Development and management

Development and managementTerna’s system for developing and managing human resources is based on performance as an indicator for guiding growth. The essential elements of the model are the definition of the objectives and the behavior that is expected, assessment of results, feedback, and development and training actions. It includes numerous instruments that have been used at the Company for some time, such as Balanced Scorecards and Management by Objectives (MBO), but the heart of the system is the Global Performance System (GPS), which was designed in 2008 and went into operation in 2009 accompanied by a training campaign addressed to all the personnel concerned.

The Global Performance System is based on a definition of performance that has two aspects. The first is the actual achievement of the pre-established objectives, while the second regards the organizational actions carried out to achieve them. A specially developed IT system accessible individually by the employees concerned records the results of the assessments and ensures that they are available over time. Performed by the person directly responsible and validated by the latter’s superior, it provides for feedback, which is essential for guiding behavior, highlighting strong points and areas that need to be improved, and set in motion measures for development, such as training. The repetition of performance assessment in annual cycles allows the growth of individuals to be monitored and guided. The application of the GPS currently involves a segment of employees with managerial and professional responsibilities: all senior executives, all junior executives (except the foremen of the shifts that control the grid in real time), and some white-collar workers.          

A total of 651 employees were involved in the first assessment cycle, which was started in 2009. In 2010, 686 employees – about 20% of the total corporate population – were involved.

The measurement of performance is also entrusted to other instruments. Terna has had for some time a strategic control system based on the Balanced Scorecard method, through which it monitors the progress made in attaining strategic economic and managerial objectives, including the main environmental and social performance objectives.     

Performance measurement is also connected with the payment of variable parts of compensation. In particular, Terna has a Stock Option Plan for its top management, which was instituted in December 2000 and scheduled to expire in 2010, but was later extended to 2013. Among other things, the adoption of this Plan has provided the Company with an important instrument for ensuring the loyalty of the senior executives who hold the most important positions for the achievement of its strategic objectives.   

The same purpose is served by the cash Long-term Incentive Plan for the top management and managers who hold key positions. Linked to corporate objectives, it was begun in 2008 for the subsequent 3 years.   

Other variable-compensation schemes are based on annual performance objectives. MBO (Management by Objectives) links the sums of individual bonuses to the extent to which both corporate and individual objectives are achieved. The corporate objectives, including those regarding environmental and social performance, are formulated in connection with the Balanced Scorecard model.