The key issue of human resources management is implementation of effective social policy of the enterprise.

Realizing its responsibility before the state, the society and employees of JSC IDGC of the North-West, the Company's management pays much attention to social aspects of its activity, which significantly influence the effectiveness of the employees' work, contribute to the development of labor productivity, production optimization, stabilization and sustainable development of the company in long-term perspective, to improvement of the employees' quality of life and positive image of the company.

Effective social security system implemented in the Company promotes the attraction of qualified specialists to the company, reduces staff turnover and becomes one of the foundations of successful industrial activity.

By investing material resources in the staff development and by actively using indirect motivation tools the Company stabilizes the team, increases employees and retirees' social security, forms positive public image, provides reasonable combination of highly skilled personnel renewal and retention processes.

The complex program "Organization of Social Policy" is developed in JSC IDGC of the North-West. The list of the Company's social policy implementation areas is broad and includes issues of non-state pension provision, medical insurance of injuries and sickness, provision of recreation and health improvement of employees, care for pensioners — veterans of AO-energo , and for young specialists, activities for formation and development of corporate culture.

The main principles of social policy implementation are the following:

• targeting — orientation first of all on the groups of workers, on whom the effective fulfillment of production tasks the achievement of the goals of the North-West network complex and the least protected layers of employees depend;
• relevance — correspondence of the granted privileges with pressing needs of concrete groups of employees, individual approach;
• competence — granting social support in various areas of activity;
• openness — open discussion of developing social positions and availability of the information on the existing benefits and guarantees;;
• productivity — constant monitoring and evaluation of the efficiency of action motivating factors.

In the existing conditions of intense competition in the labor market in the regions of presence, considering the difficulty of keeping the team under the conditions of reorganization of entities of the electric energy sector and against the background of overcoming the consequences of financial and economic crisis, special attention in 2012 was given to the development of the social aspect of productive relations.

Social policy of JSC IDGC of the North-West in 2012 was focused on:

• maintenance of social stability and development of social partnership in the conditions of reorganization;
• provision of social security for the personnel, their family members and veterans of the power industry in the conditions of the general financial and economic crisis;
• development of corporate culture with the purpose of motivating personnel to fulfill the Company's mission and to solve current problems;
• creating stable favorable socially-psychological climate in the team;
• providing positive public image of the Company.

The Company's social policy in 2012 was developed with regard to the support of the composition of social package, i.e. the package of benefits and compensation for employees, their family members and by the Collective Agreement of JSC IDGC of the North-West for 2012 by several target areas:

Disease prevention and health improvement of employees and their children

Voluntary health insurance (hereinafter referred to as VHI) and health and accident insurance (hereinafter referred to as HAI) of the Company's employees was carried out according to the Regulation on Providing Insurance Protection of JSC IDGC of the North-West (approved by Resolution of the Board of Directors of November 13, 2009) and Insurance Protection Program of IDGC of the North-West for 2012 (approved by Resolution of the Board of Directors of May 23, 2012, Minutes 99/20).

Insurance of employees in 2012 under VHI was carried out by JSC AlfaStrakhovanie, insurance under HAI was carried out by LLC Rosgosstrakh.

One of the main components of the employees' health improvement, healthy lifestyle promotion and disease prevention is granting the Company's employees of opportunities of involvement in physical training and sports, conducting competitions and sports celebrations, participation in sports competitions and tournaments. During 2012 within the framework of this area of the social policy about 200 sports activities were held, with participation of about 6.5 thousand employees. Company's team took part in the Winter and Summer Games of power engineers of the distribution grid complex of JSC IDGC Holding.

During the reporting year, though full or partial use of the Company's funds, 530 employees' children visited recreational centers of the country, including sanatoriums and health resorts of Anapa, Sochi and Tuapse, for the total amount of RUB 7.8 million (less funds provided for these purposes by municipalities and shares of employees' payments).

Social support of non-working pensioners and pensioners retiring from the Company

Company's social accountability documented in the Collective Agreement provides expenses for material support of former employees of JSC IDGC of the North-West, who received one-time material aid on Victory Day, Elderly Day and personal anniversaries during the reporting year; relatives of pensioners-veterans were reimbursed expenses on ceremonial services.

In addition to financial aid paid to retirees, various cultural events at each branch of the Company were held. In order to promote social and public support of veterans of the power industry, according to the order of Director General the Company a corporate holiday "Day of the elderly people — veterans of JSC IDGC of the North-West" was held on the 30th of the last month of each quarter. The Veterans Coordinating Council was established in JSC IDGC of the North-West. The veterans willingly meet with the youth, participate in the actions organized by the Company or JSC IDGC Holding (historic and memorial action Victory Banner Relay Race 2010-2012, all-Russian ecological action "Let's Save the Forest Energy", corporate mentoring movement, development of dynastic labor succession, creation of corporate museums and historic rooms, maintenance of historic records and references, International Memorial Relay Race From Motherland of Heroic Deeds — to Motherland of a Hero, etc.)

The Company's employees participated in festive actions, devoted to the celebration of the anniversary of the Great Victory and Lifting of the Siege of Leningrad, carried out acquisition of materials for writing the Company's chronicle (recollections of the oldest employees, photo materials), topical meetings (meetings of veterans with young employees and students) were held in all branches.

Target social payments, benefits and compensations to the Company's employees

This component of the personnel social package of JSC IDGC of the North-West employees provides a number of target monetary payments and compensations to the personnel according to the applicable norms of the Collective Agreement effective in 2012, the most essential of which are:

• one-time material aid before vacation;
• compensation of traveling expenses within the territory of the Russian Federation for the employees and their dependents, working in the Far North regions and the districts equated to them to a place of their vacation and back;
• 50% discount for the household electric energy consumption;
• payments to the employees at birth of a child, registration of marriage, death of relatives;
• one-time payment to the employees retiring after the establishment of labor pension.

Implementation of the of Non-state Pension Provision Program

The Non-state Pension Provision Program for the employees of IDGC of the North-West (hereinafter the Program) for 2012 was approved by the Company's Board of Directors on March 7, 2012 (Minutes No.94/15). The main purpose of the Program is providing worthy living standard of the Company's employees at pension age, and creating the conditions for effective solving of personnel issued, such as decrease of staff turnover and keeping the employees in the power supply system. In 2012 the Company continued cooperation with Non-state Pension Fund of the Electric Power Industry (hereinafter the Electric Power Industry NPF) in the framework of implementation of non-state pension provision program for employees in four areas:

• corporate plan (financed by the Company), including the Support Program;
• parity plan (financed by the Company and the employee);
• co-financing program (financed by the employee, the Company and the State);
• transfer of the funded part of the state pension to NPF.

Within the framework of the approved Program in 2012 the Co-financing Program was implemented in the Company in accordance with Federal Law No.56-FZ of April 30, 2008 on Additional Insurance Payments to Funded Part of Labor Pension and State Support of Pension Assets' Formation, with participation of 308 employees.

In 2012 non-state pension was received by 3,682 people from among the retirees.

Conducting cultural events and educational campaigns

During the reporting year there were held 322 thematic public functions and more than 60 excursions for the employees with participation of more than 24 thousand people, 30 exhibitions of creative works of power engineers, and their children, over 100 activities aimed at attraction and retention of young qualified workers and specialists at the enterprises of the electric network complex — over three thousand high school and university students of the region as well as young employees of the Company — totally about 700 activities aimed at further development of the corporate culture, involving about 30 thousand people.

The Company's team participated in the Second All-Russian Contest of the Funny and Inventive among power engineers of the distributive network complex. On the initiative and with the active participation of the Youth Council the lessons for electrical safety were given in orphanages as well as congratulation of their residents with the New Year.

The Company's employees took part in the contest of children's drawings held by JSC FGC UPS and JSC IDGC Holding and devoted to the Power Engineer Day.

Development of social partnership system

In 2012 the Company effectively built relations with the с Primary Trade-Union Organizations (PTUO) and PTUO representatives' council, solving shared problems of information support of the group, of cultural and sports events organization, fulfillment of the uniform Collective Agreement and uniform position on labor remuneration of the employees. One of the most important tasks solved by the parties of social partnership in 2012 was development and coordination of the draft Collective Agreement of JSC IDGC of the North-West for 2012 and extension of its term, which was completed by joint signing of the document by the parties on January 22, 2013. There were no violations of the terms and conditions of the Collective Agreement in the reporting year.

65.8% (9,970 people) of the Company's employees are the members of shop-floor union organizations.