TNK-BP Approach to Talent Development for Business Risk Minimization

1. TNK-BP Approach to Talent Development for Business Risk Minimization TNK-BP, October, 2006

2. Organizational Capability Framework to minimizebusiness risks Organizational capability includes all the elements of Organization that collectively result in its ability to deliver its business strategy 1 Elements of Framework • Business Strategy & Plan • Manpower Strategy & Plan • Organization Structure • Competency Assessment • Recruitment • Training and Development • International Experienced Staff • Career Development • Compensation and Benefits • Succession Planning

3. Organizational Capability & Leadership Competencies What type of leadership TNK-BP needs? 1. Business strategy and plan 2. Manpower Strategy & Plan How exactly leadership looks like on each level? 3. Organizational structure How shall we recognize leaders of today? • Competency assessment • Recruitment What exactly should we develop in our leaders? 6. Training and development 7. International experienced staff What are the next career level expectations? 8. Career development What behaviors should one demonstrate to be promoted and paidhigher? 9. Compensation and benefits 10. Succession planning What are our leaders of tomorrow?

4. Corporate Leadership competencies Universal set of organizational behaviors describing successful leadership For each competence, emphasis changes with organizational level Professional competencies Required by specific positions in Streams and Functions Set of professional skills and knowledge standards required to perform concrete job role Business awareness Basic business skills and knowledge essential for: • Quick integration in the Company and corporate culture • Effective individual performance Examples include language capability, PC skills etc. ТNK-ВР Competencies Architecture

5. How were Leadership Competencies developed? From 72 interviews and 303 survey responses, 10 specifics of TNK-BP were identified: These findings are important context for our Leadership Competency Model

6. Leadership Qualities Business Qualities Personal Qualities Analysisand decision making Integrity and ethical behavior Interaction Workprocessmanagement Drivefor results Communication and engagement Developingself and others Teaminteraction Management of change 8 clusters of Leadership Competencies, critical for Company high performance

7. Leadership Competencies’ hierarchy in TNK-BP

8. Top managers Future Strategic leaders Middle-managers Front-line managers Specialists University graduates Key Leadership Development Programs-frame for Talent Management pipeline Thunderbird andINSEAD “Ascent” “Perspective” “Three horizons” University relations University relations

9. Ascent - Top level Program for Talent Management Target group: Middle managers Scope: 100 +/- each year Duration: 3 year with annual progress review Features: A diverse set of learning options, compiled in a program for each participant Key objective: To identify, develop and retain the best candidates for senior strategic roles in TNK-BP (VP level+) Summary: Middle managers nominated to participateAscent by their seniors, pass leadership assessment and out of them the pool of High potential leaders selected. This pool receives special leadership development opportunities to become ready as VP, EVP potential successors. When career opportunity opens, the pool is revised and if proper candidate exist, then promoted Sponsored by: Core Executives (L1 company level)

10. Ascent Program background Ascent program goals • To identify the best candidates for senior strategic roles in TNK-BP (VP level+) • To contribute to accelerated development of program participants. • Sustain motivation and retain the key managers What was already done • Program participants selection • Developing workshops for coaching on PDP • Assessment • Learning & development framework • Mentoring program • Ascent Management System (IT tool) Ascent program strategy • Business leaders/ CoreX involvement. • The procedure of selection, based on 4 groups of criteria: potential, motivation, behavior, performance. • Monitoring participants results (% KPI, % PDP); tracking the progress annually. • Learning offer in accordance with personal development plans. • Personal motivation of the participants is one of the key factor of the program success • Clear communications for all target groups, involved in the process

11. Behaviour Seen as positive, charismatic role model Possesses good communication and networking skills Values different opinions and points of view Leads with visible integrity Nomination and Selection Process Stream/Function EVP VP and HR approve and forward nominations to Corporate HR Corporate HR logs and forwards to CoreX for approval Approved individual confirms commitment and enters Programme Individual nominated within Stream/Function Selection Criteria and Process for Ascent Potential • Able to learn and grasp new knowledge and skills • Able to assume new responsibilities • Strategic thinking • Drives changes and proposes innovations Personal Motivation • Desire for career progression • Willingness for personal and professional development • Sustained commitment to TNK-BP Performance • Establishes challenging targets and strives to achieve them • Delivers performance objectives • Enhances team performance • Satisfies clients

12. Assessment center Corporate leadership competencies Senior-level managers Individualassessment Mid-level managers Professional competencies Initial-level managers Generalfinancialtest (example) Business Awareness competencies Specialists Criteria Participants level Assessment design for Ascent group Assessment methods used Reasons for Assessment • For clear understanding participants’ potential and limitations for their career planning and development. • To have information about participants in the comparable format. The diverse group of 101 participants was selected • For individual design of development programs. • Assessment and following feedback is one of the strongest tools of personal development . Competency rating scale

13. Learning & Development framework for Ascent Leadership Skills Development Programs • Executive development programs (in-house executives’ programs: INSEAD, Thunderbird) • Short-term open and corporate programs (leadership skills) • Development of mentoring skills On-the-Job Development • Challenging KPIs; stretching • Short-term/ long-term rotations • cross-functional • in other companies • reverse secondment to ВР Self-awareness Programs • Personal coaching • 360 degrees Tool • Personal development programs Professional Knowledge Programs • Financial and economic knowledge and skills program (Deloitte Academy) • Technical/ function specific programs Strategic Vision Development Programs • Task- force projects with cross-functional participants • Business simulations • Business Club (conferences with participation of Russian and international experts in management, psychology, finance, etc.)

14. Perspective – front-line managers’ program Target group: Front-line managers (grade 14-17). Positions: crew foreman, section leaders, refinery unit leaders, retail site managers e.t.c Scope: 5000+ Duration: 1,5 year, 9 classroom days Key objective: To facilitate front-line managers’ shift from technical expert role to leadership role, improve their decision-making quality Summary: Program designed and delivered by external consultants together with the company experts. It consists of 2 training modules + module 3, structured as a development workshop. Each training module covers several leadership competencies. Development workshop helps to practice new skills, evaluate self and plan future development. Knowledge testing and after – modules assignments included. Provides calibration of participants at the end to feed succession planning and Talent pool. Sponsored by: Top management

15. Staff Deployment and Development networks’ input in Talent Management system Line managers involvement in employees capabilities development is a key success factor for organization - SDDN groups in TNK-BP. Characteristics Core activities • Discipline established (e.g. drilling, reservoir engineering, commercial, finance) • Governance by Functional Leaders • Vital link between Functional strategy and people issues • Establish the knowledge standards within the discipline across the company • Regular meetings • Staff deployment Job opportunities Staff looking to move, rotations, assignments Succession pool reviews • Staff development Promotions Competency / Training Graduate development Mentoring program Technical development Discipline Hi-Po • Resource renewal Staff Supply / Demand Recruitment Remuneration

16. Talent Management as part of Learning & Development system Effective L&D characteristics for business risks mitigation: • Strategy driven L&D framework • Consistent and coherent approach in building learning programmes • Focus on-the-job development along with formal learning • Building technical expertise along with managerial skills • Establishing parameters to track the effectiveness of L&D • Line managers involvement in staff development • Talent pool identification, development and retention