Total Competence Shift

Hrvatsko tržište rada u 21. stoljeću Zagreb, 08. studeni 2005. Ericsson Nikola Tesla d.d.

EricssonEricsson NikolaNikola TeslaTesla aa companycompany ofof excellenceexcellence employingemploying peoplepeople ofof excellenceexcellence

High Intellectual Capital – ICT Power House Ericsson in Croatia

Nikola Tesla founded in 1949, co-operation with Ericsson started 1953 with license agreement.

Ericsson Nikola Tesla founded 1995 when Ericsson bought 49% Ericsson Nikola Tesla d.d. in the privatization of Nikola Tesla.

Others

Small Ericsson shareholders 48,7% 49,07% 4000 shareholders Ericsson Nikola Tesla d.d a company in transition

From traditional communications to The New/Future Telecoms World

From HW manufacturing to SW- and Services 2005 1949 From Labour intensive to e-business oriented administration

Competence shift and rightsizing moving towards a Information Communication Technology Ericsson Nikola Tesla d.d.

ESP 2002 - 2006 Ericsson Nikola Tesla d.d Wanted position

1. We shall be the preferred partner in Croatia and in our Export markets for business in the New Telecoms World

2. We shall be the employer of choice in Croatia attracting people of our own choice

3. We shall have a long- term growth with optimised cash flow and sound income before taxes

4. We shall be the preferred partner for Software and Services within the Ericsson group

5. We shall be a catalyst and leader in creating wealth in Croatia Ericsson Nikola Tesla d.d Main Strategies

1. Aggressively exploit all business opportunities, by creating customer added value and excellent partnership

2. Continue competence/ culture shift towards a “New Telecoms World” company

3. Cost optimisation, use of regional synergies within the CEE region and a very strong focus on internal efficiency

4. Sustain ETK’s image, being the No 1 company of choice

5. Drive and lead the Internetization process in Croatia ESP Prioritized activities/programs 2000 2001

1. Exploit all business opportunities for 1. Exploit all business opportunities for Mobile Mobile Operators Operators 2. Domestication of AXE in Russia 2. Local adaptation in Russia, INAP-R, SORM and 3. Competence development program with domestication focus on M&S for NTW 3. Competence development program with focus 4. Customer financing on M&S for NTW 5. Cost optimisation/Reduction of OPEX 4. Cost optimisation/focus on contract profitability 6. Align ETK production with overall Ericsson 5. Performance management strategy 6. Management planning: ADC to support high 7. Rightsizing program, redundancy and potentials identification, leadership and other recruitment development trainings 8. Organisation development into performance 7. Drive and lead the Internet/Infocom society management, management planning and 8. TTM/TTC own products leadership training 9. Optimisation existing resources, ensure quality 9. Maximise and drive Wireline sales within selection & recruitment internally and externally the CEE region (new) 10. Maximise and drive DMN sales within the CEMA 10. New Telecoms World adaptation (new) region with focus on key potential markets 11. TTM/TTC own products (new) 11. Create and “sell” ETK story (Creative World Cente

New Ways of Working – Strong Leadership Continous Competence Shift for stable business growth

100%

80% Rightsizing (since 1995) 60% University – Redundancy (-1850) – Outsourcing (-700) 40% – New recruitments (+1060) Others

Competence shift 20% – Life-long learning organization 0% 1995 1999 2004 Sept. 2005

Intellectual Capital Growth – Business Growth Outsourcing of HW production and none core activities

700 employees in 15 different outsourcings 3 companies failed and are closed, 370 employees 1 company has extended it’s workforce from 90 to 600 employees (VOLEX, cable manufacturing)

New method in Croatia, concentration on Core Business ETK Competence Shift - high performing synergy -

Ag e / E duc ation S tru ctur e - S e pt e mbe r 3 0, 2 005

100 90 Univ ers ity de gr ee Ot h e r s 80 70 yees o l 60 p 50 em f o r 40 e b

m 30 u N 20 10 0 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 55 57 59 61 63 65 Ag e

Silent Generation, born 1933- 1945 - our wise silents Baby Boomers, 1946- 1964 – driven to succeed - Empowered experts Generation X, 1965- 1976 – declaring their independence The Millenial Generation, 1977 – Up and Coming ETK Competence Shift - high return on human capital investment - % of employees per job area 40,0

% of employees 31.05.1999 35,0 % of employees 31.12.1999 % of employees 31.12.2000 30,0 % of employees 31.12.2001 % of employees 31.12.2002 % of employees 31.12.2003 25,0 % of employees 31.12.2004

20,0

15,0

10,0

5,0

0,0

D M g y e A n es r c IT R ng P ri c e S/ H & R& u v I M & t vi li nan r G c er e i e ly , S fa D F h S e pp M c Ot nu er i Su th rv & Ma O e S c. ur Job area So Pay for result Performance driven culture To provide competitive compensation packages for top performers To improve operational performance To visible link business driven target setting with individual/ team performance To stimulate business under- standing To encourage people to show initiative and take responsibility no time clocks New benefit system Variable pay 22% in average Lead by example – qualify every day – generate energy ETK Ways of Working

Management Clear objectives Clear KPI measurements Trust the people Regular follow-up you work for ... Balanced feedback

Fair recognition Employee Involvement University co-operation ETK image

Efficient internal communication Job Other Employees Working environment .... have pride in ... and enjoy the Flexi time what you do .... Social activities people you work with. Partnership with Union

ETK Great Place to Work - best attract best