EFQM Levels of Excellence Recognised for Excellence...

_____________________________________________________________________________________________________ Recognised for Excellence Submission Document 2002 of 52 V1/En

EFQM Levels of Excellence

Recognised for Excellence

Submission Document

ERICSSON NIKOLA TESLA d.d.

p.p. 93 – 10002 Zagreb - Croatia

© 2001 EFQM It is the EFQM’s intent to encourage the widespread use of this material within companies and or organizations. However, no part of this publication may be reproduced, stored in a retrieval system, or communicated in any form or by any means (be this electronically, mechanically, through photocopy or recording, or otherwise) without the prior written permission from the copyright owner.


OVERVIEW: ORGANISATIONAL BACKGROUND AND ENVIRONMENT NAME OF ORGANISATION: ERICSSON NIKOLA TESLA d.d. p.p. 93 – 10002 Zagreb - Croatia ORGANISATIONAL STRUCTURE: The joint stock company Ericsson Nikola Tesla (ETK) is a local Ericsson company in Croatia. The company was founded in May 1995 when the Ericsson Corporation became the major shareholder. In the present ownership structure, Ericsson owns 49,07% of shares, small shareholders own 47,61% and the Croatian Privatization Fund 3,32% of shares. In the new ETK organization (April 2003) there are three core functions: Sales; Operations; and Research and Development (R&D) Centre and four support functions: Business Support, People and Culture (Human Resources), Communication and General Services. (See page 48) LOCATION INFORMATION: The headquarters, main operations and R&D Center (telecom software design) are located in the Croatian capital Zagreb, Krapinska Street 45. In the town of Split, Poljička Street 39 the software designers are located (smaller part of R&D Center)) who organizationally belong to the R&D Center in Zagreb. TOTAL NUMBER OF EMPLOYEES: ETK has 1080 employees. More than 80% of all employees hold a university degree (mostly electrical engineers), 8% are Masters and Doctors of Science. ETK desires to attract, develop and retain the best workforce. The age and gender structure also show improvement. The average age of employees is 39,7 years and as many as 400 employees are under the age of 32, approximately 30% are female employees. All employees work full-time. Four executives come from Sweden. ORGANISATIONAL BACKGROUND: HISTORY OF THE ORGANISATION ETK continued its successful operations on the firm foundations laid by the Croatian enterprise "Nikola Tesla". "Nikola Tesla" was founded in 1949 and it was the largest specialized manufacturer and exporter of telecommunications systems and solutions in Central and Eastern Europe. The close collaboration with Ericsson dates back to 1953. The Company manufactured, installed and put into operation three generations of exchange systems. Considerable transformation took place in the last eight years after the company had joined the Ericsson group. ETK switched over to software production and supply of total telecoms solutions and services for the New Telecoms World (NTW) based on mobile Internet. The transformation of the Company is manifested in a customer-oriented organization, expansion to regional and world markets and optimizing the company as to the structure, competence and the number of employees. During 2002 the company confirmed its standing as the expert centre for total communication solutions and services in Central Europe, and in the new Ericsson organization it was assigned the status of one (out of three) centres of business excellence in customer solutions and sales support in the entire EMEA market area. The Croatian Chamber of Commerce granted to ETK «The Golden Marten» award as the best large company in the country in 2001. THE ORGANISATION’S QUALITY JOURNEY (including self assessment) ETK aims for an effective and efficient functioning of TQM system. In the period 1996-2003 ETK accomplished a lot of significant quality improvements and some of them are: - 1996: First Self-assessment against the EFQM EM by using the questionnaire approach - 1997: ISO 9001 certificate granted by SIQ to our Research & Development Centre for software design. - 1998: Research & Development Centre gets the 3rd Capability Maturity Level for software design. - 1999 until 2001: Self-assessments against Ericsson Business Excellence Maturity model. - 2000: ETK is certified according to the standard ISO 9001:1994 by Det Norske Veritas.


- 2001: As part of the Ericsson Global certification BSI granted to ETK certificate ISO 14001. - 2002: Integrated management system ISO 9001, ISO 14001 and OHSAS 18001 published on ETK Intranet. - 2002: Self-assessment against EFQM EM, a questionnaire approach, performed by Top Management Team. ORGANISATIONAL ENVIRONMENT ETK is an important part, the expert center, in Ericsson's Market Unit Central Europe (Croatia, Slovenia, Bosnia and Herzegovina, Hungary, Poland, Czech Republic and Slovakia) as well as in Ericsson's Market Area Europe, Middle East and Africa (EMEA). THE PRODUCTS & SERVICES OF THE ORGANISATION Network Rollout (Node Implementation, Network Build, Network Migration), Customer Services (Hardware Services, Network Support, Consulting Services), Ericsson Education (Consulting Services, Ericsson Online, Competence Development Solution), System Integration (Mobility Solutions, Network Management & Service Assurance, Customer Management, Business Consulting), Professional Services (Network Consulting, Managed Services) THE VISION, MISSION AND VALUES OF THE ORGANISATION The commitment of ETK is to be the preferred business partner and software/ solutions/ services provider for the NTW in Croatia and within the EMEA region. The mission of ETK is: To understand the customers’ needs, to create business opportunities for them and to offer to them the NTW solutions by being faster and better than any competitor, and by being the best partner for software and services within the Ericsson Group. In doing so ETK will generate profit and growth for all its shareholders. The ETK’s culture is defined by following corporate values: the professionalism in completion of everyday job, the respect for people which is manifested in top working conditions and partnership with customers and the perseverance in the realization of the set goals. THE ORGANISATION’S CUSTOMER BASE ETK has three cornerstones of its operations: the Croatian market, foreign markets and Ericsson's internal market. Within the corporation the company has the marketing and business responsibility for a number (70) of countries in EMEA region. In 2002 the company realized 80% of its total sales on the export markets including Ericsson's internal market. The main customers in domestic and export markets are incumbent telecom operators for fixed and mobile telephony, emerging operators, Internet Services Providers and big companies. THE STRATEGIC OBJECTIVES OF THE ORGANISATION ETK is focused on the following: a) Strengthening the global and regional role in the NTW, b) Repositioning from the solution provider to concept provider, c) Increase of the services content in the sales structure, d) Excellence in Service Performance, e) Pro-active and inventive selling, f) Forming partnership with our customers and other business partners, g) Profitability and cost control, h) Competence development & people empowerment, i) Management planning, j) Strengthening Company's image, k) Positioning Company as the leader in the New Economy in Croatia, l) Promotion of Company as an environmentally and socially responsible company. THE EXTERNAL ENVIRONMENT IN WHICH THE ORGANISATION FUNCTIONS Ericsson Nikola Tesla is a company in Croatia. The Republic of Croatia gained its independence in 1990 and is now a country in transition. By its cultural heritage Croatia is a Middle European country with 4,3 million inhabitants, and it extends over an area of 57 000 square kilometres. The capital is Zagreb with almost one fifth of the entire population residing there. The gross domestic product per capita is 5000 USD. By the level of development of the telecommunications infrastructure and according to the number of inhabitants using fixed and mobile telephony Croatia stands side by side with developed European countries.


CRITERION 1 : LEADERSHIP GENERAL INFORMATION Definition: How leaders develop and facilitate the achievement of the mission and vision, develop values required for long-term success and implement these via appropriate actions and behaviours, and are personally involved in ensuring that the organisation’s management system is developed and implemented. The Leadership criterion is concerned with HOW the organisation’s leaders are involved in:

• Developing the mission, vision and values and are role models of a culture of excellence • Developing, implementing and reviewing management systems • Involving themselves externally with customers, partners and society • Reinforcing behaviour through motivation, support and recognition

Who the organisation sees as leaders (formal and informal) and the numbers of leaders at the differing levels within it? Leadership in ETK is seen as the power to inspire and motivate, the ability to imbue employees with the desire to change the organization and to be the best. ETK leaders create the vision and the strategy and present it and themselves in such a way that employees feel enthusiastic and excited by it. ETK sees team leaders and line managers as leaders. At present, ETK has 60 line managers on 3 levels: Company President and 13 Unit Directors on the first level of management, 35 managers on the second level and 11 managers on the third level. Female managers are represented with 30% of the total number. How leaders are involved in the management system of the organisation? Leaders are involved in the management system of the organization through different kind of activities: creating vision and mission, making SWOT analyses and planning improvement actions, communicating organization needs for changes and leading changes (organization, approaches, technologies), setting goals and indicators, communicating and cascading that goals from the top to the employees, motivating employees for achievement, recognizing and rewarding people and teams (reviewing and setting new ways), recruiting the best, through fostering communication and good relationships (outdoor work meetings, at least one day a year they associate with all employees outside the company, regular weekly or monthly briefing), team building, cost analysis and cost control; they take actions to improve cost effectiveness, promote organization, people and achievement inside and outside the company, take part in professional events (organized by company or customers). Team leaders (young, enthusiastic, full of energy and with passion to win) are engaged in leading important projects in the company and in the market area. HRMS (Human Resources Management System) tool is used for Organization Management, People Management, Management Planning, Recruitment, Competence and Performance Planning, also other tools developed in the company to increase work efficiency (TRAMP, WARP). The organisation’s values and behaviours that create the culture e.g. against which leaders are assessed ETK fosters three main values: Professionalism, Respect and Perseverance, which are observed by leaders in everyday’s work. Leadership style, relationship, structural skills, participation and networking skills are reviewed and measured every year through the COMPASS and DIALOG surveys and the results are compared (benchmarked) with Ericsson Corporate, MUCE and external Best in Class. Also, the managers are assessed against four Ericsson Manager Roles: The Business Developer, The Innovator, The Competence Developer and The Relationship Builder. Development Plan for management planning candidates is set up for developing and improving leadership skills for all management levels. The LCC (Leadership Core Curriculum) program that started in 2000 is mandatory for all managers.


CRITERION 1 : LEADERSHIP Sub-Criterion 1ALeaders develop the mission, vision and values and are role models of a culture of excellence. Provide information in detail on one relevant approach to the sub-criterion, and briefly on other approaches and additional information. Title: The Strategic Planning Process APPROACH - Description of one key approach. The Strategic Planning Process includes 2 aspects: 1) how to develop the main direction and strategies for the company and 2) how to secure an agile handling of new strategic options based on the market development. The first aspect, the development of main direction and strategies, is handled in 2 steps; development of strategic direction, and development of company strategies. The second aspect, securing an agile handling of new strategic options, is handled in the strategic business development sub-process. A supporting strategic business intelligence function is connected to the process. The company’s main direction (Ericsson Strategic Planning – ESP) is a document where the company’s overall strategic and operational direction is stated. The company direction includes:

• Our Mission and Vision and Values • A SWOT analysis (not widely spread) • Our Long-Term Objectives • Our Main Strategies and Efforts.

The Main Strategies set the main guidelines on how the Long-Term Objectives should be achieved. The Top Ten Activities in the booklet ESP 2000-2004 are: 1. Business for Mobiles, 2. Y2K Project for NTW, 3. Competence Shift, 4. Financing project, 5. Trim by SAP R/3, 6. Rightsizing, 7. Company optimization, 8. Management competence 9. ETK Image and 10. Sales support in Central and Eastern Europe. DEPLOYMENT The content of the company direction (Ericsson Strategic Planning) is communicated to all employees in a booklet and over ETK Intranet. ASSESSMENT & REVIEW The company direction is periodically assessed & reviewed and if necessary updated once a year, based on the feedback from the ongoing strategic work with the Ericsson Strategies as well as from the line organization. Our actual situation and the signals we get through our Business Intelligence and Strategy Evaluation Projects are also used as input when updating company direction.

Additional approaches applicable to this sub-criterion Deployment Effectiveness measures & cross

reference to results ESP Ericsson Strategic Planning - booklet Intranet BSC and KPI in five

perspectives ESP 2000-2004 ETK Strategic Plan 2000-2004 – booklet with Top Ten Activities

Intranet % of accomplishment,

Leadership, measured by DIALOG in 2002 All employees ETK 73%, BinC 64% (External benchmark); Sub-Criterion 7A (2) (3) (4)

Goals, measured by DIALOG in 2002 All employees ETK 71%, BinC 85% Organisational efficiency, measured by DIALOG in 2002 All employees ETK 63%, BinC 67%,

Sub- Criterion 7A (3) Responsibility and initiative, measured by DIALOG in 2002 All employees ETK 61%, BinC 72% Empowerment, measured by DIALOG in 2002 All employees ETK 35%, Average

23% (for IT, telecom and Service companies), Sub-Criterion 7a (1)


CRITERION 1 : LEADERSHIP Sub-Criterion 1BLeaders are personally involved in ensuring the organisation’s management system is developed, implemented and continuously improved. Provide information in detail on one relevant approach to the sub-criterion, and briefly on other approaches and additional information. Title: Management Planning (MP) APPROACH - Description of one key approach. To ensure that the organisation has the managers able to meet organisation needs or to fill new appointments, ETK implemented the Management Planning Process, set up and recommended by Ericsson. High potential people and good performers are identified and assessed against Individual Capacity feature (Intellectual Ability, Self-Esteem, People Orientation, Perspective and Result Orientation) and against four Ericsson Manager Roles (The Business Manager, The Innovator, The Competence Developer and The Relationship Builder). Selected candidates are included in the Management Planning Process – Development Plan, Succession Planning, annual review and appointments. They are grouped in 5 categories: Management Team, International Candidates, Local Candidates, High Potential and Potential Managers. At present, there are 67 people in this pool and 50 of them are included in the Management Development Plan for Y2003/2004. ETK managers develop, implement and improve the ETK management system by implementing: Corporate Operational Development directives (Appendices FIG. 5A-1), Risk Based Assessment (RBA – business oriented application for internal management system auditing), Self-assessments against EFQM questionnaire (Appendices FIG. IA1-1), teamwork, discussions in communities and external certification body reports. DEPLOYMENT The HR function as a whole has also been fully engaged in MP process. Throughout the year HR director holds meetings with MP candidates’ superiors and they discuss development opportunities in terms of different roles and projects. Once or twice a year MP candidates have a meeting with Top Management Team and MP Candidates recognised as Corporate candidates. We are very pleased that one of our MP candidate is engaged as a member of Ericsson’s Young Advisory Team - The Y@) for Y2003/2004. In all sectors the managers are involved in RBA, Self-assessment and in improvement proposals implementation. ASSESSMENT & REVIEW The Management Planning process is assessed and reviewed periodically by ETK HR Director and the Top Management Team and once a year by the Corporate Reviewer. The best candidates are selected for Ericsson’s Next Generation or as Corporate Candidate. ETK has 3 Next Generation candidates and 1 Corporate candidate. RBA is giving feedback of direct relevance for the operational management system of the organisation.


reference to results Assessment and Development Centre – Program for assessment of MP candidates. The Centre uses psychometric testing materials to measure competence in verbal and numerical ability and a personality questionnaire. In addition to that, business scenarios are given to candidates to demonstrate competence on an individual and group capacity. ETK ran 5 (five) Assessments and Development Centres during Y2000/Y2003.

51 candidates 47,1 % of them got recommendation for managers positions, 27,5 % of them got recommendation with reservation and 25,5 % of them are not recommended

A systematic evaluation of all MP candidates is carried out with HRMS Web Tool, which provides clear visibility to senior managers of the managerial resources available to them with an emphasis on their potential for further advancement and for nomination to Ericsson Management Institute programmes

All managers have access to

this tool

No. of MP candidates in the pool/ No. of recognised as Corporate Candidates


CRITERION 1 : LEADERSHIP Sub-Criterion 1CLeaders are involved with customers, partners and representatives of society. Provide information in detail on one relevant approach to the sub-criterion, and briefly on other approaches and additional information. Title: Leaders outside of company APPROACH - Description of one key approach. ETK Leaders promote and maintain good relationships with customers, partners and representatives, take part in their activities, thus contributing to general social progress, participate in the activities of associations, join the trade delegations on the state level visiting other countries (entrepreneurs), are represented in professional bodies and associations (HUP – Croatian Association of Employers), organize events. ETK has implemented lean KAM organization oriented towards customers to ensure: • Business opportunity creation and responsibility for customers • Short/Long-Term Account Plan (Sales plan for every customer), including sales of services • Operative price management within reference price framework/rules • Customer financing responsibility. DEPLOYMENT ETK leaders (especially KAM) spend a lot of their time with customers, partners and representatives of community in all ETK markets. Some exhibitions and events have for years been organized at the same date every year. ETK experts for support functions are very active in various professional societies and governmental institutions. They share their high professional knowledge with the employees of other Croatian organisations thus contributing to prosperity development. ASSESSMENT & REVIEW ETK was nominated and was the winner of «The Golden Marten» for the year 2002 in the category Best Big Company - Croatia’s most prestigious business award given by the Croatian Chamber of Commerce. Award for Business Woman of the Year – the winner was Gordana Kovačević, ETK Vice President and Operations Director. Organizational units regularly carry out Key Customer Surveys and hold regular meetings with Key Customers (VIPnet, HT) Share best practices Number of articles published in various media. Customer Satisfaction Index, market share.


reference to results Exhibitions and Events related to the New Telecom World inside and outside ETK

Home Market Sub-Criterion 8A (3) (4); questionnaires

e-government project for Croatian government Croatia Partnerships with small Croatian companies 7 companies No. of new

applications for Mobile Internet

Self-assessments against excellence models, since 1996 Sectors, TMT Appendices FIG IA 1-1 ISO 14001 certificate, OHSAS 18001 MS, lectures inside and outside ETK in other companies and organisations

ETK, community

Internal and external audits, inspections

Customer training centre All customers Exam Participation in Croatian professional bodies All relevant

bodies in Croatia

No. of ETK employees in professional bodies

Customer satisfaction measurements Key customers See Criterion 6 (1) Sponsorships, donations to non-profit organizations Croatia Sub-Criterion 8A (1)

(2) Leaders communicate with ETK customers, DIALOG 2002 All employees ETK86%,MUCE 80%,

Sub-Criterion 8A (3)


CRITERION 1 : LEADERSHIP Sub-Criterion 1DLeaders motivate, support and recognise the organisation’s people. Provide information in detail on one relevant approach to the sub-criterion, and briefly on other approaches and additional information. Title: Human Resources Management System -HRMS APPROACH - Description of one key approach.

HRMS is Ericsson's mandatory HR Management System, based on SAP R/3. The system should work as a global database with employees data, inter-connected between companies and countries, with the functionality in line with Ericsson's key processes. It is adapted for integration with other SAP R/3 modules, such as Finance and Logistics. HRMS is a tool that supports managers in all HR management activities. By using this tool managers are able to see all data about employees, to set and follow up goals and indicators and to give feedback to employees, to promote and reward (Performance Management), to define required profiles within Organization and Position Competence (Competence Planning) and to compare them with Present Competence profile (analyse Competence Gap and set Development Plan), to identify and assess potential managers (Management Planning), to recruit talented people (Recruitment), to set and analyse organization structure (OM) and run reports, see Criterion 3 General Information. DEPLOYMENT All managers have access to this tool and also a web interface to Recruitment, Management Planning and PM/CP Management Modules. We have just deployed CP/PM Module to all managers and employees (70 % of total number of employees attended the presentations). ASSESSMENT & REVIEW HR function monitors, follows up and animates managers and employees to use this tool. An important segment in the HRMS implementation is improvement: managers measure and analyze the employees’ results or actions. This part is also important in using and improving the HRMS processes. To improve the processes in the subsequent plan and performance evaluation (once a year), ETK managers assess all positive and all negative variation in relation to the robust, committed or stretched objectives.


reference to results President’s and managers’ letters to employees by e-mail, Intranet site and publications

All employees Employees satisfaction

President’s All-Employee Award All employees Objectives for Sales and customer satisfaction realization

PD discussions, Performance Evaluation (PE) All employees Sub-Criterion 7B (4) Award granted to employee by direct manager after performance evaluation

All employees % of objectives accomplishment

Employee’s achievement publishing Intranet, comp newspaper

No. of articles

Clear and easily accessible mission, vision, policies, directives, guidelines, objectives and targets

Corporate and ETK Intranet

No. of questions to the helpdesks

Leaders support the organisation’s people, DIALOG 2002 All employees ETK83%, MUCE 79% Motivated ETK employees, DIALOG in 2002 All employees ETK 58%, BinC 72% Leaders recognise the organisation’s people, DIALOG 2002 All employees ETK64%, MUCE 63% CRITERION 2 : POLICY & STRATEGY GENERAL INFORMATION


Definition: How the organisation implements its mission and vision via a clear stakeholder focused strategy, supported by relevant policies, plans, objectives, targets and processes. The Policy & Strategy criterion is concerned with HOW the organisation:

• Uses a relevant range of external and internal information when developing and reviewing its policies and strategies

• Develops those policies and strategies in practice • Implements them through relevant processes and effective plans • Communicates them to relevant audiences

Who the organisation sees as its key stakeholders? ETK’s key stakeholders are: Customers, Employees, Suppliers, Shareholders, the Republic of Croatia as well as the local Community. ETK generates profit and growth for all its stakeholders. . What are the key strategies of the organisation and how does the organisation use continuous learning / benchmarking to inform strategy development? In line with Ericsson Strategies Planning 2000-2004 (the goal of which is to secure a long-term development of ETK operations) the MUCE and ETK strategies for 2003 are: - to aggressively exploit selected business opportunities by creating added value for the customer and excellent partnership. - to capitalise on synergies by using the regional resources to create a cost-effective market unit. - to develop and promote generic product offerings from the business units. - to drive Services as a business on its own right. - to be visible in order to be the No. 1 telecommunications supplier in the region and the partner of choice. To build strategic partnership with selected customers. - to build and maintain competence. To compete in the New Telecom World, ETK needed (in 2000) and still needs a major competence shift from the traditional telecommunications world towards The New Telecom World (NTW), meaning datacom and infocom competencies. Candidates for intensive education within the company are defined and found; active training within new areas is performed internally and externally. For that purpose ETK established partnerships (co-operation agreements) with the Faculty of Electrical Engineering and Computing in Zagreb and Split and also invested in a laboratory for NTW in Zagreb. Competence gap analysis, based on Ericsson Competence Model, was accomplished and a program for Competence Shift towards NTW was developed. The existing competences for NTW are periodically benchmarked with those in other MUCE companies. Competence managers both at ETK level and in some large sectors were appointed. What are the key processes and how is the ownership of processes decided? The ETK key processes are: 1) ETK without R&D: Sales and Marketing Processes for Direct Distribution within the Operator Segment. This applied process is compatible with generic Ericsson Business Process (EBP). 2) Research & Development: - Process Support - Corporate Processes - Assignment Handling Processes - Project Management Processes - Product Realization Processes. For generic Ericsson processes a process owner was appointed at corporate level. For processes applied at local companies a process owner is appointed locally. Process Owner for processes stipulated by ISO management system standards is the relevant company manager, e.g. Company Quality Manager for ISO 9001 processes.


CRITERION 2 : POLICY & STRATEGY Sub-Criterion 2APolicy and strategy are based on the present and future needs and expectations of stakeholders. Provide information in detail on one relevant approach to the sub-criterion, and briefly on other approaches and additional information. Title: Business Development APPROACH - Description of one key approach. ETK is continuously monitoring and analysing the situation in the market(s). This monitoring is aimed at understanding the business environment and ETK competitive position in order to utilise the full market potential and capitalise on the market needs and identified business opportunities. ETK performs Business Analysis by implementing a Market Analysis (Market potential, Market trends, Regional/Global aspects, Local economy trends), and by considering Business Environment (“Power structure”, Liberalisation & deregulation, Risk & contingency plans) and Business Intelligence (Industry analysis, Competitor analysis, Key players). By anticipating possible (future) business scenarios ETK determines where it wants to be and works out medium-/long-term business plans policies and strategies to get there. These activities enable ETK to deliver the high quality forecasts, to link its strategies with actions, to monitor the performance and to make strategic adjustments along the journey towards the wanted position. DEPLOYMENT ETK Mission, Vision, Values, Long-Term Objectives and Main Strategies are communicated to all ETK units and employees via ETK web sites and booklets. Every year the deployment process is performed according to the following scheme: 1) At MUCE and ETK level main strategies and objectives (planning) are defined and aligned with those on the corporate level, 2) At managers meetings Key Success Factors are determined, 3) Unit managers have to decide on units goals and targets and they have to align them with the company goals and targets, 4) Key Performance Indicators (KPI) are selected for stipulated business perspectives (e.g. Financial, Customers, Employees, etc) presented on BSC and 5) units and employees responsible for KPI prepare standardised periodical reports on KPI for the purpose of informing and acting (corrective actions if necessary) with BSC. ASSESSMENT & REVIEW The units and employees responsible measure and report monthly/quarterly on attained KPI levels for publishing on ETK BSC. For each KPI robust, committed and stretched levels are determined. Actual achievements for all stipulated business perspectives are published on ETK web sites (detailed data are password protected) and general picture is accessible to all ETK employees. If BSC for some perspective and KPI indicates possible future or already existing negative trend, respective unit manager has to assess and review all data and has to take necessary actions (preventive or corrective). Company performance is continuously monitored and regularly discussed (quarterly) in Business Review meetings held on top management level. Corrective actions (if any) are agreed and monitored thereafter. In regularly held Managers Forum (ETK president and all ETK managers) BSC results are also discussed and communicated.

Additional approaches applicable to this sub-criterion

Deployment Effectiveness measures & cross

reference to results Ericsson Strategic Planning (ESP 2000-2004) Intranet Sub-Criterion 9A (1)

(2) (3) (4) Business Analysis 80% % Of accomplishment Business Planning 90% % Of accomplishment Business Innovation 50% % Of accomplishment Business Consultancy 50% % Of accomplishment


CRITERION 2 : POLICY & STRATEGY Sub-Criterion 2BPolicy and strategy are based on information from performance measurement, research, learning and creativity related activities. Provide information in detail on one relevant approach to the sub-criterion, and briefly on other approaches and additional information. Title: Balanced Scorecard APPROACH - Description of one key approach. ETK outputs are promptly presented on web site by using BSC approach. (Appendices FIG. 2B-1) At the beginning of the year stipulated KPI are distributed on the Strategy Tree for the following 5 areas (perspectives): Financial, Customer, Internal Efficiency, Innovation and Employees. A cockpit communicator indicates the achievement for each KPI graphically by positioning the needle (pointer) on one of several relevant positions: Off Track, Warning, On Track, On Target or Excellent. This approach enables managers to identify easily and quickly all divergences from clearly marked objectives and targets. Based on ETK achievements (i.e. the knowledge of our strength) published on BSC and on systematically analysed information supplied by our Business Development unit (e.g. information on market potential and market trends; liberalisation and deregulation, risks, competitors, key players; technology innovations, routines and strategies for partnering, end-user perspective, network development scenarios; value chain, strategies for operators) the ETK management defines new strategies and revises the existing ones. DEPLOYMENT ETK objectives/ KPI and their values in current year for the levels robust, committed and stretched have been published on ETK Intranet for 5+yrs. These objectives/KPI are used for determination of objectives for single unit and for every employee as well. This approach enables an alignment of every employee’s performance plan for actual year with corresponding unit or ETK plan. ASSESSMENT & REVIEW The information related to company performance is assessed and reviewed periodically (monthly/quarterly) by the respective unit/function managers and/or ETK Management Team. Assessment and Review of results published on ETK BSC are described in Sub-Criterion 2A.


reference to results Business Intelligence 30% BIC - Corporate

Business Intelligence Centre, Intranet, Sub-Criterion 6B (2)

Objective setting process 100%, 5+yrs BSC DIALOG, especially Empowerment, Management/Leadership 100%, 5+yrs Sub-Criterion 7A (1)

(2) (3) (4) Customer satisfaction measurements Key

customers, 5+yrs

Sub-Criterion 6A (1), 6B (1) and (4) KAM is internal customer

Competence shift All employees See Sub-Criterion 4E Self-assessments Whole ETK,

5+yrs % of improvement proposals accomplishment, Appendices FIG. IA1-1

Familiarity with the goals, DIALOG 2002 All employees ETK 71%, BinC 85%


CRITERION 2 : POLICY & STRATEGY Sub-Criterion 2CPolicy and strategy are developed, reviewed and updated. Provide information in detail on one relevant approach to the sub-criterion, and briefly on other approaches and additional information. Title: Development of policies and strategies APPROACH - Description of one key approach. Corporate policies are prepared after extensive consultation within Ericsson. It is not expected, however, that these policies will provide full and absolute guidance; on the contrary, it is expected that the question of interpretation and suggestions for improvements will arise. Corporate Policies are mandatory and must be adhered to unless the appropriate Corporate Function approves a variation. By taking into account the collective experience of the organization, the Corporate Functions are able to develop and continually improve Ericsson Corporate Policies. In line with corporate policies and strategies, ETK management develops more specific and possibly more detailed policies and strategies by reviewing the long-term objectives and business framework (mission, vision, values and scope of operation) on a yearly basis. Strategies to obtain the objectives are continuously worked with. DEPLOYMENT A Corporate Policy is the framework established by the Chief Executive Officer within which the operations in the entire Ericsson organization shall be carried out. The website 'Inside Ericsson' is the main distribution point for the Corporate Policies. Only the versions listed on that website are guaranteed to be the correct versions. Which means that the Chief Executive Officer approved them and they have not been altered in any way since this approval. All policies are available on MUCE and ETK website as well as Ericsson Intranet under “Work Support”. ASSESSMENT & REVIEW The ETK management periodically performs the assessment and review of ETK policies and strategies by comparing the achievements with planned results. These assessments include regular Risk Based Assessment (RBA), Management Reviews and Self-Assessment. Company units/functions continuously scan for, and evaluate new business opportunities and threats and, if necessary, develop/modify/adjust policies, objectives and strategies for the ETK to act on.


reference to results Corporate Policies Intranet BSC Corporate Directives Intranet BSC, certificates Corporate Guidance Intranet BSC SWOT Analysis All units Action Points Corporate Business Intelligence Intranet Critical Success Factors identification (ESP 2000-2004) Intranet, all

employees Criterion 2 General Information (GI)

Customer satisfaction measurements Key customers Sub-Criterion 6A (1) DIALOG, employees satisfaction measurements All ETK

employees Sub-Criterion 7A all, 7B (1) (2); Diagrams, Scores

Media appearances (articles about ETK published in public media) All important media in Croatia

No. of articles about ETK published in media, Sub-Criterion 8A (1)

Investor relations Investors Sub-criterion 9A, 9B


CRITERION 2 : POLICY & STRATEGY Sub-Criterion 2DPolicy and strategy are deployed through a framework of key processes. Provide information in detail on one relevant approach to the sub-criterion, and briefly on other approaches and additional information. Title: Sales and Marketing Process for Direct Distribution within the Operator Segment APPROACH - Description of one key approach. The process flow is based on Customer Relationship Management (CRM) i.e. on Customer Satisfaction and it represents the approach and activities that are in line with ETK Quality Policy (“…We provide products, services and solutions that satisfy customer expectations”). The process flow starts with the very first continuous processes of: Strategy Implementation Planning – the core of all activities, Marketing - preparing the market and paving the way for any sales and Create Business Opportunities – the continuous search for business. (Appendices FIG. 2D-1) The purpose of sub-process Strategy Implementation Planning is to provide the basic platform for all Sales and Marketing activities towards a customer. Based on Market Unit’s Market Plan the Account Plans outline the strategies, objectives and action plans to create new and continued business. The sales process is supported by the Core Three Concept, and based on Value Based Selling. The three members of the Core Three Team (Account/Commercially Responsible, Total Solution Responsible and Contract Fulfillment Responsible) cover permanently the full range of activities towards a customer and have ultimate responsibility and authority within their respective scope of work. DEPLOYMENT The process is deployed in all ETK sales units and Operations and for all contracts. ASSESSMENT & REVIEW Core Three Reviews serve to secure the progress according to decisions taken and to provide the firm basis for coming decisions. The Core Three team members meet, if possible together with other participants in the project and specialists. Filled out checklist is the basic input for the meetings. Sales Decision Points form the top of the hierarchy. They are built on the input from the Core Three finalization Reviews. The Sales Process is measured on Hit-rate in combination with a qualitative analysis. Hit-rate is based on targeted business opportunities at Sales Decision Point - Pursue Business Opportunity and measure the rate of signed contracts and number of offers/tenders. The qualitative analysis shall indicate the reasons for success or loss.


reference to results ETK Market Plan All markets Sub-Criterion 9A (3) Account Plan All accounts % of realization Core Three (teamwork) All customers

and all contracts

Hit-rate Sub-Criterion 6B (1)

Business Intelligence (Competitor Information) Sub-Criterion 6B (2) Customer satisfaction All major

customers, 5+yrs

CSI (Croatian mobile operator VIPnet CSI=100%)

Investor relations Investors ETK financial results Risk Based Assessment-RBA, see criterion 5 All sectors, 2

yrs No. of improvement proposals

Self-assessments (EFQM Excellence Model and Ericsson Model) ETK, 7 yrs Appendices FIG. IA1-1


CRITERION 2 : POLICY & STRATEGY Sub-Criterion 2EPolicy and strategy are communicated and implemented. Provide information in detail on one relevant approach to the sub-criterion, and briefly on other approaches and additional information. Title: Policy and Strategy communicating APPROACH - Description of one key approach. Corporate policies and strategies are published on the Corporate Intranet. Each Market Unit defines its policies and strategies in line with corporate policies & strategies and communicates them on the Intranet sites. Local companies, like ETK, adjust its policies & strategies with relevant MU’s policies & strategies and communicate them in presentations, booklets, manager forums and Intranet sites. ETK’s Communication department issues periodically booklets named “Ericsson in Croatia” and “Ericsson Strategic Planning” in electronic and hardcopy version. These publications contain the mission, vision, policies, main strategies and objectives for the period of 5 years, as well as for the actual year. All objectives are adjusted to the relevant and actual policies. All ETK units have their goals for the actual year, and targets for each month, if this is appropriate. According to the unit’s goals, all ETK employees have their Performance Plan with individual work tasks. Every year the responsible manager performs for his employees an overall rating of their Performance Plan accomplishment by using ratings with meaning: outstanding, excellent, good, needs improvement and not acceptable. Employee’s annual award in percent of annual salary depends on the rating of the Performance Plan for 3+years. For each employee the annual award in percent of his/her annual salary depends on the rating of individual Performance Plan, this approach has been used at ETK for 3+years. DEPLOYMENT Policies & strategies have been deployed 100% for 5+years on Corporate and ETK Intranet sites. Individual Performance Plan is deployed 100%. ASSESSMENT & REVIEW Each unit manager prepares for the Company President a monthly report on the unit’s objectives accomplishment. Company president and ETK Strategic Team periodically review actual strategies and objectives realization and inform all ETK managers at the meeting of Manager Forum. The company managers responsible periodically assess actual policies and prepare new proposals for the revisions. The president or top management representative for the relevant area approves the new revisions of policies.


reference to results Human Resources Management System, Competence Management All employees Competence profile,

Appendices FIG. IA2-1 Managers Forum (president’s periodical meeting with all managers) All managers Mr. E Competence shift 62% Targets are met Performance Management in ETK Core

processes BSC - KPI

Policies & Forms, more than 37 (People and Culture department) Intranet Work Support (Policies) on Corporate Intranet Intranet Ericsson Direction (Main Strategies) Intranet Risk Based Assessment-RBA All sectors,

2yrs No. of IP, follow-up and next RBA

Self-assessments ETK, 7yrs Appendices FIG IA1-1 ETK Operational Management System, see Appendices FIG. 5A-1 Intranet RBA-internal audits


CRITERION 3 : PEOPLE GENERAL INFORMATION Definition: How the organisation manages, develops and releases the knowledge and full potential of its people at an individual, team-based and organisation-wide level, and plans these activities in order to support its policy and strategy and the effective operation of its processes. The People criterion is concerned with HOW the organisation:

• Plans, manages and improves its people resources • Identifies, develops and sustains its people’s knowledge and competencies • Involves and empowers its people • Communicates with its people • Rewards, recognises and cares for its people

How the population of the organisation is made up. Include overall numbers, and any relevant breakdowns, for example different grades, locations, part time, full time, agency, contract staff etc. ETK has 1080 employees – 320 female and 760 male. All of them have a permanent job. The qualification structure is as follows: − University education – 803 employees, 6 of them with Doctor’s degree and 63 with Master’s of Science − 2-year university education – 68 employees − High school education – 169 employees − Highly skilled workers – 8 employees − Skilled workers – 12 employees − Lower education – 20 employees The average age of ETK employees is 40 years. 284 ETK employees are younger than 30, 538 employees are between 30 and 50 years of age and 258 employees are 50 or older. The average service record is 16 years. The structure is: 458 ETK employees have 10 end less years of service, 328 employees have between 11 and 25 years of service and 294 have 26 and more years of service. What externally recognised systems standards, e.g. Investors in People, Excellence through People etc. the organisation is applying in the management of its people?

ETK is applying the corporate Human Recourses Management System (HRMS) based on SAP/R3, which supports and connects key HR processes in the local company, thereby enhancing the quality and efficiency in HR processes and administrative work. The system works as a global database with employees data, inter-connected between companies and countries, with the functionality in line with Ericsson's key processes. HRMS consists of several functions (modules), all run in the same system

− Basic Personnel Administration - personnel & organisational data from hiring to leaving, statistical analyses available at any time

− Recruitment - from open applications and vacancies to applicant pool or hire

− Competence Management - analyzes organisational strategic competence, competence profiles, Curriculum Vitae & Personal Development documentation, organisation & staffing, dimensioning & forecasts

− Management Planning - information about managers &management candidates – Curriculum Vitae & Individual Performance, searches for candidates who match requirement profiles when filling vacancies, statistical analyses

− Performance Management – measuring, evaluating & following the individual performance achievements according to defined individual plans.


CRITERION 3 : PEOPLE Sub-Criterion 3APeople resources are planned, managed and improved. Provide information in detail on one relevant approach to the sub-criterion, and briefly on other approaches and additional information. Title: Fairness in all terms of employment including equal opportunities APPROACH - Description of one key approach. ETK pays much attention to the recruitment of the best workforce and their development. ETK ensures equal opportunity in employment, development, compensation and all other personnel activities without discrimination due to race, religion, colour, nationality, sex or age. In order to achieve our main objectives “To dominate the new fast growing Mobile Internet space” is it very important to change the culture and the values in the company. In ETK today female managers achieve very good results and demonstrate excellent leadership skills. ETK won the Equality Award for the year 2000 against tough competition with other Ericsson companies in Europe. The Ericsson Equal Opportunities Award is a high profile activity within the company, stimulating actions that support the work for equality between men and women within Ericsson. EEEA enables competition between different Ericsson companies in Europe. It promotes the concept of equality and encourages the companies to take the initiative to bring forward and to develop female resources. This is valid on all levels of the company hierarchy. All Ericsson companies in Europe can use EEEA slogan and logotype: a) in recruitment advertisements, b) on letters and envelopes, c) on the company's web-site and d) in press releases concerning personnel recruitment and the improvement of working conditions for men and women. DEPLOYMENT Ericsson strives for workforce diversity, and adheres to the principles of equal and non-discriminatory employment opportunities. According to corporate policies and culture, from the year 1995 on ETK has ensured equal opportunities for all its employees. ASSESSMENT & REVIEW People resources are planned, managed and improved in compliance with job requirements and present competencies. Managers, together with employees, measure, plan and improve the competences of the employees through Performance Management Process.


reference to results Corporate human resources policies and directives Intranet Internal efficiency Employees surveys related to benefit programs Intranet Sub-Criterion 7B (2)

(3) Career Development Managing New managers Job position review Competence Management Intranet Competence status

review Compensation & Benefits System Intranet Best practice/Policy

Improvements HRMS All employees See Sub-Criterion 1D Competence shift Intranet See Improvement

Action 2 ETK job catalogue (job descriptions) All employees ETK policies and forms Intranet Internal efficiency Working time, very flexible Intranet Appendices FIG. 4C-1;

Sub-Criterion 7B (3) Human Capital Index, DIALOG 2002 All employees ETK 670, BinC 730


CRITERION 3 : PEOPLE Sub-Criterion 3BPeople’s knowledge and competencies are identified, developed and sustained. Provide information in detail on one relevant approach to the sub-criterion, and briefly on other approaches and additional information. Title: Aligning individual and team objectives with the organisation’s targets APPROACH - Description of one key approach. To align the performance of each employee to the objectives of his/her organization, according to corporate rules, ETK has a Performance Management process. The purpose of that process is to set a global framework to connect business objectives with team and individual goals and to secure a qualitative feedback to foster a high performance culture driven by customer demands. There is a clear link between the unit’s objectives and targets and the team and individual goals through individual tasks plan. Each employee has his/her individual plan for current year and the employee and the manager evaluate the performance of the employee at the end of the planning period. DEPLOYMENT Heads of Ericsson Units and Companies are responsible for implementing a local Performance Management Process based on the Corporate Directive. In ETK that process has been implemented in the whole company since the year 2000. Yearly ETK objectives and targets are cascaded from the ETK level to sectors’ level and finally to each employee’s performance plan, i.e. deployment is 100%. ASSESSMENT & REVIEW HR role is to support and encourage the line management in these processes and to drive the connection of goal setting and following-up towards both competence planning and remuneration. Every manager in ETK is responsible for Performance Management within his or her own unit. All employees are active in goal setting and responsible for their own competence development. Performance is evaluated and considered as one element in the compensation process.


reference to results Ericsson Strategic Planning (ESP 2000-2004) Intranet Sub-Criterion 1A Reviewing and updating individual and team objectives 100% PM- PD&PE talk Appraising and helping people improve their performance 100% PM- PD&PE talk Competence Management All employees Sub-Criterion 7B (1) HRMS Intranet See Sub-Criterion 1D Roles and Responsibilities in the Ericsson organisation Intranet Ericsson Competence Model (competence profile development for individual employee and organisation)

Intranet Competence gap, Appendices FIG. IA2-1

Competence shift, see sub-criterion 7B, See Improvement Action 2 Competence in 2002

Intranet ETK 80%, BinC 81%

Ericsson University (seminars on Ericsson Intranet) Web Learn Exam, certificate Seminars for employees (Quality, Environment, Occupational Health and Safety)

Available to all units, Intranet

Questionnaire, certificate

Human Capital Index , DIALOG 2002 All employees ETK 670, BinC 730 Work towards clear goals, DIALOG 2002 All employees ETK 77%, BinC 90% Goals follow-up All employees ETK 81%, BinC 73%


CRITERION 3 : PEOPLE Sub-Criterion 3CPeople are involved and empowered. Provide information in detail on one relevant approach to the sub-criterion, and briefly on other approaches and additional information. Title: Involvement and supporting innovative and creative behaviour APPROACH - Description of one key approach. In ETK employees are encouraged and supported in their individual and team-based participation in improvement activities through their individual tasks that are planned together by the employee and the manager for the current year. ETK calls for and supports innovative and creative behaviour through the award policy too. For the purpose of additional motivation and evaluation of the creativity in the company, ETK has defined two ways for rewarding proposed innovation solutions: • The innovation disclosure award • The patentable invention award DEPLOYMENT Involvement and supporting innovative and creative behaviour are a part of Performance Management process in the whole company, especially in the unit Research & Development. ETK inherited from the ex-company the Innovation Rule Book which has been in force since 1995. The invention award rules have been valid since 2000. ASSESSMENT & REVIEW The Innovation Management Group receives innovation proposals/solutions from the employees. The result of their estimation can be a statement that the submitted innovation proposal provides

• possible business opportunity for ETK and further analyses are needed • business opportunity for ETK or a patent application shall be submitted


reference to results Encouraging employees to work in teams In all ETK

units PM-Individual tasks and evaluation

ETK professional journal “Revija” In all ETK units

Number of copies

Publications in ETK newspaper “Komunikacije” Edition 5000 copies

Internal satisfaction measurements

Empowerment Index, DIALOG 2002 All employees

ETK 35%, MUCE 28%; Sub-Criterion 7A (1), positive trend 3yrs

Creativity and Speed, DIALOG 2002 All employees

ETK 66%, MUCE 59%

Rule Book on the awards for creativity and inventiveness at work Intranet No. of rewards Decision about rewarding the proposed innovation solutions in company

Intranet No. of rewards

International Assignments Intranet No. of assignments All Employee Award 2003, ETK President’s Award introduced 2000 Intranet Objectives and

achievement Units’ employees meetings outside ETK ETK units BSC, DIALOG Managers Forum (All managers’ meeting with ETK President in ETK or outside ETK)

Several meetings per

year

BSC, Periodical Reports


CRITERION 3 : PEOPLE Sub-Criterion 3DPeople and the organisation have a dialogue. Provide information in detail on one relevant approach to the sub-criterion, and briefly on other approaches and additional information. Title: Internal communication channels at ETK APPROACH - Description of one key approach. At ETK there are several permanent internal communication channels that comply with the corporate standards and communication policy. The corporate policy is: " All of Ericsson's communications shall be planned, executed and measured against the strategic objectives of our company and shall be designed to create the best environment possible for Ericsson to do business. Communications shall always ensure that Ericsson treats its communications on a non-selective basis and is in compliance with disclosure rules and requirements of markets, stock exchanges and governments." The strategic orientation of ETK regarding the information and informing is to secure the perception of Ericsson and confidence in the company through efficient internal and external communication activities. Ericsson has to be perceived worldwide as one company. The responsibility for internal and external informing has been given to the organizational unit Communications, and this responsibility has also been incorporated in all management structures at ETK. Important communication channels at ETK are: company paper “Komunikacije”, the Intranet and the Internet. "Komunikacije" is a monthly that has been published regularly for 39 full years. Via the newspaper the employees are informed of company agreements, business plans, policy and strategy of ETK, and they also obtain information about the activities of the Labour Union. "Komunikacije", being the medium through which the management regularly informs the employees, are entrusted with the task of developing the awareness that it is necessary to achieve the corporate and company objectives, to increase the employees’ satisfaction and to enhance the loyalty to the company. DEPLOYMENT In addition to the ETK Communications staff a number of associates/experts from all company units participate in the publishing of "Komunikacije". This internal paper with the printing run of 5000 copies is intended for the information of employees, retired employees, business partners, shareholders, state authorities, cultural and educational institutions. The Internet and Intranet pages comply strictly with Ericsson corporate standards. They are updated as required, daily, weekly or monthly, and this is taken care of by the specialists of ETK Communications and by the responsible officers from every organizational unit. The mentioned channels are used for the distribution of information from the management to the employees. Feedback information from the employees is obtained at business meetings held in every organizational unit. ASSESSMENT & REVIEW All articles to be published in "Komunikacije" are read and revised by the Communications Director and by the Editor-in-Chief. The information on the intranet/Internet is also subject to evaluation on the part of the mentioned managers. Once a year the readers of "Komunikacija" are interviewed via the web and their proposals are observed as much as possible. The results of the survey are published in the paper and on the Intranet page.


reference to results ETK’s newspaper “Komunikacije” Inter/External Costs, cost coverage

with advertisements Internet/Intranet Inter/External Costs, No of visitors Annual report on business performance of ETK Stakeholders Costs, Sub-Criterion

8A (1) ETK presentation booklet Partners,

journalists Costs


CRITERION 3 : PEOPLE Sub-Criterion 3EPeople are rewarded, recognised and cared for. Provide information in detail on one relevant approach to the sub-criterion, and briefly on other approaches and additional information. Title: Recognising people in order to sustain their involvement and empowerment APPROACH - Description of one key approach. Employees are recognised through their performance and behaviour (each employee has an individual tasks plan) and are rewarded yearly and additionally in case they achieve some tasks or goals of extreme importance for the Company whereby employee’s singular activity has contributed to the: • increase of income • increase of employee’s/customer’s satisfaction • boost/promote positive Ericsson image Recognised employees are promoted in their career path in accordance with the promotion policy in the company. DEPLOYMENT Employees are recognised and rewarded through the Performance Management process in the whole company. This approach has been used in the company since 2000 and the coverage is 100%. Performance Management is clearly communicated to everyone through different communication channels (presentations, articles in the company newspaper, web pages). ASSESSMENT & REVIEW Performance Management is used as a tool to recognise and reward the best employees. The practice was evaluated and the process was improved.


reference to results Compensation & Benefits System (Salary & Compensation, Awards, Benefits, Loan & Tax Privilege, Other payments to employees)

All units and all employees

Employee satisfaction and performance results, DIALOG

Extended health care program (benefit) All managers Employee satisfaction surveys and improvements in accordance with the results; Sub-Criterion 8B (1)

Restaurant and canteens (subsidy for catering policy) All employees Employee satisfaction surveys and improvements in accordance with the results

Flexi-time All employees Employee satisfaction and performance results; Sub-Criterion 7B (3), Appendices FIG. 4C-1

Birthday party All employees No. of participants and employee satisfaction

Jarun event-company day All employees No. of participants and employee satisfaction


CRITERION 4 : PARTNERSHIPS AND RESOURCES GENERAL INFORMATION Definition: How the organisation plans and manages its external partnerships and internal resources in order to support its policy and strategy and the effective operation of its processes. The Partnerships & Resources criterion is concerned with HOW the organisation manages its external and internal (non-people) resources in ways that are consistent with its overall aims and to align with its other approaches. Outline the implications of your overall Policy and Strategy on each of the subjects in this Criterion, e.g. does your Policy and Strategy mean that you should seek to establish full partnerships with all of your suppliers, or just with specific groups? How are the partnership opportunities and management of the various resources (mentioned through 4a-4e) supported by policy and strategy? ETK policies and strategies do not explicitly require full partnerships with customers, suppliers and other organisations, but such kind of partnership is implicitly contained in published strategies for 2003. Our strategies published on the Intranet in presentation booklet ETK in 2003 are: 1) Dedication to customer success 2) Value adding teamwork 3) Passion to win and 4) Fast creativity. ETK internal and external business relations are strongly influenced by quality policy (“..World Class Quality in all areas of its business..”) and strategies. ETK‘s presence in the global telecommunications is founded on three cornerstones of its operations: the Croatian market, foreign markets and Ericsson’s internal market. Operating within these three areas, the company co-ordinates its business aspirations with its customers’ needs and implements its quality policy and strategies. The company’s experts learn the customers’ business and persistently search for the new values for customers and this all leads to partnerships with the customers on the company’s markets. ETK utilizes its expertise in modern communications technologies and solutions to efficiently improve its customers’ success by adding value in customers’ processes. On the home market, which represented 22% of its total business in 2002, ETK has developed a good business partnership with the Croatian Telecom, VIPnet, with many users of its business and special communications systems and with many small Internet service providers in Croatia. For many decades ETK has successfully cooperated with the operator Croatian Telecom (HT) on the home market. Together they have built the modern public fixed network of the country with 96 AXE exchanges providing an overall capacity of 2,2 million telephone lines and the mobile network based on the NMT system 450 (Nordic Mobile Telecommunications) with an overall capacity of approximately 130 000 subscribers. The companies continue to develop their good partner relations that leave open the possibility of collaborating in other telecommunications areas. ETK established an excellent strategic partnership with VIPnet, the first private mobile operator in Croatia, which since its start in commercial operation in 1999 has attracted more than 900.000 users and has become the main partner of ETK on the home market. As a result of the successful collaboration on the GSM network, in 2001, ETK delivered to VIPnet the GPRS system, which is the first commercial GPRS system in Croatia and in the whole region of Central Europe. With it the company made a stride toward the area of the mobile Internet and continues to supply the applications that use the GPRS access and collaborate in operations for the potential introduction of UMTS in Croatia. The company closely cooperates with a lot of small, mid-sized and large organisations and enterprises in Croatia such as the Faculty of Electrical Engineering and Computing, public administration, the Croatian Railway, the Croatian Electric-Power Supply, oil and gas industries (INA), the Croatian Television, outsourced companies (earlier ETK sectors) and numerous hotels. According to the Ericsson Strategic Planning 2000-2004 the 3rd key activity Competence Shift for the New Telecom World was recognized as crucial for the ETK future. A close partnership with the Faculty of Electrical Engineering and Computing in Zagreb was developed, ETK invested in faculty’s telecom equipments for the New Telecom World and hundreds of younger engineers went in waves to the faculty to get the new knowledge.


CRITERION 4 : PARTNERSHIPS AND RESOURCES Sub-Criterion 4AExternal partnerships are managed. Provide information in detail on one relevant approach to the sub-criterion, and briefly on other approaches and additional information. Title: Suppliers/Partners APPROACH - Description of one key approach. ETK commitment is to support long- and short-term profitability through efficient supply of technology, materials, products and services. In order to satisfy the operational requirements ETK is building long-term relations with the most important suppliers. Secure sourcing is mandatory and dual sourcing is preferred whenever cost effective. External sourcing is to be considered whenever competitive and in line with our core strategies. In suppliers/partners relations ETK wants to achieve: short Time To Customer (TTC), low total costs, required functionality, high quality, a limited number of suppliers. In co-operating with suppliers/partners ETK focuses on supplier obligation to introduce and maintain ISO 9001 and ISO 14001 standards. Records of the supplier evaluations are maintained. All suppliers of products and services are registered in the program package SAP/R3. Preferred suppliers/partners are: Companies registered in Ericcson’s Vendors databases (ELIZA), Companies which signed General Purchasing Agreement (GPA), ISO certified companies have priority if other conditions are the same. Non-preferred suppliers supply products and services which do not influence the quality of products for customers or are the subject of occasional purchases, or are of minor value (no need to sign agreement). ETK has partnership agreements in sales and services segment and also in the Ericsson Mobility World. Enterprise sales and service partners develop applications for the mobile Internet as service providers and they have to prepare forecasts in money and equipment quarterly. ETK supports its partners with presentations, service support (second line support) and in marketing activities through the marketing funds. DEPLOYMENT The suppliers/partners policy is deployed in all ETK (relevant) units. Enterprise partners cover whole Croatian markets in sales and service segment. ASSESSMENT & REVIEW Companies registered in Ericcson’s Vendors databases were selected and audited by Ericsson Corporation (Qualification of suppliers, manufacturers). Local supplier selection is based on commercial and financing conditions assessment through BON1 and BON2 (a structured assessment of supplier's financial position); assessment of level of implementation of Quality & Environmental system acc. to ISO 9001 and ISO 14001 implementation (certificates, ETK auditing of suppliers). Review: Qualification of suppliers, manufacturers (corporate); Records of the supplier evaluation, GPA list, List of ISO certified suppliers/partners. Enterprise partners are selected and classified against their knowledge and competences.


reference to results Preferred Suppliers list All orders Reviewed on web Suppliers relationship development All main

suppliers Questionnaire and Classification

Enterprise- sales and services partners All partners Classification - platinum, gold, silver

Ericsson Mobility World – partners network

All partners Launched applications; Partnership/Mobile World (KPIs)

Applications & Partnering, BSC, Innovation Key partners On target CRITERION 4 : PARTNERSHIPS AND RESOURCES Sub-Criterion 4B


Finances are managed. Provide information in detail on one relevant approach to the sub-criterion, and briefly on other approaches and additional information. Title: IAS – International Accounting Standards APPROACH - Description of one key approach. Financial statements are prepared for each financial year in accordance with International Financial Reporting Standards issued by the International Accounting Standards Board, which give a true and fair view of the state of affairs and results of the company. IASs were implemented in our company in 1993 and have been applied since then. All our financial policies and directives are based on IASs. Each version within the existing IASs or adoption of new Accounting Standards is implemented in our company. Our procedures and processes are improved and changed accordingly. By proceeding in this way the interests of all related parties are met, i.e. shareholders, customers, vendors, etc. DEPLOYMENT All finance activities in the company are in compliance with policies and directives based on IASs and the Accounting By-Law. As we are a part of Ericsson Corporation, our obligation is to send our reports to Ericsson Corporate on the monthly basis. For each finance process we have description and process flow. We also send quarterly reports to the Croatian authorities. We were the first company within the Ericsson Group that implemented IAS 39 as a new standard for the year 2002. ASSESSMENT & REVIEW We have external audit of our financial statements performed on the annual basis and so far there have been no major findings. Since 2000 the internal corporate audit has been performed in our company, until now with no major remarks but only improvement proposal. Our financial reports (including comparison with the previous reporting period) are prepared on the monthly, quarterly and annual basis. We are using BSC approach for follow-up of major business and financial activities through different KPIs. We are constantly implementing new tools in analyzing financial results and in that way we are involved in the process of permanent learning.


reference to results External finance audit

Financial activities

Auditors’ report, No remarks

Internal Corporate audit (Sales, purchase, travel processes)

Sales and Financial units

No remarks – Improvements

Tax authorities (all taxes including VAT)

100 %

No remarks

Authorisation Policy for ETK (rights to sign agreements, to invest and to have the right to authorise different types of costs to the company).

Intranet Internal auditing


CRITERION 4 : PARTNERSHIPS AND RESOURCES Sub-Criterion 4CBuildings, equipment and materials are managed. Provide information in detail on one relevant approach to the sub-criterion, and briefly on other approaches and additional information. Title: Risk and Security Management APPROACH - Description of one key approach. The security of persons and assets in ETK follows the highest standards in the area. Risk and Security Management in the company as a system integrates technical and physical solutions and administrative and organizational measures according to corporate policies and directives (Ericsson Security Directives) and customer demands (processes owners). Also, applied solutions have to be coordinated with local regulations and they have to follow contemporary achievements in developing the video surveillance system, counter-burglary alarm and fire detection and prevention. For security services ETK has engaged Zvonimir Security k.d., the leading provider of such services in Croatia. The site security tends to be indiscernible but comprehensive and to enable tracking and logging all the events that occur as a security breach in order to take action in minimizing the damage and for future system improvements. Some of the data generated by security systems are used for business purposes, like visits log and transactions on Access Control System. . DEPLOYMENT Security systems cover all ETK sites, including leased plants and office space. Every person on the site; employee, visitor, and business associate and engaged external services, are involved in security by handling the equipment in proper way, education and following defined security measures. These systems have functioned this way since 1997. . ASSESSMENT & REVIEW The control over security is realised by corporate security audits (result is an improvement plan with action points), through sustained internal security projects (improvement plan), annual inspections by competent state authorities, by attending specialised exhibitions and seminars, through customer feedback and monthly reports provided by respective security services and officers. (Appendices FIG. 4C-1)

Additional approaches applicable to this sub-criterion Deployment Effectiveness

measures & cross reference to results

Energy Management (electrical energy, steam, gas, water). ETK has energy monitoring system (central unit, terminals and basic stations)

All units, 5+yrs

Sub-Criterion 8B (4); Consumption monitoring, costs reporting, costs cutting programs

Cost reduction in waste management All units, whole loc.,

5+yrs

Sub-Criterion 8B (3); Total waste in kg/year, Total costs in local currency /year

Facility Management All units, whole loc.,

5+yrs

Total costs in local currency /m2 % realization/plan

Occupational Health & Safety Management System (OHSAS 18001 certification in progress)

All units, 5+yrs

Sub-Criterion 8B (1)(2)

Environmental Management System (ISO 14001 certified) Whole ETK location

Sub-Criterion 8B (3)(4)


CRITERION 4 : PARTNERSHIPS AND RESOURCES Sub-Criterion 4DTechnology is managed. Provide information in detail on one relevant approach to the sub-criterion, and briefly on other approaches and additional information. Title: Exploiting existing technology APPROACH - Description of one key approach. In telecom software design activities we are applying existing leading edge technology for product development project – processes, methods and tools, developed by Ericsson organisation units responsible. The technologies that determine the competitiveness of products in Ericsson business are the core technologies and they have been developed and continually improved by Ericsson based on world class technology. In order to be the first, it is necessary to have effective development processes, methods and frameworks to create new applications and services in a controllable and rapid manner. R&D management prepares and publishes the targets for current year as follows:

• Critical Success Factors • Strategic targets, targets for actual year • Market position, Customers • Employees (competence shift to new technology, increase employee motivation) • Technology & Innovation • Financial and internal efficiency

DEPLOYMENT Ericsson’s Core unit Core Network Development (CCND) is responsible for technology deployment. CCND is a global organization with a few R&D Centers at several locations around the world. The deployment and implementation is performed by CCND responsible people and ETK R&D local engineering support. Deployment of changes and improvements is part of our daily life and it is incorporated in our management system published on ETK Intranet sites and is ISO 9001:2000 certified ASSESSMENT & REVIEW Assessment is performed on project and line organisation level. The executive ETK R&D management performs reviews to provide evidence and verification of the effectiveness and efficiency of the applied technologies, and it is a part of our Management System, the framework in which our operational activities are managed to achieve our business targets. The ETK R&D management defines the annual Targets/Operational Plan (Key Performance Indicators - KPI and Deployment) to support fulfillment of the organization’s performance. Key Performance Indicators are used to measure progress towards the targets within Market, Customer, Employee, Technology& Innovation and Financial & Internal Efficiency perspectives. Performance of the organization is managed against the plan. Corrective actions are taken when the actual results and performance deviate from the plan.


reference to results Innovating technology 70% New products ETK as future oriented company (BSC Innovation) Intern/Extern Sub-Criterion 8A (1) ETK new strategic/generic solutions (BSC Innovation) 100% Internal Sub-Criterion 7B (1)

(4); BSC, Target, trend 3 G readiness Internal and

External Sub-Criterion 7B (1) (4); Targets, events

ETK as an System Integrator Internal On track (good) CRITERION 4 : PARTNERSHIPS AND RESOURCES Sub-Criterion 4E


Information and knowledge are managed. Provide information in detail on one relevant approach to the sub-criterion, and briefly on other approaches and additional information. Title: Information and Knowledge Management APPROACH - Description of one key approach. ETK strategic decision is paperless office. In order to accomplish this decision ETK implemented LAN and connected all ETK servers and users. This enables efficiency by sharing all necessary information and knowledge between ETK employees using the same resources. Three key parameters must be met in such approach: capacity, availability and security of the network and servers. ETK continuously measures these parameters and implements necessary resources to keep them close to defined targets. Two common solutions are used: 1) local web site sharing all public information and 2) web oriented applications and servers with data and applications designated for specific groups of users and data and applications available to all ETK employees. By using ECN (Ericsson Corporate Network) and modem connection all the resources are available from any point in Ericsson or from any point around the world using dial up connection. In all cases performance and security are under control. Full Central Help desk support is available between 7:00 and 18:00 and limited support is available practically around the clock improving the efficiency of all the users. DEPLOYMENT To ensure fast response to every user requirement ETK defined the standards for every workplace. Unique and flexible network and other IT resources do this. The distribution of standard PC hardware and software, and network implementation is centralised and deployed by IT functions PC and network support. Every installation is tested on key performances and the results are recorded. The monitoring of performance is just one way of infrastructure control. Other ways include feedback given by user satisfaction survey or Help desk. Every company department or work group is responsible for own data and access rights. IT function is responsible for administration, back up and control of security policy and the performance of IT resources. Necessary knowledge, the general level or the specific one is recognised and planned in the course of Personal Development (PD) discussion. Acquiring necessary knowledge is possible in internal courses, through our partners or by using the web (Ericsson web learning accessible for all employees). In all cases results are measured and registered. ASSESSMENT & REVIEW Although we monitored IT resources from the very beginning (in 1980) of using system tools, after joining Ericsson (1995) we gradually and systematically implemented monitoring, and provided to our users better and better service. We defined a lot of KPIs (Key Performance Indicators) that give us a clear picture of IT resources. Among them are availability and usage of IT resources and the number of Help desk calls and time needed for closing every problem. All this parameters are recorded, analysed and discussed in management meetings and corrective actions are defined enabling continuous improvement.


reference to results Competence development for the New Telecom World (NTW) 1999-2001

172 employees

15% of ETK employees

Competence evolution 2002 - Competence development program organised and executed by FER

52 employees

5% of ETK employees

Mr E – Web learning (ERICSSON) 932 employees

72% of ETK employees

Competence, DIALOG 2002 All employees ETK 80%, BinC 81%, Sub-Criterion 7B (1)

Learning, DIALOG 2002 All employees ETK70%, MUCE 63% CRITERION 5 : PROCESSES GENERAL INFORMATION


Definition: How the organisation designs, manages and improves its processes in order to support its policy and strategy and fully satisfy, and generate increasing value for, its customers and other stakeholders. The Processes criterion is concerned with HOW the organisation’s:

• Processes are systematically designed and managed • Processes are improved, as needed, using innovation in order to fully satisfy and generate increasing

value for customers and other stakeholders. • Products and Services are designed and developed based on customer needs and expectations • Products and Services are produced, delivered and serviced • Customer relationships are managed and enhanced

Outline the organisation’s main customer groups/markets and the processes which interface with them. For many decades ETK has successfully cooperated with the operator Croatian Telecom (HT) on the home market. Together they built the modern public fixed network of the country (96 AXE exchanges). ETK established excellent business cooperation with VIPnet, the first private mobile operator in Croatia (GSM network with more than 900.000 users). Within business communication systems, ETK closely cooperates with and delivers communications solutions to many Croatian small, mid-sized and large enterprises. The share of the home market accounts for about 20% of the company’s overall annual operation. On the corporate level ETK has responsibility for export operations for over 35 countries of Central and Eastern Europe and Africa (Bosnia and Herzegovina, Montenegro, Republika Srpska, Macedonia, Kosovo, Slovenia, the Czech Republic, Slovakia and Albania, Russian Federation, Belarus, Ukraine, Moldova, Kazakhstan, Uzbekistan, Kyrgyzstan, Georgia, Armenia, Azerbaijan, Tajikistan, Turkmenistan, also some twenty countries in Africa). The share of export in total sales of ETK in 2002 was 60% and with the export of knowledge (telecom software) and services to Ericsson Sweden and other Ericsson companies we can speak of 80% export share. Outline the organisation’s products and services. ETK offers to its customers the complete range if Ericsson products, solutions and services. The most important examples are: Service solutions are: Network Rollout, Customer Services, Ericsson Education, System Integration and Professional Services. Incumbent operators, emerging operators, Internet Services providers: ATM Switching Systems, Internet Protocol Routers, Internet Network Solutions, Next Generation Networks – Engine, AXE Switching Systems, Intelligent Networks services; Access Networks – Narrowband and Broadband: Engine Access Ramp, xDSL solutions, Transport Solutions: Microwave Systems – MINI LINK, Synchronous Digital Hierarchy (SDH), WCDMA systems, GSM systems, EDGE solutions, GPRS systems; Business systems: Switching Systems MD 110, BusinessPhone, Business Cordless Telephone System – DECT, Wireless LAN Access; Special systems: EriTac – Ericsson Integrated Tactical Communication System (Military applications). What externally recognised systems standards, e.g. ISO9000, ISO14000, etc. is the organisation applying in process management? How are targets for processes actually set ? Our approach to total quality is mainly based on customer-oriented organisation focused on core competencies; steady and persistent processes improvements, teamwork, continuous competence development, leadership and ISO certifications. ETK is certified against the standards ISO 9001:1994 (re-certification in June/July 2003), ISO 14001 and the certification against OHSAS 18001 is in process. The intention of these certifications is to enable us all at ETK to build a good platform for integrated Operational Management System (OMS) and further TQM development. ETK adopted the Ericsson Business Process consisting of well-defined and documented management processes, core processes (at ETK Sales and Marketing Processes), and support processes. For each year, ETK management decides on robust, committed and stretched objectives and Key Performance Indicators published on ETK Intranet sites.

CRITERION 5 : PROCESSES Sub-Criterion 5AProcesses are systematically designed and managed.


Provide information in detail on one relevant approach to the sub-criterion, and briefly on other approaches and additional information. Title: The Sales and Marketing Process, Appendices FIG. 2D-1 APPROACH - Description of one key approach. The ETK Operational Management System (OMS) is based on the Ericsson Business Process (EBP). (Appendices FIG. 5A-1) ETK OMS represents the ‘value flow’ of the Sales and Marketing Process, i.e. it defines generic inputs, activities, management, support and outputs. These, together with relevant supporting information, are presented and maintained by the corresponding process owner at corporate or ETK level. The idea is to define and communicate good practice that can be cost effective and applied consistently throughout the business. ETK adopted the Ericsson Victor concept (graphical definition and presentation of processes in order to reduce textual documentation) providing a framework which:

• Defines management, core and support processes, together with the corresponding inputs/outputs. • Identifies decision authorities and connects to relevant decision points. • Defines and connects persons responsible, competence, tools, resources, legal and other requirements to

corresponding process activities. • Serves as the ‘portal’ for accessing all information relevant to a defined process. Such information may

include documents, templates, etc. • Provides performance objectives and corresponding measures for processes at the point of use.

DEPLOYMENT The ETK OMS is based on a pragmatic view of visualizing what needs to be managed in the business. This message is clearly communicated to everyone by ETK OMS presented and used via the intranet and focusing on the management of the key processes of the business (3+yrs). Annual ETK objectives and targets are cascaded from the ETK level to sectors’ level and finally to each employee’s performance plan, i.e. deployment is 100%. ASSESSMENT & REVIEW Instead of classical internal audits, ETK is implementing Risk Based Assessments (RBA, 2yrs)), and Management Review. The overall objective of RBA is to determine the suitability, adequacy and effectiveness of the MS in ensuring that the organisation meets its objectives. RBA is in particular: 1) Focussing on the most vital aspects for successful operation of the organisation. 2) Planned and prepared according to a structured method, involving both top management and operational personnel.3) Giving feedback of direct relevance for the management of the organisation. 4) Assisting in combining the operational management system to the business objectives. 5) Based on MS standards requirements too. Management Reviews are performed each week, months, quarterly and yearly, depending on sector’s practice.


reference to results Balanced Scorecard (Customer and Financial Perspective) Intranet, all

employees KPIs; Criterion 7 and 9

Global Customer Satisfaction Survey 50% VIPnet satisfaction in 2002 is 100%

ETK Customer Satisfaction Measurement Key customers Customers satisfaction, Sub-Criterion 6A (1), 6B (3) (4) KAM is internal customer

Inventory Turnover (ITO) management (important in Time To Customer process)

Whole ETK Sub-Criterion 9B (2)

ISO 9001 and ISO 14001certificate, OHSAS 18001 certification in progress

Whole ETK Internal and external audits

CRITERION 5 : PROCESSES Sub-Criterion 5BProcesses are improved, as needed, using innovation in order to fully satisfy and generate increasing value for customers and other stakeholders.


Provide information in detail on one relevant approach to the sub-criterion, and briefly on other approaches and additional information. Title: EMEA CS&SS Centres of Excellence APPROACH - Description of one key approach. The new network of the Market Area Europe, Middle East and Africa Customer Solutions and Sales Support (EMEA CS & SS) is directed at enabling new ways of creating business opportunities through the utilization of the synergies of the resources, competencies and other professional strengths within all fourteen Market Units in EMEA and at lowering the operational costs. The new concept will function as a virtual networked entity. It is constituted on the existence of three Centers of Excellence (CE). The new concept will help and facilitate to bring Ericsson back on track and to success and to preserve top competencies despite the rightsizing of resources. The benefits include sharing of knowledge and experiences, adopting the best practices, establishing the centers of competence and resources that can be utilized more efficiently through making them available to every KAM within EMEA. The Centres of Excellence are structured to participate in the entire sales chain, from pre-sales to after-sales. DEPLOYMENT The new approach is deployed in all 14 EMEA Market Units. The Centers in MU Central Europe, MU North West Europe and MU Italy function as drivers of business and each of them covers several Market Units within EMEA. Common tools to be used are KSTool, MORE, SIO, HRMS, eOrder desk. There is also EMEA Customer Solution and Sales Support Community opened in KSTool. MORE tool is used in co-operation with Global Service organisation. SIO tool is utilised to support the sales forces- KAMs, account managers, Core Three teams and other people that need customer information. HRMS is used for overall resource and competence management. eOrder desk is used as a common registration Tender/Offers/Solutions desk and as the Solution database (Customized Solutions List as well as Knowledge Source). With the support and cooperation with KAM and the commitment from EMEA/Management team together with the usage of Quick Win Strategy, simple and fast decision making process the potential for success is ensured. ASSESSMENT & REVIEW Distribution of responsibilities is clearly defined in the whole region and in programs of cooperation with the business units. Results are assessed and reviewed monthly and presented in regular monthly reports. The System of Measurement and Performance Indicators are simple, feasible and transparent to improvements. The System provides relevant information about actual situation in the network and secures permanent monitoring and improvement. The proposed key performance indicators indicate Network Quality, Network Rightsizing, Network Business influence and Internal Structure Quality. Customer Solution & Sales Support within EMEA Market Units have their own local business scorecards with key performance indicators adjusted for their local needs. The above KPI’s are considered as key indicators on the EMEA CS&SS level and have to be mandatory.


reference to results The Core Three Concept (Account/Commercially Responsible, Total Solution Responsible and Contract Fulfilment Responsible)

Sales, Solutions,

Service

Decision Points- Solution data base, Project System

Knowledge management (structured information as competence data bases, knowledge data bases, solutions data base.)

Intranet, Ericsson

University

Sub-Criterion 7B (1)(2); KSTool, HRMS, certificate,

The Performance Measurements system provides relevant information about actual situation in the network and secures permanent monitoring and improvement.

All EMEA companies

EMEA Solution Key Performance Indicators

CRITERION 5 : PROCESSES Sub-Criterion 5CProducts and Services are designed and developed based on customer needs and expectations.


Provide information in detail on one relevant approach to the sub-criterion, and briefly on other approaches and additional information. Title: Customer Support Services APPROACH - Description of one key approach. By using intensive market research and according to the Ericsson and Market Unit strategy for new services development, ETK offers and delivers System Support Service to maintain the highest possible quality of service in operator’s telecommunication system. The people who designed, developed and built telecom system in question provide this service. Signing a System Support contract with ETK means that operator can focus on its customer’s needs for 100% network availability. Higher network performance generates more revenue and customer can use its experts for more profitable activities. The major part of the communication between the operator and Ericsson’s local support office (ELS) is intended to take place on the web. That is why a web and remote connection is a necessity for the System Support. Besides, during problem solving in an emergency situation and for new software deployment, ETK’s technicians are able to establish an on-line connection to the operator’s system. DEPLOYMENT Customer Support Services are valid for the customers in wireless market: Belarus, Bosnia and Herzegovina, Croatia (VIPnet and HT Mobile), Montenegro; and for the customers in wireline market: Belarus, Bosnia and Herzegovina, Croatia, Kazakhstan, Kyrgyzstan, Georgia, Montenegro, Republika Srpska. The estimated coverage of customer support services is slightly below 100%.

ASSESSMENT & REVIEW Besides improving the level of security for the customers, customer support service helps operators track down failures and also acts proactively to secure the network. It measures performance e.g. in run-time and failure percentage, and compares it to the service level objectives. The quality of service (e.g. Customer Satisfaction, Contract Fulfilment, Customer Evaluation) is measured periodically and reported by Balanced Scorecard for assessment and review.


reference to results Front Office All customers Sub-Criterion 6A (2);

ELS performance indicators

Back Office Core Network Mobile 100% ELS performance indicators

Back Office Wireline Core 100% Sub-Criterion 9B (3); Back Office Service Network & Applications 100% ELS performance

indicators Back Office Network Management 100% ELS performance

indicators Hardware Services All customers Sub-Criterion 6A (2)

(3) Services Delivery Management 100% ELS performance

indicators

CRITERION 5 : PROCESSES Sub-Criterion 5DProducts and Services are produced, delivered and serviced.


Provide information in detail on one relevant approach to the sub-criterion, and briefly on other approaches and additional information. Title: Customer Network Solution Verification/Customer Network Integration Process (CNSV/CNSI) APPROACH - Description of one key approach. Services CNSV/CNSI are performed in line with customer’s requirements, documented global processes and documented local procedures. CNSV is one of the processes used in the GSD (Global Service Delivery) organization. The CNSV and CNSI processes form together one process for verification and integration activities on GSD Network Integration orders. The process CNSV is the process for: 1) Order Analysis of Network Integration orders, 2) Customer requirement analysis and 3) Verification of Customer Network Solutions (CNS) in “safe” environment. The process CNSI is the process for: 1) Integration of Customer Network Solutions (CNS) in the Customer Network, 2) Follow up and Conclusion. Ericsson Project Management methodology (PROPS) is implemented for activities planning in these processes. Process CNSV is compiled from activities like: Order Assignment Acceptance, Order Analysis, Project Planning, until Customer Acceptance and Project Conclusion. DEPLOYMENT Processes CNSV/CNSI are deployed globally. All Ericsson local companies have to implement global CNSV and CNSI Process Description and more detailed local procedures and work instructions. On Ericsson Global Services intranet sites there are descriptions of all global processes as well as for ETK local service activities on sites for Global Service Delivery Centre. All customers’ relevant information is systematically documented and appropriate contact channels (e.g. Call Centre) by using up-to-date IS/IT are established. ASSESSMENT & REVIEW Specified measurements and demonstrations have to be performed to demonstrate to the customer: 1) the capabilities of the Customer Network Solution (CNS), 2) the migration procedure; and finally to receive a go ahead to implement CNS into the customer’s network. These activities are performed according to initial requirements as agreed upon during the Order Analysis. The Customer Demonstration is done together with the customer. The tests are performed in accordance with the test agreements signed by ETK and the customer. All deviations from the expected test results are documented and commented in the Test Report.


reference to results Ericsson Project Management (PROPS) Intranet, all

major projects

Tollgates (decisions), Milestones (reports)

ETK Customer Training Centre All customers

No. of courses, Sub-Criterion 6A (4); 7B (1)

Competence Evolution Program 88% No. of certified courses The Core Three Concept (Commercially Responsible, Total Solution Responsible and Contract Fulfilment Responsible)

All contracts Decision Points- Solution data base, Project System

Customer Project Efficiency, BSC Perspective - Innovation All customers 2 yrs On target In Service performance, BSC Perspective - Customer Key customers Sub-Criterion 9B (3);

BSC CRITERION 5 : PROCESSES Sub-Criterion 5ECustomer relationships are managed and enhanced.


Provide information in detail on one relevant approach to the sub-criterion, and briefly on other approaches and additional information. Title: System Support /Customer relationships APPROACH - Description of one key approach. System Support is a comprehensive package of basic and optional service components and a vital ingredient in helping ETK’s customers attain and maintain peak performance of their system. Basic Service elements are: 1)Basic CSR Handling, 2) Emergency handling, 3) SW Updates 4) Remote Connection, 5) Remote FNI (First Node Implementation). Optional service elements are: 1) Online Support, 2) FNI (First Node Implementation) On-site, 3) Remote Problem Solving, 4) Emergency on-site, 5) Helpdesk, 6) Helpdesk 24/7 and 7) NetQB (Network Quality Benchmarking). Depending on unique situation and customer needs the service elements are packed together and offered with service levels that meet customer needs. All CSRs are taken care of in the CSR handling process, providing a single interface for all kinds of operation and maintenance requests – technical requests, consultation (helpdesk), emergency requests etc. All CSRs, except for emergency requests, shall be assigned severity ‘High’, ‘Medium’ or ‘Low’. Emergencies are always assigned severity ‘Emergency’. Correct software maintenance is vital in keeping systems updated and running at peak performance. Software updating - corrections of software - is also important for the continuous quality of customer’s network. DEPLOYMENT Deployment is performed 100% throughout Ericsson to all customers with signed service contract with ETK. ASSESSMENT & REVIEW To create a common understanding of procedures and responsibilities, a customer specific Procedures Manual was developed as a part of the support contract. The Procedures Manual describes the daily working procedures to be applied by both the customer and Ericsson. It covers areas such as processes, contact lists, escalation flows, meetings and measurement procedures necessary for periodical assessments and reviews. It was developed in cooperation with our customers. To enhance the customer satisfaction level ETK measures, among other things, an important quality parameter: CSR lead-times. These are e.g. for Emergency: Share 98 % Remedy 12 hours, Solution 72 hours. The Share displays the number of CSRs that ETK will handle within the lead-times stated. A Remedy is defined as the action(s) required to solve a problem by limiting its effects. The remedy may cause restrictions in system performance. A Solution is defined as the action(s) required to prevent the re-occurrence of a problem and/or any underlying causes of a problem. When a solution is implemented, the system is restored to the state it was in before the problem occurred. The lead-times for severities High, Medium and Low are stipulated in the same manner.


reference to results System Support All customers Sub-Criterion 6A (2);

Support Contracts Customer Service Request (CSR) Handling All customers Sub-Criterion 6A (3);

Lead Time, contract Emergency Handling All customers Lead Time, contract Customer Satisfaction Key customers Sub-Criterion 6A (1) Cost Control All customers Costs cutting

programs; SAP CRITERION 6 - 9 : RESULTS GENERAL INFORMATION Definition: What the organisation achieves.


6. Customer Results - what the organisation is achieving in relation to it’s external customers. 7. People Results - what the organisation is achieving in relation to its people. 8. Society Results - what the organisation is achieving in relation to local, national and international society. 9. Key Performance Results - What the organisation is achieving in relation to its planned performance General trends across the results The overriding trend aligned with the objective of maximizing the value growth for its shareholders has been firmly established at Ericsson Nikola Tesla. This objective is a touchstone for all we do. Our intent is to be recognized as one of the best regional companies, constantly adapting our approach to a changing business environment, while making our actions motivating for our shareholders, customers, employees and community we are working in. Constant improvement of business processes, major achievements in management of our financial assets as well as the wide recognition of the role we have in the local and the regional communities and the perception of the company as a prime target employer have emphasized the importance of major inspiration we all bear on mind, i.e. to enable the state of the art communication among people. All these challenging tasks have been achieved by effective risk management, strong operating leverage and disciplined capital management. Ericsson Nikola Tesla's main objective is to grow within the limits of the regional financial capability. The long-term objective is to keep annual growth rate of 20% and this has been maintained despite the extremely volatile circumstances on telecommunication market. Strong liquidity position and unprecedented diversification and utilization of available financial instruments have led to further market expansion keeping net sales and orders booked in line with the growth rate whereas operating expenses were significantly reduced. All affirmative trends are continued and are recognizable in Q1 (Quarter 1) and Q2 2003 business results thus contributing to our determination to keep them on track. How the results are segmented Ericsson Nikola Tesla has pioneered the introduction of Balanced Score Card (BSC) concept by introducing the Strategy Tree. The model applied can be utilized twofold, at tactical, operational level but it can be developed to meet long-term strategic goals. The process is established to define the Key Performance Indicators - KPIs, grouped into different perspectives having links between them. The focus is on defining employee’s perspective followed by innovation perspective. Mid part incorporates internal efficiency perspective branching to customer perspective and finally defining the result through financial perspective. Each level is subject to elaborate an analysis of elements and indicators to follow up and analyze at different authorization levels of decision-making. Identify any key linkages between the Enabler criteria and the Results shown in later pages Ericsson Nikola Tesla has created an open information environment for all key functions defined to meet any particular information need required by either in-company or out -company participants in a business process. The Intranet, the Internet, management meetings, management forums, team building events, time reporting etc. for all authorization levels are at the disposal of all participants and all are encouraged to respond and supply feedback, even anonymously if so preferred. Such practice enables the achievement of forecast goals and facilitates any crisis management as well as restructuring demand. Key linkages between the Enabler criteria and the results are:

• Clear policies, strategies, directives and objectives (robust, committed and stretched). • Organization oriented towards customers (KAM, lean organization, Internet sites, Customers

satisfaction measurements, Brand management) • ETK is an excellent employer (knowledge management, working environment, empowerment, people

satisfaction measurement – DIALOG, PD discussions, remuneration in relation with results). • Strong orientation towards core processes, excellent processes documenting and publishing on the

Intranet, KPIs publishing on BSC in 5 perspectives (Financial, Customers, Internal efficiency, Innovation, Employees).

CRITERION 6 : CUSTOMER RESULTS Sub-Criterion 6APerception Measures


Detail on this page the four key results relevant to the area in graphical format, and describe further results in terms of trends, targets, comparisons and the approach which has caused the result to be achieved.

CUSTOMER SATISFACTION INDEX

050

100150

1996

1998

2000

2002

Year

Val

ue (%

)

Local Global

Goals: 2001-75%, 2002-80%, 2003-80%;

SERVICE & SUPPORT

0

50

100

1996

1998

2000

2002

Val

ue (%

)

Local Global

Goals: 2001-75%, 2002-80%, 2003-80%

The customer satisfaction Process/Measurement as a part of the Sales &Marketing Process shows positive trend. ETK enhances relationships with the customers so that improvement actions can be taken on time and in the right areas.

Service and support of the system include measurement through: System availability, Response time for hardware services and software support, Response time and recovery in emergency situations, etc. Significant improvement in customer satisfaction with Service support is visible.

CSR Statistics for Customer (VIP-Net)

0

5

10

15

1999 2000 2001 2002 2003

Syst

ems

020406080

CSR

/Sys

tem

s

Systems CSR/Systems

Training for customers

02000400060008000

10000

1998 1999 2000 2001 2002050100150200

No. of student-days No. of courses

Goals/No. of courses: 2000/150, 2001/160, 2002/160

Consistent year by year improvement shown. Average number of Customer Services Requests (CSR) per systems is going down although the complexity of the network (Number of different systems; VIPnet in this particular case) is going up.

The number of students slightly decreased due to overall market situation in telecommunication segment, and the number of courses increased, due to development of training needs on the overall ETK market.

Further Results Segmentation Trends Targets Comparisons Causes

Cooperating and communicating with customers

Key Customers

Positive- 4+ years

Met last 3 years

MUCE

New MU organization, Process improvement activity in Sub-Criterion 5C, 5D, 5E, Front Office/Help Desk

Designing solution to support & increase customer future business

Key Customers

Positive- 4+ years

Met last 3 years

MUCE CS &SS

New regional/global organization, Process improvement activity in Sub-Criterion 5B

Complaint - claims Deliveries On track Failed last year N/A Suppliers

CRITERION 6 : CUSTOMER RESULTS Sub-Criterion 6BPerformance Indicators



Hit rate per year

0100200300400500

1999 2000 2001 20020%10%20%30%40%50% Tender/

OfferContract

Hit rate

Goals: 2001-35%, 2002-37%, 2003-40%

Comparison with main competitor

0

50

100

1999 2000 2001 2002

Year

CSI

Val

ue fo

r B

road

per

form

ance

(%

) Ericsson

Siemens

Hit rate as a measurement in Marketing & Sales and Operations area shows continual progress in last 4 years. Tender Hit rate is defined as a percentage of signed Contracts and number of Offers/Tenders/ Solutions.

Comparison of Ericsson (ETK) versus main competitor in relevant segments like communication, product performance, designing solutions, delivery & installation and services. Consistent improvement over the last 3 years.

020406080

100

1996 1997 1998 2002

Year

%

Customer Satisfaction (Self-assessments'

Goals: 2001-4,0; 2002-4,1; 2003-4,1 Customer Satisfaction results (Self-assessments against EFQM questionnaire, in 1999, 2000 and 2001 Self-assessments were performed against Ericsson Business Excellence Model)

Internal ETK KAM Customer Satisfaction measurements with Customer Solution/Operations area shows significant positive trend


Project efficiency

Projects

Positive 2 years

Met targets

MUCE

SAP project system, Company Efficiency programs

Delivery precision Contract fulfilment

Stable level On target N/A Suppliers, customers

e Order desk registration Solutions Positive 3+years

Met target MUCE CS&SS Tool usefulness, process simplicity

Orders booked Contract Positive 2+years

Met last 2 years N/A Customer focus deployed through whole ETK

Awareness of customers’ satisfaction, DIALOG 2002

All employees Positive 3 years Met last 2 years ETK 73%, BinC 74%

Customers’ satisfaction published on Intranet

Awareness of customers’ quality demand, DIALOG 2002

All employees Positive 3 years Met last 2 years ETK 79%, BinC 83%

KAM organization

CRITERION 7 : PEOPLE RESULTS Sub-Criterion 7APerception Measures

KAM SATISFACTION (INTERNAL)

3,90 4,00 4,004,30

4,50

3,50

4,00

4,50

5,00

1999 2000 2001 2002 2003

Year

Val

ue (r

ate

on sc

ale

1-5)



0%

10%

20%

30%

40%

2000 2001 2002

EMPOWERMENT INDEX

ETK Total

MUCE Average

External Average

ETK Committed Goals: 2002-35%, 2003-35%

0%

20%

40%

60%

80%

2000 2001 2002

LEADERSHIP INDEX

ETK Total

ERICSSONAverageExternalAverage

ETK Committed Goals: 2002-74%, 2003-73%

The DIALOG survey measures and focuses on improving the overall capacity of our organization & employees to create Value for our Customers. The Empowerment index measured in the survey gives a critical indication of ETK ability as an organization to create this value.

Leadership index in DIALOG survey shows the employees’ perception/satisfaction with their managers’ relationship, structural, participation and networking skills.

0%

20%

40%

60%

80%

2000 2001 2002

ORGANIZATIONAL EFFICIENCY

ETK Total

ERICSSONAverage

ExternalAverage

Goals: Best in Class

CHANGE MANAGEMENT

0%

20%

40%

60%

80%

2000 2001 2002

ETK Total

ERICSSONAverage

Goals: Better than Ericsson average Organizational efficiency at ETK is high. The survey shows that employees think the company is organized in such a way that everyone knows who should do what. Employees are satisfied with the tools for their work and the way in which they divide work between them. It makes it easier for them to achieve ETK objectives.

New ideas are strongly encouraged and supported at ETK. Employees are satisfied with the speed of changes after the decisions are made. There is an inspiring spirit and enthusiasm in the company. ETK results are higher than the Ericsson average. No comparison is available with external average because of specific questions for Ericsson Group.


Responsibility & Initiative, DIALOG 2002

All employees Positive 3yrs To best in MUCE

ETK 61%, MUCE 61%

Action plans and improvements

Authority, DIALOG 2002 All employees Positive-3yrs To be best in MUCE

ETK 67%, MUCE 64%


Stress, DIALOG 2002 All employees Positive 4yrs To best in MUCE

ETK 7%, MUCE 10%,

Working environment, lectures

Motivation, DIALOG 2002, high

All employees Positive 3yrs To be best in MUCE

ETK 58%, MUCE 50%

Working environment, leadership, awards

CRITERION 7 : PEOPLE RESULTS Sub-Criterion 7BPerformance Indicators



COMPETENCE INDEX

0%20%40%60%80%

100%

2000 2001 2002

ETK Total

ERICSSONAverageExternalAverageBinC

Goals: Best in Class (BinC)

DIALOG RESPONSE RATE

70% 80% 90% 100%

2000

2001

2002

ETK Total

ERICSSONAverage

Goals: 2000-80%, 2001-85%, 2002-90%, 2003-95% Dialog survey shows that ETK employees assess their professional competences as very high. ETK employees are satisfied with their competences and the way they deal with customers’ requirements and complaints.

ETK employees are highly involved in the satisfaction survey Dialog. With such involvement the survey results are a reliable base for improvements in the company (action plan).

ABSENTEEISM AND SICKNESS

02468

101214

1996

1998

2000

2002

%

sikness up to 42days

sickness longerthan 42 days

maternity leave

Goals: 2000-10%, 2001-8%, 2002-6%, 2003-4%

PE DISTRIBUTION

0

20

40

60

2000 2001 2002

%

Outstanding

Excellent

Good

Acceptable

The main reason for such a low rate of absenteeism and sickness are the benefits for all employees:

• medical unit inside the company location • extended health program for all employees

Goals: 2000-45%, 2001-48%, 2002-50%, 2003-52% Outstanding and Excellent The achievement of individual and unit/company tasks/goals, measured by Performance Evaluation – PE, is very high and in correlation with unit/company business results. • Outstanding or excellent- achievements that are above

normal standards • Good- all or majority of objectives are met on the level

expected from a competent employee.


Co-operation & Process, DIALOG 2002

All units Better than in 2000, worse than in 2001

To be best in MUCE

ETK 73%, MUCE 67%


Human Investment Whole ETK Better than in 2002

On target Other MUCE companies


3G Readiness (3G = Third generation of mobile telecom)

Responsible units

Positive On committed target

Better than other MUCE companies

ESP 2000-2004

CRITERION 8 : SOCIETY RESULTS Sub-Criterion 8APerception Measures



0

500

1000

1500

2000

1999200020012002

period

appe

aren

ces

010203040506070

med

ia

appearences targetappearences actual media target

media actual

Performance 1999-2002 ETK appearances in media

05

1015202530354045

targ

et

actu

al

targ

et

actu

al

targ

et

actu

al

targ

et

actu

al

1999. 2000. 2001. 2002.

customer orientedactiv.culture

faculty

environment

humanitarianactivitiesscience

sport

education

health

Number of sponsorships

Consistent year by year improvement shown. After a relatively slow period over 1999 and 2000., in 2001. were 1051, and in 2002. there were 1825 media appearances related to Ericsson and ETK in the Croatian daily paper, magazines, TV and on the web sites. ETK is on the top of Croatian perception

ETK regularly sponsors and participates in different areas: humanitarian and socially oriented actions, students club and organisations, customer oriented activities, culture, sport, environment, etc

INFO 2002 (INFO- International Information Technology Fair – Zagreb) - The Award for the high level of overall performance

Ericsson Nikola Tesla’s web pages among 10Best corporate web sites. The competition for the best web site was organized by magazine VIDI


Information accessibility Intern/External Positive - 5+yrs Met last 5 years Other comp. ETK Intranet/Internet Medical check-ups Intern/External Positive Every year First in Croatia ETK OH&S policy “Doctor in Your Workplace” Company Positive Every year First in Croatia ETK OH&S policy Annual reports All stakeholders Positive Met last 5 years Other MUCE

companies Corporate directive

Equal opportunities, EEEA Award, sub-criterion 3A

Ericsson in Europe

Positive Ericsson companies

Corporate and ETK policy

CRITERION 8 : SOCIETY RESULTS Sub-Criterion 8BPerformance Indicators



NUMBER OF INJURIES AT ETK

0

5

10

15

20

1996 1997 1998 1999 2000 2001 2002year

Inj

urie

s

Goals: 2000-600, 2001-700, 2002-750

As the number of dangerous jobs decreased over the years and the occupational health and safety management system was introduced the number of injuries at work has been reduced to a minimum.

Every year training courses in occupational health and safety are held (e.g. vocational training for the authorized officials, for employees representatives, administering first aid, safe work,…)

MUNICIPAL WASTE MANAGEMENT

0

200

400

600

800

1998. 1999. 2000. 2001. 2002. Year

ton,

103 k

n

Quantity (t)

Cost (1000kn)

Goals: 2000-550, 2001-500, 2002-300 (t)

WATER CONSUMPTION

0

50

100

150

200

250

300

1998. 1999. 2000. 2001. 2002.Year

103 m

3

Goals: 2000-100, 2001-50, 2002-40 x 103 m3 In 1996 ETK agreed on two goals concerning the municipal waste management: to reduce the quantity of municipal waste and to change the mode of payment which meant that instead of paying for municipal waste per square meter of business area we would pay per quantity. Both goals were achieved. ETK is the first company in Croatia that started the new practice of payment.

For ETK the continual goal is to reduce the water consumption. ETK reached this goal through several activities such as closing down activities, central control of water supply system, and by increasing the awareness of employees.


Certificate 18001 Company End of 2003 First in Ericsson

ETK OH&S policy

Certificate ISO 14001 Global/ETK Ericsson comp. ETK program Reduction of energy consumption ETK Positive 5+yrs Met last 5 years N/A Changing of core

activities External communication on Social responsibility & Environment

ETK/interested parties

Positive 5+yrs Met 3 years N/A Proactive approach, Social responsibility

CRITERION 9 : KEY PERFORMANCE RESULTS Sub-Criterion 9AKey Performance Outcomes

TRAINING IN OH&S

0200400600800

1000

1998 1999 2000 2001 2002year

Tra

ined

em

ploy

ees

Goals: 2000-2003: No injuries



0%

5%

10%

15%

20%

25%

30%

1998 1999 2000 2001 2002Actual result

0200.000400.000600.000800.000

1.000.0001.200.0001.400.0001.600.0001.800.000

1998 1999 2000 2001 2002

KH

RK

Actual resultTarget

Sales General & Administrative expenses as % of Net sales Reporting and tight control of expenses resulted in better decision making for reducing these costs. Informatization of internal, mostly administrative, processes has also had great impact on reducing SG&A expenses. High level of employees’ awareness.

Orders Booked

After slowdown on domestic market (Croatia) 2002 has brought more Orders booked from this market. 2002 target is met, even exceeded.

0

200.000

400.000

600.000

800.000

1.000.000

1999 2000 2001 2002

KH

RK

Actual resultTarget

0

50.000

100.000

150.000

200.000

250.000

1998 1999 2000 2001 2002

KHR

K

Actual resultTarget

Export sales Huge increases in export sales are mainly due to Customer financing program and taking over of new markets responsibilities. New responsibilities in Africa especially in 2002. Targets are met in last 3 years.

Income before taxes Despite the world crisis, and considerable drop down of dollar value that began at the end of 2001 with terrorist attack on WTO in New York, Income before taxes remained stable and in accordance with planned values. The result is extremely positive which is also evident from the benchmarking with corporate Ericsson’s negative result. Targets have been met over the years with average exceeding of 16%.


Net sales growth EMEA Positive- 3+years

Last 3 years exceeded by 1% average

2 years better than global Indus. trends

New market acquisitions

CRITERION 9 : KEY PERFORMANCE RESULTS Sub-Criterion 9BKey Performance Indicators



0%

20%

40%

60%

80%

100%

2000 2001 2002Actual resultTarget

020406080

100120140

1998 1999 2000 2001 2002

days

Actual resultTarget

Utilization rate Year- to- year we constantly keep the utilization of resources on stable level, between 80% and 90%. Each year targets are exceeded in all company resource units, especially in the Research & Development center (SW design), that also contribute to exceed targets defined on Ericsson regional level (Market Unit Central Europe).

Inventory Turnover Consistent year-to-year improvement shown. From the year 2000 on all targets have been met. Change of core business from manufacturing to service and sales oriented company effected a shift from inventory to account receivable part of asset management. Better and better reporting and control system on working capital have had impact on actual result.

05

1015202530354045

1998 1999 2000 2001 2002

SD

T m

in/e

xch/

year

v

SDT TotalTarget

0

100.000

200.000

300.000

400.000

500.000

600.000

1998 1999 2000 2001 2002

KHR

K

Cash and cash equivalents

In Service Performance (ISP) SDT, System Down Time is the downtime when traffic is inhibited, i.e. due to a CEF and/or the downtime due to System restarts/reloads. SDT is expressed in minutes/exchange/year. Due to signed support contract with customers, and preventive maintenance, each year SDT is better and better.

Cash Improved cash management resulted in increased amount of cash and cash equivalents. Target- to have positive cash flow- has been achieved. Even in 2001 when Consolidated Ericsson had problems with cash flow, ETK had excellent results in comparison to them.


Future oriented company ETK Excellent Met 2 years MUCE ESP 2000-2004


Examples of Applicant’s Improvement Actions (Please use the following pages to describe 3 of your improvement actions.) Improvement Action 1 A Title of Improvement Action:

Self-assessment 2002 against EFQM Excellence Model

B Owner of the Action:

Company Quality Manager

C Date for Full Deployment:

October 2003

D Priority Ranking:

High E Model Criterion:

5: Processes

F Current Status as of the submission date:

90% completed

Description of Improvement Action G APPROACH (Describe the improvement action and rationale for selection)

• ETK has carried out self-assessments since 1996: against EFQM Excellence Model in 1996, 1997, 1998, 2002 (questionnaire approach) and against Ericsson Excellence Model in 1999, 2000 and 2001.

• This approach enables ETK managers to better understand present ETK strengths and weaknesses, areas for improvement and current position on a scale of business excellence.

• According to the self-assessment results, ETK has accomplished significant improvements since 1996 (from 370 scores in 1996 up to 690 scores in 2002), Appendices FIG. IA1-1.

• Each self-assessment indicated areas for improvement and accordingly each time an improvement plan with action points was prepared (Activity, Responsibility, Due date, Follow-up).

H DEPLOYMENT (How is the approach being implemented?) • Until 2002 self-assessments had been implemented on units level; all units involved prepared

their own improvement plan. In 2002 ETK the Top Management Team performed self-assessment on ETK level. The results were statistically analyzed and interpreted.

• Self-assessment results were presented in a relevant report and presentation and discussed at a Top Management Team meeting. After the presentation, the President appointed an EFQM team and defined the following tasks: 1) Selection of the most important improvement proposals (IP) between 16 possible improvements revealed after the self-assessment, 2) Co-ordination of all activities during 2003 necessary for certification to “Recognized for Excellence”, i.e. to the second EFQM level of excellence.

• During several meetings EFQM team decided on criteria for IPs condensation and selection (possible due to some correlations) and defined 5 general IPs for 2003. These IPs were deployed to all ETK units and explained in detail at Quality Coordinators meeting.

• Each ETK unit prepared its improvement plan by selecting all IPs relevant to that unit. • Company Quality Manager performs the follow-up of units’ improvement plans.


Improvement Action 1 (continued) A Title of Improvement Action:

Self-assessment 2002 against EFQM Excellence Model


Company Quality Manager


October 2003

D Priority Ranking:


5: Processes


90% completed

Description of Improvement Action I RESULTS (Deployment Measurement)

Comments

Has the improvement action been deployed within the time scales described in the Improvement Plan?

• The units’ improvement plans were deployed and implemented according to schedule.

Has the improvement action been deployed to its full potential as described in the Improvement Plan?

• Planned improvements by units in 2003 are to be implemented (70%) by June 03. The rest will be implemented until December 2003.

J ASSESSMENT AND REVIEW Monthly or weekly update, could include;

• learning points, issues for resolution • revisions to the described approach and why • revisions to the deployment plan and why,

etc

• Company Quality Manager performs the follow-up after Q103 and Q203. An intermediate follow-up in May is implemented to secure higher % of improvement plan accomplishment by units.

• Beside the Corporate Global Customer Satisfaction measurement program, a local, own-developed customer satisfaction measurement program is implemented.

• Due to reorganizations and achieved improvements, the web sites of ETK units published on the Internet and Intranet were revised and updated.

• Information on company and units’ objectives for 2003 is published on ETK Intranet and is easily accessible to all employees responsible.


Improvement Action 2 A Title of Improvement Action:

Competence Shift (CS)


Robert Lakovnik (Vesna Franjic)


2004

D Priority Ranking:


3: People


70% completed

Description of Improvement Action G APPROACH (Describe the improvement action and rationale for selection) • In line with Ericsson Strategic Planning (ESP) the ETK Management Team determined strategic

objectives for period 2000-2004 with focus on top 10 activities. Among the key factors for Ericsson success ETK Management determined as key activities Competence Shift. (CS 2004) – project for competence development with focus on new area the New Telecom World (NTW). Project started in 1999 and as sponsors were nominated ETK President Åke Enell and Deputy Rajko Pfaff. Objectives of project: to increase the number of NTW experts in % of total ETK employees (in 1999 – 7%, in 2000 - 14%, in 2001-28%). Main activities in the project:

o to make competence gap analysis for ETK key positions, (Appendices FIG. IA2-1) o to define development program (list of training courses, internal and external,

project plan) o to define candidates for active training o to follow up the accomplishment o reporting and reviewing during the year

• In order to stress competence required for NTW, in 2002 the subproject Competence Evolution Program (CEP 2002) was formed. ETK Competence Manager is responsible for following up the training program and improving the relations with FER.

Competence development is also achieved within the postgraduate studies. If Competence Gap Analysis outlines a unit’s need for postgraduate competencies, Unit Competence manager will determine the need for new competences, required knowledge and competences for each job (under guidance of Unit’s Director) and recommend in written form the candidates for defined post graduate studies in current year. Competence manager is responsible for finding and offering university postgraduate programs. HR Director finally approves every application for postgraduate studies. HR unit is responsible for monitoring and following up the accomplishment H DEPLOYMENT (How is the approach being implemented?)

• Postgraduate education as a continuous long-term process was implemented in all ETK units with great results. In 2003 at ETK there are 175 active postgraduate students. The rate of finished studies is very high. For instance, in the time period 1990 to 2001, 25 employees attended postgraduate courses, and only one did not finish this study (96 % achievement).

• Competence Shift was also implemented in all ETK units. In the period from 1999 till 2003 through CS 2004 project and CEP 2002 training programs, 224 employees finished FER university development program (20 % of ETK employees).



Competence Shift


Robert Lakovnik (Vesna Franjic)


2004

D Priority Ranking:


3: People


70% completed


Comments

Has the improvement action been deployed within the time scales described in the Improvement Plan

• The competence development plan –FER education was followed up through “5 waves” (from 1999-2001) and in 2002 the CEP 2002 started.

• Postgraduate study: the majority of students finished education according to the plan (96%)

Has the improvement action been deployed to its full potential as described in the Improvement Plan

• FER education for NTW in year 2001- 172 certificated employees (61% of planned attendees)

• Postgraduate study (from 1999 till 2003) included 200 employees (18% of ETK employees)

• Web learning Mr E - 935 certificated employees (72% of ETK employees)



etc

• Line Manager and Competence Manager perform monitoring of realised and planned training, throughout the year.

• Early each year, during the PD discussion between the Line Manager and employees an evaluation is made of performed training and defined competence gap (difference between present and required competencies).

• In accordance to both individual and company plans a new development plan will be compiled containing continuous activities for improving and reaching required competence level.


Improvement Action 3 A Title of Improvement Action:

Application TRAMP


M. Staresincic B. Kranic


January 2001

D Priority Ranking:


5:Processes


100% completed

Description of Improvement Action G APPROACH (Describe the improvement action and rationale for selection)

- For years ETK has had a few thousands of business trips a year. These travels, and especially the travel expenses, were difficult to track, so ETK decided to introduce a new, modern and efficient tool for travel tracking. Significant savings were expected.

- During the year 2000 in-house design and development implementation of the Travel Management Project (TRAMP) started, with a goal to develop a web-based application for travel management. At the end of the year 2000 the first release of the TRAMP application was introduced, and now ETK has a complete overview of travel expenses, travel plans and expenses are automatically posted to SAP/R3. Recently TRAMP has been revised to introduce possible improvements revealed during the two-year implementation.

- It appeared that the business processes should be analysed and changed if necessary according to the principles of targeted goal.

H DEPLOYMENT (How is the approach being implemented?) - In spring 2000 ETK formed the TRAMP project team; they held many interviews with

managers, travel department staff and the people who travel very often. In autumn 2000 the first release of TRAMP, a web-based interactive application, was on disposal to ETK employees.

- There were many organizational changes in business processes but the project team was strongly supported by top management and the project was finished successfully.

- Almost all ETK employees were trained in workshops held by TRAMP coordinators. - From 2000 to 2003 a lot of improvements were implemented with the goal to get closer to

traveller needs. Possibilities include: - Creation of travel plan (more than one destination per order, proper cost object addressing

with formal control in the central business information system) - Automatic request for flight and/or hotel room reservation (with a possibility for direct

sending of orders to travel agencies) - Automatic visa request (for destinations where needed) - Electronic way of plan approval - Automatic information to travellers and administrators about plan approval, rejection or

sending to revision - Connecting all bills with the proper travel plan (administrator - for those received by the

company; traveller - for those received by him/her) including automatic cost calculation - Controlling function - Electronic way of travel cost calculation approval - Data prepared for postings to the central business information system.



Application TRAMP



January 2001

D Priority Ranking:


5:Processes


100% completed


Comments

Has the improvement action been deployed within the time scales described in the Improvement Plan

• All plans were deployed and implemented according to the schedule.

Has the improvement action been deployed to its full potential as described in the Improvement Plan

Improvement action resulted in substantial savings, i.e.: • In addition to process changes, a

significant reduction of engaged assets through advances and reduced cash circulation through the company.

• A significantly reduced number of process participants.

• Paper savings. • Significant timesavings achieved by e-

communication. • Savings resulting from awareness of

travel costs by both authorised signatories and travellers.

• Each of the savings achieved can have different effects in different companies. According to the analyses, estimation is that the company having three thousand travels a year can return its investment within one year period of time.



etc

• Travel department staff collects all traveller’s comments and, if needed, order specific improvement from IS support department.

• There are many reports generated by TRAMP which are useful for reviewing travel matters, and performed regularly and on request


Ericsson Nikola Tesla d.d. , Zagreb, Croatia Organisation Chart

LM Ericsson

PRODACT&SOLUTION DIMENSION MARKET&CUSTOMER DIMENSION

Market Area Europe, Middle East and Africa

Market Unit Central Europe (MUCE)

Marketing & Sales

ETK ERICSSON NIKOLA TESLA ETK Strategic Team

ETK Top Team

Operations

R&D Centre

Business Support

People&Culture

Communication

General Services

KAM HT KAM VIPNet KAM Enterprise KAM BiH, Montenegro KAM Special Project Business Development KAM e-systems


Appendices Page 1

FIG. 2D-1 Sales and Marketing Process for Direct Distribution within the Operator Segment Appendices Page 2

CRM, Customer Relationship Management

Customer Satisfaction

SDP 3

Create Sales

opportunities

CustomerBuy-in

Preparation of

proposal

Get acceptance Negotiation

Define Market

Opportunity

Contracthandshake

Define BusinessSolution or

SP/PP content

Design Market Offer

Provisioning

Final acceptand

payment

Market offer

maintenance

Marketing communi-cation

Phase-outBusinessSolutionor SP/PP

Supply

Ericsson Planning

Contract execution

SDP 4SDP 2SDP 1

1 5

3 2 4

On Track

Warning

Off Track

On target

Excellent

Employee

1 5

32 4

On Track

Warning

Off Track

On target

Excellent

Innovation

1 5

32 4

On Track

Warnin

Off Track

On target

Excellent

Internal efficiency

1 5

32 4

On Track

Warning

Off Track

On target

Excellent

Customer

1 5

3 2 4

On Track

Warning

Off Track

On target

Excellent

Financial

FIG. 2B-1 ETK Balanced Scorecard


Access ControlDaily Activities by Registration

0

2

4

6

8

10

12

14

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

Hour

%

1999 2000 2001 2002 2003

FIG. 4C-1 Some ETK employees are comming into ETK premises very early and stay very late

FIG. 5A-1 ETK Operational Management System (OMS)

Appendices Page 3


FIG. IA1-1 In 1999, 2000 and 2002 ETK have performed Self-assessment against Ericsson Business Excellence Model and obtained results are not comparable with EFQM Excellence Model

FIG. IA2-1 Competence gap analysis for datacom experts

LIST OF ABBREVIATIONS ATM Asynchronous Transfer Mode KSTool Knowledge Sharing Tool AXE Digital Public Exchange LAN Local Area Network BinC Best in Class (External benchmarks: IT,

telecom and Service companies) N/A Not Applicable

0,00

1,00

2,00

3,00

4,00

5,00

Network integration (standards, scenerios,concepts…)

NTW Solutions (products, services…)

Technology (protocols, OS, RDBMS, …)

Market situation (competitors…)

NTW - strategic development

Teamwork

Approach to change

Written and oral communication

English (Russian…)

Ericsson (processes, products)

Overall business awareness

Customer orientation

Planned Actual

Average competence gap for:Datacom experts

EFQM Self-assessments Results

3750 56

69

0

20

40

60

80

1996 1997 1998 2002

% Achievement of ETK


BSC Balanced Scorecard NTW New Telecoms World COMPAS Employees satisfaction measurement

tool (older version) MORE Managing Opportunities and Resources

for Ericsson CEP Competence Evolution Program MS Management System CRM Customer Relationship Management MUCE Market Unit Central Europe (local

Ericsson companies in Poland, Czech Republic, Slovak Republic, Hungary, Croatia, Bosnia-Herzegovina and Slovenia

CSI Customer Satisfaction Index OH&S Occupational Health & Safety CSR Customer Service Request OMS Operational Management System

(Integrated Quality, Environmental and OH&S Management System)

CS&SS Customer Solutions & Sales Support PC Personal Computer DECT Digital Enhanced Communication

Technology PD Personal Development

DIALOG Dialog is Ericsson's employee survey that is used since 1999 worldwide.

PE Performance Evaluation

EDGE Enhanced Data for Global Evolution PM Performance Management ELS Ericsson Local Services PM-

PD&PE Performance Management – Performance Development & Performance Evaluation

ESP Ericsson Strategic Planning PROPS Project management approach with stipulated milestones and tollgates in each project phase

EMEA Market Area Europe Middle East and Africa, see Organisation Chart

RBA Risk based Assessment (business oriented internal auditing)

ETK Ericsson Nikola Tesla d.d., Zagreb R&D Research & Development FER Faculty for electrical and computing

sciences, Zagreb SAP/R3 Business management software

GPA General Purchasing Agreement SIO Sales Information Organiser GPRS General Packet Radio Service SIQ Slovenian Institute for Quality GSM Global System for Mobile

Telecommunication SWOT Strengths, Weaknesses, Opportunities

and Threats analysis HR Human Resources TMT Top Management Team Hit rate Percent of accepted tenders TRAMP Travel management tool HRK 1 EUR = 7,56 HRK or kn (Croatian

currency) TQM Total Quality Management

HRMS Human Resources Management System UMTS Universal Mobile Telecommunications System

HT Croatian telecom operator VIPnet Croatian mobile operator IAS International Accounting Standards WARP Web based authorization program IP Improvement Proposal (after RBA or

audits) WCDM Wideband Code Division Multiple

Access IT Information technology ITO Inventory Turnover KAM Key Account Manager KPI Key Performance Indicator

EFQM Levels of Excellence Recognised for Excellence...

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