as a sear port of Nakhodka in the Far East. There exist other schemes of employee-employer relations with each scheme having its own concept on overcoming disagreements: despite similarity of problems each particular situation calls for a specific decision. As a result a structure started to be formed to permit cooperation with different trade unions and NGOs.
In an attempt to achieve a mutual decision with regard to the level of salary, labor safety and social benefits, the employer and the employee should find a balance between effectiveness of the business and social responsibility. At the same time Otary Arshbi notes that: "the Social Board is not a cap on the cattle to blow steam off."
There are actual tangles of problems for the Social Board to solve at enterprises recently incorporated into Evrazruda, a downstream group of the holding. The newly acquired enterprises feature low labor effectiveness, obsolete equipment and have a superfluity of hands. Each of them needs to be immediately dramatically revamped. Mr. Arshbi is very realistic about them: "These enterprises are not stagnant one. They are really bankrupt."
However, whole settlements even towns in three regions of Russia are dependent on keeping the mine operations. For a small Siberian town even a lay–off of ten persons can immediately grow from a local problem into a political one. "Therefore, - says Mr. Arshbi, - in this cases we need to act very thoroughly applying "high precision surgery methods".
EvrazHolding` s Social Board would invite representatives of municipalities and NGOs to take part in its projects. The Board` s manager of a project would tell them how the restructuring process is supposed to go on and which responsibilities are supposed to be undertaken by the company, by the local administration, by trade unions and other shareholders. If the project implies a lay-off of some employees the Board would offer them a job in another mining enterprise. In this case the company undertakes to relocate the employee. If due to some reason the person can` t get transferred, for example, to work at the neighboring mine, the company in cooperation with the heads of the local municipality are trying to offer the person a job in municipal services sometimes creating a new municipal service specifically for this purpose, in which case the company finances the new service.
In the course of such a dialogue an optimum decision acceptable all the participants is achieved between the business, municipality and trade unions.
The holding treats welfare of its employees an economic category. "It is important to understand the logics of our company, - says Mr. Arshbi, - operating profit has not been of interest for us for quite a period of time. What we are really interested in is capitalization and cost of the company. We want to make a real brand." The chairperson of the holding` s Social Board says that it is domestic companies which make the country strong, that the international community should associate Russia not with bear, vodka and Kalashnikoff assault rifle, but with steel brands like the Russian Sobol or EvrazHolding. When the worker, the main character in the company, feels comfortable, there will be no problem for the company."
In Mr. Arshbi` opinion the Social Board is a tool "invented at a dramatic moment owing to people` creativity" which has permitted to arrange a fair and open dialogue and which will work until all the problems are solved for ever. "Assuming the fact that our disagreements (between the employee and the employer) are antagonistic, problems suffice for long. Therefore, it is normal that there is an effective tribunal to consider our claims against each other and to give a civilized solution to our disputes. We want to have a sound trade union and our profit has nothing to do with that. If the trade union sees our company make more money in this quarter it has the right to raise a question on distributing the profit under additional quotas what we do with pleasure."
To keep progressive development of the holding, the region and the company we need stability, not strikes and pickets. "Today we have reached a new step: it deals with a complex social management system, -summarizes Otary Arshbi, - One can say that the Social Board is a body owing to which a system of public expertise has started working with regard to any decision whatever unpopular it could be."