ARCO VARA AS - NASDAQ OMX Baltic

Human resource management principles
The Group has three different operating divisions in six different geographical regions. Whilst general
characteristics like independence and initiative are appreciated in all employees, each division needs
employees with varying qualifications, background and skills. The Group organizes its human
resource management at the division level. Management believes that imposing common principles for
human resource management at the Group level would make them less effective and overly general.
Some personnel-related services have been organized at the Group, whilst the majority of issues in the
human resources (HR) management are at the discretion of division management. The chairman of the
Management Board is responsible of personnel issues on the Group management level. Some divisions
have HR directors in their management teams whilst in some cases the heads of the divisions perform
the HR role themselves.
Human resource management at the Group level includes implementing motivating remuneration
schemes, diversified training programs, personnel valuation systems, a social atmosphere boosting
teamwork and high quality working environment.
Remuneration schemes differ based on the position and division specific features. In addition to their
monthly salaries, employees receive annual bonuses. On the management level, bonuses are directly
dependent on the financial results of the year. However for the majority of the employees bonuses are
distributed from the Group’s bonus pool following the proposal of the division head and approval of
the Supervisory Council.
The direct superior of each employee is responsible for conducting a personnel valuation and
development assessment interview at least once per year. The interview process is designed to
encourage feedback from the employee to the employer as well as vice-versa. The training plans,
remuneration and professional targets for the following year are set on the basis of the interview. For
management, a 360 degree assessment programme is used; each member of the management provides
feedback on all management members at different scales and the results are used to evaluate the
effectiveness and performance of each member of the management.
To promote teamwork and social intercourse, the Group periodically organises intra Group social
events.
Recruitment and training
In the course of preparation of annual budgets, the head of each division proposes its requirements for
personnel growth and related costs as well as plans for training. Each division head as well as the
heads of the subsidiary companies are personally responsible for identifying the need for additional
positions to be filled and to organise the necessary recruitment process. The means of recruiting vary
depending on the position to be filled; in general the Group prefers to advertise publicly for open
positions, although recruiting companies are usually engaged for senior managerial positions.
Each employee’s training requirements are assessed after development assessment interviews. In
addition to specific professional training, the Group organises training courses to develop the overall
social, time-management, sales related or other skills. The Group has in-house induction programmes
for new employees. The Group also co-operates with selected external training suppliers.
At management level, quarterly management meetings are held for approximately 25 people at a time.
These meetings combine training programs, updates on the quarterly performance as well as teambuilding
activities. The members of the Management Board are also subject of the so called “runnerup”
training programme. The programme requires that each member of the Management Board
appoints two replacements for himself, who are trained and kept up to date with latest developments in
the area. This program is designed to ensure the continuity of managerial skills, availability of
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