Workshop with Arun Team

1. Workshop with Arun Team Competency Model Development December, 2005

2. Agenda Competency Concept Competency Model Core Competency Development Managerial Competency Development Job Family Competency Development

3. Hay Group’s Definition of Competency • Enable top performers to demonstrate critical behaviors: • More often • In more situations • With better results Any characteristic of an individual that predicts outstanding performance in a given job, role, organization or culture

4. Competency Concept – Iceberg Model Knowledge Skill Social Role Self Image Trait Motive Technical Competency Behavioral Competency The characteristics was illustrated as an Iceberg. The most important characteristics to determine high performance are in Behavioral Competency; difficult to identify and to develop. Technical Competency is the necessary competency, but not sufficient.

5. Technical & Behavioral Competency • Technical Competency: • Skills are the things a person knows how to do well (word processing skills, reading a profit and loss statement) • Knowledge is what a person knows about a particular substantive area (accounting principles, medical, law) • Behavioral Competency: • Social Role is the image a person projects to others, reflects a person’s values – what one believes important to do (roles to develop others, roles to help and direct others) • Self Image is the way a person sees him/herself – the internal concept of identity (seeing oneself as a teacher or leader) • Traits are relatively enduring and stable characteristics of a person’s behavior (being a good listener, extrovert, introvert) • Motives are natural and constant thoughts and preferences in a particular area (Achievement, Affiliation, Power) that drive, direct and select a person’s outward behaviors

6. Taxi Driver Competency Key Tasks Basic Requirements Ideal Characteristics 1. 2. 3.

7. Competency – Example Doctor B Doctor A • Graduated from the best medical school • 20 years experience • Graduated from the best medical school • 20 years experience • A “Healer” • “I heal” • Emphatic • Influence Drive • An “Expert” • “I am a specialist” • Perfectionist • Achievement Drive

8. Relationship between Competency and Job • Natural Tendencies and Traits • For example: • Initiative • Interpersonal Sensitivity • Self Confidence Task-Related Knowledge and Skills Relative Importance • For example: • Companies product, • Labor Relations, • Law skill in active listening, negotiating Low High Job Complexity • Some competencies become more important as complexity of job become higher

9. Competency Dictionary • Over three decades of its research on outstanding performers, Hay has been able to develop a competency dictionary. These competencies used for developing competency model. • The following 21 competencies capture the most commonly characteristics seen in outstanding performers of various companies in many countries • Each competency has 3 to 6 level of competency which was defined in behavior indicators • Achievement Orientationei (Dorongan Berprestasi) • Analytical Thinking (Pemikiran Analitis) • Conceptual Thinking (Pemikiran Konseptual) • Customer Service Orientationei (Orientasi Pelayanan Pelanggan) • Developing Othersei (Pengembangan Orang Lain) • Directiveness (Pengarahan) • Flexibilityei (Fleksibilitas) • Impact and Influenceei (Dampak & Pengaruh) • Information Seeking (Pencarian Informasi) • Initiativeei (Inisiatif) • Integrityei (Integritas) • Interpersonal Understandingei (Pemahaman Antar Pribadi) • Organizational Awarenessei (Pemahaman Organisasi) • Organizational Commitment (Komitmen Organisasi) • Relationship Buildingei (Pengembangan Hubungan) • Self-Confidenceei (Kepercayaan Diri) • Team Leadershipei (Kepemimpinan • Teamwork and Cooperationei (Kerjasama) • Change Leadershipei (Kepemimpinan Perubahan) • Concern for Orderei (Peduli terhadap Keteraturan) • Self Controlei (Pengelolaan Emosi)

10. Example of Competency • Achievement Orientation (ACH) • Definition: A concern for working well or for surpassing a standard of excellence. The standard may be one’s own past performance (striving for improvement); an objective measure (results orientation); outperforming others (competitiveness); challenging goals one has set; or even what anyone has ever done (innovation). Thus a unique accomplishment also indicates ACH. • Competency Level: • Wants to Do Job Well; Expresses Affect or Feeling about Performance • Creates Own Measures of Excellence • Improves Performance • Sets and Works to Meet Challenging Goals • Makes Cost-Benefit Analyses • Takes Calculated Entrepreneurial Risks

11. Evidence that Competencies Equates to High Performance • In a study of more than 2,000 managers from 12 large organizations, 81% of the competencies that distinguished outstanding managers were related to emotional intelligence. Boyatzis, TCM (1982) • “181 different positions from 121 organizations worldwide…67% of the abilities deemed essential for effective performance where emotional competencies” (cf. Rosier, 1994) • “Reanalyzed data from 40 different corporations…to differentiate star performers from average ones..emotional competencies were found to be twice as important in contributing to excellence as pure intellect and expertise” Goleman, WWEI (cf. Jacobs and Chen, 1997

12. Evidence that Competencies Equates to High Performance • In Leadership Roles: • Study of 15 global companies attributes 85-90% of leadership success to emotional intelligence. At the highest leadership levels, EI accounts for virtually the entire advantage. • In Sales Roles: • Study of 44 Fortune 500 firms shows that high-EI salespeople produce twice the revenue of average performers. • In Technical Roles: • Programmers in the top 10% of EI competency can develop effective software three times as fast as those lower in EI. • For all Roles: • Emotional competence is twice as important as cognitive abilities for star performers in all jobs, in every field.

13. Competency & Bottom Line Results • Increased Retention • Incorporating Competencies in job-specific competency models leads to 90-percentile success rates in recruiting. • A global consumer products firm, which did not use emotional competence for hiring decisions, found that 50% of all division presidents left within 2 years of hiring, at a total search cost of $4m. • When the firm started to evaluate for competencies only 6% of new divisions’ presidents left within 2 years. • Increased Sales • Developing Competencies in Financial services agents increased sales to twice that of those who were weak in certain competencies.

14. Agenda Competency Concept Competency Model Core Competency Development Managerial Competency Development Job Family Competency Development

15. Objective of Competency Model Development • Competency model is a means of communicating to employees of what is required to be outstanding in an organization • As the application, company should look for, develop and reward employees using characteristics in the Competency Model • In developing Competency Model, we need to: • Translate company’s vision, mission and values into core competency as the basis to integrate employees’ behaviours across department and functions • Determine competency required for managerial position • Define competency required for specif job or function in the organization structure

16. Competency Model • There are three category in Hay Group approach in developing Competency Model: • Core Competency: Competency that is translated from company’s vision, mission and values and need to be demonstrated by each employee across organization • Managerial Competency: Competency that is related to managerial accountabilities and need to be demonstrated by employees in the managerial position • Job Family Competency: Competency that is related to specific function in the organization and need to be demonstrated by employees that hold the job in that specific function

17. Competency Model Core Competencies Leadership Competencies Job Family Competencies Job Family 2 for Level 1 Job Family 3 for Level 1 Level 1 Core Competency for Level 1 Managerial Competency for Level 1 Job Family 1 for Level 1 ... Job Family 2 for Level 2 Job Family 3 for Level 2 Level 2 Core Competency for Level 2 Managerial Competency for Level 2 Job Family 1 for Level 2 ... Level in the Organization Managerial Competency for Level 3 Job Family 2 for Level 3 Level 3 Core Competency for Level 3 Job Family 3 for Level 3 Job Family 1 for Level 3 ... ... ... ... ... ... ...

18. Competency Model – Example • The higher the job level in the organization, the higher the requirement of competency level • Different job family have different competency requirement ILLUSTRATIVE Core Competency Leadership Competency Job Family Competency • Achievement Orientation • Analytical Thinking • Integrity • Strategic Orientation • Team Leadership • Developing Others Marketing & Sales Operations Maintenance Logistics HSE Customer Service General Affairs Engineering Support Information Technology Human Resources Internal Audit Finance & Accounting General Management Legal

19. Core Competency Vision & Mission • What do we want to be ? • How are we going to achieve it? • Current Core Competency Model, if any • What is important the company? • What are the behaviors and values that we like to emphasize to our employees? • What are the behaviors and values that we don’t like to emphasize to our employees? Target Work Culture – CSort Exercise Core Competency • What behaviors do we like to see in our people? • What are the behaviors needed for outstanding performance in the company? • What drives outstanding performance in the company? • What are the qualities required to succeed in the future of the company? Focus Group – Executive Team Benchmark Competency Model • What is the core competency model in other benchmark companies?

20. Managerial Competency Managerial Accountabilities in the Company • What are the main accountabilities for managerial position to achieve their main purposes? • Current Competency Profile, if any Managerial Competency • What is the leadership competency model in other benchmark companies? Benchmark Competency Model

21. Job Family Competency Sales Production Management Engineering Level in Job Family • Job Family is a set of jobs or positions that have common and similar nature of work and require broadly similar skills, knowledge and competencies Example

22. Integrated Human Resources Management Vision & Mission Values Business Objectives Business Strategies Competency Model Strategic Intentions Business Results Career Management Remuneration System Selection & Recruitment Performance Management Organization Structure Training & Development Job Analysis Job Evaluation

23. Integration of Competency Model with HR system Core Competency Assessment Managerial Competency Assessment Results of Competency Gap Results of KPI Achievement Job Family Competency Assessment Performance Management System Training & Development Career Planning System Career Experience and Background Company’s Given Budget Calculation of Merit Increase Distribution of Annual Bonus Company’s Given Budget Compa Ratio

24. Agenda Competency Concept Competency Model Core Competency Development Managerial Competency Development Job Family Competency Development

25. Arun’s 2010 Vision Statement • To be a reliable Plant and ready for further services that give maximum benefits to the stakeholders as a legacy in LNG Industry Reliable Plant Ready for Further Services Give Maximum Benefit to Stakeholders Legacy in LNG Industry • Keep the plant running until the last gas supply • Plant operation closed with minimum waste (pollution) • Keep utilities running reliably • Keep the people high morale, motivated and loyal • Utilize assets for other purposes e.g. tank for bunkering business • LNG port transfer to be Commercial port • People are high sellable, competitive and competent • People are on demand • Employee shouldn’t worry with their future by securing skill, financial, mental and health • Facilities that beneficial for community distribute to them • Facilities (housing) will be distributed to employee • Transfer all facilities becoming Education Center • Support local government in developing places to work after Arun • Want to be remembered as reliable, safe and reputable LNG company • Former Arun employees will proud being part of the company

26. Vision – Competency • Keep the plant running until the last gas supply • Plant operation closed with minimum waste (pollution) • Keep utilities running reliably • Keep the people high morale, motivated and loyal • Utilize assets for other purposes e.g. tank for bunkering business • LNG port transfer to be Commercial port • People are high sellable, competitive and competent • People are on demand • Employee shouldn’t worry with their future by securing skill, financial, mental and health • Facilities that beneficial for community distribute to them • Facilities (housing) will be distributed to employee • Transfer all facilities becoming Education Center • Support local government in developing places to work after Arun • Want to be remembered as reliable, safe and reputable LNG company • Former Arun employees will proud being part of the company • Achievement Orientation • Concern for Health, Safety & Environment • Organization Commitment • Achievement Orientation • Technical Competency • Integrity • Organization Commitment

27. Arun’s Values Integrity Teamwork Open-mided/ Respectful Creative Acting in a way that is consistent with what one says; is important; that is, one’s behavior is consistent with one’s values (values may come from business, society, or personal moral codes) Implies the intention to work cooperatively with others, to be part of a team, to work together, as opposed to working separately or competitively The ability to value the contribution of others, the willingness to hear and respect others point of view and opinion Capacity to improve both individual and business performance by identifying and/or developing a new way forward Transparent Excellence Compliance Care Open, honest and sincere on the process of sharing information and discussion amongst team A concern for working well or for surpassing a standard of excellence Capacity to understand, adhere to and promote organisational policies, practices and standards to support the effective day-to-day functioning of the business Feeling and exhibiting concern and empathy for company, society and for the whole member of company

28. Values – Competency Acting in a way that is consistent with what one says; is important; that is, one’s behavior is consistent with one’s values (values may come from business, society, or personal moral codes) Implies the intention to work cooperatively with others, to be part of a team, to work together, as opposed to working separately or competitively The ability to value the contribution of others, the willingness to hear and respect others point of view and opinion Capacity to improve both individual and business performance by identifying and/or developing a new way forward Integrity Teamwork Teamwork Achievement Orientation

29. Values – Competency Open, honest and sincere on the process of sharing information and discussion amongst team A concern for working well or for surpassing a standard of excellence Capacity to understand, adhere to and promote organisational policies, practices and standards to support the effective day-to-day functioning of the business Feeling and exhibiting concern and empathy for company, society and for the whole member of company • Integrity • Teamwork Achievement Orientation Organization Commitment Interpersonal Understanding

30. TARGET WORK CULTURE vs CURRENT WORK CULTURE Arun’s C’Sort Result

31. The Basic Purpose of Each Work Culture FUNCTIONAL • Learn and Apply Specialized Technologies • Assure Reliability • Limit Risks PROCESS • Continuous Improvement • Customer Satisfaction TIME-BASED • Flexible Technology • Market Dominance • Maximizing Returns on Assets NETWORK • Innovation • Mobility • Partnerships and Strategic Alliances

32. The Focus of Performance and Measures of Success FUNCTIONAL • Bottom Line Performance • Return on Equity • Reputation PROCESS • Team-based Performance • Customer-driven Processes • Benchmark Image TIME-BASED • Program Teams • Multi-functional Expertise NETWORK • Venture driven • Situational Roles • Relationship Management

33. The Key Competencies Required in Each Work Culture PROCESS • Customer Service Orientation • Teamwork and Cooperation • Continuous Improvement FUNCTIONAL • Professional Expertise • Achievement Orientation • Concern for Order • Self Control TIME-BASED • Self Confidence • Initiative • Flexibility • Impact and Influence NETWORK • Initiative • Relationship Building • Trail-Blazing

34. Executive Team - Focus Group Ideal Characteristics What behaviors do we like to see in our people? What are the behaviors needed for outstanding performance in Arun LNG? What drives outstanding performance in Arun LNG? What are the qualities required to succeed in the future Arun LNG ? • Orang yang bersemangat, tidak perlu disuruh • Kerja tuntas, dan berkualitas • Proaktif, tidak menunda-nunda • Disiplin • Ulet, gigih • Bersemangat • Berani mengambil resiko yang terkalkulasi • Forward Thinking • Bertanggung jawab (Konsekwen) • Rela (bersyukur, ikhlas) • Mencintai pekerjaan • Ingin selalu maju

35. Achievement Orientation Orang yang bersemangat, tidak perlu disuruh Kerja tuntas, dan berkualitas Disiplin Ulet, gigih Bersemangat Berani mengambil resiko Ingin selalu maju Initiative Proaktif, tidak menunda-nunda Forward Thinking Integrity Bertanggung jawab (Konsekwen) Rela (bersyukur, ikhlas) Organization Commitment Mencintai pekerjaan Focus Ideal Characteristic – Competency

36. Integration Process to Identify Core Competency

37. Arun’s Core Competency Achievement Orientation Integrity Organization Commitment Teamwork Concern for Health, Safety & Environment *See Definition of each Competency in Competency Dictionary

38. Agenda Competency Concept Competency Model Core Competency Development Managerial Competency Development Job Family Competency Development

39. Identification of Managerial Competency Direct and manage activities in the work unit in order to enser the efficiency and effectiveness of work performance and results Prepare work unit plan in order to ensure the implementation of plan and program in accordance to overall business plan and objectives Motivate, coach, and identify employees development needed in order to improve their competency and capability ILLUSTRATIVE Main Accountabilities of Managerial Positions Have intention to increase team effectiveness to get high productivity Capable to prioritize and prepare work plan which is aligned with company’s strategic plan and objectives Have intention to foster others development process Behavior Characteristics Needed Team Leadership (TL) Strategic Orientaiton (SO) Developing Others (DEV) Managerial Competency

40. Identification of Managerial Competency

41. Arun’s Managerial Competency Developing Others Directiveness Team Leadership Strategic Orientation *See Definition of each Competency in Competency Dictionary

42. Agenda Competency Concept Competency Model Core Competency Development Managerial Competency Development Job Family Competency Development

43. Job Family – Definition & Concept • Job Family is defined as: • Broad groupings comprising a set of jobs or positions where the nature of the work is similar and has common themes • Linked activities – similar activities are undertaken at a progressively senior level in the family • Which are likely to require similar skills, knowledge and competencies in order to drive performance • Which represent a natural career path, though lateral movement across job families may take place. • Job Family is not: • Not organization structure – Job Family do not describe reporting relationship • Not reflecting salary structure – Job Family focus on roles, accountabilities and characteristics of the job

44. Using Job Family Approach • Job Family is suitable in situations: • Reorganization – need to redefine the accountabilities of the jobs • There is a need to enhance the flexibility of career movement • In order to introduce competency-based performance management • There is a need to empower employees in planning and monitoring their own career management • Job Family is not suitable in situations: • On-off job • Small organization where there is only one function in the organization

45. Job Family Identification in Arun Value Chain Analysis Logistic, General Affairs, Security, HSE Engineering Support (Support Creation of Services/ (Support Creation of Services/ Products for Customers) Products for Customers) Support Activities Support Activities Information Technology Information Technology Margin Margin Human Resources Human Resources Finance, Accounting, Legal, Audit Operations Operations Projects Projects Marketing Customer Customer & & Services Services Logistic Logistic Margin Margin Plan Plan Sales Sales Construction Construction Maintenance Maintenance Primary Activities Primary Activities (Creation of Services/ Products for Customers) (Creation of Services/ Products for Customers)

46. Job Family Identification ILLUSTRATIVE Customer Service Marketing & Sales Operations Maintenance General Affairs HSE Engineering Support Finance & Accounting Legal Logistic Information Technology Human Resources Audit