HR practices at ITC

Submitted by: Arjun Singh Deswal 156/2010

INDIAN TOBACCO COMPANY ITC is the first from India and among the first 10 companies in the world to publish its Sustainability Report in compliance (at the highest A+ level) with theest G3 guidelines of the Netherlands-based Global Reporting Initiative (GRI), a UN-backed, multistakeholder international initiative to develop and disseminate globally applicable Sustainability Reporting Guidelines. ITC is the first Indian company and the second in the world to win the prestigious Development Gateway Award. It won the $100,000 Award for the year 2005 for its trailblazing ITC e-Choupal initiative which has achieved the scale of a movement in rural India. The Development Gateway Award recognizes ITC's eChoupal as the most exemplary contribution in the field of Information and Communication Technologies (ICT) for development during the last 10 years. ITC e-Choupal won the Award for the importance of its contribution to development priorities like poverty reduction, its scale and replicability, sustainability and transparency. ITC has won the inaugural 'World Business Award', the worldwide business award recognising companies who have made significant efforts to create sustainable livelihood opportunities and enduring wealth in developing countries. The award has been instituted jointly by the United Nations Development Programme (UNDP), International Chamber of Commerce (ICC) and the HRH Prince of Wales International Business Leaders Forum (IBLF). ITC is the first Corporate to receive the Annual FICCI Outstanding Vision Corporate Triple Impact Award in 2007 for its invaluable contribution to the triple bottom line benchmarks of building economic, social and natural capital for the nation. ITC has won the Golden Peacock Awards for 'Corporate Social Responsibility (Asia)' in 2007, the Award for CSR in Emerging Economies 2005 and Excellence in Corporate Governance' in the same year. These Awards have been instituted by the Institute of Directors, New Delhi, in association with the World Council for Corporate Governance and Centre for Corporate Governance. ITC Hotel Royal Gardenia, Bengaluru is the first Indian Hotel and world's largest, to get the LEED Platinum rating - the highest green building certification globally. The Stockholm Challenge 2006 for the e-Choupal initiative. This award is for using Information Technology for the economic development of rural communities. United Nations Industrial Development Organisation (UNIDO) Award at the international conference on Sharing Innovative Agribusiness Solutions 2008 at Cairo for ITC's exemplary initiatives in agri business through the e-Choupal. The Corporate Social Responsibility Crown Award for Water Practices from UNESCO and Water Digest for its distinguished work carried out in the water sector in India. ITC also received the National Award for Excellence in Water Management 2007 in the 'beyond the fence' category from the CII Sohrabji Godrej Green Business Centre for its leadership role in implementing water and watershed management practices. The watershed programme also won the Asian CSR Award 2007 for Environmental Excellence given by the Asian Institute of Management. The Award recognizes and honours Asian companies for outstanding, innovative and

world-class projects. The Company also received the Ryutaro Hashimoto Incentive Prize 2007 for Environment & Development from the Asia Pacific Forum. This Award aims at promoting information dissemination of good practices towards sustainable development in the Asia-Pacific region. The Readers' Digest Pegasus Award for corporate social responsibility, recognising outstanding work done by socially conscious companies. The Corporate Award for Social Responsibility 2008 from The Energy and Resources Institute (TERI) in recognition of its exemplary initiatives in implementing integrated watershed development programmes across 7 states in India. The company also won the award in 2004 for its e-Choupal initiative. The Award provides impetus to sustainable development and encourages ongoing social responsibility processes within the corporate sector. The 'Enterprise Business Transformation Award' for Asia Pacific (Apac), instituted by Infosys Technologies and Wharton School of the University of Pennsylvania for its celebrated e-Choupal initiative. The Best Corporate Social Responsibility Practice Award 2008 jointly instituted by the Bombay Stock Exchange, Times Foundation and the NASSCOM Foundation. The NASSCOM CNBC IT User Award 2008 in the Retail & Logistics category. The Company has been recognised for its pro-active and holistic approach to IT adoption and the seamless alignment of IT with business strategy. This is the fourth time that ITC has won Nasscom's Best IT User Award since it was instituted in 2003. The Institute of Chartered Accountants of India Award for Excellence in Financial Reporting with its Annual Report and Accounts, adjudged as a commendable entry under the Category 'Manufacturing and Trading Enterprises. The Business Today Award for the Best Managed Company in recognition of its outstanding initiatives in the consumer products segment. HUMAN RESOURCE STRATEGY ITC is committed to employee engagement that upholds individual dignity and respects human rights. ITC's employment practices are premised on attracting and retaining talent based only on merit. Its capability development agenda ensures the deepening and enhancement of skills of all its employees through customised training and development inputs. Responsibility: It is the overall responsibility of the Divisional Chief Executives, through the members of their Divisional Management Committees, Human Resources and EHS Functions, to ensure that employment and EHS practices in all Units are in accordance with the policy outlined above and to ensure total compliance with all statutory provisions governing labour practices and decent work. Specific responsibilities are assigned to different individuals based on the roles being performed by them. The Corporate Human Resources and EHS functions are responsible for reviewing and updating standards and guidelines on labour and EHS policies, employment practices, and for providing guidance and support to all concerned. Management: The Company leadership 'walking the talk' and a relentless focus on

implementing the policy underlines the Company's approach to employment practices and creating a decent work environment. The Human Resources and EHS functions of each business are the primary custodians of ITC's labour and EHS policies and employment practices, the implementation of which is reviewed periodically at the Unit and the Divisional levels. The Corporate Human Resources and EHS functions provide specialist services to assist in the implementation and monitoring of the same. The multi-layered and multi-dimensional audit framework of the Company also helps in monitoring compliance with laid down policies and statutory regulations. Training & Awareness: The policy is shared with employees and potential employees through training programmes, communication sessions, the Company portal, intranet sites and pre-placement presentations. Managers from HR, EHS and Engineering departments are provided regular training for effective implementation of these policies. Monitoring & Follow-up: The Human Resources and EHS staff of the Divisions regularly monitor progress to ensure proper implementation of these policies, while the Unit Heads and the Divisional Management Committees follow-up periodically to ensure full compliance. The Corporate EHS Department undertakes regular audits of the Units. Objectives: The primary objective is to nurture a culture of meritocracy amongst a committed and enthusiastic workforce from diverse backgrounds. In the pursuit of this objective, the following goals have been set for the next five years: All ITC's Units, which are already 'beyond compliance' in all areas related to labour practices, will continue to be so. Ensure that the Company's record of attraction and retention of talent is superior to other companies in the comparative sample. Enable employees to perform to their fullest potential to add value to the enterprise, nation and themselves. Enhance the Company's employee value proposition so that ITC retains its position as an employer of choice. Endeavour to eliminate accidents and injuries both onsite and offsite. Awards: A number of awards for excellence in Human Resources and EHS management and practices bear testimony to ITC's commitment to Human Resource Development and EHS and to best-in-class employment practices. Context: High standards of employment and EHS practices enhance the Company's performance, help in the attraction and retention of quality talent, and enhance the equity of the Company as a responsible employer PERFORMANCE MANAGEMENT Strong Mentorship program for every newcomer Self Appraisal System No 360 degree review, only the employee and his approver have a discussion Gap-Analysis ,need based training required

Belief that employee is the best judge of his performance Enough Job enlargement Opportunities are offered Some Initiatives like Common Canteen for all employees Attrition rate : ITC is 5-6 per cent compared to the FMCG industry average of 10-12 per cent. Employees who cross the 5-year threshold usually stay on in the company for many more years Encouragement given to employees for seeking transfers across the verticals according ones taste Inspirational Visits to various world class factories in India and abroad to get exposure to best practices in the world Enough Job enlargement opportunities are on offer for the employees No policy of legally binding its employees ITC also doesnt have any policy of giving Sabbatical leaves to its employees for pursuing higher studies Policy on Freedom of Association ITC's culture is characterized by cooperative relationships and high employee involvement that relies on building partnerships and interdependence. Adhering to these principles has helped build, sustain and strengthen harmonious employee relations in the organisation. Policy ITC respects the employees' right to organize themselves into interest groups as initiatives of the workers, independent from supervision by the management. In keeping with the spirit of this Policy, employees are not discriminated against for exercising this right. Implementation The policy is comunicated to all employees through induction programmes, policy manuals and intranet portals. The custodian of this policy is the HR head of each operational unit who reports directly to Unit Head on such issues. The actualisation of this policy is evident from the joint agreements and minutes that are signed between the union and the management. Monitoring & Audit Each ITC Unit has appropriate systems and checks to ensure compliance with the Policy and statutory provisions, including means for filing of grievances, collective bargaining agreements and minutes from worker meetings. Compliance with the Policy is regularly monitored by Divisional and Corporate HR.

ITC recognises that a comprehensive management development strategy is the key to enhancing individual, team and organizational effectiveness, as well as building strategic capabilities and processes for organizational vitality and renewal. In ITC, management development goes far beyond training and development as is commonly understood. Management development initiatives include, in addition to formal training and development programmes, a host of interventions such as cross-functional and multibusiness exposure, developmental assignments/ secondments, membership of task forces, special assignments, systems and processes such as the appraisal system, the strategy of organization itself, etc. Core training and development inputs are imparted to every individual based on his level of responsibility, in addition to training and development interventions relating to his functional specialisation. A key focus of ITC's management development efforts is the development of business leadership across businesses in support of ITC's belief that an organization with a diversified business portfolio can be managed effectively only when competent and effective leadership is distributed across the organization.
FROM ITCs WEBSITE

Personal Conduct All directors, senior management and employees have the obligation to conduct themselves in an honest and ethical manner and act in the best interest of the Company at all times. They are expected to demonstrate exemplary personal conduct through adherence to the following: Avoidance of Conflict of Interest All directors, senior management and employees must avoid situations in which their personal interest could conflict with the interest of the Company. This is an area in which it is impossible to provide comprehensive guidance but the guiding principle is that conflict, if any, or potential conflict must be disclosed to higher management for guidance and action as appropriate. Transparency and Auditability All directors, senior management and employees shall ensure that their actions in the conduct of business are totally transparent except where the needs of business security dictate otherwise. Such transparency shall be brought about through appropriate policies, systems and processes, including as appropriate, segregation of duties, tiered approval mechanism and involvement of more than one manager in key decisions and maintaining supporting records. It shall be necessary to voluntarily ensure that areas of operation are open to audit and the conduct of activities is totally auditable. Protection of Confidential Information No director, senior management and employee shall disclose or use any confidential information gained in the course of employment/ association with the Company for personal gain or for the advantage of any other person. No information either formally or informally shall be provided to the press, other publicity media or any other external agency except within approved policies. Company Facilities No director, senior management and employee shall misuse Company facilities. In the use of Company facilities, care shall be exercised to ensure

that costs are reasonable and there is no wastage. Leading by Example The organisations directors and senior management set the professional tone for the Company. Through both their words and their actions, the organisations leadership conveys what is acceptable and unacceptable behaviour. ITCs directors, senior management and employees must constantly reinforce through their actions and behaviour that ITCs stated beliefs of responsible corporate citizenship are rooted in individual conviction and personal integrity.