Chief of Human Capital Development & Retention TELKOM Group

Bandung, 27th March 2017

REWARDING BEST TALENTCompensation & Benefit Practices at TELKOM Indonesia

AGENDA

02

03

REWARD PHILOSOPHY & STRATEGY

04

REWARD PRACTICES

01TELKOM & ITS CHALLENGE

MOVING FOREWARD & DISCUSSION

Ownership

Public 47.4%

Government 52.6%

Treasury Shares 2.6%

is listed at Indonesia Stock Exchange (TLKM), NYSE (TLK US) and sustaining growth with 10 International

Footprint

Employee

Telkom Group 24.785

Telkom 16.097

Telkom Indonesia

CONNECTING THE WORLD

Market Capitalisation at IDX

IDR 458.6 Tn* *) 1 Agustus 2016

• TSEL Coverage :± 97% Population

• 40 cities and more already 4G LTE• 13,2 Mio Fiber

Optic Homes

passed

• 357 K Wi-Fi

• >82.000 km

Nationwide Fiber

Optic backbone

network

74.000 M2

Data Center

Customer Base:

• 48 Million

Broadband,

• 156 Million Selular

• 10,5 K Fixed Line

Source: Annual Report

EMPLOYER OF CHOICE

April 2014Most Admired Companies 2014(TOP Brand)

January 2016Asian Make Winners (MAKE)

September 2016 September 20166 Awards in Indonesia Human Capital Study (Dunamis)

Januari 2016

Indonesian Employers of Choice Awards (HAY Group & SWA)

Best Overall Corporate UniversityBest Innovative Corporate University

May 2015

Global Council of Corp. Univ. Award

DIVERSE PORTFOLIO IN TIME MARKET

32Subsidiaries &

Affiliation

KEY PRINCIPLES

02

03

LEVERAGE TOTAL REWARD PERSPECTIVE

04

ATTRACT & RETAIN BEST TALENTS

01 REFLECT & TRANSLATE CORPORATE STRATEGY

DRIVE EXPERIENCE & BUSINESS IMPACT

Telkom Group Corporate Strategy

VisionTo Become a Leading TIMES Player in the Region

VisionBe the King of Digital in the Region

Corporate Strategy:

• Directional Strategy: Sustainable Competitive Growth

• Business Strategy: Converged TIMES portfolio

• Parenting Strategy: Strategic Guidance

Corporate Strategy:

• Directional Strategy: Disruptive Competitive Growth

• Business Strategy: Customer Value through digital TIMES portfolio

• Parenting Strategy: Strategic Control

ShiftingThe

Business

Mission1. To Provide TIMES Service with Excellent

Quality & Competitive Price.2. To be the Role Model as the Best Managed

Indonesian Corporation

MissionLead Indonesian Digital Innovation &

Globalization

2015 2016 - 2020

ObjectivesSuperior value & IDR 300T Market Cap in 2015

ObjectivesTop 10 Market Capitalization Telco in APAC by

2020

6 Product Portfolios with 5 Customer Facing Units (CFU)

New parenting strategy will see a shift to a CFU based model

Customer Facing Units (CFU)

Implications:

• Tighter operation integration to maximize business value by customer segment

• Need to be more controllability on subsidiaries including in HCM activities

THERE IS NO BEST REWARD PRACTICES, THE BEST

PRACTICES ARE WHAT BEST FIT TO YOUR STRATEGY

& CULTURE

Aligning Reward Strategy and Business Strategy

Managing HCM as a Group Initiatives

International Remuneration

Challenges in Managing HCM as A Group

Objectives

1.CSS Parenting Strategy: “StrategicControl”

2.Masterplan HCM: “Managed HCMas a group”

3.CHCO Direction: “BoD-1 and BoD-2Belongs to Group”

4.HCM Council Charter

1. Keselarasan antar entitas Telkom Group dalam:

1. Grading System

2. Remuneration system and structure

Sebagai prasyarat dalam pengelolaan HCMsecara Group

2. Desain carrer roadmap Telkom Group denganmemperhatikan Job Family, kesetaraan gradingdan remunerasi

1. Grading Alignment yaitu melakukanproses Evaluasi Jabatan untuk Telkomdan Anak Perusahaan di seluruh level

2. Penyusunan sistem Remunerasi &alignment di Level Telkom Group, melaluiproses Salary Survey, mencakupkomponen Cash & Benefit

3. Pergerakan karir untuk Talent TelkomGroup

Fact Findings:

1. Non standard Remuneration practices in group level

2. Non Standard Banding system in group level

Benefits

1. Smooth talent supply for business

2. Challenging career

3. Competitive and attractive remuneration

4. More Manageable and controllable

Execution Challenge

1. Grading alignment among Telkom group

2. Remuneration alignment among Telkom group

ChallengesBackground

Evaluate 500 Benchmark Positions of TELKOM Group

Using Mercer’s IPE Method

12

Impact

Communicati

on

InnovationKnowledge

Risk

1.Communication

2.Frame

1.Organization size

2.Impact

3.Contribution

1.Knowledge

2.Team

3.Breadth

1.Innovation

2.Complexity

1.Risk

2.Environment

Internationa

l Position

Evaluation

By Mercer

Selecting 500 benchmark

positions as anchor for define

grading alignment and develop

slotting tools

The objective of the project was to align Telkom group’s

grading through systematic method

From... To...

Telkom Group’s Grading Alignment

Telkom Group Job Evaluation

Using International Position Evaluation

(IPE)

Non Standard Banding system in group level

LEVE

L

TELKO

M

TELKOMS

EL

TELIN/ METRA/

INFRA/MITRAT

EL

INFOMEDIA/

PINS/ GSD/

AKSES/

PATRAKOM/

Others

BOD-1

EGM/EV

P/

SVP/SG

M/VP/Dy

EGM

EVP/SVP/

VP/ Senior

Business

Expert

EVP/EGM/ KADIV

BOD-2

GM/AVP/

SM/

Func.

Expert/

OSM/Dy

GM

GM

EGM/ SGM/

VP/GM/ Dy

KADIV/ HEAD

OF/ GM

EGM/OVP/VP/GM/

HEAD OF

BOD-3

MANAG

ER/

SENIOR

OFFICE

R

MANAGE

RMANAGER

AVP/GM/ PM/

JUNIOR PM/

MANAGER/

ACCOUNT MGT

BOD-4

…

BOD-7

… … … …

LEVEL TELKOM TELKOMSELTELIN/ METRA/

INFRA/MITRATEL

INFOMEDIA/ PINS/ GSD/ AKSES/ PATRAKOM/

Others

BOD-1EGM/EVP/SVP/SGM/

VP/Dy EGMBP I

EVP/SVP/VP/ Senior Business Expert

BP VIBP V

EVP/EGM/KADIV

BP I

BOD-2

GM/AVP/SM/ Func. Expert/ OSM/Dy

GM

BP II GM BP IV

EGM/ SGM/ VP/GM/ Dy

KADIV/ HEAD OF/ GM

BP IIEGM/OVP/

VP/GM/HEAD OF

BP II

BOD-3MANAGER/

SENIOR OFFICER

BP III MANAGER BP III MANAGER BP III

AVP/GM/ PM/ JUNIOR

PM/ MANAGER/ ACCOUNT

MGT

BP III

BOD-4…

BOD-7…

BP IV …BP VII

…BP II

…BP I

…BP IV

… …BP IV

…

Mercer Position Class 6x – 6x

Mercer Position Class 5x – 6x

Mercer Position Class 5x – 5x

Mercer Position Class ≤ 5x

Job

Prefix

EVP/SVP

/VP/EGM/

SGM

VP (AP)

SM/AVP/G

M

MANAGE

R/

SENIOR

OFFICER

OFFICER

Telkom Group

Banding

Structure

VI

V

IV

III - I

New

Development

tools

Uncover Talent

Mobility Opportunities Among

Group

Building career

pipelineTalent

Diversity

Career paths

Telkom Group Remuneration Alignment

Telkom Group Grading Alignment

Uncover Talent Mobility Opportunities Among Group Implementation of Telkom Group Remuneration and Grading Alignment as Talent Mobility Enabler

Reward Management“New Game for Group & Global Compensation”

Aligning Reward Strategy and Business Strategy

Managing HCM as a Group Initiatives

International Remuneration

Telkom Indonesia International Footprints

Type of International Remuneration Framework

S A L A R Y

B E N E F I T

F A C I L I T I E S

•COLD

•Local Transport

Local

Regulation

Living

Facilities and

Expatriates

Needs

Host TANI• Monthly frequent• Currency Conversion• Base Salary 75%• Base Allowance 25%

1. Incidental Allowance (THR)2. Incentive3. Annual Bonus4. BPJS (JHT & JP) 5. Country Social Security 6. Annual Leave

1. Life Insurance2. Health Insurance3. Accomodation4. Communication Allowance5. Home Trip6. Children Education7. Relocation Allowance

Int’l

Benefit

Int’l

Facilities

BALANCE

SHEET

Remuneration method from TOWER WATSON which aims to find the compensationvalue in the host country based on the remuneration of the employee in homecountry.

How much

Salary when

repatriated?Using the same method, we just substracted the Cost of LivingDifferences (COLD) and host local transportation from Host TANI thenadjust it with salary increment happened in home country duringoverseas assignment.

Remuneration for host

country will be documented,

reviewed and decided in

AGM Subsidiary which held every year

By Using

Several

References

•CEO Roles• Salary Benchmark•Cost of Living Index•Business Segment•Revenue Size

AGMResolution

International Remuneration Framework

Running with Multigenerational Workforce

Architecting Reward Strategy

Employee Reward Strategy

Attract New Talent

Motivate Employee

Retain Employee

External trends in HR

Attract and retain talent are priorities

The development of career paths is crucial

Source: Mercer report

Using a total reward system to control employee

rewards cost as well as enhancing employee

satisfaction

Career & Environment Reward

Foundational Rewards Performance Based Rewards

Improve Pay Mix and

Pay Level to minimize

gap based on nature

of Industry

1

2 3

Total Reward Approach & Deploy

TOTAL REWARD

Compensation BenefitWork-life

effectiveness

RecognitionPerformance

Management

Talent

Development

*) Total reward framework by Willis Towers Watson

Rewards yang diberikan dalam bentuk dengan peningkatan karir, pengetahuan, keahlian serta kenyamanan karyawan atas suasana kerja.

Rewards yang memenuhi kebutuhan dasar karyawan atas rasa aman dan stabilitas.

Rewards yang pemberiannya dikaitkan dengan performansi dan kontribusi dari employee yang dapat terukur dengan jelas.

Business Performance

and Result

Employee:

• Satisfaction

• Task Behaviour

• Engagement

Attract

Motivate

Retain

Running with Multigenerational Workforce

Architecting Reward Strategy

Employee Reward Strategy

Attract New Talent

Motivate Employee

Retain Employee

Current Telkom’s Component of Compensation

1. Base Salary (12x) 2. THR (1.5 x THP*)

*) THP consist of:• Base Salary• Ins. Premium• Ins. Jabatan

1. Ins. Premium2. Ins. Jabatan3. B. Kemahalan4. BBP5. Telekomunikasi*6. BBM*7. Driver*

*) untuk level dan posisitertentu

1. Jasa Produksi2. Mid Term Insentif3. Ins. Sales & Marketing

(ISM)*4. Diskresi Mgt**

*) untuk posisi tertentu**) diberikan ssi

kebijakan Mgt

No Long Term Incentive

1. Fasilitas kesehatan2. COP/ BPFKJ*3. Pasca Kerja

*) untuk level dan posisitertentu

Running with Multigenerational Workforce

Architecting Reward Strategy

Employee Reward Strategy

Attract New Talent

Motivate Employee

Retain Employee

Drive Employee Performance by Variable Pay

Job Level Career Track

BOD-1

BOD-2

BOD-3

BOD-4

BOD-5

BOD-6

Man

age

rial

Tra

ck

Entry Level

Managerial Professional Expertise

Fixed Pay Ins. Jabatan based on job level and roles & responsibilities (RC)

Ins. Jabatan based on job level

Should pass C&QTest

Variable Pay Jasprod/ MTI (tahunan) • Jasprod/ MTI (Tahunan)• Ins. Sales & Marketing

(per TW)

Jasprod/ MTI (tahunan)

Managerial Professional Expertise

Fixed PayIns. Jabatan based on job level

Variable Pay Jasprod/ MTI (tahunan) • Jasprod/ MTI (tahunan)• Ins. Sales & Marketing

(per TW)

Jasprod/ MTI (tahunan)

Jasprod/ MTI dipengaruhi oleh:1. Performansi perusahaan2. THP3. Perfomansi Unit4. Performansi Individu5. Kontribusi karyawan

ISM dipengaruhi oleh:1. THP2. Revenue Ach.3. Sales Ach.4. Collection rate

Recognize Employee Achievement: Telkom Award

Telkom give reward & recognition to employee for their achievement based on certain criteria

Reward and Recognitions

Informal

Formal

Unit Telkom Group

Individu Telkom GroupPerformance

1. Best Leader2. Best Manager3. Best Officer

Innovative1. Best Innovator2. Most Inspiring Role Model 3. Most Inspiring Culture Agent 4. Best Knowledge Worker

Dedication1. Karyawan Daerah terpencil2. EVP

Intermediate

Basic

Advance

Penghargaan lain (dari BOD atau Kepala UBIS)

Penghargaan Eksternal

Contoh:Satya Lancana

Penerima Penghargaan Kriteria Penghargaan Level Penghargaan

Unit1. Best Unit2. Best WITEL3. Most Admired Culture Activation

Running with Multigenerational Workforce

Architecting Reward Strategy

Employee Reward Strategy

Attract New Talent

Motivate Employee

Retain Employee

Top Talent Retention Plan: Incentive Top Talent

BoD-1 and BoD-2Remuneration for Top Talent

Philosophy

Ensure Top Talent’s remuneration competitiveness with market.

Influenced by performance

Competitive as Talent Retention

All high potentials are high performers, but not all high performers are high potentials.

-Andre Lavoie on https://www.entrepreneur.com/article/248018-

“When performance is the only criteria employees are evaluated on, high performers will

be the only ones moving up–and your high potentials will be moving out.”

- Brian Knight, Director of Performance at Focus 3-

VERY HIPO

5%Hig

hM

ed

ium

Low

PO

TEN

TIA

L (C

HA

RA

CTER

)

PERFORMANCE

HighMediumLow

POTENTIAL

75%

POTENTIAL

75%

IMPROVE

5%

Inc. IWT

Incentive for Top Talent

Market Reference

“Principle in designing incentive's amount is to maintain employee’s annual income meet target market range to ensure competitiveness with market”

Conclusion

Conclusion

1. Reward strategy must align with corporate strategy so reward system can work effectively and delivervalue to company

2. Telkom Indonesia use Total Reward Framework that integrate foundational reward, Performancebased reward, and Career & Environmental reward to attract, motivate, and retain employee

3. Based on Telkom Indonesia internal survey and analysis, career and environmental rewards have thehighest effect to drive employee task behaviour, followed by Performance-based reward, andFoundational Rewards.

4. Telkom reward strategy:

a. Attract new talents:

• remuneration system that align, comparable, and competitive with market

b. Motivate Employee:

• using different type of variable pay for each career track, based on roles and responsibilities

• Recognize employees achievement by awarding them

c. Retain employee:

• Opportunity for employee development

• Incentive for Top Performer as retention plan

Terima kasih