Responsible employer

Maintaining relationships with our employees based on cooperation, co-creation and fairness are fundamental when it comes to motivation and incentive and are a major factor behind our attractiveness as an employer and the loyalty of our employees. These relationships are decisive in guaranteeing the long-term competitiveness of our company.

As a responsible employer, we maintain trusting relationships with our employees throughout the Group as well as with trade unions and employee representatives and engage in extensive dialog with them. This involves the works councils, the Central Works Council, the Group Works Council and the Group representative for the disabled within the Group in Germany, and the European Works Council at a European level. We maintain constructive relationships based on mutual trust with these three employee representative bodies.

Fair pay and benefits
We give our employees fair pay in line with the standard wages typical to that country's employment market and guarantee equal pay for work performed by men and women without discrimination. We pay Deutsche Telekom managers in compliance with our Group-wide Global Compensation Guideline. We also offer our employees additional benefits such as our company pension scheme. We assess the effectiveness of our pay and benefits elements by conducting various measures such as employee interviews.

Socially acceptable staff restructuring
Our Group restructuring activities, which will help us stay competitive in the future, were a central topic this past year and will continue to be in years to come. These activities include complex staff restructuring measures. Deutsche Telekom is committed to socially responsible staff restructuring with the extensive support of our employees. These measures are based on our integrated planning and management process, which the Board of Management annually reviews and approves. We document the progress of our socially responsible staff restructuring activities in our monthly Group reports.

To help us effectively implement our Group Employee Relations Policy („Employee Relations Policy“), we conduct special reviews to assess labor relations at the different national companies as well as any human rights-related risks resulting from our business activities. In 2014 we reviewed and analyzed implementation of the Employee Relations Policy on-site at our subsidiaries in Mexico, Romania and the UK. The results will be published on our homepage. In Mexico, for example, we found fair employment conditions for subcontractors in compliance with all regulations. Employees in Romania were effectively involved in change processes during a major re-branding effort. Workshops and ambassador programs eased their doubts and got them ready for the changes. The national business unit in the UK has improved its employees' work-life balance considerably with more flexible working hours and more opportunities to work from home.

The Group's 2014 headcount was slightly below the figure for the end of 2013. We saw some offsetting effects in our Germany, U.S., Europe and Systems Solutions segments: We increased our headcount in our operative segment in Germany by 3 percent, particularly in the wake of restructuring and expanding our "networks of the future" business area. In our operative segment in the U.S. the number of employees rose by 7 percent due to a growing customer base. In contrast, we experienced a drop in headcount of around 2 percent in our Europe segment compared to December 31, 2013. This can partially be attributed to the sale of shares in Euronet Communications in the Netherlands. Measures to improve efficiency also resulted in decreases in Romania, Croatia and Hungary. However, this development was partially offset by an increase in headcount following the inclusion of the GTS Central Europe group on May 30, 2014 as well as by growth following the staff restructuring in Greece. A decrease in the employee headcount by approx. 4 percent in our Systems Solutions segment can particularly be attributed to domestic staff restructuring measures. Employee numbers decreased by around 11 percent at Group Headquarters and Group Services. This can particularly be attributed to deconsolidation of the Scout24 group and staff restructuring measures.

The transformation at T-Systems, which has been ongoing since 2014, involves a complex staff restructuring process. Within the scope of these activities, we made socially responsible adjustments to the T-Systems employee headcount during the reporting period. The Group offered support to employees whose positions were cut through a variety of measures. This meant that we were able to avoid compulsory redundancies and set up our new business areas with qualified IT experts in 2014. We focused on the following measures:

Opportunities for civil servants
Deutsche Telekom, the German Federal Ministry of Finance and Telekom Placement Services launched the "Chancen Bund" initiative in April 2014. The regulations for this initiative were specified under the guidance of the German Federal Ministry of Finance with the successor companies of the former Deutsche Bundespost. The goal of this initiative is to fill up to 600 permanent IT positions at federal government level throughout Germany with civil servants from Deutsche Telekom by the end of 2015. Over the course of the year we were able to second or transfer Deutsche Telekom IT experts for almost 300 positions; the German Federal Ministry of Finance will open up a maximum of 300 more positions in 2015. Through these measures, we are able to make socially responsible adjustments to our staff headcount and offer our highly qualified civil servants throughout Germany secure employment perspectives while helping the government meet its needs for IT experts.

Innovative change management with Job Service & Placement
Our active change management program, Job Service & Placement (JSP) was launched in 2014. In the program, we prepare employees whose positions are scheduled to be cut or have already been cut for employment opportunities within and outside of our company. We assist them with professional location analyses, perspectives consulting and application assistance; they can also receive compensation payments when switching to an internal or external position with less favorable pay and benefits. First priority is given to employees who use the JSP service to fill jobs that are being advertised internally, and we offer them appropriate additional training of up to six months if necessary. JSP started its work in Q4/2014. We also provide support to anyone whose position has been cut through transparent communication, e.g., through our event series, "On-site consultations on staff restructuring during the transformation process."

At the start of 2015, we introduced new and revised reward instruments for our top-level managers throughout the Group within the scope of our "Lead to win" initiative. In addition to recognizing individual performance and contributions to the company's success, the purpose of these instruments is to encourage our managers' entrepreneurial mindset. The new remuneration system has three focal points. Employee performance from the previous year is rewarded within the scope of variable short-term incentives. Long-term incentives are used to reward employees for their contribution to the Group's success. Our share-matching plan encourages employee co-ownership of the Group. The rewards are directly related to the results of our new performance assessment system, Performance Dialog. The new system is being used globally for the 2,700 top-level managers at the Group.

We successfully continued our intensive dialog with employee representatives and trade unions in 2014. The year was characterized by measures of far-reaching strategic significance such as the technological transformation with all-IP  and restructuring T-Systems, none of which could have been done without the collaboration of employee representatives. Our commitment to trusted cooperation, which is anchored in our Employee Relations Policy, has been very successful. We will continue this approach of close partnership in 2015.