KazMunayGas Cuts Top Managers’ Salaries and Cancels Bonuses
On 18 May 2020, Dauletzhan Khassanov, HR Managing Director of JSC NC “KazMunayGas” (KMG, the Company), gave a briefing at the venue of the Central Communications Service under the President of the Republic of Kazakhstan. The briefing was devoted to the HR policy as part of implementation of the anti-crisis strategy.
The speaker began by saying that profits in the first quarter fell three times against the same period of the previous year, and some subsidiaries recorded losses. In order to stabilise the financial position and to reduce the negative market impact, KazMunayGas is developing an anti-crisis strategy that will enable the Company to minimize losses and create conditions for a high start in the post-crisis period.
In particular, the Company is streamlining its business processes and reviewing the implementation plans for many projects and activities, which are losing relevance in the crisis situation.
As Dauletzhan Khassanov said, optimisation has primarily affected the remuneration of the management. On 12 May, a new system of official salaries was approved. The system provides for a 30% reduction in the salaries of the Chairman and Deputy Chairmen. Some management jobs will be made redundant, and the employees will be appointed to lower-level positions, with a resultant reduction in the salaries of the mid-level executives by up to 20%. The wages of ordinary employees will remain intact.
Thus, taking into account the cancellation of bonuses in 2020, the KMG central administration executives will lose more than 50% of their earnings.
In addition, as was announced earlier, KMG is reducing the number of central administration staff in the framework of the anti-crisis strategy by 34%, from 729 to 480. The relevant decision was made by the Board of Directors on 29 April 2020.
According to Dauletzhan Khassanov, 90% of the people who are made redundant will quit KazMunayGas. Given the current situation in the labour market, a socially responsible lay-off program has been developed at the request of the Samruk-Kazyna Fund. The program includes a compensation package and an outplacement plan.
The compensation package consists of:
- a one-time payment in the amount of three monthly salaries;
- six-month financial support to compensate for loss of income;
- the right to use medical insurance services at the expense of the Company until February 2020.
The outplacement plan at KMG provides for various activities with the participation of career advisers. Such advisers will help the employees analyse their advantages and the situation in the labour market, and to work out individual development plans. They will also advise how to behave during interviews, make a correct CV, etc. Group trainings will be arranged for the employees as well. Taken as a whole, such measures are expected to offer them better employment chances in the future.
“Although this is a generally accepted world practice, we can say that KazMunayGas is the first Kazakhstan company to implement such a program of support for its former employees. We understand very well that workforce restructuring is always painful and hard. In such a situation, some people may be at a loss and not know what to do. Our task is to help them,” Dauletzhan Khassanov said.