CONTENTS
CONTENTS ...... 2
1. Foreword ...... 5
1.1 Statement of the Chairman of the Board and the CEO ...... 5
1.2 Message from the Corporate Responsibility Manager ...... 6
1.3 About the Report ...... 8
2. About Bezeq – Organizational Profile ...... 9
2.1 General Information ...... 9
2.1.1 General ...... 9
2.1.2 Changes during the Reporting Period ...... 10
2.1.3 Areas of Company Activity ...... 11
2.1.4 organizational structure ...... 13
2.1.5 Customers and Performance ...... 13
3. Corporate Responsibility at Bezeq ...... 16
3.1 General Background – What is Corporate Responsibility? ...... 16
3.2 Bezeq’s Corporate Responsibility Activities – In Brief ...... 17
3.3 Challenges and Opportunities in Corporate Responsibility ...... 18
4. Stakeholders: Identity, Dialog, and Reporting ...... 20
4.1 Stakeholders ...... 21
4.1.1 Customers ...... 21
4.1.2 Employees ...... 22
4.1.3 Shareholders ...... 23
4.1.4 Suppliers ...... 24
4.1.5 Community (organizations supporting the community) ...... 24
4.1.6 Regulation...... 25
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4.1.7 General Public ...... 26
4.1.8 Competitors ...... 26
5. Ethics at Bezeq ...... 27
5.1 Principles of Practice:Bezeq values ...... 27
5.2 Code of Ethics ...... 28
5.3 Implementing the Code of Ethics ...... 32
6 Corporate Governance ...... 34
6.1 Bezeq Management ...... 34
6.2 Bezeq Board of Directors ...... 35
6.2.1 Committees of the Board of Directors ...... 36
6.2.2 Processes for Avoidance of Conflict of Interests among Directors ...... 38
6.2 Communication with Corporate Governance Bodies...... 38
6.3 Risk management and Responsible Business Conduct ...... 39
6.4.1 Risk Management ...... 39
6.4.2 Internal Auditor ...... 39
6.4.3 Internal Corporate Control ...... 39
7 Membership in Organizations and Awards ...... 40
7.1 Membership in Various Organizations ...... 40
7.2 Awards ...... 41
8. Social Performance ...... 42
8.1 Employment and Human Rights ...... 42
8.1.1 Managerial Responsibility (managerial approach) ...... 42
8.1.2 Bezeq’s Employees ...... 43
8.1.3 Fair Employment/ Human Rights ...... 48
8.1.4 Employee Benefits ...... 49
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8.1.5 Employee Development ...... 51
8.1.6 Employee Position Survey ...... 54
8.1.7 Employee Feedback ...... 56
8.1.8 In-House Service Satisfaction Survey ...... 57
8.1.9 Bezeq Intra-Organizational Network ...... 59
8.1.10 Safety and Hygiene in the Workplace ...... 60
8.2 Community / Social Performance ...... 62
8.2.1 Bezeq and the Community ...... 62
8.3 Our Customer Products and Services ...... 70
9. Environmental Performance ...... 80
9.1 General Background (Managerial Approach) ...... 80
9.2 Bezeq Thinks Green ...... 81
9.2.1 Energy Saving Initiatives (direct and indirect) ...... 81
9.2.2 Green Products ...... 85
9.3 Using Environmental Resources Wisely at Bezeq ...... 86
10. Financial Performance ...... 87
11. GRI INDEX ...... 89
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1. FOREWORD
1.1 STATEMENT OF THE CHAIRMAN OF THE BOARD AND THE CEO
We are pleased and proud to present Bezeq’s first Corporate Responsibility Report. Bezeq has a long-standing and rich history of media activity. The company’s structure and ownership have changed many times since its foundation as a public government corporation (traded on the Israeli Stock Exchange), and ultimately leading up to private ownership. In many ways, Bezeq is essentially Israeli and it is not by a chance that it is often thought of as a national corporation, despite the fact that it operates in a competitive market with commercial and financial goals. Playing such an integral role in Israel’s public life, it is inevitable that Bezeq would also be involved in a variety of ways and on different levels in the everyday life of the community and the environment. Such involvement does not depend on any one report or another, or on any particular legal, regulatory or other obligation. It is derived first and foremost from Bezeq’s own spirit and that of its employees over many years, with their genuine commitment to the public they serve and the environment to which they belong. That involvement can be seen all around Bezeq, from volunteer work on the part of employees, through Bezeq’s financial contribution to the community, to huge technological advances, including massive investment in the nationwide establishment of one of the most advanced communications infrastructures anywhere in the world. Bezeq actively promotes all aspects of corporate responsibility throughout the company. We pride ourselves on being as thorough and professional in that area as we are in our commercial activity. Our motto is to do more and talk less and we strive to implement this very same principle in corporate responsibility. Yet, there is also a strong practical significance to the publication of this Corporate Responsibility Report. It makes us look into a mirror that reflects our corporate responsibility activities across the board, urging us to constant improvement on the basis of clear indices. This Report forms the foundation for ongoing improvement which we hope will be expressed in future reports. Each and every stakeholder in the company can find on these pages significant points of strength in Bezeq’s corporate responsibility activities, as well as other points worthy of improvement. We are committed to striving at all times towards continued improvement and excellence. Shaul Elovitch Avi Gabbay
CEO, Bezeq Chairman of the Board
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1.2 MESSAGE FROM THE CORPORATE RESPONSIBILITY MANAGER
Over the last three years, Bezeq has worked consistently and methodically towards improving performance in all areas of corporate responsibility. We view the publication of this Corporate Responsibility Report as a necessary measure and a natural result of our very good achievements in this field in recent years.
You now hold in your hands Bezeq’s first ever Corporate Responsibility Report, containing data referring to the corporation’s performance in 2010. The Report is intended for regular publication henceforth on a bi-annual basis. It will present Bezeq’s activities in a range of activities included in the general category of “corporate responsibility”, as well as our special initiatives in the field.
This Report represents one more layer in Bezeq’s concept of transparency. We have reason to be proud of our corporate responsibility activities, but the principal aim of this Report is to expose that activity to the general public. For us, as Bezeq employees, the Report provides a platform for constant improvement, since every publication of this kind, based on our activities, can only form the basis for further improvement and progress.
Bezeq is a household name throughout Israel and most Israelis benefit from the many and varied services we offer. With the current Report, we intend to clarify to all stakeholders other aspects, perhaps less widely known, of Bezeq’s deep and long-term connection to the environment and society within which we operate.
We, the employees, consider it a privilege to be widely thought of as Israel’s national telecom company and, like any privilege, this one also carries an obligation to the environment we work in. This Report describes the ways in which we fulfill that obligation.
From a historical perspective, corporate responsibility as a structured managerial methodology is still in its infancy. For many years, modern management operated without any formal approach to corporate responsibility. It is only in recent years that it has become an integral part of the central strategic decision- making of commercial organizations.
Although most senior managers are aware of the importance of corporate responsibility in the decision- making process, the work of the Corporate Responsibility Manager is nevertheless complex. In highly pressured and competitive market conditions, in a business environment that is sometimes inclined to be cynical and harsh, it is not always easy to attach sufficient importance to the values of corporate responsibility; worse, there could even be a risk of making cynical and self-serving use of the corporate responsibility tool.
The Corporate Responsibility Manager is charged with adhering to right and just use of this important tool. He or she must be able to guarantee honesty and transparency in applying the different tools and pave the best path for the company towards observing corporate responsibility values, while also integrating them into the
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company’s business and financial goals without any adverse effect on these (or ideally, even improving them), or at the very least with only the most negligible effect. Since corporate responsibility is still a young discipline in the commercial world, we can expect to see many more changes and variations before it becomes a truly integral and genuine part of organizational activities, and until its positive impact on organizational activities is maximized. I am deeply indebted to all those who contributed to this Report; it involved an exceptionally great effort. Bezeq’s corporate responsibility activity is spread over many areas and it was no simple matter to reflect this faithfully and adequately. We chose the team of consultants at Deloitte Brightman Almagor Zohar to assist us in the professional preparation of the Report. With their help, we have been able to transform our abundance of raw materials into a coherent report with a genuine value. Thanks are due to the Steering Committee, including representatives from all of Bezeq’s divisions, for each member’s individual contribution (Effi Arieli of Human Resources; Orly Ohayon of Operations and Logistics; Shlomit Tzur of Marketing; Yoel Negri from the Legal Bureau; Yaniv Bar Gil of Engineering and Networks; Shlomo Sasso of Finance and Budgeting; Eran Malchi of the Private Division; the Company Auditor Leor Segal; and Meir Abitbul, Community Contribution Manager, who was also responsible for collating the material for this Report). Special thanks also go to Linor Yochelman, the Company Secretary, Limor Hassin Klein of the Legal Bureau, Ronen Sheor of the Marketing Division, and Naftali Sternlicht of the Financial Division, who read and checked sections of the draft proposal and added their comments.
Guy Hadass Corporate Responsibility Manager and Spokesman, Bezeq
This report forms the basis for further dialog with any interested party. Please contact Meir Abitbul, Community Contribution Manager, with any questions at 02-5395584 or [email protected].
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2. ABOUT BEZEQ – ORGANIZATIONAL PROFILE
2.1 GENERAL INFORMATION
2.1.1 GENERAL
Bezeq – The Israel Telecommunication Corp. Ltd. (hereinafter: “Bezeq” or “the company”) was founded in 1984 as a government-owned company. The activities of Bezeq, which had previously come under the auspices of the Ministry of Communications, were transferred to the new company. It was later privatized. As of 1990, Bezeq has been a public company whose shares are traded on the Tel-Aviv Stock Exchange (TASE). Below is the organizational structure as at the date of this Report. The following diagram indicates the structure of holdings in the company and the company’s holdings in subsidiaries and related companies, as at March 1st, 2011:
B Communications The Public (through B Tikshoret)
69.71% 30.29%
"Bezeq" The Israel Telecommunication Corp., Limited
100% 100% 71.55% 49.78%
Pelephone Bezeq Walla! D.B.S. Satellite Communications International Communications Services (1998) Ltd. Ltd. Ltd. (1) Ltd.(2)
(1) A public company traded on the Tel Aviv Stock Exchange (2) The company has share options which at the time of publication of the periodic report grant rights to 8.6% of DBS shares.
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2.1.2 CHANGES DURING THE REPORTING PERIOD
In 2010, two material changes took place in the company:
Sale of a Controlling Stake
In April 2010, following completion of a transaction between the company’s former controlling shareholder Ap.Sb.Ar. Holdings Ltd. and B Communications Ltd. for the off-exchange sale of all of Ap.Sb.Ar.’s shares in Bezeq, representing at the time 30.43% of the company’s issued and paid up capital, the controlling stake in Bezeq was sold. The Stock Exchange was informed that all preconditions to the transaction had been fully met, including receipt of all mandatory regulatory approvals, and including the approval of the Ministry of Communications, the Antitrust Commissioner, the Prime Minister and Minister of Communications pursuant to the provisions of the Communications Law (Telecommunications and Broadcasts), 5742-1982 and the Communications Order (Telecommunications and Broadcasts), 5757-1997, and also including corporate approval from B Communications Ltd. and individual controlling shareholders therein, to own control in Bezeq.
The purchase of the company’s shares was made via B Communications (SP2) Ltd., which is wholly owned by B Communications (SP1) Ltd.
Acquisition of Walla
In 2010, Bezeq International Ltd. purchased shares of Walla! Communications Ltd. (hereinafter: “Walla”), and in September 2010, with the approval of the Antitrust Commissioner, transferred the shares to Bezeq. Hence, after the share transfer, the structure of the company’s holdings changed and the company now owns 71.55% of Walla shares. Walla thus became a subsidiary of Bezeq.
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2.1.3 AREAS OF COMPANY ACTIVITY
Bezeq has a general license to provide national fixed line communications services. It also provides a range of telecom services, namely:
Nationwide Fixed Telephony Service (Land-Line Telephones)
This service includes primarily: basic fixed line telephony service for domestic phones and auxiliary services (such as caller ID, voice mail, domestic switchboard, etc.), public telephones, 144 directory information service and more. The company estimates its market segment in the fixed telephony market at the end of 2010 at 65% of the private market (households) and 78% of the commercial market.
Internet Access Infrastructure Service
Bezeq supplies broadband Internet access infrastructure services using DSL (Digital Subscriber Line) Internet technology. The technology uses copper telephone wires to transfer data at high speeds by using frequencies higher than voice frequency, thus enabling simultaneous use of audio and data transfer technology. In 2009, the company launched NGN (Next Generation Network), a next generation communications network based on all-IP architecture. This network enables Internet surfing at significantly higher speeds than in the past. It should be noted that a large number of the company’s customers who are connected to NGN technology are upgrading their Internet access packets to higher speeds than were previously possible.
The company estimates its market segment in the Internet infrastructure market at 59% as at the end of 2010.
Data Transmission and Communications Service
Bezeq supplies data communications services, including P2P (point-to-point) data transmission networks, data transfer between computers and various communications networks, hook-up services to Internet networks and remote access for businesses.
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Other Services
Bezeq provides additional services, including:
Various services for other communications operators.
Broadcast services (operation and maintenance of radio and TV transmitters for the IBA – Israel Broadcasting Authority – and Channel 2 TV).
Establishment and operation of networks or sub-networks for various customers (e.g. the Israeli Ministry of Defense, HOT Cable Company, radio and TV broadcasting companies).
IP Centrex services (private and virtual telephone exchange on a public network).
Data Center services (a service offering customers back-up and functionality solutions).
Online 144 directory information service (B144) – a search engine enabling the user to find the telephone numbers of business and private individuals, including via a classified search.
New services for the company’s NGN network, such as BPhone, which allows telephone calls via the Internet to be made as landline calls; network storage service; and domestic switchboard services.
More details are available in Section 8.3: Our Customer Products and Services.
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2.1.4 ORGANIZATIONAL STRUCTURE
The following chart shows the general organizational structure of the Company:
Chairman of the Board
Company Management CEO Secretary (without directors)] (36)
Company CFO and Legal Advisor Regulation Spokesperson Auditor Deputy CEO Headquarters divisions (Including Deputy CFO) Engineering Human Operations and Information Economics Private Business Marketing (1172) and Network Resources Logistics Technology & Budget Division Division Division Division Division Division Division Division
(3392) (898) (1718)
2.1.5 CUSTOMERS AND PERFORMANCE
Bezeq is Israel’s leading telecom service provider and considers it paramount to offer a universal service that provides a solution to all users, without exception.
The company set itself the goal of supplying a comprehensive service to all of its customers in Israel. This activity is performed via 25 service centers and 16 retail outlets, while the company employs some 900 technicians and other employees who are engaged in direct sales and ongoing support in commercial companies of various sizes.
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Financial results for 2010 testify to a significant improvement in all profit indices: Total Bezeq assets – NIS 13,291m.; total Bezeq sales turnover for 2010 – NIS 5,263m.; Bezeq operational profit for 2010 increased by 34.1% to NIS 2b.; net profit for Bezeq in 2010 represented a record for the company at NIS 1.43m. (an increase of 28.8% as compared to the previous year). The company’s equity is divided into share capital and debt (Bezeq fixed telephony): 5,327 divided 13,291 = 40%. EBITDA also rose in 2010 to NIS 2.73b., (an increase of 18% as compared to the previous year). Furthermore, revenue totaled NIS 5.26b.
Revenues from Internet services in 2010 were NIS 977m., an increase of 13.2% from 2009. The increase was mainly due to a growth in the use of value-added services and speed upgrades for the company’s customers. The success of the NGN infrastructure nationwide encouraged subscribers to upgrade and the average band width grew by 59.3% as compared to the previous year, to 4.3 Mb per second. The establishment of an advanced NGN network is underway and by the end of 2011 it will cover close to 85% of households in the country. Fixed line activity further reinforced the company’s standing as a leader in Israel’s Internet market, with the number of Internet subscribers for 2010 increasing by 3% to a total of 1.07 million subscribers as of December 31st, 2010.
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At the end of 2010, the company had 2,365,000 fixed telephone lines among customers enjoying the range of services and products which Bezeq offers to both private and business sectors through its various sections. Company sales can be divided into two main categories of customer: private customers (comprising 60%) and corporate customers (40%).
NIS (millions) 2010 2009 2008
3,128 3,165 3,303 Income from private customers 2,134 2,138 2,195 Income from corporate customers 5,263* 5,303 5,498 Total revenues
*It should be noted that the gap between the cumulative amount of income from private customers and corporate customers and the total revenues as specified in the table derives from rounding up the amounts.
The table below presents data about the division of company income according to principal products and services for activities during 2008-2010 (in millions of NIS):
Item 2010 2009 2008
3,160 3,333 3,572 Income from fixed telephony 60.04% 62.85% 64.97% Percentage of total company income 977 863 790 Income from Internet infrastructure services 18.56% 16.27% 14.36% Percentage of total company income 882 851 811 Income from data transmission and data communication services 16.76% 16.04% 14.75% Percentage of total company income 244 256 325 Income from other services 4.64% 4.84% 5.92% Percentage of total company income 5,263 5,303 5,498 Total income from fixed line communication in Israel
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3. CORPORATE RESPONSIBILITY AT BEZEQ
3.1 GENERAL BACKGROUND – WHAT IS CORPORATE RESPONSIBILITY?
Corporate responsibility may be defined as achieving commercial success while also implementing social, environmental, and moral values in the ongoing management of the business.
It is a combination of the clear and acknowledged commercial interest of generating profit (“the bottom line”) and responsible, value-based managerial conduct in all matters pertaining to the environment, the community, company employees, customers and so forth in ongoing activity and proper corporate governance.
Stakeholders are the factors who influence and are influenced by the company’s activity (customers, suppliers, employees, partners, shareholders, the community in which the company operates and government and non-government bodies which are in any way involved in the company’s activities, etc.). It is they who seek a broader meaning beyond the single profit line; it is with them that the commercial organization conducts an ongoing dialog and it is to them that it reports according to the “triple bottom line”, which deals with the organization’s financial, environmental, and social performance. A commercial organization which promotes corporate responsibility in its activities does so with the understanding that it is not operating in the vacuum; it has a duty towards its stakeholders. Such a commercial organization assumes that in the long term, its corporate-responsibility-related activities will also have a positive impact on the profit line.
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3.2 BEZEQ’S CORPORATE RESPONSIBILITY ACTIVITIES – IN BRIEF
Bezeq is Israel’s oldest and largest telecommunication company and as such, it is part of the nation’s history; it is deeply connected with the present and has a significant influence on the technological, financial, and social future of the country.
Bezeq supplies advanced telecom services daily to millions of private and commercial customers in Israel. It is responsible for the livelihoods of thousands of families and for developing the country’s communications infrastructure. All of these aspects create many close points of contact with the company’s stakeholders.
Bezeq’s operations are based on an outlook that reflects corporate responsibility, while understanding that this is the right and proper way to conduct business vis-à-vis the company’s stakeholders, a way that also ultimately contributes to the organization itself and maximizes the value of all of its stakeholders. Bezeq firmly believes that this is the right way to conduct business and acts according to that belief.
This Corporate Responsibility Report describes Bezeq’s activities in all layers of social responsibility. One key principle that Bezeq has adhered to in social responsibility is narrowing the digital gap; this is apparent in all company activities that are connected to the society we live in, and also characterizes all of our business activities. Year after year, Bezeq invests capital into building the most widespread and advanced communications network infrastructures in Israel. Those networks and the services provided for them, whether by Bezeq or by other external factors, form the main thrust towards closing the social gaps that exist in the country as a result of an absence of technology.
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3.3 CHALLENGES AND OPPORTUNITIES IN CORPORATE RESPONSIBILITY
Any commercial organization operating in a competitive market may face many challenges as an inherent part of corporate responsibility. The goals of corporate responsibility may be perceived as threatening to the organization’s ultimate goal of generating profit, enhancing operational efficiency, and cutting costs.
At Bezeq we believe that adhering to and implementing corporate responsibility principles in our decision- making processes and ongoing company activities will be of a great benefit to the company in the medium and long terms. Hence, Bezeq seeks to convert the challenges that typify corporate responsibility into real opportunities for the company.
In environmental matters, Bezeq is constantly acting to conserve and enhance the environment we operate in. For instance, we are developing a new, advanced and highly environmentally friendly NGN to remain in line with the advanced technologies offered to consumers.
The new network, which precludes the need to maintain numerous centers around the country, greatly reduces Bezeq’s carbon footprint and represents a significant saving in electrical consumption, since it cancels out the operation of those centers, including air conditioning. At the same time land will be freed up, often close to city centers, which contributes to quality of life on a local level. The NGN project is based on the recycling of underground copper cables and replacing them with optic fibers. Moreover, NGN offers an especially broad band width, allowing the development of many remote work and cloud computing applications. All of these measures reduce the need for the high-energy-consuming physical movement involved in ongoing business activities. Bezeq’s NGN project is unique in the world for its exceptionally fast installation rate and it helps the company to diminish its environmental impact at a rapid pace.
Another example of an opportunity which is being developed by Bezeq in relation to corporate responsibility is in the area of contribution to the community. Every year, the company donates significant amounts of money to benefit the community, aimed mostly at closing the digital gap in Israeli society. Bezeq contributes to numerous commendable projects in order to maximize such community contribution, with full, hands-on involvement in every project, determining, together with the NPO it partners, clear goals and milestones towards the project’s success. Bezeq’s experience helps contribute to that success while also promoting
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volunteer work on the part of its employees. Closing the digital gap is a valuable service to the Israeli economy and further increases the impact of Bezeq’s contribution.
Community contribution provides another opportunity to reinforce employees’ status and sense of affiliation both to the organization and to the social environment. Bezeq encourages employees to volunteer, offering them as wide a range as possible of proposed volunteer activities adapted to their own requirements and abilities. In this area, Bezeq cooperates with dozens of NPOs, with the result that the number of employees volunteering grew by tens of percentage points in the past year alone. Bezeq operates dedicated volunteer motivation programs such as a “Volunteer Tender”, which enables employees to publish their volunteer activity and receive a monetary grant from the company towards financing a special volunteer project. Bezeq also holds “record days” for volunteer recruitment, with many NPOs invited to visit the company premises in order to propose volunteering activities to employees.
The challenges arising from corporate responsibility are many and varied, and Bezeq consistently seeks to convert them into opportunities.
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4. STAKEHOLDERS: IDENTITY, DIALOG, AND REPORTING
As part of the preparations towards drafting this Report, a Steering Committee was established, comprising representatives of the company’s different divisions. Members of the Steering Committee were responsible for communicating the subject of performance and reporting in the area of corporate responsibility to the relevant factors in their own divisions. They were also charged with identifying principal stakeholders on the basis of their familiarity with the affairs of the company and the public which is affected by its activities (customers, suppliers, community, etc.) and which in turn affects the company (the initiators of regulation and those who influence it, investors, the community, etc.). Finally, the Committee members were required to identify all material subjects to be included in this Report, assuming the stakeholders identified were its target readers.
All data presented in this Report were received from the company’s employees and directors, each in his or her own area of expertise. Measurable data are presented according to accepted measuring and reporting criteria in each area.
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4.1 STAKEHOLDERS
4.1.1 CUSTOMERS
Bezeq’s customers are at the core of the company’s commercial and managerial approach. We are very aware that it is thanks to our customers that we are able to prosper as a commercial company; hence, we have a responsibility to provide those customers with outstanding service based on advanced technology, a broad range of services, and attractive prices. Bezeq offers customers transparency, fair practice, respect, and appreciation.
Bezeq maintains contact with customers by means of media campaigns, press releases, the company’s website, social networks (like Facebook and Twitter), special events organized by the company (for both private and business sectors), and via invoices delivered monthly to every customer.
Bezeq maintains ongoing, daily dialog with customers via telephone service centers. The company’s automated system manages customers and records calls, enabling a continuous flow of customer service from the service personnel appropriate to the customer’s needs and a large team of technicians. There is also a designated department to handle customer queries, dealing with complaints received from different sources (by mail, phone, and online) from customers who find the service provided unsatisfactory. Bezeq has a number of customer feedback systems, as well as focus and survey groups. The company website also offers a Contact Us service for direct contact with senior company management. Many customers make use of this direct contact channel, introduced especially for their convenience, to write to the CEO or other senior managers relaying their problems, difficulties, or suggestions for improvements in the service. Every message is answered and the method enhances the sense of cooperation.
A number of areas of special interest have arisen from the various dialog channels with customers. These include: technological leadership, continuous excellence and improvement of quality of service, clarity of rates and charges, and more. This subject is addressed in greater detail in Section 8.3: Our Customer Products and Services.
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4.1.2 EMPLOYEES
Bezeq’s employees are the heart and soul of the company and the source of our strength and our success. As a high-tech company based on customer service, our human capital is crucial to our continued success. Bezeq invests heavily in the welfare and well-being of employees. Organizational culture is a key element in the company’s business strategy, and the company also focuses on nurturing a culture based on principles of excellence, competitiveness, and open dialog. This investment includes training and assimilation processes for managers and workers alike, as well as incentive programs and the development of internal promotion tracks.
A new collective agreement was recently signed, forming an extension of the collective agreement that was signed when the company was privatized. The agreement ensures the cooperation of employees, imparting a sense of genuine partnership in the change processes which the company has undergone since its privatization. It also offers a safety net for those employees whose positions, as a result of structural changes in the company, were eliminated These needs were identified and addressed in continuous dialog between the company and its employees. In addition to employment agreements, Bezeq promotes ongoing dialog with workers via various annual surveys: an employee position survey, internal service satisfaction survey and others. The results of the surveys provide information both about issues with room for improvement and advantages to be maintained. The surveys are additional to employee feedback, which is conducted twice a year among all employees, in the form of open and frank dialog between employees and their direct superiors. Bezeq also developed an advanced, intra-organizational communications system based on social media, enabling and promoting dialog throughout the company, in an unobstructed manner that transcends hierarchical considerations. Additional details of dialog with employees and issues arising there ranging from equality of rights, employee benefits, employee training and qualification, to safety and hygiene in the workplace, etc. can be found in Section 8.1: Employment and Human Rights.
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4.1.3 SHAREHOLDERS
As a commercial company traded on the Tel Aviv Stock Exchange (TASE) and owned by many different stakeholders – private and corporate investors in Israel and abroad and holders of controlling interests – Bezeq’s goal is to maximize its value for those stakeholders. The company strives to generate the best possible financial results, adopting a long term view and taking all stakeholders into consideration. We actively protect our shareholders’ rights, including, inter alia, the right to peruse company documents, the right to read the Articles of Association and financial statements, and the right to receive dividends (the company dividend policy is to distribute 100% of net profits from ongoing activities). The company convenes annual general meetings at which the financial statements are discussed, and holds other meetings as necessary. In addition to the aforementioned direct dialog with shareholders, indirect dialog is also conducted via analytical questionnaires addressing various subjects, including participation in ratings and provision of current information to the Stock Exchange. The true outcome of dialog with shareholders is seen in the strengthening of Bezeq shares on the Stock Exchange, an expression of the shareholders’ confidence in the company’s future activities.
Bezeq Share Price on Tel Aviv Stock Exchange in 2010
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4.1.4 SUPPLIERS
Bezeq treats suppliers with respect, fairness, and in the spirit of partnership. As Israel’s largest telecom company, developing and operating a vast communications network across the country, Bezeq needs the services of many different suppliers. Thus we attach the greatest importance to observing the rules of corporate responsibility in all matters pertaining to our conduct with suppliers. We hold ongoing dialog with them in the form of meetings scheduled by our Acquisitions Branch further to any problems that arise and according to our requirements. Information on suppliers and other subjects is available on the company’s website: http://www.bezeq.co.il/about/Pages/purchase.aspx . We also maintain open dialog with the suppliers’ customers within the company, checking out their satisfaction regarding the quality of products and services supplied. The company is equally conscientious about including in all purchase agreements binding sections concerning the following items: respect of the rights of suppliers’ employees, adherence to safety, adherence to environmental conservation, and an undertaking by the supplier pertaining to the strict fulfillment of all applicable standards.
4.1.5 COMMUNITY (ORGANIZATIONS SUPPORTING THE COMMUNITY)
Bezeq has always been an integral part of the Israeli landscape and has close links with the general public. Although no longer government owned, the company will always at its core remain “the people’s company” and the Bezeq name is synonymous with the country’s telecom services. The company contributes to the community as part of its deep commitment to the issue of social responsibility. It works to benefit the community through financial donations and the donation of communications infrastructures to social organizations and NPOs. As part of its efforts on behalf of the community, and in a desire to narrow the gaps in Israeli society, Bezeq helps organizations dedicated to reducing educational-learning gaps arising from lack of access to computers and the Internet (“The Digital Gap”); such gaps are felt in all areas of educational achievement and integration into the work place . Bezeq encourages and assists employees in volunteering for the community as part of its commercial and cultural commitment to the community in which it operates. Bezeq maintains ongoing contact with the management of the NPOs and organizations that are recipients of the company’s support. A designated Community Contribution Manager is responsible for continuous contact with the community. The allocation of a key person makes the handling of community contact with the various organizations a universal policy. It also enables the provision of continuous, one-stop-shop service across the board, with a material effect on the quality of service offered to the community.
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The company has set up a website dedicated to the subject of Bezeq’s contribution to the community, further increasing the transparency of its community activities. The website contains reading materials about: Bezeq policy on contribution to the community, the main projects receiving contributions, and more. The website also offers an opportunity for different NPOs to contact Bezeq with requests for support of various social programs. The subject is addressed in greater detail in Section 8.2: Community / Social Performance.
4.1.6 REGULATION
As Israel’s largest communications company, naturally working in an area that is crucial to theeveryday lives of the country’s individuals and businesses, Bezeq operates within a complex regulatory framework on many points of contact. Bezeq acts with transparency and cooperation with all regulatory bodies involved in one way or another with the company’s activities. We recognize the importance of regulation, which is aimed at promoting communications in Israel and maintaining market competition, while maximizing the resulting benefit for consumers in particular and the country in general. Against this background, Bezeq works mainly with the following bodies: the Ministry of Communications, Ministry of Finance, Antitrust Authority, Securities Authority, and the Knesset (the Israeli legislative body). Bezeq maintains continuous dialog with these regulatory bodies in promoting communications infrastructures, adapting them to the many advances in technology and rapid changes in the market, and in all matters pertaining to the improvement of consumer services. The company strictly abides by the provisions of all laws and regulations applying to the formal direction and arrangement of its activities. These include the Communications Law (Bezeq and broadcasts), 5742-1982; the Securities Law, 5728-1968; Companies Law, 5759-1999; RESTRICTIVE TRADE PRACTICES LAW, 5748- 1988; CONSUMER PROTECTION LAW, 5741-1981 AND CONSUMER PROTECTION REGULATIONS THEREOF; AND THE COMPANY’S GENERAL LICENSE. Bezeq’s Deputy CEO for Regulations and Legal Advisor keep track of the appropriateness of such legal provisions, while ensuring that the relevant personnel stay informed and maintain dialog with parties responsible for facilitating orderly activity where necessary. Moreover, further to a recommendation from the Antitrust Authority in the matter of monopolies, the company employs an Internal Enforcement Supervisor whose job is to make sure that the RESTRICTIVE TRADE PRACTICES LAW IS ACTIVELY ENFORCED AND HOLD EFFECTIVE AND OPEN DISCUSSIONS WITH THE Antitrust Authority to that end. In order to streamline this function from time to time, the company also has a designated Steering Committee.
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4.1.7 GENERAL PUBLIC
As Israel’s principal supplier of communications services, Bezeq is in contact with all of the country’s residents and also takes into consideration those who are not customers of the company. The nationwide availability of the Bezeq telecom infrastructure makes it possible to provide solutions for everyone and maintain a dialog with the general public via the company’s website and various networks. Within that dialog, we encourage people to contact us with any relevant subject, which also helps us pursue our goals of continuous improvement and the highest quality service.
In January 2011, at the annual Partnership and Growth Convention of the Authority for the Economic Development of the Arab, Druze, and Circassian sectors, Bezeq signed a joint declaration with leaders from the world of finance, business and industry. This constituted a declaration of intent to cooperate towards the integration of the Arab sector into the country’s economy for the benefit of all Israelis.
4.1.8 COMPETITORS
Bezeq views competition in the telecom market as a healthy challenge, urging the company towards improvement, renewal and the provision of the best possible quality of service to all customers.
Bezeq operates in a highly competitive market, with the greatest number of competitors in the telecom sector. Competitiveness is at the very foundation of a healthy economy and sustainable growth. For that reason, Bezeq welcomes competition in all areas of activity, as long as it exists in an atmosphere of fairness and on equal terms. Bezeq operates fairly in a competitive market, with strict adherence to the law and codes of business ethics.
Bezeq joins the ranks of other companies operating responsibly and transparently in publishing this Corporate Responsibility Report detailing its performance in the field. It is Bezeq’s hope that other companies will likewise join in promoting “competition” in the area of social and environmental performance.
As for competition in the Internet market, Bezeq stands firmly by its traditional neutral approach, believing that the more telecom companies conduct themselves in this manner, the more secure the Internet in Israel will be in the future.
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5. ETHICS AT BEZEQ
5.1 PRINCIPLES OF PRACTICE:BEZEQ VALUES
In a world of changing cultures, with companies failing and starting up, new services and products being introduced and disappearing, we at Bezeq have decided on four practical principles of action. These principles form the essence of our “business credo”, and as such are irreplaceable and unalterable.
Integrity
Be true and faithful to what we believe in. Act sincerely, decently, and fairly and do the right thing, without compromise.
Mutual Respect
Treat all others with respect: colleagues, customers, business partners – in all dealings, at all times, even if you feel otherwise! Respect comes before business.
Personal Responsibility
Each and every one of us has a commitment to the company and its employees, to personal and professional development, to achievement, to results, and to full and open reporting on our activities.
Equality
We support equality and shun discrimination on sexual, religious, or national grounds.
Excellence
Each and every one of us is responsible for outstanding quality of performance in every assignment and every managerial action. Excellence and a constant attempt to improve will be our guiding principles.
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5.2 CODE OF ETHICS
The process of drafting the Code of Ethics began back in 2006 and involved the Steering Committee and an external advisor. The Code of Ethics was published at the end of 2008. At Bezeq, we understand that no decision on a business-oriented action with ethical implications is ever easy and any such decision may impact any one of our six groups of company stakeholders: employees, customers, shareholders, business partners (suppliers and subcontractors), competitors and the community. Therefore, the Code of Ethics includes a reference to all relationships with those stakeholders:
Among ourselves:
We will promote a safe, healthy and pleasant work environment.
We will treat ourselves and our colleagues with respect, fairness and integrity – at all times. The differences between us as individuals are a human and business advantage in the group we represent. We wish to attract the very best people, develop and appreciate the contribution of each individual to our joint success.
We and our customers:
We promote values of respect for our customers, professional conduct, transparency, and confidentiality.
We will do whatever we can to be our customer’s preferred choice, a choice based on quality, a fair exchange and the highest standard of service that we will provide to our customers. Our relations with customers are long term and based on respect, integrity, professionalism, and mutual trust. The customer’s benefit and our immediate response to his or her needs are at the core of our business activity and practice. Our leading status in the field is due to the renewal, quality and service that we offer to our customers – we will not exploit pressured situations, lack of understanding or lack of knowledge among our customers to any negative end.
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We and our company assets:
We support our commitment to safeguard company assets and the proper use thereof.
Shareholders’ investments in the company are a sign of respect and faith in each and every one of us. We shall do whatever possible to nurture it at all times, while working for the benefit of the company. The twin principles of the duty of trust and the duty of proper disclosure form the basis of our activity as a company.
We and our business partners:
We encourage fairness, transparency, and decision making based on professional and business like considerations.
We act to establish and enrich cooperation between ourselves and our many business partners, such as: marketers and distributors, suppliers and subcontractors, as an important part of the ongoing improvement of our deployment in a competitive market; and to create added value for our customers and shareholders.
We and our competitors:
We will strive to be a business leader, while at the same time respecting the rules of fair competition.
We welcome competition because it presents an ongoing challenge, encouraging us to achieve our best professional, creative, and innovative performance, with the goal of offering the very best to our customers.
We in the community and the environment:
We recognize the importance of corporate responsibility, giving to the community, involvement on the part of employees and conserving the environment and the community with a view to the future.
We are an integral part of the community at all levels, and of the environment that provides us with the beauty and scenery in which we operate. Our business and the communications services we develop work for the benefit of the community and the quality of all our lives. We also encourage such activity outside of business and working hours.
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The Code of Ethics does not claim to provide an unequivocal response to the everyday dilemmas that company employees and managers may encounter, but a few basic questions can help identify the proper course of action and/ or decision to be taken:
20/20 Vision
Does your action conform to our “business credo”?
Are you being faithful to Bezeq in your decision?
Will you feel comfortable relaying your action at a team/ management meeting?
Would you like your decision / action to be published in the press?
Would your action be perceived as proper action by each of the six stakeholder groups?
Will you feel comfortable “looking at yourself in the mirror?”
To ensure transparency and implementation of the Code of Ethics, the Deputy CEO Human Resources was charged with the responsibility of implementing the Code of Ethics in the company. He operates with the help of a committee of Deputy CEOs, with all company managers acting as ambassadors in relation to ethics-related matters.
Areas of responsibility include, but are not limited to: in-house training and education for company workers and management; control and enforcement of the principles of the Code of Ethics; examination and update of the Code of Ethics as necessary; performance measurement; and endeavors to improve performance in issues related to ethics. The Code of Ethics Manager (Deputy CEO Human Resources) reports directly to the company CEO, who attached the utmost importance to the subject when he stated the following:
“We believe that ethics also carry a commercial and marketing advantage. Alongside our legitimate desire to increase profits and share value, we choose to strive openly toward value-based principles and I have no doubt that as long as we pursue those, we will successfully pass not only the test of ethics, but also those of ROI or EBITDA.”
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Furthermore, Bezeq operates a consultation and reporting mechanism, with the option of anonymity, which is designed to enable workers at all levels to report any alleged breach of the Code of Ethics without fear, to investigate breaches and try to promote and ensure ethical conduct among workers and managers. Bezeq investigates and handles all reports forwarded to the Code of Ethics Manager discreetly, respecting confidentiality and privilege, and strives to do everything in the company’s power to avoid any harm whatsoever to a worker who, in good faith, reported conduct that is not in line with the company's values as defined in the Code of Ethics.
Implementation of the Code of Ethics at Bezeq is the responsibility of the CEO Human Resources, who operates with the help of a committee of Deputy CEOs and with all company managers acting as ambassadors for the subject.
The Code of Ethics Manager is responsible, inter alia, for: in-house training and education, measurement, control and enforcement, reporting, updating the Code of Ethics (according to circumstances), and constant efforts to improve the company’s ethical performance.
In addition to in-house activities, Bezeq will take measures to promote awareness of business and ethical responsibility among all of the company’s stakeholders.
Bezeq will take into account an employee’s ethical record when debating appointments to senior positions; clear preference will be given to workers who display integrity and loyalty and who create an ethical environment that has a positive impact on the conduct of other workers.
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5.3 IMPLEMENTING THE CODE OF ETHICS
Since the publication of the Code of Ethics, the Ethics Committee has been active, meeting at least twice a year to discuss any matters related to the Code, its implementation and the company’s ethical performance. The Ethics Committee consists of the following: Deputy CEO Human Resources; Manager of the Private Division; Manager of the Business Division; Deputy CEO Regulation; Manager of the Human Resources Development and Training Branch; Manager of the Learning Resources Development Department; and a service representative. A program for the implementation of the Code of Ethics was recently designed and operated, aimed principally at creating a connection between Bezeq’s employees and management and the company’s Code of Ethics. As mentioned above, the Code represents the rules and guiding principles of proper working conduct to be pursued so as to enhance the company’s business prestige.
The program includes a multi-stage implementation throughout the company, from introducing the subject to the CEO’s office, through the various divisions and independent implementation of managers of those divisions, to departmental managers and through them to the workers. Implementation among workers includes distribution of the Code of Ethics and confirmation by workers, use of innovative designated educational software (an “implementation kit for managers”), and more.
The Human Resources Development and Training Branch developed the 20-minute long “implementation kit for managers”, which includes a lesson containing dynamic activity by the manager with his or her team, presentation of ethical dilemmas in Bezeq and a process for solving the dilemmas based on the Code of Ethics.
In the event of dilemmas with no solution, they are referred to the Ethics Committee for debate. Answers concerning such dilemmas are delivered in an orderly manner to the referring party via the manager of the relevant Division.
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Study of the subject is periodically renewed. A learning game with prizes is delivered to workers; they may watch the software and are required to confirm with their signature that they have read the text of the Code – see example below.
Shalom,
Bezeq’s Code of Ethics – our “business credo” – is a systematic document that defines the guiding principles and proper rules of conduct that we should pursue in the regular course of our business. The Code was approved by the Board of Directors and CEO of Bezeq and we are all required to familiarize ourselves with it and conduct ourselves accordingly.
As part of our periodic refresher policy, all company managers and employees are required:
1. To read the document. Click here for the “Our Business Credo” document 2. To confirm with our signature that we have read the Code and understand the contents. 3. Click here to confirm: I have read/signed
Win prizes too!*
Play the Our Business Credo game, answer the questions and enter the prize raffle.
Click here for the software game
Please note! Prizes are conditional upon confirmation of having read the Code.
*You can win an Ipod, a digital camera, or an exciting voucher for two.
Yours,
Ehud Mezuman
Deputy CEO Human Resources & Ethics Manager
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6 CORPORATE GOVERNANCE
Corporate governance is the overall name for a range of mechanisms designed to ensure that companies are run in such a way as to benefit all their stakeholders and fulfill all their legal obligations. Bezeq considers corporate governance to be a key element of its business activity and accordingly, the company examines its performance under the applicable legal provisions and continually checks that the core organizational processes contribute to achieving the goals defined below.
6.1 BEZEQ MANAGEMENT
Avi Gabbay has served as Bezeq’s CEO since November 2007. Mr. Gabbay is one of the most experienced managers in the Israeli telecommunications field. Prior to taking up his current position, he was CEO of the Bezeq International subsidiary for four years, and before that served as Deputy CEO Finance and Strategy and Deputy CEO Management Resources at Bezeq. Mr. Gabbay came to Bezeq from the Budget Department at the Ministry of Finance, where he was Coordinator of Telecommunications. Mr. Gabbay is 44 years old and has a BA in Economics and an MBA from the Hebrew University of Jerusalem.
As shown in the section on organizational structure, the company’s management is based on a system of managers, each with responsibility for a different area and activity of a different division:
Ran Guron, Assistant CEO and Deputy CEO Marketing
Allan Gelman, CPA, Assistant CEO and Chief Deputy CEO Finance
Guy Hadass, Company Spokesman
Itamar Harel, Deputy CEO and Manager, Private Division
Linor Mezuman, Attorney, Company Secretary
Ehud Mezuman, Deputy CEO Human Resources
Dudu Mizrahi, Deputy CEO Finance and Budgets
Amir Nachlieli, Attorney, Deputy CEO and Legal Advisor
Yaakov Paz, Deputy CEO, Manager, Business Division
Sharon Fleisher Ben Yehuda, Deputy CEO Regulation
Eli Frank, Deputy CEO Information Systems
Yuval Keinan, Deputy CEO Engineering and Network Division
Eyal Kamil, Deputy CEO Operations and Logistics Division
Lior Segal, Attorney & CPA, Internal Auditor
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6.2 BEZEQ BOARD OF DIRECTORS Bezeq’s Board of Directors operates according to the provisions of the Companies Law and the Securities Law and Regulations, and pursuant to the company’s Articles of Association and Board of Directors work procedures.The Board of Directors is responsible for determining strategy and supervision of the activities of the company and its subsidiaries. Fourteen directors serve on the Board, of whom four are independent directors; two are outside directors appointed pursuant to the provisions of Section 249b of the Companies Law. ACCOUNTING MEMBERSHIP ON BOARD NAME POSITION AND FINANCE COMMITTEES EXPERTISE Shaul Elovitch Chairman and owner of Chairman of the Security Committee Eurocom Group, Director of Board of Directors several telecom companies Yitzhak Idelman Outside Director Audit Committee; Expert Chairman, Committee for Examination of Financial Statements Orna Elovitch Peled Director Or Elovitch Director Fees Committee Eldad Ben Moshe Director Committee for Examination of Financial Statements Eliahu Holtzman Director Security Committee Felix Cohen Director Rami Numkin Director on behalf of employees Arieh Saban Director Yehuda Porat Director on behalf of employees Security Committee Mordechai Keret Outside Director Chairman, Audit Expert Committee; Committee for Examination of Financial Statements; Chairman, Fees Committee; Security Committee Amikam Shorer Director Fees Committee; Security Committee Shlomo Rodev Director Dr. Yehoshua Rosenzweig Independent Fees Committee; Audit Director Committee
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The directors’ background is examined before they take up their position on the Board, in order to ensure their competency to fulfill their position. They are also required to sign a declaration of eligibility which is published accordingly.
The work of the Board of Director is performed at comprehensive sessions, which are convened at least 12 times per year to discuss, inter alia, subjects like determination of company strategy and policy; supervision of managerial activity at Bezeq and business activity of its subsidiaries; handling of conflicts of interest; ongoing follow-up of performance of work programs and budgets; approval of material company transactions; definition of company policy in matters of risk exposure and any other matter of material significance to company activity.
The Board evaluates directors’ activities regularly as part of the follow-up on performance of assignments and tasks; at the time of appointment or renewal of the office term of a director, the Board also evaluates activity and compatibility to the requirements of the Board.
6.2.1 COMMITTEES OF THE BOARD OF DIRECTORS
The functions and powers vested in the Board of Directors are performed during discussions held at comprehensive sessions of the Board and at meetings of the various specialist committees: Audit Committee The Audit Committee operates by virtue of the Companies Law. The Committee’s composition reflects the great importance which the Board of Directors attaches to holding disinterested discussions. Even today, before the entry into force of the provisions of Amendment 16 of the Companies Law (and beyond the requirements thereof) for a majority of independent directors, the Committee is already composed entirely of independent directors, including two outside directors (Committee Chairman Mordechai Keret and Yitzhak Idelman), and one independent director (Yehoshua Rosenzweig). The Committee’s responsibilities include, inter alia, examining the nature of the company’s activities, investigating any faults in the company’s business management, approving exceptional transactions, approving work programs for the Internal Auditor and supervising the activity thereof, and examining the internal auditing system. The Audit Committee also discusses responsibility policies. Security Committee The Board of Directors must appoint a Security Committee chosen from its members. The Committee is chaired by the Chairman of the Board. Three other directors must also serve on it, of whom one must be an outside director. Further to the Board of Directors’ work procedure, the Committee addresses security related subjects, as defined in the Communications Order (Telecommunications and Broadcasts), (Determination of Essential Service provided by Bezeq, the Israeli Telecommunication Corp., Ltd), 5757–1997.
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Committee for the Examination of Financial Statements This Committee operates by virtue of the Companies Regulations (Provisions and Criteria for Proceedings for the Approval of Financial statements), 5770-2010. It formerly operated as a separate committee on the Board of Directors. It comprises three members, of whom two are outside directors (Yitzhak Idelman and Mordechai Keret), one of these (Yitzhak Idelman) serving as Chairman, and one independent director (Eldad Ben Moshe). The Committee members are experts in accounting and finance, pursuant to the Companies Regulations (Conditions and Criteria for Directors with Accounting and Financial Expertise and Directors with Professional Expertise), 5766-2005. The Committee holds comprehensive discussions, during which it formulates the Board of Directors' recommendations on the following matters: Estimates and assessments made in connection with financial statements. Internal audits connected with financial statements. Completeness and proper disclosure of financial statements. Accounting policy adopted by the company. Evaluation of value, including discounts and the underlying estimates, which form the basis for the data in the financial statements.
Fees Committee The Committee has four members, including one outside director and one independent director. The Committee was established as part of Bezeq’s overall view of attaching the greatest importance to the handling human resources. The Committee operates as an advisory body to the Board of Directors on most matters related to human resources, including: The company’s pay policy regarding senior employees and other employees of all types and professions. Advice to the Board on the company’s employment policy. Advice to the Board on organizational changes in the company. Advice to the Board on approval of collective work agreements. Follow-up of performance of wage budget and work programs and agreements pertaining to human resources. Discussion on pay and employment terms for senior employees, with the exception of the CEO. The proposed annual fees program. Provision of monetary bonuses to senior employees. Options programs for senior employees. The fees of independent outside directors are paid pursuant to the Companies Regulations (Rules on Honorarium and Expenses of outside Directors), 5760-2000. The remuneration of the five senior officers with the highest salaries, the Internal Auditor and directors from among the workforce are published as required in the company’s financial statements.
The company Board of Directors held talks on the terms of office and remuneration of officers and stakeholders in the company and the link between the salaries paid in 2010 to each of the senior officers and stakeholders in the company and their activity and contribution to the company during 2010.
The work of the Board of Directors and its committees includes the formulation and approval of many policy documents, including the Code of Ethics, an environmental policy document, the procedure for transactions with related parties, the procedure for the prohibition on use of inside information, the procedure for signatory authorization and more.
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6.2.2 PROCESSES FOR AVOIDANCE OF CONFLICT OF INTERESTS AMONG DIRECTORS
The Board of Directors is responsible for determining policy and rules for the handling of conflict of interests, with the intention of protecting the company from improper or illegal acts or from the influence of any person not acting in the company’s best interest. Specifically, the Board adheres strictly to the rules for handling transactions in which the holder of a controlling interest and/or officer is involved, or in which such holder of a controlling interest and/or officer may have a personal interest, subject to the provisions of the law. Such rules also apply to a transaction between a controlling shareholder and/or an officer in the parent company and subsidiaries. The same rules apply equally to members of the Board and to relevant organs of the company and its subsidiaries.
6.2 COMMUNICATION WITH CORPORATE GOVERNANCE BODIES
Various channels of communication exist so that relevant stakeholders may approach corporate governance bodies to make themselves heard or to receive updates.
Naturally, company employees may approach managers independently and raise any subject with senior managerial ranks. A “whistleblower” system is also in place today, allowing employees to contact the Internal Auditor anonymously with problematic issues. Employees also enjoy an “open channel”, which is effectively a portal on which issues may be raised anonymously. In addition there is a “notice board” (not anonymous), enabling employees to post messages on various topics and receive answers to every posting.
Additional options include the CEO’s meetings with managers, periodic branch or divisional meetings and more. Other stakeholders and the general public can contact the company via the website (http://www.bezeq.co.il/Pages/contactus.aspx and English language site: http://ir.bezeq.co.il/phoenix.zhtml?c=159870&p=irol-contactus).
Surfers may select the person they wish to contact from the company management, who is responsible for routing messages and verifying that they are dealt with. A designated team handles all such messages and follows up completion of handling to the party’s satisfaction.
For further details about the intra-organizational communications system and the “open channel” see Section 8.1: Employment and Human Rights.
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6.3 RISK MANAGEMENT AND RESPONSIBLE BUSINESS CONDUCT
6.4.1 RISK MANAGEMENT
The company Board of Directors is the competent body to determine group policy for various risk exposures. The company initiates risk management practice which is responsible for identifying, analyzing and handling various matters presenting a risk to business activities. A Risk Manager was appointed.
6.4.2 INTERNAL AUDITOR
In addition to management, the Board of Directors and its committees, Bezeq also employs an Internal Auditor who is charged, inter alia, with correct corporate governance. The Internal Auditor is responsible for examining the fitness of the company’s activities; checking the completeness of financial and operational information; examining financial management of finances and liabilities in the company; examining the fitness of decision making processes; examining the company’s information systems; examining material transactions; examining the fitness of intra-organizational communication procedures; examining procedures for material issues; and exposing any faults in the company’s business management. It is to the Internal Auditor that applications on a variety of subjects are referred, such as anonymous reporting mechanisms on ethical issues, breach of procedure and so on. The Internal Auditor presents the findings of his work to the Audit Committee; his direct superior within the organization is the company’s CEO.
6.4.3 INTERNAL CORPORATE CONTROL
The company completed implementation of I-SOX (Goshen Regulations) activity for the first time in 2010, pursuant to the Securities Regulations (Periodic and Immediate Statements), 5730-1970. This activity examinesthe effectiveness of internal controls over financial reporting and disclosure. Such checks include an examination of key controls on a number of levels: entity level controls, highly material processes, general controls on information systems and accounting period closure processes. It should be noted that any relevant defects were handled within this checking process in a manner that enabled the company to declare that its internal controls on financial reporting and disclosure are effective; a Compliance Officer was also appointed for matters of corporate governance in the company (not including subsidiaries). His role also covers supervision and control of application of the provisions of corporate governance in the company. During 2011, the company is getting preparedto implement the provisions of the Sarbanes-Oxley Act of 2002 in the matter of internal control, which is required in light of the company’s status as a material subsidiary of B Communications Ltd., which is traded on NASDAQ.
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7 MEMBERSHIP IN ORGANIZATIONS AND AWARDS
7.1 MEMBERSHIP IN VARIOUS ORGANIZATIONS
Bezeq encourages employees and managers to participate in organizations that give added value to them and thus also to the company. The company’s deputy CEOs take part in professional activities in many areas, such as: the company is a member of ISRA (the Israeli Public Relations Association), the Marketing Association, the Information Systems Club of the Marcel and Annie Adams Institute for Business Management Information Systems, which operates under the auspices of Tel Aviv University’s Faculty of Management (Bezeq’s Deputy CEO Information Technologies is an elected member of the president’s forum of the club), the C3 club (for CIOs and CEOs of IT companies) for “People and Computers”, and the Organization of IBM Equipment Users. The Deputy CEO Information Technologies is also an elected member of the management and presidency of the Israel Chamber of Information Systems Analysts, an organization which Bezeq has supported for several years with prime sponsorship of its annual conference.
In the matter of corporate responsibility, Bezeq is an associate of Maala – Business for Social Responsibility, which since 1998 has been the most prominent professional roof organization in Israel for businesses seeking to make a difference in the area of corporate responsibility.
The Maala organization is a leader in the development and application of corporate social responsibility (CSR) as part of a business’s regular modus operandi. The assumption is that the practice of social, environmental and ethical values in a firm’s ongoing business will contribute to its commercial success and the betterment of Israeli society. Maala belongs to a global network of business organizations promoting CSR and operates in cooperation with parallel organizations around the world, representing the UN Global Compact, CSR 360 and BSR.
As part of its activities in Maala, Bezeq took part for the second year running in Maala ranking and in 2010 was ranked on the Gold list. As in all areas of activity, we hope to continue improving and progressing in this too.
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7.2 AWARDS
As a prominent company striving for excellence, Bezeq is active in many arenas and accordingly has received awards of recognition and appreciation. During the reporting period the company won several awards, as specified below:
Marketing
Effie international competition for effective marketing and publicity: in 2010 Bezeq was in 2nd place in the Media Communications, High-Tech and Computers category due to effective marketing of the NGN network, and 2nd place in the Sectors category due to the effective introduction of fast Internet in the Arab sector. On two consecutive years Bezeq was a recipient of Superbrands, the international seal of excellence, for marketing activity and the Bezeq brand name.
Also in 2010 Bezeq ranked 12th on the Globes Brand Index out of 100 leading brands in Israel (4th place in Israeli brands).
Human Resources
The 2010 Israel Management Center Award for Excellence in Human Resources Management. Leading companies in the market took part in the competition and three projects submitted by Bezeq reached the final and won:
First place in the Professionalism in Human Resources category, for “Internal Chat as a Tool for Cultural Change” project. This project saw the company’s management taking a strategic decision to integrate Enterprise 2.0 software in the company, out of both a desire and need to “speak a new language” and enable employees to use advanced tools to help promote business. The move was implemented by the Human Resources Development and Training Branch and the Human Resources Division, together with the company Spokesman and the Marcom Branch, part of the Marketing Division. It included the establishment of “internal chats”, with two key components – a “notice board” and an “open channel” on Bezeq’s internal portal (see more information about the intra- organizational communications system in Section 8.1: Employment and Human Rights). Second place in the Human Resources as a Strategic and Change Generating Partner category, for the project From Work Assignment Officer to Regional Service Manager. Third place in the Human Resources Promoting Social Issues category, with “A Warm Home for Youth at Risk” – a project to employ young trainees at Bezeq.
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8. SOCIAL PERFORMANCE
8.1 EMPLOYMENT AND HUMAN RIGHTS
8.1.1 MANAGERIAL RESPONSIBILITY (MANAGERIAL APPROACH)
To us at Bezeq work is a calling and we are committed to the highest level of professionalism. Our work is the key to our success. Our vision focuses on the development of human capital and programs and activities designed specifically with the customer in mind, maintaining good, responsible working relations and upholding the company’s goals.
Bezeq is consistent in creating an organizational culture to support the company’s vision. It is the role of the Human Resources Division to instill in our human capital – all ranks of workers and managers alike – a desire for achievement and excellence, and to develop a cultural environment that reflects the values we believe in: professionalism, personal responsibility, integrity, mutual respect, openness and transparency, which will enable the company to achieve its business objectives. Those values are measured regularly by means of regular dedicated mechanisms: an employee position survey conducted once every 18 months over the past four years, and an internal services survey conducted once a year.
The Human Resources Division, which is responsible for nurturing Bezeq’s human resources, promotes the company’s objectives and principles of conduct, inter alia in the following ways:
Improving managerial culture, openness and enthusiasm among workers and managers. Creating a challenging environment for career development and encouraging workers to take responsibility. Managing a streamlining program and organizational change while fully realizing employees’ potential. Responding to the company’s need for technology and new services – ultra-high speed NGN and assimilation of the CRM system. Responding to the requirements of intensive service via the company’s different “service openings” (service centers, technicians, chain of retail outlets, customer file manager), by appropriate recruitment and goal-oriented training, preventing the loss of customers and constantly improving employee skills. Implementing the new work agreement while retaining balanced working relations and enabling fulfillment of the company’s objectives. Acting to nurture and maintain the health and welfare of employees and their families.
In the 2010 BDI survey published in The Marker, Bezeq was chosen as one of the “10 best companies to work for”. The excellent terms and conditions offered to all employees include: pension insurance, advanced training fund, vacation and culture package, holiday gifts, and more.
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8.1.2 BEZEQ’S EMPLOYEES
The company takes many different measures to protect the rights of employees and to that end, has set up a variety of dedicated control mechanisms.
According to employee acceptance procedure, any vacant position is open to all candidates regardless of religion, ethnicity or gender. Acceptance criteria are identical for all and all candidates undergo an identical sorting process.
Employment policy and determination of employment terms is based on objective tools and conditions determined in the collective agreement, or further to comparative surveys of market rates. Here too there is no differentiation on grounds of religion, ethnicity or gender. Development and training programs for every occupation and role are implemented as part of overall planning, after an examination of employees’ and managers’ needs. All employees, without discrimination and according to occupation and the requirements of the job, benefit from a training and qualification scheme. Further to the work agreement identical terms are also observed for termination for employment or retirement on early pension, without discrimination on grounds of religion, ethnicity or gender.
As of December 2010, some 7,370 workers were employed at Bezeq. Of these, 5,779 (78%) are employed full time and 1,591 (22%) are part-time employees.
Bezeq makes every effort to employ ethnic minorities and weaker populations, who have difficulty integrating into the work force. Below are a few examples:
Collaboration with "Jasmine", an association for Arab and Jewish women, and the Kav-Mashve employers' coalition for equality for Arab university graduates, in order to promote employment of workers from the Arab sector. Vocational training courses for the ultra-Orthodox sector in cooperation with "Mafteach Ltd." (“the key to an open society”), further to which 24 ultra-Orthodox women from the Hasidot Gur community were employed in 2010 at the 199 Bezeq customer service center in Ashdod. Partnership with two organizations: "Tapuach" (offering educational-technological programs) and "Strive Israel" (a social program designed to foster financial independence), aimed at offering vocational training to the unemployed so as to help them return to the work force.
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Employee Segmentation by Management Level and gender
Women Men Total Total %
Workers 2,700 3,565 6,265 85%
Managers 322 783 1,105 15%
Total 3,022 4,348 7,370
Total % 41% 59%
Employee Segmentation by Geographical Region
Region No. of Employees
Tel Aviv and Gush Dan metropolitan area 2,744
Central region (Gedera to Hadera, not incl. Gush Dan) 733
North 1,832
Jerusalem and the south 2,061
Total 7,370
Percentage of Employees on Collective Agreements
Agreement No. of Employees %
Personal contracts* 747 10%
Collective agreement 6,623 90%
Total 7,370 100%
*All Bezeq contracts / agreements are for unlimited periods.
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EMPLOYEE TURNOVER
In 2010 Bezeq, recruited 815 new employees. Below are tables of those new employees segmented by different characteristics (gender, geographical work region, education, etc.).
Employee Recruitment by Gender
Gender No. of Employees % Male 458 56% Female 357 44% Total 815 100%
Employee Recruitment by Geographical Region
Work Region No. of Employees
Tel Aviv and Gush Dan metropolitan area 141
Central region (Gedera to Hadera, not including Gush Dan) 167
North 228
Jerusalem and the south 279
Total 815
Employee Recruitment by Education
Type of Degree No. of Employees
Engineers 6
Practical engineers & technicians 23
Academic 68
Other (non-academic) 718
Total 815
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Employee Recruitment by Age Group
Age Range Quantity
18-20 41
21-30 629
31-40 125
41-62 20
Total 815
In 2010, the employment of 1,536 workers was terminated. The tables below show segmentation by different parameters (age, gender and geographical work area):
Division by Age
Age No. of Employees %
30-50 408 27%
Over 50 115 7%
Under 30 1,013 66%
Total 1,536 100%
Division by Gender
Gender No. of Employees %
Male 776 51%
Female 760 49%
Total 1,536 100%
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Division by Geographical Work Region
Region No. of Employees %
Tel Aviv 461 30%
Central region 76 5%
North 399 26%
South 600 39%
Total 1,536 100%
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8.1.3 FAIR EMPLOYMENT/ HUMAN RIGHTS
Bezeq believes that all workers, without exception, are entitled to equal treatment. This attitude is embedded in the company’s Code of Ethics, one of whose fundamental principles is the principle of equality, as expressed in our “business credo”.
Another key to success, according to the Bezeq approach, is well developed working relations between the company and its workers. The workers are represented by the employees’ organization, which works in close and fruitful partnership with management. As a result, Bezeq’s investment in employees is exceptionally high, as is clear from their obvious loyalty to the company and its values, and is also reflected in the high level of satisfaction expressed by customers on the receiving end of the company’s services.
Anonymous complaints are handled by an internal system and a prevention of sexual harassment committee, which discusses relevant complaints and serves as an “employer” in legal matters pertaining to the prevention of sexual harassment. The Company Secretary, who is responsible for internal matters of sexual harassment, operates mechanisms to enforce the Prevention of Sexual Harassment Law and is also responsible for the appropriate training of all new employees and for periodic refreshment among all employees and managers. The company also adopted the regulations defined by law and implements a broader procedure for sexual harassment. It is noteworthy that the sexual harassment regulations are posted on notice boards in all locations where there is a large concentration of employees.
Bezeq respects and practices the freedom to unionize. Accordingly, the company has an active employees’ organization which contributes significantly to employee welfare and fruitful dialog with management.
In addition to the aforementioned Bezeq employees, the company also has a trainee program employing high school students aged 16-18 (10th-12th grades). These young men and women combine study and work twice a week at Bezeq for periods of up to two years (until they are 18). They are trained by personal mentors from among the established Bezeq workforce, who guide, train, and work alongside them for the duration of their term of employment.
During summer vacations, the 16-18 year old children of Bezeq employees are also invited to work at the company. They receive a safety briefing and their work is authorized by the Youth Employment Bureau. Employees’ children are attached for 10 days to short-term projects with community organizations, such as community centers, hospitals, old age homes, summer camps and so forth. The children’s work for the community organizations forms a part of Bezeq’s community contribution and they are duly paid for it. The company does not practice forced employment and all workers are protected from any such risk by virtue of agreements, personal contracts and the law.
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8.1.4 EMPLOYEE BENEFITS
The provisions of the Civil Service Regulations apply to all employees. This is a collection of rules formalizing the management of civil service in matters of human resources and specifying the rights and obligations of State employees and the collective agreements applicable to them.
Beyond those rights and obligations, and in recognition of the value of employees as a key to the company’s success and the desire to ensure their satisfaction and maintain Bezeq’s reputation as a desirable employer, permanent employees are entitled to additional benefits as part of the special agreements signed by the company. Such benefits include:
Phone calls – employees are entitled to a regular increment for their telephone call quota. Refund of summer camps – participation in the cost of attendance by employees’ children at summer camps during the summer vacation. Medical tests – department managers are sent for regular medical check-ups once every two years. High school grants – participation in high school costs for employees’ children, in the amount of NIS 500. Loans according to employment status, seniority in the company and pay level. Gifts for personal landmark occasions (childbirth, bar mitzvah, marriage) according to seniority in the company. Gifts for reservists, for all workers serving 25 calendar days per year or more. Study grants for children of employees on reaching high school age. The grants are awarded to permanent employees according to seniority in the company. Furthermore, the welfare organization that is common to all Bezeq employees grants all workers (subject to a minimum term of employment) additional benefits, such as: a personal welfare package for vacation, culture and sport according to the scope of their position; various insurance packages (health, dental, life); gifts for holidays; gifts for children of employees (childbirth, entering 1st grade, army conscription); events for employees’ children (entering 1st grade, bar mitzvah); subsidies for Hannuka shows and retail vouchers for major marketing chains. The abovementioned benefits are not exclusive only to permanent employees; those working on monthly and hourly employment contracts are also entitled to benefits, such as: Seniority and index increment – in addition to the wage scale, an automatic promotion mechanism is also in place for wage updates according to seniority. Shift increment – shift workers are entitled to remuneration for shift work, on a progressive scale per hours worked.
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Convalescence pay – workers are entitled to convalescence pay on completion of 11 months of work at the company (as compared to the usual 12 months at most firms). The entitlement to 5-10 days of convalescence is determined according to the employee’s seniority. The rate per day of convalescence is the same as for permanent workers and significantly higher than usual market rates. Payment to professional organizations – practical engineers, qualified technicians, engineers or workers with some other academic education are entitled to participation by the company in membership fees for professional organizations. Provident fund for non-pension components – after working at the company for six months, workers are entitled to contributions paid into a provident fund for non-pension items at a rate of 5% of non- pension components on the part of the employer. Employment terms for mothers – mothers in full-time employment only are entitled to work one hour less per day for one year with no adverse effect on their pay. All company employees whose positions are not measured according to goal achievement as defined in the agreement are entitled to an annual bonus. Green Line border increment – this additional payment is paid to employees whose work requires them to enter territories over the Green Line. Coverage of meals – company workers are entitled to financing for meals in amounts ranging from NIS 8 to NIS 45 for every full day’s attendance (over 6 working hours), according to their position. Advanced training fund – after six months of work with the company employees are entitled to join an advanced training fund. For employees who join the advanced training fund, the company will allocate 7.5% and will deduct 2.5% monthly from the employee’s ordinary monthly salary, at his expense.
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8.1.5 EMPLOYEE DEVELOPMENT
Bezeq invests extensively and in many different ways in developing human resources. Every year, in September or November, a “training requirements survey” is conducted with the participation of all branch managers. The survey takes the form of a personal meeting at which branch managers prepare all the training and development requirements for their branch for the coming year. The requirements are formulated into a single comprehensive program, arranged according to occupation. The program is then budgeted , prioritized and approved.
The development program includes reference to:
1. Basic ongoing training for every new employee according to occupation. 2. Ongoing training for existing employees according to need and goals. 3. Ongoing training for new and established managers on all levels. 4. Special development training for managers with promotion potential. 5. Special ad hoc training according to divisional / company management needs.
The training and development program is openly published on the company’s portal and can be viewed by all employees at the beginning of every year.
Shalom, We are pleased to present, as we do every year, a breakdown of the training program for 2011 and to sum up the past year. 1. Preparing the 2011 training program 2011 is already upon us and with it comes the human resources development and training program, which is designed to help us fulfill the company’s objectives for the year. From August to November 2010 we held meetings with managers of all the company’s branches and some departmental managers, aimed at identifying what challenges and requirements we face in order to help us meet next year’s goals. The meetings resulted in the formulation of a training program which was checked by the branch managers and then approved by the Division manager. The program is always available on the company’s portal (see link below). The program presents a breakdown of all training and qualification planned for 2011 for every job, and how such training will be implemented (frontal, online interactive study, on-the-job training, etc.). A breakdown of scope (number of sessions, participants) and input (number of working days / trainer days) is provided for each training activity. We must all be aware that 2011 is a year of crucial importance to our work: in addition to ongoing training we are also installing a new CRM system, requiring the investment of many resources. Hence it is vital that we manage the training program jointly and correctly, for the most effective results and wisest use of our organizational resources. At the beginning of every quarter the training program will be re- examined in order to verify that it is meeting changing needs. 2. Summary of human resources development and training in 2010 We also attach below a link to the summary report of human resources development and training in 2010. This report is delivered quarterly to the A team of every Division individually. These reports will be available on the organization’s portal – see link below. Thank you for your cooperation. We wish all of you a happy and successful New Year and achievement of all our goals! Click here for the 2011 training program Click here for 2010 summary Sigal, Gilad, Michal, Moran, Effi and the staff of the Human Resources Development and Training Branch Human Resources Division
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Below is a breakdown of the 2010 employee training program:
EMPLOYEES MANAGERS
Division No. of No. of No. of No. of training & working training & working mentoring days on No. of mentoring days on No. of days training participants days training participants
Private 2,423 25,487 3,772 62 413 297
Business 257 2,523 1,015 51 220 50
Engineering 152 1,584 993 25 319 157 & Network
Human 70 297 113 19 81 45 Resources
Information 70 567 188 42 295 77 Technology
Economics 15 66 42 38 62 34 & Finance
Operations 35 430 209 30 559 67 & Logistics
Marketing 14 45 24 14 39 21
Total 3,036 30,999 6,356 281 1,988 748
Total % 92% 94% 89% 8% 6% 11%
The organization’s portal also set up a career management site, with the following aims:
To create transparency of information on developing a career with the company. To instill motivation to develop and advance in the company. To provide tools for workers and managers to enable them to plan and manage their careers.
In effect, workers can see all mobility data about the company on the site, both per quarter and per annum. The website publishes notices on all employees who were promoted to managerial positions, as well as a selection of articles and tools to help workers advance their own career in the organization. Some 70% of promotions and integration into Bezeq occur through employee mobility within the company.
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Have you asked yourself where you’re headed?
Field work? Technology? Management? Marketing? Training?
We are proud to launch our new career management site! To make your road to success clearer and better planned, we have collated here the most important information and insight for you. What you will find on the new site: All positions, as they become available in the company A selection of tools and recommendations on how to plan and build your career Data about promotions and mobility within the company Career stories of actual employees and managers in the company
Click here to access the career management site
Yours, Organizational Development and Career Management Department Recruitment Department
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8.1.6 EMPLOYEE POSITION SURVEY
Bezeq’s managerial approach attaches the highest importance to receiving feedback and evaluation from all employees. Accordingly, for the past four years the company has conducted an “Employee Position and Culture Survey” based on the model of Employee Engagement, which is designed to investigate the factors that account for the commitment, involvement and motivation level of company employees. Those factors include subjects related to Bezeq’s “managerial culture”, “branch management culture”, the managerial skills of the direct and indirect superior and aspects concerning the individual – position, promotion, pay, recognition and appreciation, means of performing the work and others. An organization-wide Employee Position and Culture Survey was conducted at Bezeq for the third time in June 2010. There were 5,432 respondents, representing 82% of total possible respondents. The survey asked respondents to select six characteristics/values (out of 36) that best reflect the company’s modus operandi (existing status). Most of the values were “effective values” that Bezeq strives to apply in the company, and a small number (marked in red) were “ineffective values” which Bezeq hopes to reduce. The following table provides a summary of responses from the employees who took part in the survey:
EXISTING CULTURAL VALUES 2010 VS. 2008 AND 2006 BEZEQ 2010 BEZEQ 2008 BEZEQ 2006 1 Profitability 49% 1 Profitability 43% 44% 1 Bureaucracy 2 Competitiveness 40% 2 Competitiveness 40% 41% 2 Organizational politics 3 Professionalism 39% 3 Business overview 39% 41% 2 Professionalism 4 Leading / being #1 38% 4 Professionalism 35% 37% 4 Competitiveness 5 Business overview 36% 5 Pressure 34% 34% 5 Personal interest 6 Renewal 29% 6 Organizational politics 31% 33% 6 Quality 7 Service orientation 27% 7 Bureaucracy 29% 31% 7 Profitability 8 Pressure 25% 8 Efficiency 27% 27% 8 Pressure 9 Ambitiousness 24% 9 Leading / being #1 24% 27% 8 Business overview 10 Quality 24% 10 Personal interest 20% 27% 8 Service orientation
The results of the 2010 survey indicate a significant, continuous change in organizational values and culture at Bezeq since the first survey was conducted in 2006. It is clear that while values that formerly represented company activities in employees’ views were in part “ineffective” – unnecessary to the company and expressing discontent among workers – the values that guided Bezeq in 2010 were profitability, competitiveness, leadership, a business oriented overview and renewal and innovation.
We are proud that these are the values that now represent the company’s activity to its employees, and pleased to know that the many steps undertaken by management, Employee Development and managers have brought about such a change. An ongoing trend appears to be underway, a trend towards focusing organizational energy on the customer, on future management, innovation and management of assignments. It is noteworthy that the new trend transcends divisions, departments and demographic features such as managerial level, employment status and so forth. Diagram 2.2 below illustrates the results of the Employee Satisfaction survey, showing a sweeping growth in satisfaction in all categories.
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Diagram 2.2
A significant increase was also registered in employee-related aspects: challenge and interest in the job, personal and professional development, chances of promotion, recognition and appreciation, pay and benefits. As a company that cares about employee development, Bezeq hopes that past surveys will help the company reach conclusions and achieve goals, measure results and meet the goals defined. The objectives of the previous survey: “Creating an environment that permits frank and open dialog between managers and workers, and the possibility of giving constructive feedback”, were achieved and a significant improvement in this field is visible.
Bezeq employees have made it clear in the latest survey that they do experience more open communications and greater cooperation between and within units. The subject of communication is of the greatest importance, since it has implications for many other subjects touching on the company’s organizational climate, managerial culture and employee culture. An improvement in this area will enable greater transparency without misrepresentation of data and a tool for workers to respond to surveys and questions free of anxiety. Accordingly, the company management decided to continue focusing on this same goal in the coming year.
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8.1.7 EMPLOYEE FEEDBACK
In addition to measuring employees’ satisfaction and their view of Bezeq, the company also pursues a policy of ongoing employee development to be carried out at all management levels.
The process arose from a desire to create constant improvement in performance by determining assignments and goals, by measuring progress and evaluating goal-oriented performance in an atmosphere of open, constructive dialog and with coordination of expectations.
All employees take part in the six monthly, computerized evaluation and feedback process. A “summary and feedback of goals and capabilities for the previous year” is issued once a year, at the beginning of each year, and goals for the coming year are defined.
Half way through the year, usually in June-August, progress towards those goals is briefly examined, followed by a brief current status feedback. This process too is conducted among all employees, with the exception of “front line” workers (service staff and technicians), who in any event undergo monthly evaluation and their pay is also based on monthly performance. Hence, a quarterly evaluation and feedback conversation is held with them for an overview of their performance during that quarter. Training and development processes are designed for immediate improvement of performance.
Some 4,260 workers and managers participated in the 2009 feedback. The 2010 evaluation and feedback process is currently underway.
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8.1.8 IN-HOUSE SERVICE SATISFACTION SURVEY
Bezeq examines employee satisfaction with the company’s performance and managers’ satisfaction with employees. To gain the broadest possible overview of other valued viewpoints, the company also conducts an annual satisfaction survey (usually in November) of the quality of in-house service. The past year saw an 88% response rate of all possible respondents. The respondents were asked to rank their assessment of every service in every index (in the four Head Office Divisions) on a scale of 1 (“not at all satisfied”) to 10 (“completely satisfied”). The internal customer satisfaction survey for in-house service quality was distributed for the fourth time in November 2010 to managers on all managerial levels (the previous survey was held in December 2009). The following table illustrates the evaluation indices:
General satisfaction with service General satisfaction with quality of service and contact with unit
Quality of result Exhibit thorough knowledge, professional experience, excellent performance, few errors
Adherence to timetables From product/service suppliers within promised timetables, reliability and punctuality
Cooperation Willingness to help, meet the other party half way, openness and collaboration in knowledge and information, concern, understanding, patience and courtesy in communication
Flexibility Efficient handling of sudden and unexpected events, understanding of frequent changes in requirements and response thereto, willingness to implement changes, creative, “out-of-the- box” thinking in response to problems
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Average Bezeq Indices for 2010 vs. 2009 by Services
The diagram indicates a clear and steady improvement in the level of in-house service at Bezeq.
The report resulting from the survey is analyzed at Divisional level and compared to previous years. Each Division manager analyzes the results and formulates a plan to improve any service which can be improved, in coordination with the customer whose satisfaction level ranked low.
These ongoing processes are held as an integral part of Bezeq’s organizational culture in recent years. It is our belief that the consistent in-house assessment, evaluation and implementation of improvement processes are instrumental in promoting and developing material change in organizational culture.
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8.1.9 BEZEQ INTRA-ORGANIZATIONAL NETWORK
Over the past four years, as part of the privatization process, Bezeq underwent some material changes, both external (organizational structure, strategic focus, branding, etc.) and internal (organizational culture, work processes, streamlining and overheads). These changes were simultaneous and intensive and form the foundation of the company’s business results, as expressed in the financial statements. A change in organizational culture does not happen overnight; many stages and multiple elements are involved. It was necessary to switch from a culture of “government-owned monopoly” to one of “competitive private company” whose workers are assessed and paid on the basis of performance, a company with a managerial approach of frank and open dialog between managers and workers, a culture that encourages and welcomes feedback and works towards constant improvement of service and aggressive streamlining of efficiency. This has not been a simple goal to accomplish. One of the tools that was helpful in bringing about the change was Web 2.0. About two years ago the company took a strategic decision to introduce Enterprise 2.0 in an effort to “communicate in a new language” and offer workers an opportunity to use state-of-the-art tools to help promote business. How did we do this? An “in-house chat” site was established on the intra-organizational portal, containing two key components: a “notice board” and an “open channel”.
The “notice board” is in effect a mini-site that is available to all employees of the company. It contains blogs written by managers and workers across the board. The principal blogger is the CEO, Avi Gabbay, who posts messages every few weeks, sharing his managerial dilemmas and experiences with employees and asking for their reactions, ideas, thoughts and especially cooperation. Other bloggers do likewise. In its 18 months of operation, the site has had over 230,000 entries (“hits”) from workers, representing an average of nine minutes online time, 296 posts and over 6,000 responses – impressive statistics by comparison with other similar sites. The site provides a channel for the transfer of information directly from management to workers and from workers to managers (vertically), and bi-directional posts between workers (horizontally). It is an egalitarian, transparent, accessible and fast communications system allowing for feedback and ideas from inside the organization; a platform that has contributed to establishing an environment of openness and innovation. It also increases employees’ involvement in what is going on in the company and enhances a sense of affiliation for new employees.
The “open channel” operates anonymously (unlike the “notice board”, where bloggers are openly identified). It provides a method of posting questions and receiving answers anonymously. Questions are referred to professional factors in the company and answered within three working days. They are classified into “roof subjects” and allocated identifying numbers, to allow a search and location of answers on the system. The open channel is multi-directional and, after two years on air, has received over 950 questions and answers on a variety of subjects related to company activity, several suggestions for improved efficiency and in particular a large amount of energy, innovation and accessibility to information within a short time.
In 2010 Bezeq was awarded first prize in a competition for Excellence in Human Resources Management held by MIL (the Israel Management Center) for the “in-house chat” project (notice board and open channel) in the Professionalism in Human Resources category.
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8.1.10 SAFETY AND HYGIENE IN THE WORKPLACE In all matters related to safety committees, Bezeq operates according to the Labor Inspection (Organization) Law, 5714-1954 and the Safety Committees and Safety Officers Regulations, 5721-1960.
All Bezeq employees (100%) are represented on safety and hygiene committees. The following safety committees are in place: Private Division, Business Division and Engineering and Network Division. BezeqTech has an additional committee and there is also a national committee.
All the committees are on a par, with equal and joint division among management and workers’ representatives. Each committee has between six and eight members. The role of the committees is to improve safety and hygiene conditions in all units, to inspect causes of accidents in the workplace and recommend measures to prevent and avoid such accidents. A safety committee is authorized to take major measures against a worker who fails to observe accepted safety rules.
To avoid the risk of accidents at work in general, and accidents at heights (while climbing telephone poles) in particular, Bezeq prepared and distributed safety directives which are applied in the training program, and special educational software on the subject was also added on the organization’s portal.
The following diagram illustrates statistics for safety related events in 2009 and 2010, showing a drop in safety related events in the workplace.
Statistics for Safety Related Events 2009 vs. 2010
Bezeq also promotes safe and healthy behavior by means of training in ergonomics and safe driving, which are available to all employees.
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Ergonomic Measures Bezeq is attentive to the worker’s comfort in the workplace, both in terms of general physical and workplace layout and in terms of individual work stations. Accordingly, the company developed educational software dedicated to the subject, which is available to all workers, describing the risks inherent in a work environment that is not adapted to each individual and recommending correct seating position, organization of the work station and awareness of lighting and noise in the work environment.
Promotion of Safe Driving Familiarity with the different aspects of safe conduct on the roads is vital for the prevention of traffic accidents. Hence, Bezeq’s safety officers are keen to increase awareness of safe driving habits by means of employee training programs and distribution of emails and various promotions on the intra-organizational email.
Following are some examples of the company’s endeavors to promote safe driving:
1. “Best get home safely” – distribution of safe driving kits to workers.
2. National Commitment Day – “Green light” training in the company.
3. Intra-organizational email updates to increase awareness of safe driving.
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8.2 COMMUNITY / SOCIAL PERFORMANCE
8.2.1 BEZEQ AND THE COMMUNITY
In our activities we attach the greatest importance to the community in which we work. It is the community to which our customers, suppliers and workers belong. Having started out as the national telecommunications provider, providing good service to the community is of supreme value. In line with this belief, Bezeq encourages employees to volunteer and contribute to the community as part of the company’s deep commitment to social and environmental responsibility.
Our work for the community includes both financial contributions and promotion of volunteering among the workforce. We also donate telecommunications infrastructures to social organizations and NPOs. Our intention is to make the best possible use of the company’s resources to benefit the community, in the hope of closing the digital gap in Israel and so helping also towards narrowing the financial-social gap in today’s society. With these contributions – both financial and by way of products and services – we boost the activities of various NPOs in several fields, such as establishing IT centers, computer training, Internet hook-up for needy populations and more.
Together with the organizations, Bezeq formulates work programs to include objectives, goals and milestones towards implementation of the programs. For their part, the organizations are required to submit periodical reports to Bezeq on their progress. In this way the company is able to exercise proper and effective control and follow-up of the contributions offered.
Bezeq makes a conscious effort to donate only to registered NPOs bearing Proper Management certification from the Registrar of Fellowship Societies at the Ministry of Justice. We also encourage organizations to participate in a ranking report which is issued at the end of the ranking process; the report is drawn up by company analysts with reference to measurement of the NPOs selected to participate. The ranking takes into account, inter alia, the NPO’s transparency, ethics, the work of the auditing body and specific topics according to the type of NPO and its activity.
Bezeq has contributed to the community ever since it was first established. For the past two years the subject of donations has been addressed as an integral part of the overall social responsibility strategy. As a sign of the importance the company attaches to contribution to the community, a Community Contributions Manager was appointed to be responsible for handling applications from NPOs, managing ongoing contact with them, formulating an annual work program, preparing a specific program together with the NPOs for use of the donated funds, following-up and supervising use of the donated funds and recruiting volunteers among the workforce for community projects.
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Criteria for Selection of a Project The work program is derived, as previously explained, from company policy; at the beginning of the year it is presented for approval firstly to the CEO and then to the Board of Directors. A number of general elements were determined for selecting a project for contribution and involvement on the part of the company and employees, so as to be sure of proceeding with a unified policy, in keeping with management decisions on community contributions, as defined in the social investment program. These elements include: Connection to Bezeq’s activities and strategy for the community contribution. Projects with real value to the community. Potential for involvement and volunteering on the part of the company’s staff. Long-term projects. Projects of public consequence, with widespread public consensus on their goals.
Modus Operandi of Work Programs: Financial donation to social-educational projects implemented by an NPO with proven capability in the field. Participation in initiating and planning the project. Follow-up and supervision of progress in implementing the project and actual use of the donated budget. Initiation and management of volunteer personnel from the company’s workforce in projects included in the Bezeq community contribution program. Financial support and sponsorship for one-time programs and events for special contribution to the community, such as: supply of food, employment, culture and art. Principal Contributions In contributing to the community and seeking to help close social gaps in Israel, Bezeq focuses mainly on helping organizations and NPOs which are active in closing educational and learning gaps in society arising from a lack of availability of computers and Internet (the “digital gap”). This gap is felt throughout all areas of educational achievement and integration into the work market. Below is a list the principal organizations that benefit from Bezeq’s support:
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Tapuach: Appleseeds Academy Bezeq contributes to the Tapuach organization’s Appleseeds Academy, helping it to establish and operate IT centers for the benefit of the entire community. The Tapuach Appleseed Academy was founded 10 years ago with the aim of endeavoring to close social gaps by increasing technology education among young people living in the geographical and social periphery. The organization operates a number of computer studies programs designed to boost education and knowledge and cultivate excellence among the youngsters in order to facilitate their future integration into the academic and work arena. Bezeq has partnered Tapuach since its inauguration, offering support mainly in the installation of the telecommunications lines needed in its activities. Two years ago the company decided to broaden its support and realize its vision of contribution to the community. Tapuach was deemed a suitable recipient, both in terms of its specialist field and in its scope of activity and geographical deployment. Hence a program was formulated to assist Tapuach in renovating and upgrading computer classrooms and turning them into IT centers for the use of the entire community. The new centers work on an “open house” system for all local residents, offering tuition in computer and Internet usage, as well as additional programs, such as: The Neta youth program, including technical computer and communications network studies. English language tuition. Advanced vocational training for women and vulnerable populations. Community computer support lab at reduced prices, operated by young trainees on the Neta program. To date five such IT centers have been established in the following locations: Ramla, Akko, Nazareth, Beer- Sheva and Dimona. A further five are scheduled to be opened in 2011.
A Computer for Every Child Bezeq assists the Computer for Every Child project with financial donations intended to cover the cost of Internet hookup for the project’s children. The company also urges its employees to volunteer and help train the children with computer familiarization lessons and Internet surfing. The Computer for Every Child project was established at the initiative of the Prime Minister’s Office and a group of business people, with the aim of closing the digital gap among children living in underprivileged neighborhoods. In Israel there are over 100,000 families with children of school age who have no access to computers or the Internet. The children of such families lag behind and are deprived access to computer technology. This results in a significant disadvantage in all areas of their education and will reflect on their future integration into the work market. The project receives thousands of kits every year, which include: a computer, a software package, Internet hookup, technical support for three years and 60 hours of tuition for the children and their parents. Bezeq selected this important project as a beneficiary of its community program in the hope of contributing to closing the social-educational gap by helping all children in Israel avail themselves of the opportunities and innovations on offer in the high-tech era.
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Kav Or Distance Learning for Children in Hospital Bezeq contributes to Kav Or, an NPO that enables distance learning for hospitalized children. Kav Or operates an educational program for children in children’s departments of hospitals around Israel. They began their activity in 1993 and are currently active in 27 hospitals from Zefat and Nahariya in the north to Eilat in the south. Thanks to Bezeq’s contribution Kav Or is able to provide a pleasant, attractive learning environment in children’s wards, including computers with a wide range of software, training for the educational team and technical support for the computers. Bezeq’s intention in supporting Kav Or is to close the learning gap created by sickness and hospitalization through distance learning, and dispel anxiety and stress with a computerized “playground” for the children.
Jasmine – the Association of Business Women in Israel Bezeq supports Jasmine – the Association of Business Women in Israel, which offers computer and Internet courses aimed at closing the digital gap among women from the Arab sector. Jasmine – the Association of Business Women in Israel was established by the Center for Jewish-Arab Economic Development with the intention of helping Arab and Jewish women set up their own small businesses and integrate into the Israeli economy. This is the second year that Bezeq has sponsored Jasmine’s activities, offering computer and Internet tuition courses to Arab business women. The course is designed to give the women online tools and exploit Internet capabilities to promote their businesses. Bezeq is also helping to finance an additional Jasmine program designed to qualify women from the Arab sector for employment. The program offers basic computer courses for unemployed women, aiming to help them find work and integrate into the work market.
Ofanim Organization Bezeq contributes to the Ofanim Organization, which seeks to redress the absence of equal opportunity in education through the advancement of people living in peripheral regions. The organization offers opportunities to children in outlying areas, strengthening their motivation to study and succeed. Most of Ofanim’s activities are held in mobile labs set up in buses, which travel from location to location in the children’s areas of residence. Thanks to Bezeq’s contribution, Ofanim was able to finance the operation of a mobile computer lab.
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Ben Yakir Youth Village Bezeq has helped students at the religious Ben Yakir Youth Village with the construction of an advanced computer classroom and the financing of computer and Internet courses.
The Ben Yakir Youth Village, which was founded by the Jewish Agency’s Youth Aliyah Department, offers boarding conditions to at-risk children and education in a religious environment. Most of the boys at the Ben Yakir Village come from broken homes and families suffering from poverty and violence. For children exposed to violence at home and in the street, the boarding school offers a warm, supportive environment. Some are even on the verge of criminal activities, in which case the village represents a lifeline to them.
Bezeq’s contribution to the Ben Yakir Village took the form of financing the establishment of advanced computer classes and computer tuition for at risk 12-18 year olds in the state-religious school system. The computer tuition included familiarity with computers, computer applications, digital media and website building. The classes were held in small groups during the school year, with adaptation as necessary to the student population and their specific requirements. They were accompanied by a professional educational team at the village. The study program was devised by the Ben Yakir school in collaboration with the Jewish Agency, the Appleseeds Academy and Bezeq.
Bezeq’s contribution was designed to help the youngsters integrate in the future into regular frameworks such as the army and the workplace.
Beit Issie Shapiro At Beit Issie Shapiro Bezeq helps by financing a program for the development of alternative supportive communication for special needs children. Beit Issie Shapiro offers a range of programs and services designed to enhance quality of life for children and adolescents with special needs. The organization operates rehabilitative day centers for special needs children: In Raanana (a special education school and pre-school center) In Kalansua (a day center for toddlers and children) Both centers treat children with complex developmental disabilities. The children benefit from a broad selection of treatments, including physical therapy, hydrotherapy, occupational therapy, art therapy, music therapy, speech therapy and more.
Many children at Beit Issie Shapiro are unable to speak and some will never learn to speak. The program supported by Bezeq aims to develop alternative modes of communication for such children, to enable them to experience some success in their ability to communicate with the world around them. The program will include, inter alia, the development of: Computer software adapted to the children’s special needs, to encourage cognitive development as part of an entertaining and enjoyable experience. Computer scanning of books, introducing them to children visually on the screen. Software-based communication boards, voice output, etc.
Beit Issie Shapiro also serves in an advisory capacity to local authorities and organizations on special education issues. Thus it is able to disseminate acquired knowledge and influence the lives of many special needs children around the country.
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Trainee Program Bezeq has practiced a policy of offering employment to youth at risk since 1984. The central goal of the project is to integrate the youngsters into society as citizens with equal rights and obligations, including full military service. The youngsters in question have dropped out of the study circuit and are now attached to special programs in the education system. The relationship between Bezeq and the youngsters is that of employer- employee further to laws governing youth employment. The youngsters are employed in a number of jobs in the company and gain valuable experience through their exposure to advanced computer systems. Under the two year old project, every trainee is accompanied by an established Bezeq employee who acts as a mentor in all work related matters. During the year 100 trainees were employed around the country. Due to the success of the project, the company plans to include 150 such trainees in 2011.
Additional contributions to closing the digital gap are made to other organizations, such as: Yad Sarah – assistance with financing of Internet service at the organization’s branches. Talpiot Children’s Village (Hadera) – financing the purchase of computers and setting up an Internet café. Nitzan – assistance with integrating computers into remedial tuition for children with learning disabilities. Keren Or – financing the purchase of computers for an institution for blind and disabled children. Children at Risk – financing the purchase of computers and Internet for autistic children. Hiot Organization for immigrants from Ethiopia – financing Internet infrastructure for a youth club.
Bezeq has also made donations to NPOs and other programs making a special contribution to the community in a variety of fields, such as: welfare, food supplies to the needy, culture, art and more.
Other organizations that have benefited from donations from Bezeq include: Organizations supplying food to the needy, e.g. Leket (“Israel’s national food bank”), Latet (humanitarian aid), the Jaffa Institute (for the promotion of education in Tel Aviv-Yafo), Yad Eliezer (for families suffering from financial hardship), Hazon Yeshaya (food distribution, vocational training, etc.) and Migdal Or (rehabilitation for the blind). Ahavah Children’s Village – help with funding the establishment of a children’s emergency treatment center. Ofek Project – for employment of at-risk youth during the summer vacation. Adopt a Soldier – financing welfare activities for combat border guards in the south.
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Bezeq Employees Volunteer for the Community Bezeq is deeply committed to contributing to the community in which it operates, closing social gaps and helping the needy and vulnerable populations in our midst. The company therefore attaches the greatest importance to including employees in volunteer activities for and in the community. Accordingly, we encourage our workers to join in volunteer activities as part of the annual work program. The following activities were undertaken to that end: A dedicated organizational portal was set up to deal exclusively with contributions to the community. The portal keeps employees informed of activities on behalf of the community and provides information on Bezeq’s volunteering activities. Employees may tell friends about the company’s community activities and may put forward other related suggestions. A “volunteer tender” allowed employees an opportunity to recommend organizations and NPOs, as well as concrete programs for the benefit of the community. Employees whose proposals were accepted in the tender received a financial contribution to their chosen organization. “Planting Hope” – a volunteer recruitment happening, where dozens of organizations were invited to visit the different Bezeq premises and talk with employees – potential volunteers – about their activities. Many employees met with the representatives of the organizations and expressed an interest in beginning the process of volunteering for the community.
Bezeq’s attitude to selecting organizations for which it encourages its employees to volunteer is to look beyond those to which the company makes financial contributions, to others which conform to the company policy for community contributions.
Bezeq employees exhibit an outstanding volunteer spirit and to date some 600 people have joined in volunteer activities to different extents. Organizations and projects that enjoyed volunteer work from Bezeq employees included: Tapuach; A Computer for Every Child; Tzeva; Yad Sarah; Israel Cancer Association; Nitzan; Gvanim; Ami Association, the operators of Beit Cohen in Beer Sheva; Jaffa Institute; Zichron Menachem Association; Struggle for Life Association; Latet; Lev – Fighting Together; Bialik-Rogozin School, Tel Aviv; Keren Or, Jerusalem; and more.
Division of Community Donation Budget, 2010 Bezeq’s community donation budget for 2010 totaled NIS 8m., an increase of 45% compared with the previous year. Some 15% of the budget was designated for response to applications for support received by Bezeq during the year. The company attaches the utmost importance to closing the digital gap in Israel and accordingly allocated 60% of its designated budget to contributions in that area.
This year too we offered help to many organizations through other contributions of money-equivalent value, such as: fast Internet lines for NPOs and organizations, donation of obsolete equipment (old computers, used furniture, old telephone poles, etc.), allocation of computer tuition classrooms and even allocation of telephone stations at service centers dedicated to fund raising.
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Analysis according to Maslow’s Hierarchy of Needs We chose to present Bezeq’s method of allocating financial donations to the community by means of the Maslow pyramid model below, which clearly illustrates how the company’s donation program responds to a wide variety of needs.
Self-Actualization: Culture and Art
Respect and Esteem
Sense of Belonging: Narrowing Digital & Social Gaps
Security: Occupational & “Home”
Physiological Needs: Food Provision
Division of Budget in NIS
Need on Type of Contributions in % of Total Contributions % of Total Maslow Contri- 2009 (NIS) Contributions in 2010 (NIS) Contributions in Hierarchy bution in 2009 2010
Physiological & Food 292,000 5% 610,000 7% basic needs supplies
Security Employment 1,057,000 19% 1,785,000 21%
Sense of Closing belonging digital & 3,424,659 62% 5,046,000 60% social gap Respect & “Adopt a esteem Soldier”: sponsorship 317,221 6% 455,056 5% of events + program Self- Culture & art 408,620 8% 482,000 6% actualization
Total 5,499,500 100% 8,378,056 100%
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8.3 OUR CUSTOMER PRODUCTS AND SERVICES
Managerial Viewpoint
Bezeq is Israel’s oldest and largest communications company, supplying service to the majority of the country’s households and businesses. The company currently has 2.3 million customers for telephony and over a million for Internet services. Sales can be divided into two principal types of customer: private (60%) and commercial (40%). As Israel’s leading telecom company, Bezeq considers it vital to be able to respond to the needs of all segments of the population, including the ultra-Orthodox, the Arab sector and immigrants from the former Soviet Union. In 2006-2007 Bezeq underwent a fundamental organizational change from an organizational structure based on a division according to geographical regions to one based on division of functions, aimed at streamlining and improving customer service. At the same time, the company underwent a strategic change and update of corporate identity and announced its determination to become “the market leader in homes and businesses and provide a comprehensive telecommunications solution for customers”. The new company slogan: "Bezeq, Home is best" also expresses our desire to lead the communications market in Israel in customer satisfaction by reinforcing the value of the customer in homes and businesses. Bezeq endeavors to realize this ambition and strengthen customer value in three principal ways: new advanced technology products and services going “one step further” in service quality Transparency of rates and charges
Advanced technology products and services Bezeq seeks to supply customers with the most up-to-date technology available. In 2009 the company launched NGN (Next Generation Network), a state-of-the-art telecommunications network based on IP architecture. NGN makes it possible to surf the Internet at ultra-high speeds of up to 100 mega fibers per second, thus providing a solution to the most demanding of customer requirements and the ever growing demand for higher broadband speeds. The new network has added value in that it also offers greater consumption of content applications, as well as allowing more leisure and entertainment time. A significant number of Bezeq customers who are connected to NGN chose to upgrade their speed last year.
The introduction of NGN also enabled the launch of advanced, innovative communications services, offering customers new capabilities, such as: domestic switchboard, BPhone (a service enabling phone calls to be made via the Internet as fixed line phone calls), and more.
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Bezeq offers a wide range of services and the company strategy includes the regular development and launch of new services for both the private and the business market, indicating how much value the company attaches to customers and the necessity of satisfying their changing and growing demands. Below is a breakdown of the principal Bezeq services:
Telephony Services The company’s telephony services mainly refer to basic, domestic fixed line telephone service and auxiliary fixed line facilities such as: voice mail, caller ID, Follow Me, fast dial, conference call, etc. Bezeq also offers national dialing numbers (1-700 and 1-800) which are either fully or party paid by the business party and a consolidated call center (information service with data on subscribers to all operators). In addition, the company operates about 12,500 public telephones (call boxes) around the country, which are activated by different kinds of dialing cards. Bezeq intends to continue launching more products in response to market trends and customer demand. The company also offers a range of telephony call tracks, together with the basic call charge structure, to enable customers to select the track best suited to their requirements. At the end of 2010 the company had approximately 2,365,000 fixed lines in operation. Bezeq’s share in the fixed telephony market at the end of 2010 is estimated at 65% in the private market and 78% in the business market.
Internet Access Infrastructure Services The Internet market has been one of fastest growing markets in recent years and this service has become one of Bezeq’s principal occupations and a key component in the investment in technologies, marketing and advertizing, procuring customers and upgrading their Internet surfing speeds. At the end of 2010 the company had approximately 1,066,000 Internet subscribers (as compared to 1,035,000 at the end of 2009). Thanks to the introduction of NGN, Bezeq managed to increase the average speed package for customers from 2.7 mega fibers per second at the end of 2009 to 4.3 mega fibers per second at the end of 2010. As at the end of 2010 the number of Internet subscribers connected to the NGN network represented 52% of Internet subscribers and the number of NGN consumers (with surfing packages of 10 mega fibers per second or more) was 34% of all Bezeq Internet surfers connected to NGN (i.e. 18% of total Bezeq Internet subscribers).
Changes in package speeds for Bezeq Internet users in 2006-2010 (in mega fibers/sec.):
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In addition to Internet access services, Bezeq also offers added value service and Internet end equipment at attractive prices. These include advanced wireless-N technology, enabling customers to surf from a laptop or from several computers simultaneously; network storage facilities to back up the customer’s data; wireless homeplug to increase signal range at home; and more.
Data Transmission and Communication Services Bezeq offers transmission services and data communication, including at high speed, to communication operators and corporate customers. Data communication services are supplied on existing, traditional infrastructures like Frame Relay, ATM infrastructures and new infrastructures such as IP VPN (Virtual Private Network) and Metro Ethernet. IP VPN offers managed communication solutions for businesses, allowing hook- up between an organization’s different branches. Metro Ethernet infrastructure can supply communications infrastructures using Ethernet technology for services in both the business and private sectors. Recent years have seen a trend in the transition from data communications on existing traditional infrastructures to IP based infrastructures, such as IP VPN (Internet Protocol: the use of this protocol enables the consolidation of voice, data and video services), and Ethernet protocol (such as Metro Ethernet). The transition enables businesses to offer their clients larger traffic transmission volumes at lower prices. For that reason demand is growing.
Other Services Services to communications operators – Bezeq supplies services to other communications operators (international operators with cable transmission licenses, Internet providers, etc.). Such services include, as aforementioned, infrastructure services, links to the company network, transmission services, charge and collection services, rental of domains and rented services in those domains, and granting of submarine cable user rights. Broadcast services – the company operates and maintains radio transmitters operated, inter alia, by the IBA (Israel Broadcasting Authority): TV transmitters belonging to Channel 1 and Educational TV; also transmitters belonging to Channel 2 and the transmitters of a number of regional radio stations. Bezeq is responsible only for the operation and maintenance of the transmitters for the purpose of broadcasting the radio or television programs, and not for the content of the broadcasts. Sub-contracting works – Bezeq performs the establishment and operation of networks or sub- networks for different customers (e.g. the Ministry of Defense, HOT cable company, radio and television broadcasting companies, cellular operators, international communications operators, local authorities, municipalities and government bodies). IP Centrex service – a virtual central exchange service on the public network. Data Center services – a service offering the customer back-up and durability solutions. Online B144 service – a search engine for telephone numbers of businesses and individuals, including a classified search.
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Bezeq’s Customer Service In order to offer every household and business in Israel the best and most suitable communications solution, Bezeq constantly instills into employees – from the moment they take up their position and throughout their work – the value system that must always guide them in their work: Service – the ability to see the customer’s needs through his eyes and his viewpoint, to understand what he expects of the company and find a way of providing it. Professionalism – we must be the best at what we do in our different occupations; each worker must be an expert in his own field. Speed – to achieve the fastest possible TTM (time to market) in handling the customer’s requirements. Competitiveness – to understand that the customer is constantly faced with a range of alternatives and that we must be his “new” choice for each decision. It is our job to be the best choice for him. Being up-to-date, relevant and innovative – we must be quick to learn new technologies and be able to offer the customer the latest and most relevant solution to global changes, while remaining abreast of future innovations. Flexibility – we must be prepared for rapid change, to solve problems and offer solutions. Advanced planning and implementation capabilities – to plan carefully and wisely and implement as necessary, always paying attention to quality and time elements. We do our utmost in the company to teach and instill these values and behaviors.
Bezeq’s Code of Ethics In 2010 all Bezeq employees were introduced to the company’s Code of Ethics, which is to be used as a “behavioral compass” to guide and direct personnel in all areas of their work. The Code of Ethics contains, inter alia, reference to our relationships with customers and defines the following credo:
“We are committed to customer satisfaction and will do our utmost to create the feeling that we have tried our very best at every meeting with customers. We will attempt always to be the customer’s preferred choice, a choice based on quality, value and service of the highest standard to the customer. Our relationship with the customer is a long-term one based on respect, integrity, professionalism and mutual trust. The customer’s wellbeing and our rapid response to his needs are at the forefront of our activities and business conduct. We are leaders in the field thanks to our ability to remain up-to-date, our constant renewal and the quality of service that we offer the customer. We will not abuse times of pressure, lack of understanding on the part of the customer or his inferior knowledge of the field.”
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Bezeq’s Service Strategy
Two years ago a service strategy was formulated, defining the principles further to which we operate in providing frontal (for technicians and retail outlets) and telephone service. Formulation of the strategy began with the collation of information from customers and representatives: Information from customers was received via quantitative phone and Internet research, focus groups and in- depth interviews. Information from workers came from their direct contact with customers via person-to-person conversations, round tables where employees raised proposals for streamlining, indicated problems in customer-related processes (analysis of service events), investigations of successes and failures, drawing conclusions and improving processes. After performing an in-depth analysis of the quantitative and qualitative information, the four following guidelines were determined: 1. Rapid response to customer’s requirements – to pre-empt the customer in awareness of problems, via smart quality end-user equipment and investment in advanced infrastructures; to solve the problem, thus minimizing faults experienced by the customer; and to maintain continuity of service. 2. Control and independence in self-services – a range of independent self-services via commercial, technical phone service, available to the customer 24 hours a day with no need to wait for human response. 3. Maximum FTR (first time right) – giving responsibility and authority to technicians dealing with customers, adopting a correct service-oriented approach, including first-time visits, and learning lessons from failures. 4. Minimum wasted customer processing time – e.g. minimum customer presence during handling time, efficient conversations and efforts at quick solutions, granting increased authority to representatives, etc.
Control & Minimum Rapid response to independence Maximum FTR wasted customer needs of service customer time
Implementation of Service Strategy In order to implement the strategy on a practical level, we operate a measurement and reward system among employees, whereby managers and workers are measured and rewarded according to the following parameters: sensitive, quality service; number and percentage of repeat faults; manner of ending handling of customer applications; and more. In addition, the service strategy is implemented in the following ways: Training workers in service systems. “Round table” sessions (routine meetings of service representatives with managers up to Deputy CEOs of customer divisions). Periodical feedback conversations. Intra-organizational channels of communication – online “notice board” and “open channel”.
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Customer Satisfaction and View of Bezeq Surveys Bezeq conducts regular customer satisfaction surveys on all customer interface points: Satisfaction with service at all business and private customer centers. Satisfaction with service at retail outlets. Satisfaction with service from technicians. Satisfaction with 144 Information service. Satisfaction of business customers with customer file management service and communications advisors. Covert customer control (for service in Bezeq retail outlets and call centers). Satisfaction surveys for retention activity (provided by the Customer Retention Center). A range of surveys conducted among customers leaving Bezeq. Some of the surveys are conducted within 24 hours of receipt of service, and some check customers who have undergone several stages of service, after one week.
The satisfaction surveys are Bezeq’s way of keeping our finger on the pulse and making sure that our customers receive the best possible service at all times.
In addition to satisfaction surveys, Bezeq performs ongoing tracking to examine customers’ views of the company on a number of parameters: Loyalty Preference Recommendation Image Relevance to customer’s life Like and dislike View of customer service View of product quality – telephony and Internet View of value received in return for price charged View of Bezeq as a reliable company
The tracking surveys enable Bezeq to ensure that we continue to supply the best possible products and services to our customers and that our overall customer activities are reflected in our image.
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Customer Survey Results: Improvement in Customer Satisfaction on all Levels of Company Service Bezeq conducts a daily customer satisfaction measurement survey, 24 hours after receipt of service on any service level (graded on a 10-level assessment scale). Below are satisfaction results from private customers from the 24 hour surveys, on an overall satisfaction parameter as at the end of 2010:
There was also a significant drop in numbers of customer applications to the Customer Query department in the Division. In addition to the 24 hour surveys, Bezeq conducts quarterly surveys to look into three primary customer- related processes: Line installation, Internet installation and various repairs. The survey is graded from 1 (low satisfaction) to 10 (highest satisfaction level). The survey enables us to identify failures in the process and correct them accordingly for all parties involved.
We also see a high level of satisfaction among our corporate customers. The results are illustrated in the following diagram:
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Long-Term Satisfaction from Business Customers
SMB CUSTOMERS
9.2 9.2 9.4 9.1 8.9 8.6 8.7 8.3 8.4 8.4 8.5 7.9 7.8 7.6 7.7 7.2
Conduct & courtesy Representative’s Clarity of information & Feeling that representative is professionalism & familiarity explanations doing utmost to satisfy with details
28/02 29/02 02/02 00/02
STRATEGIC CUSTOMERS
9.3 8.7 9.1 9.1 8.8 8.2 8.5 8.2 8.5 8.2 8.5 8.6 7.7 8.1 7.8 8
Conduct & Representative’s Clarity of Feeling that courtesy professionalism & information & representative is familiarity with explanations doing utmost to details satisfy
28/02 29/02 02/02 00/02
Examination of Bezeq Service in External, Independent Surveys
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In December 2009, the domestic telephony sector was examined in an external, independent survey conducted by Globes.
Two companies were compared in this business sector: Bezeq and HOT. The findings of the survey indicated that Bezeq led in first place in this field, with an overall average of 7.9 as compared to 7.2 for HOT. In all parameters covered by Globes, Bezeq was found to provide better customer service. In the public confidence report Bezeq was also the company with the lowest complaint level (see press cuttings from Globes and The Marker below).
Transparency of Service: Initiatives to Ensure Clarity of Charges and Rates 1. Bezeq operates a free Internet portal for customers – Bezeq Personal (Bezeq Ishi), on which customers can examine their updated account status online, round the clock, see a breakdown of calls and follow up previous bills. 2. All Bezeq rates and all telephony tracks are published on the company’s website. Updates in rates are also published in the press and a notice is posted on the website, as well as notices sent to customers along with their telephone bill. Whenever a new telephony track or special offer is launched, Bezeq publishes notices in the press and updates the company’s website. 3. Bezeq adheres to proper disclosure standards and telephone bills include all details as determined by the Ministry of Communications, i.e. number of minutes taken to calculate the account; division into types of destinations; details of special offers; information on obligations; and more. 4. Bezeq fully implements the Fixed Term Transaction Law for special offers and sends letters to customers immediately upon joining a fixed term transaction, specifying the complete terms of the package: all rates for the program for the duration of the offer and thereafter, including information on obligations and exit fees. Towards the end of the special offer, Bezeq delivers another letter to the customer announcing the exact closing date and the anticipated rate following the end of the offer. Furthermore, under the Continuous Transaction Law and the Consumer Protection Law, Bezeq specifies in writing four possible ways to disconnect (phone, fax, email or post) and sets forth to the customer his right to disconnect from the service within 14 days without a fine.
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Bezeq’s Preparedness for Emergency Situations Israel faces a number of major threats that could lead to national emergencies: war, terror attacks, epidemic, large-scale natural disaster and leakage of hazardous materials.
Bezeq’s infrastructure supplies essential communication to the entire country and the company is therefore classified as a key element in Israel’s national emergency arrangements. Bezeq is one of the desginated authorities directed by NEMA1 for routine and emergency preparedness.
As part of Home Front preparedness for different emergencies, NEMA is responsible for holding large-scale drills among the general population. Each drill simulates a particular emergency situation and all the authorities responsible for handling the Home Front in emergencies take part – Home Front Command, designated authorities, local authorities, other bodies relevant to certain cases and even the general public. NEMA is responsible for organizing the drills and coordinating between the different factors involved. At the end of the drills, conclusions are drawn about the level of preparedness of the various relevant bodies and the Home Front.
The relevant emergency authority at Bezeq is authorized and responsible for undertaking the appopriate measures to ensure supply of Bezeq services, which are defined as essential in times of national emergency. To that end the company takes a number of steps to prepare for emergencies, including: Regular maintenance of designated plants. Confinement of plants so designated. Updating of emergency files. Participation in drills. Participation in Home Front Command courses.
Summary Results show that customers view Bezeq as a leading and reliable service-oriented company. Bezeq was included in the Superbrands index in 2009 and 2010 and was ranked among the leading companies in the Globes brand index.
Moreover, customer surveys allocate Bezeq the highest marks as a leading communications company, supplying a complete telecom solution at home.
1 The Ministry of Defense’s National Emergency Managemenet Authority, known in Hebrew as Rachel.
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9. ENVIRONMENTAL PERFORMANCE
9.1 GENERAL BACKGROUND (MANAGERIAL APPROACH) Bezeq takes active steps towards reducing environmental damage and pursuing the principles of sustainable development, with responsible, transparent and fair business practice at the foundation of its activity as Israel’s leading provider of telecom services. The company adheres to the following principles: Bezeq takes care to prevent and avoid environmental damage. The company is committed to managing its environmental impact so as to ensure continuous improvement. The company undertakes to measure its environmental impact on a regular basis, understand ecological implications and take decisions accordingly. The company undertakes to cooperate with other companies and public factors with the intention of promoting environmental issues. The company will take steps to introduce environmental education among employees and will initiate and participate in community projects. The company recognizes that natural resources constitute an asset that is the domain of the public, the community and future generations and acknowledges the principle of sustainable development. The company hopes that its commercial decisions will achieve a good balance between financial development and environmental conservation.
It is important to note that the communications and telephony arena in which Bezeq operates has direct, if relatively minor environmental impact and Bezeq wishes to minimize such impact even further. At the beginning of 2010 Bezeq formulated its environmental policy, which includes goals and schedules for the reduction of environmental impact. The environmental policy was reviewed and approved by the Board of Directors in April 2010 and published openly on the company’s website. The definition of environmental policy forms an integral part of the overall social responsibility strategy, and seeks to achieve a balance between demand for products and services and a reduction in the company’s environmental impact. Environmental impact was identified in the following areas: Energy – fuel and electrical consumption. Consumption and economy of water. Use of hazardous materials and hazardous waste. Consumption of materials: reduced consumption, recycling and re-use (of paper, end user equipment, etc.). The BezeqTech plant also has ISO 14001 certification from the Standards Institution of Israel for Environmental Management Systems (valid up to December 31, 2012). As part of Bezeq’s activities towards reducing the use of metals, the company is laying down NGN (next generation network). This represents state-of-the-art technology in the fixed line telephony networks field. NGN technology is based on optic fibers laid in the neighborhood of the customer’s house and enabling the supply of IP based high speed broadband and advanced telephony services.
Bezeq is the only telecom company in Israel to invest in the nationwide deployment of this advanced technology infrastructure.
Bezeq takes care of home and the environment!
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9.2 BEZEQ THINKS GREEN
9.2.1 ENERGY SAVING INITIATIVES (DIRECT AND INDIRECT) Bezeq is scrupulous about managing its direct environmental impact, involving employees in the initiative as necessary. Employee involvement contributes to managing change in the organization’s internal environmental conduct on the one hand, and has the secondary bonus of increasing overall environmental activity on the other.
Bezeq cares for the environment
LET’S TAKE CARE OF OUR ENVIRONMENT! We all understand that a healthy business organization can continue to exist and thrive for a long time if it operates in a strong environment and a strong society. Natural resources belong to all of us and we are all responsible for preserving them for future generations. Many times acts performed for the benefit of the environment result in greater efficiency and savings, creating a dual profit for both the environment and the organization involved. This blog reviews our company’s activities aimed at environmental conservation and we were surprised (or perhaps not…) to learn that many such activities are underway. There is undoubtedly much more that we can all do on the subject and each of us needs to change one small aspect of our daily lives in order to make something big happen. Bezeq’s environmental policy was recently approved by the company’s management and published on the website. We welcome as many ideas and suggestions on environmental matters as you have to offer. Let’s all be green partners together! Environmental issues are handled at company headquarters by the Operations and Logistics Division, Processes Department and Chain Planning and Supplies
Click here to post a message on the notice board
The company is not satisfied only with effective management of resources in its business activity, but also hopes to influence the activity of each and every employee even outside of working hours, by providing information and tools for greener conduct, such as: automobile driving, recycling, energy saving, etc.
The Operations and Logistics Division, which is responsible for operating all of the company’s logistical and operational infrastructure, is also responsible for implementing environmental policy.
In recent years Bezeq has been very active in a variety of environmentally conscious projects, as well as taking environmental considerations into account and examining green aspects and savings in the consumption of resources. Furthermore, the company has always paid the utmost attention to legal requirements in everything pertaining to hazardous materials and waste evacuation.
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Collaborative Ecological Venture for a Protected Community The venture addresses the recycling of electronic waste by the special needs public, thus creating employment and financing for the rehabilitation of that population. Bezeq collects electronic equipment (such as old computers, electronic cards, remote control units, exchanges and telecom equipment) and transfers it, by means of the venture, to NPOs employing the special needs population.
The venture creates a link between companies, factories, institutions and local authorities wishing to promote and improve the quality of the environment by the responsible handling of their electronic waste, and the employment and rehabilitation of the special needs public. The NPOs contact bodies willing to donate their waste and, where any financial value is involved, provide a receipt for the donation. “Ecology for a Protected Community” is a professional body supporting the venture in operations, logistics and marketing according to environmental regulations.
People employed on the venture in dismantling and sorting the components enjoy work with a rehabilitative element, in appropriate environmental conditions, and are remunerated for their work by the “Ecology for a Protected Community” venture. The employment experience proves that recycling work improves the self- esteem of the workers and is appropriate to their abilities.
Participation in this social ecological venture increases awareness of the importance of collecting electronic waste (which would otherwise be disposed of with general garbage, thus causing damage to the environment).
Below is a list of the principal activities performed by the company to date:
Paper use Bezeq tries to reduce direct paper consumption for internal usage in the following ways: Internal use of online channels (such as Internet, internal information systems, organizational portal, email, operations systems enabling scanning of invoices and agreements). Repeat use of internal envelopes. Online reading of internal reports and moves to reduce the number of reports issued by the company. Paper-free, automated acquisitions process. Bezeq actively tries to reduce indirect paper consumption by sending direct mailings to customers in the following ways: The company encourages customers to receive their telephone bills by email. Notices to customers are concentrated into a single mailing. Cancelling unnecessary mailing of notices and integrating them with the monthly telephone bill.
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Energy Consumption and Savings Operation of energy saving control systems on air conditioning at Bezeq sites Bezeq’s energy consumption derives mainly from the supply of electricity to the company’s infrastructure installations. In addition to electrical consumption by the network, the company’s buildings, offices, warehouses and service centers also consume electricity. Bezeq performs automated follow-up and control of electric bills from all company sites, including exceptional consumption. The principles of energy saving activity are based on: Controlled operation of fresh air units day and night, according to outdoor temperature and humidity; switching off air conditioners in various switchboard rooms when not in use at night; re-operation according to room temperature. Control systems have thus far been installed at 13 principal centers. Annual saving on electricity expenditure from this activity totals NIS 950,000. Moreover, there are further savings in terms of maintenance, technicians’ work hours and vehicle and fuel costs. Installation of air conditioning control in NGN communications rooms: the control software includes an “economizer” solution, enabling cooling of communications rooms by the use of outside air in winter and on cold nights and operating fans instead of air conditioners. Operation of Smart Cool systems: these systems allow for more efficient use of air conditioning systems, resulting in 15% greater efficiency in electrical consumption of compressors. Transition to T5 lighting technology: this produces a 40% saving in electrical consumption on indoor lighting and a 50-70% saving on electrical consumption for outdoor lighting. Installation of space detectors to switch off lights and air conditioners in rooms. Installation of Airco Saver controls for split air conditioner units: this produces a 30% saving in electrical consumption of compressors. The temperature in communications rooms was raised by 2 degrees at all Bezeq sites.
Reduction in Fuel Consumption In managing the purchase of the Bezeq’s fleet of vehicles, the company also takes into account the vehicle’s fuel consumption per kilometer. Switching to some gas consumption vehicles is planned. Technicians in densely populated areas have switched to the use of motor scooters. For journeys of over 50 km. Bezeq encourages workers to use public transport instead of driving the company vehicle at their disposal. The company organizes a staff transportation service for employees at service and support centers. The company’s safety officers initiate safe driving courses and give advice and tips on correct driving and fuel saving, such as: safe driving, correct driving, maintaining correct tire pressure, emptying the baggage compartment and regular vehicle maintenance.
Water Usage and Savings Water is used by all workers on a daily basis. Bezeq follows up the quantities of water consumed at the company and all its installations. Wherever possible, toilets are fitted with dual flush systems and Chascham water saving regulators are installed on all possible taps at all sites.
Waste Treatment Modern society produces many different types of waste, from regular waste through recyclable waste to hazardous waste. The company recycles waste paper and complies with legal requirements in all matters pertaining to the removal of hazardous materials.
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Waste Paper All paper used in the company is transferred for recycling to the Amnir Recycling group or shredded at Bezeq sites prior to collection by Amnir. All cardboard boxes used in the company are likewise transferred for recycling by Amnir. In recent years awareness was raised regarding both paper saving and data security among the company’s workers and shredding is encouraged for all paperwork, including sensitive information. This activity contributes both to preventing paper wastage and to waste recycling.
Electronic Waste Electronic waste is handled by a contractor who evacuates the waste subject to the requirements of laws and regulations (under a contractual undertaking with scrapping suppliers).
Telephone Exchange and Copper Waste Copper cables and equipment are currently reused. Copper cables that are no longer needed are sold to industrial recycling contractors. Waste designated for destruction is transferred to appropriate waste disposal sites further to directives from the Ministry of the Environment.
Hazardous Waste The handling of hazardous materials is the realm of the company’s Safety Department. A manager was appointed with responsibility for Safety, and his duties include the writing of procedures and work instructions for organized storage, use of hazardous materials and removal of hazardous waste, training and drills regarding hazardous materials, and so forth.
The subject of hazardous materials is relevant in many company activities, such as the operation of generators, diesel tanks and batteries. At every site where hazardous materials are in use, the Safety Department issues safety sheets for display in all sensitive locations. A special procedure is in force for the issue of hazardous materials. The procedure addresses all aspects of the handling of such materials in the company, including removal as required by laws and regulations and directives from the Ministry of the Environment.
Collection of Batteries Special collection points are installed at the company’s premises for collection of domestic batteries, to enable workers to handle such waste conveniently. The batteries are collected and delivered to the local authority for organized, safe burial.
Bottle Collection for Recycling Bottle banks are placed at the company’s premises for collection of plastic bottles for recycling.
Noise Pollution Silencers are installed in generator rooms to reduce noise pollution. Canopies have been installed to shade Bezeq cabinets in hot outdoor locations. The canopies are designed to protect the equipment in the cabinet and reduce fan activity.
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9.2.2 GREEN PRODUCTS Bezeq’s environmental policy includes environmental considerations in all areas concerning the introduction of new products, as defined below:
NGN – a Greener Network In using the NGN network Bezeq is moving Israel’s telecommunications from the world of fast Internet into the world of ultra-fast Internet, with speeds of up to 100 Mb. The significance of the project is not only a major upgrade in Bezeq’s existing telecom network, but the establishment of an entirely new infrastructure, based on a transition from the use of copper cables to optic fibers. Furthermore, the transition from local manned exchanges to active external cabinets results in savings on electrical consumption by the new network, does away with the need for as wide a geographical deployment as was previously required, with the integration of IT protocol using optic fibers which can be laid very close to the customer’s residence, simplifying the topology of the network. In this way we reduce electrical consumption and the company’s “carbon footprint” and evacuate communications installations, sending the previously used copper cables for scrap. The project is beneficial to the environment and reinforces the attraction of NGN as an innovative, green telecommunications alternative.
Movable Peak Bezeq is participating in the Israel Electric Corporation’s “movable peak” initiative by operating generators according to IEC requirements. The company was motivated to join the “movable peak” system in the spirit of social responsibility and in order to enable IEC to overcome insufficient electrical supply to consumers at peak hours.
Range of Green Communications Products and Services Bezeq thinks green and offers a range of services, communications products and different applications that represent a green alternative to existing products, while enabling customers to save electricity, paper and iron waste, such as: The www.b144.co.il website, a complete, free-of-charge replacement of traditional business telephone directories. Voice mail is an efficient replacement for electronic answering machines. The service is provided at a nominal monthly rate of under NIS 5 (including caller ID), and calls to it are free from any Bezeq phone (unlike cellular companies, for instance, which provide the service free but charge high rates for calls accessing it). Our Fax2Mail service means that at a monthly rate of NIS 5.90 (plus the charge for the voice mail on which it operates), customers can now manage without a traditional, paper-guzzling fax machine. The customer receives faxes direct to his email in picture file format. In addition to savings on paper and the fax machine itself, the service also makes it easy to save important fax documents as computer files. BMail enables customers to receive their Bezeq bill by email in PDF format instead of by regular post (“snail mail”). The system saves paper, is environmentally friendly and makes it easy to save bills as computer files. NetDisk is a service supplying the customer with online volume storage, where he can back up important files. Instead of buying a back-up drive or CDs, which are liable to deterioration, theft or
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destruction, the customer can feel secure and confident that his files are safely backed up on NetDisk. The service is offered at a low price of NIS 1 per every 1Gb of storage volume. The online BezeqBill service enables customers to receive free of charge a breakdown of outgoing calls up to the last six months and cancels the need to call a service center for a paid detailed printout. IP Centrex is an advanced smart IP exchange service (virtual exchange) which replaces traditional exchanges at business premises.
9.3 USING ENVIRONMENTAL RESOURCES WISELY AT BEZEQ
SUBJECT 2007 data 2008 data 2009 data 2010 data Energy consumption by 230 227 225 235 source (millions of kW/h) Water consumption (cu.l) 91,422 89,493 53,566 52,423 Kilometrage p.a. – km. 93,086,951 90,437,903 92,310,247 93,430,471 Kilometrage p.a. – liter 9,476,877 9,315,884 9,521,783 9,783,295 Kilometrage p.a. – km/liter 9.82 9.71 9.69 9.55 B.4 solid waste per type, weight and relevant activity (burial, recycled waste, recycled waste destination) Waste paper including No data 234 175 154 cardboard (Amnir Recycling) – tons Electronic computer waste – No data 234.1 174.1 37.575 tons End equipment and scrap 760.3 950.4 855.4 421.9 equipment waste – cu.m. Battery waste – tons No data 333.6 426 118.67 Removal of hazardous waste 3.49 3.25 1 0.8 (hazardous materials as defined in the Hazardous Substances Law, 5753-1993) – tons
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10. FINANCIAL PERFORMANCE
Managerial Approach An integral part of Bezeq’s vision is to be a leader in both homes and businesses by providing communications solutions in all possible locations, including remote and sparsely populated areas, areas where investment in network infrastructure and maintenance are not financially justifiable but will be of great social benefit and value.
Bezeq’s profits are rising annually and the company is well able to meet the challenge of increasing competitiveness in the communications arena. Profits rose from NIS 1.1b. in 2009 to NIS 1.43b. in 2010, with an increase in profit rate of income from 20.9% in 2009 to 27.1% in 2010.
In addition to the direct financial value that can be measured in the company’s financial statements, Bezeq also indirectly influences financial value in the entire economy.
Bezeq’s introduction of an accessible, cheap communications infrastructure (broadband) creates business opportunities for many companies expanding their range of services, bringing them into the global market and changing the face of the country’s economy.
According to World Bank statistics, an increase of 10% in the penetration of broadband and super-fast Internet will bring about a 1.3% growth in GDP (gross domestic product). Such an increase translates into over NIS 10b. in goods for Israel. Additional by-products of the introduction of fast Internet are an increase in jobs, an increase in the number of companies and significant changes in global economies.
These trends are taking place as we watch, and especially so due to the deployment of NGN, which should be available to 90% of Israel in the course of 2011, placing the country firmly in the forefront of countries with the fastest penetration rate of fast Internet.
Despite their critical contribution to the country’s economy, the massive investments in the company’s infrastructure, which are necessary for the expansion of band width, originate from self-financing by Bezeq, with no monetary assistance from any other country or institution.
One example of the many by-products of expanding band width is the VOD service available to satellite company customers thanks to the fast Internet infrastructure.
Fast Internet enables many possibilities of remote work, which contributes to closing the gap for peripheral areas, increases leisure time and cuts energy costs, with resulting environmental implications.
Bezeq’s financial success directly impacts on the company’s employees, shareholders (both those with controlling interests and the general public), suppliers, the country’s treasury (via taxes) and, by implication, the entire economy.
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Below are some key data on Bezeq’s financial performance (from the company’s consolidated financial statement for 2010):
The Company’s Added Financial Value This value reflects Bezeq’s contribution to GNP:
DATA IN MILLIONS OF NIS
2008 2009 2010
Profit from operating activities 950 1,107 1,426
Salaries and auxiliary pay costs 1,375 1,411 1,447
Tax payments and tax contributions 400 431 527
Depreciation and amortization 852 794 690
ADDED FINANCIAL VALUE 3,577 3,742 4,090
Direct Financial Value DATA IN MILLIONS OF NIS
2008 2009 2010
Proceeds from net sales plus income from 5,642 5,388 5,395 realization of assets and investments
Operational costs including payments to 2,030 1,947 1,504 suppliers, non-strategic investments and royalties
Payment of salaries and benefits to employees 1,315 1,356 1,393 (current payments, not future liabilities)
Financing payments 183 167 196
Tax payments less government receipts (by the 335 202 260 State)
Total investment in community and donations 3.9 5.7 9.0
DIRECT FINANCIAL VALUE 9,508 9,065 8,758
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11. GRI INDEX
Page Profile No./Direct Section Reported Description Disclosure answer 5 1.1 Fully Statement from the most senior decision-maker of the organization. 1.1 18 3.3 Fully Description of key impacts, risks, and opportunities. 1.1 9 2.1.1 Fully Name of the organization. 1.1 11-12 & 69- 8.3 & Fully Primary brands, products, and/or services. 1.1 72 2.1.3 2.1.1 & Operational structure of the organization, including main divisions, 9,13 Fully 1.2 2.1.4 operating companies, subsidiaries, and joint ventures. Tel-Aviv, Azrieli Fully Location of organization's headquarters. 1.3 Center Bezeq Number of countries where the organization operates, and names of operates Fully countries with either major operations or that are specifically relevant 1.4 only in Israel. to the sustainability issues covered in the report. 9 2.1.1 Fully Nature of ownership and legal form. 1.5 Markets served (including geographic breakdown, sectors served, 13-15 2.1.5 Fully 1.6 and types of customers/beneficiaries). 2.1.3 11-12 &13- &2.15 Fully Scale of the reporting organization. 1.7 15&43 &8.1.2 Significant changes during the reporting period regarding size, 10 2.1.2 Fully 1.8 structure, or ownership. 41 7.2 Fully Awards received in the reporting period. 1.12 Fiscal year Fully Reporting period (e.g., fiscal/calendar year) for information provided. 2.1 2010
Page Profile No./Direct Section Reported Description Disclosure answer N.A,This is the First CR Fully Date of most recent previous report (if any). 2.1 report for Bezeq. biennial Fully Reporting cycle (annual, biennial, etc.) 2.2 page 7 1.2 Fully Contact point for questions regarding the report or its contents. 2.3 20 4 Fully Process for defining report content. 2.4 Boundary of the report (e.g., countries, divisions, subsidiaries, 8 1.3 Fully leased facilities, joint ventures, suppliers). See GRI Boundary 2.5 Protocol for further guidance. State any specific limitations on the scope or boundary of the report 8 1.3 Fully 2.6 (see completeness principle for explanation of scope). Basis for reporting on joint ventures, subsidiaries, leased facilities, 8 1.3 Fully outsourced operations, and other entities that can significantly affect 2.7 comparability from period to period and/or between organizations. Data measurement techniques and the bases of calculations, including assumptions and techniques underlying estimations 8 1.3 Fully applied to the compilation of the Indicators and other information in 2.8 the report. Explain any decisions not to apply, or to substantially diverge from, the GRI Indicator Protocols. N.A,This is Explanation of the effect of any re-statements of information the First CR provided in earlier reports, and the reasons for such re-statement Fully 2.12 report for (e.g.,mergers/acquisitions, change of base years/periods, nature of Bezeq. business, measurement methods). N.A,This is the First CR Significant changes from previous reporting periods in the scope, Fully 2.11 report for boundary, or measurement methods applied in the report. Bezeq. Table identifying the location of the Standard Disclosures in the Currant table 11 Fully 2.11 report.
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Page Profile No./Direct Section Reported Description Disclosure answer N.A, No external Policy and current practice with regard to seeking external assurance Fully 2.12 assurance for the report. done for the report Governance structure of the organization, including committees 33-38 6.2 Fully under the highest governance body responsible for specific tasks, 3.1 such as setting strategy or organizational oversight. Chairman of BOD does not sarve as Indicate whether the Chair of the highest governance body is also an Fully 3.1 an executive executive officer. officer in Bezeq. For organizations that have a unitary board structure, state the 35 6.2 Fully number of members of the highest governance body that are 3.2 independent and/or non-executive members. Mechanisms for shareholders and employees to provide 38 6.2 Fully 3.3 recommendations or direction to the highest governance body. Linkage between compensation for members of the highest governance body, senior managers, and executives (including 37 6.2.1 Fully 3.4 departure arrangements), and the organization's performance (including social and environmental performance). Processes in place for the highest governance body to ensure 38 6.2.2 Fully 3.5 conflicts of interest are avoided. Process for determining the qualifications and expertise of the members of the highest governance body for guiding the 36 6.2 Fully 3.6 organization's strategy on economic, environmental, and social topics. Internally developed statements of mission or values, codes of 28 &80 5.2 & 9.1 Fully 3.7 conduct, and principles relevant to economic, environmental, and
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Page Profile No./Direct Section Reported Description Disclosure answer social performance and the status of their implementation. Procedures of the highest governance body for overseeing the organization's identification and management of economic, 36 6.2 Fully environmental, and social performance, including relevant risks and 3.8 opportunities, and adherence or compliance with internationally agreed standards, codes of conduct, and principles. Processes for evaluating the highest governance body's own 39-40 6.4 Fully performance, particularly with respect to economic, environmental, 3.12 and social performance. Explanation of whether and how the precautionary approach or 39 6.4.3 Fully 3.11 principle is addressed by the organization. Externally developed economic, environmental, and social charters, 26 4.1.7 Fully principles, or other initiatives to which the organization subscribes or 3.11 endorses. Memberships in associations (such as industry associations) and/or national/international advocacy organizations in which the 40 7.1 Fully organization: * Has positions in governance bodies; * Participates in 3.12 projects or committees; * Provides substantive funding beyond routine membership dues; or * Views membership as strategic. 21-26 4.1 Fully List of stakeholder groups engaged by the organization. 3.13 Basis for identification and selection of stakeholders with whom to 21-26 4.1 Fully 3.14 engage. Approaches to stakeholder engagement, including frequency of 21-26 4.1 Fully 3.15 engagement by type and by stakeholder group. Key topics and concerns that have been raised through stakeholder 21-26 4.1 Fully engagement, and how the organization has responded to those key 3.16 topics and concerns, including through its reporting. 87 10 Fully Disclosure on Management Approach EC DMA EC Direct economic value generated and distributed, including 88 10 Fully EC1 revenues, operating costs, employee compensation, donations and
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Page Profile No./Direct Section Reported Description Disclosure answer other community investments, retained earnings, and payments to capital providers and governments.
87 10 Fully Significant financial assistance received from government EC4
Understanding and describing significant indirect economic impacts, 87 10 Fully EC9 including the extent of impacts. 80 9 Fully Disclosure on Management Approach EN DMA EN 86 9.3 Fully Direct energy consumption by primary energy source. EN3 83-84 9.2.1 Partially Energy saved due to conservation and efficiency improvements. EN5 Initiatives to provide energy-efficient or renewable energy based 85-86 9.2.2 Fully products and services, and reductions in energy requirements as a EN6 result of these initiatives. Initiatives to reduce indirect energy consumption and reductions 83 9.2.1 Fully EN7 achieved. 86 9.3 Fully Total water withdrawal by source. EN8
265,033 Ton Fully Total direct and indirect greenhouse gas emissions by weight. EN16
86 9.3 Fully Total weight of waste by type and disposal method. EN22 42,43,48, 8.1.3 Fully Disclosure on Management Approach LA DMA LA 51-53,60-61, Total workforce by employment type, employment contract, and 43-44 8.1.2 Fully LA1 region. Total number and rate of employee turnover by age group, gender, 45-47 8.1.2 Fully LA2 and region. Benefits provided to full-time employees that are not provided to 49-50 8.1.4 Fully LA3 temporary or part-time employees, by major operations. 44 8.1.2 Fully Percentage of employees covered by collective bargaining LA4
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Page Profile No./Direct Section Reported Description Disclosure answer agreements. Minimum notice period regarding significant Minimum notice period(s) regarding significant operational changes, operational Fully LA5 including whether it is specified in collective agreements. changes is not defined specified in agreements. Percentage of total workforce represented in formal joint 60 8.1.10 Fully management-worker health and safety committees that help monitor LA6 and advise on occupational health and safety programs. Average hours of training per year per employee by employee 52 8.1.5 Fully LA10 category. Programs for skills management and lifelong learning that support 51-53 8.1.5 Fully the continued employability of employees and assist them in LA11 managing career endings. Percentage of employees receiving regular performance and career 56 8.1.7 Fully LA12 development reviews. 48 8.1.1 Fully Disclosure on Management Approach HR DMA HR Operations identified in which the right to exercise freedom of 8.1.2 & 43 & 48 Fully association and collective bargaining may be at significant risk, and HR5 8.1.3 actions taken to support these rights. Operations identified as having significant risk for incidents of child 48 8.1.3 Fully labor, and measures taken to contribute to the elimination of child HR6 labor. Operations identified as having significant risk for incidents of forced 48 8.1.3 Fully or compulsory labor, and measures to contribute to the elimination of HR7 forced or compulsory labor. 62 8.2 Fully Disclosure on Management Approach SO DMA SO
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Page Profile No./Direct Section Reported Description Disclosure answer Nature, scope, and effectiveness of any programs and practices that 63-69 8.2.1 Fully assess and manage the impacts of operations on communities, SO1 including entering, operating, and exiting. Total value of financial and in-kind contributions to political parties, None- 0 NIS Fully SO6 politicians, and related institutions by country. 70 8.3 Fully Disclosure on Management Approach PR DMA PR Practices related to customer satisfaction, including results of surveys measuring customer satisfaction. 73-78 8.3 Fully PR5
Internal Corporate Responsibility Policy (Human Resources) – description of subjects included in the policy: equal and non- discriminatory opportunity, including equal pay for equal work, non- harassment policy, the right to unionize, employee training and 48 8.1.3 Fully INT1 development, part time employment, dismissal policy (and support for dismissed employees), anonymous communication mechanism, occupational safety and hygiene – especially ergonomics and work related stress/pressure. Employee satisfaction: results of employee position survey with reference to the following areas: occupational security, pay and 8.1.6 & benefits, balance between work and private life (including stress and 54-58 8.1.7 & Fully INT3 pressure at work), training and development, internal 8.1.8 communications culture, the company’s social performance vis-à-vis the community. Contribution: donations to charity, community investments and sponsorship, data on financial contributions, employee volunteer 68-69 8.2.1 Fully SOC1 hours, donation of equipment and money-equivalent contributions, overheads and administrative costs. 88 10 Fully Creating added financial value for the past three years (2008-2010). SOC2
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Page Profile No./Direct Section Reported Description Disclosure answer Practices to ensure health and safety of field personnel involved in the installation, operation and maintenance of masts, base stations, laying cables 60-61 8.1.10 Fully and other outside plant. Related health and safety issues include IO3 working at heights, electric shock, exposure to EMF and radio frequency fields, and exposure to hazardous chemicals. Policies and practices to ensure availability and reliability of telecommunications products and services and quantify, where 79 8.3 Fully PA3 possible, for specified time periods and locations of down time. Programmes to provide and maintain telecommunication products 79 8.3 Fully and services PA6 in emergency situations and for disaster relief. 78 8.3 Fully Initiatives to ensure clarity of charges and tariffs. PA10 Provide examples of telecommunication products, services and applications that 85 9.2.2 Fully have the potential to replace physical objects (e.g. a telephone book TA2 by a database on the web or travel by videoconferencing)
The information in this Report and all data contained herein (hereinafter: “the information”) are the sole property of the Company and may not be used without the express consent of the Company. In any event, the information herein should not be exclusively relied upon and, without derogating from the aforementioned and the following, in any event of contradiction, conflict or incompatibility between the information herein and any other information and/or data contained in the Company’s records and/or the Company’s reports and/or statements and official publications, the information and/or data contained in the Company’s records and/or the Company’s reports and official publications, respectively, shall prevail. The purpose of this Company Report is to inform all stakeholders in the Company of the Company’s activities, achievements, programs and plans in the area of corporate responsibility, further to GRI reporting requirements and on the basis of the Company’s evaluation. It should be noted that the Company is reporting for the first time within this framework, and accordingly some of the information contained in this Report was not formerly available for reporting and has not undergone current measurement procedures, but was collated expressly for the purpose of this Report. Regarding some of the information herein, estimates and evaluations were used which may vary as a result of changes in the Company, the market in which it operates, regulation applicable thereto and the general environment.
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