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HR practices at ITC

Submitted by:

Arjun Singh Deswal

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INDIAN TOBACCO COMPANY

ITC is the first from India and among the first 10 companies in the world topublish its Sustainability Report in compliance (at the highest A+ level) withtheest G3 guidelines of the Netherlands-based Global Reporting Initiative (GRI), a

UN-backed, multistakeholder international initiative to develop and disseminateglobally applicable Sustainability Reporting Guidelines.

ITC is the first Indian company and the second in the world to win theprestigious Development Gateway Award. It won the $100,000 Award for the year2005 for its trailblazing ITC e-Choupal initiative which has achieved the scale of amovement in rural India. The Development Gateway Award recognizes ITC's e-Choupal as the most exemplary contribution in the field of Information andCommunication Technologies (ICT) for development during the last 10 years. ITCe-Choupal won the Award for the importance of its contribution to development

priorities like poverty reduction, its scale and replicability, sustainability andtransparency.

ITC has won the inaugural 'World Business Award', the worldwide businessaward recognising companies who have made significant efforts to createsustainable livelihood opportunities and enduring wealth in developing countries.The award has been instituted jointly by the United Nations DevelopmentProgramme (UNDP), International Chamber of Commerce (ICC) and the HRHPrince of Wales International Business Leaders Forum (IBLF).

ITC is the first Corporate to receive the Annual FICCI Outstanding VisionCorporate Triple Impact Award in 2007 for its invaluable contribution to the triple

bottom line benchmarks of building economic, social and natural capital for thenation.

ITC has won the Golden Peacock Awards for 'Corporate Social Responsibility(Asia)' in 2007, the Award for CSR in Emerging Economies 2005 andExcellence in Corporate Governance' in the same year. These Awards have beeninstituted by the Institute of Directors, New Delhi, in association with the WorldCouncil for Corporate Governance and Centre for Corporate Governance.

ITC Hotel Royal Gardenia, Bengaluru is the first Indian Hotel and world'slargest, to get the LEED Platinum rating - the highest green building certificationglobally.

The Stockholm Challenge 2006 for the e-Choupal initiative. This award is forusing Information Technology for the economic development of ruralcommunities.

United Nations Industrial Development Organisation (UNIDO) Award at theinternational conference on Sharing Innovative Agribusiness Solutions 2008 atCairo for ITC's exemplary initiatives in agri business through the e-Choupal.

The Corporate Social Responsibility Crown Award for Water Practices fromUNESCO and Water Digest for its distinguished work carried out in the watersector in India. ITC also received the National Award for Excellence in WaterManagement 2007 in the 'beyond the fence' category from the CII Sohrabji GodrejGreen Business Centre for its leadership role in implementing water andwatershed management practices.

The watershed programme also won the Asian CSR Award 2007 for

Environmental Excellence given by the Asian Institute of Management. TheAward recognizes and honours Asian companies for outstanding, innovative and

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world-class projects. The Company also received the Ryutaro HashimotoIncentive Prize 2007 for Environment & Development from the Asia PacificForum. This Award aims at promoting information dissemination of good

practices towards sustainable development in the Asia-Pacific region.

The Readers' Digest Pegasus Award for corporate social responsibility,

recognising outstanding work done by socially conscious companies.The Corporate Award for Social Responsibility 2008 from The Energy and

Resources Institute (TERI) in recognition of its exemplary initiatives inimplementing integrated watershed development programmes across 7 states inIndia. The company also won the award in 2004 for its e-Choupal initiative. TheAward provides impetus to sustainable development and encourages ongoingsocial responsibility processes within the corporate sector.

The 'Enterprise Business Transformation Award' for Asia Pacific (Apac),instituted by Infosys Technologies and Wharton School of the University ofPennsylvania for its celebrated e-Choupal initiative.

The Best Corporate Social Responsibility Practice Award 2008 jointlyinstituted by the Bombay Stock Exchange, Times Foundation and the NASSCOMFoundation.

The NASSCOM CNBC IT User Award 2008 in the Retail & Logisticscategory. The Company has been recognised for its pro-active and holisticapproach to IT adoption and the seamless alignment of IT with business strategy.This is the fourth time that ITC has won Nasscom's Best IT User Award since itwas instituted in 2003.

The Institute of Chartered Accountants of India Award for Excellence inFinancial Reporting with its Annual Report and Accounts, adjudged as acommendable entry under the Category 'Manufacturing and Trading Enterprises.

The Business Today Award for the Best Managed Company in recognition ofits outstanding initiatives in the consumer products segment.

HUMAN RESOURCE STRATEGY

ITC is committed to employee engagement that upholds individual dignity andrespects human rights. ITC's employment practices are premised on attractingand retaining talent based only on merit. Its capability development agenda ensuresthe deepening and enhancement of skills of all its employees through customised

training and development inputs.

Responsibility: It is the overall responsibility of the Divisional Chief Executives,through the members of their Divisional Management Committees, Human Resourcesand EHS Functions, to ensure that employment and EHS practices in all Units are inaccordance with the policy outlined above and to ensure total compliance with allstatutory provisions governing labour practices and decent work. Specificresponsibilities are assigned to different individuals based on the roles being

performed by them.The Corporate Human Resources and EHS functions are responsible for reviewingand updating standards and guidelines on labour and EHS policies, employment

practices, and for providing guidance and support to all concerned.Management: The Company leadership 'walking the talk' and a relentless focus on

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implementing the policy underlines the Company's approach to employment practicesand creating a decent work environment.The Human Resources and EHS functions of each business are the primary custodiansof ITC's labour and EHS policies and employment practices, the implementation ofwhich is reviewed periodically at the Unit and the Divisional levels. The Corporate

Human Resources and EHS functions provide specialist services to assist in theimplementation and monitoring of the same. The multi-layered and multi-dimensionalaudit framework of the Company also helps in monitoring compliance with laid down

policies and statutory regulations.Training & Awareness: The policy is shared with employees and potentialemployees through training programmes, communication sessions, the Company

portal, intranet sites and pre-placement presentations. Managers from HR, EHS andEngineering departments are provided regular training for effective implementation ofthese policies.Monitoring & Follow-up: The Human Resources and EHS staff of the Divisionsregularly monitor progress to ensure proper implementation of these policies, while

the Unit Heads and the Divisional Management Committees follow-up periodically toensure full compliance. The Corporate EHS Department undertakes regular audits ofthe Units.Objectives: The primary objective is to nurture a culture of meritocracy amongst acommitted and enthusiastic workforce from diverse backgrounds. In the pursuit of thisobjective, the following goals have been set for the next five years:

All ITC's Units, which are already 'beyond compliance' in all areas related tolabour practices, will continue to be so.

Ensure that the Company's record of attraction and retention of talent issuperior to other companies in the comparative sample.

Enable employees to perform to their fullest potential to add value to theenterprise, nation and themselves.

Enhance the Company's employee value proposition so that ITC retains itsposition as an employer of choice.

Endeavour to eliminate accidents and injuries both onsite and offsite.Awards: A number of awards for excellence in Human Resources and EHSmanagement and practices bear testimony to ITC's commitment to Human ResourceDevelopment and EHS and to best-in-class employment practices.Context: High standards of employment and EHS practices enhance the Company's

performance, help in the attraction and retention of quality talent, and enhance theequity of the Company as a responsible employer

PERFORMANCE MANAGEMENT

Strong Mentorship program for every newcomer

Self Appraisal System

No 360 degree review, only the employee and his approver have a discussionGap-Analysis ,need based training required

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Belief that employee is the best judge of his performanceEnough Job enlargement Opportunities are offered

Some Initiatives like Common Canteen for all employees

Attrition rate : ITC is 5-6 per cent compared to the FMCG industry average of 10-12per cent.Employees who cross the 5-year threshold usually stay on in the company for manymore yearsEncouragement given to employees for seeking transfers across the verticalsaccording ones taste

Inspirational Visits to various world class factories in India and abroad to getexposure to best practices in the world

Enough Job enlargement opportunities are on offer for the employees

No policy of legally binding its employeesITC also doesnt have any policy of giving Sabbatical leaves to its employees for

pursuing higher studies

Policy on Freedom of Association

ITC's culture is characterized by cooperative relationships and high employeeinvolvement that relies on building partnerships and interdependence. Adhering tothese principles has helped build, sustain and strengthen harmonious employeerelations in the organisation.Policy

ITC respects the employees' right to organize themselves into interest groups asinitiatives of the workers, independent from supervision by the management. Inkeeping with the spirit of this Policy, employees are not discriminated against forexercising this right.Implementation

The policy is comunicated to all employees through induction programmes, policymanuals and intranet portals.The custodian of this policy is the HR head of each operational unit who reportsdirectly to Unit Head on such issues.The actualisation of this policy is evident from the joint agreements and minutes thatare signed between the union and the management.Monitoring & Audit

Each ITC Unit has appropriate systems and checks to ensure compliance with thePolicy and statutory provisions, including means for filing of grievances, collective

bargaining agreements and minutes from worker meetings.Compliance with the Policy is regularly monitored by Divisional and Corporate HR.

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ITC recognises that a comprehensive management development strategy is the key toenhancing individual, team and organizational effectiveness, as well as buildingstrategic capabilities and processes for organizational vitality and renewal. In ITC,management development goes far beyond training and development as is commonlyunderstood.

Management development initiatives include, in addition to formal training anddevelopment programmes, a host of interventions such as cross-functional and multi-

business exposure, developmental assignments/ secondments, membership of taskforces, special assignments, systems and processes such as the appraisal system, thestrategy of organization itself, etc.Core training and development inputs are imparted to every individual based on hislevel of responsibility, in addition to training and development interventions relatingto his functional specialisation.A key focus of ITC's management development efforts is the development of businessleadership across businesses in support of ITC's belief that an organization with adiversified business portfolio can be managed effectively only when competent and

effective leadership is distributed across the organization.

FROM ITCs WEBSITE

Personal ConductAll directors, senior management and employees have the obligation to conductthemselves in an honest and ethical manner and act in the best interest of theCompany at all times. They are expected to demonstrate exemplary personal conductthrough adherence to the following:

Avoidance of Conflict of Interest

All directors, senior management and employees must avoid situations inwhich their personal interest could conflict with the interest of the Company.This is an area in which it is impossible to provide comprehensive guidance

but the guiding principle is that conflict, if any, or potential conflict must bedisclosed to higher management for guidance and action as appropriate.Transparency and Auditability

All directors, senior management and employees shall ensure that their actionsin the conduct of business are totally transparent except where the needs of

business security dictate otherwise. Such transparency shall be brought aboutthrough appropriate policies, systems and processes, including as appropriate,segregation of duties, tiered approval mechanism and involvement of morethan one manager in key decisions and maintaining supporting records. It shall

be necessary to voluntarily ensure that areas of operation are open to audit andthe conduct of activities is totally auditable.

Protection of Confidential Information

No director, senior management and employee shall disclose or use anyconfidential information gained in the course of employment/ association withthe Company for personal gain or for the advantage of any other person. Noinformation either formally or informally shall be provided to the press, other

publicity media or any other external agency except within approved policies.Company Facilities

No director, senior management and employee shall misuse Companyfacilities. In the use of Company facilities, care shall be exercised to ensure

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that costs are reasonable and there is no wastage.Leading by Example

The organisations directors and senior management set the professional tonefor the Company. Through both their words and their actions, theorganisations leadership conveys what is acceptable and unacceptable

behaviour. ITCs directors, senior management and employees must constantlyreinforce through their actions and behaviour that ITCs stated beliefs ofresponsible corporate citizenship are rooted in individual conviction and

personal integrity.