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  • 2017 Corporate Responsibility Report

Agile and flexible: Promoting new manners of cooperation

Our contribution to the SDGs

Our employees use their commitment, their expertise and their abilities to pave the way for a digital society. About 217,300 people in over 50 countries worldwide make a major contribution to our business success. As a responsible employer, we very much value dialog, cooperation and fairness. We give our employees the opportunity to realize their potential and to contribute their individual strengths and ideas within our Group. We use future-oriented methods and tools to support them on their road to the digital working world.

Shaping change at the company

Digitalization is revolutionizing the way we work. Today, we are seeing new ways of cooperating and an increased degree of automation. Employees are expected to offer more flexibility, social competence, and personal responsibility. They also need to be life-long learners and be more self-directed. We have made it our goal to help our employees make these changes – and to help them not only manage change, but also take an active role in shaping it. Co-determination rights play a key role in this. Hence, we pursue dialog-oriented employee relations throughout the Group and engage in trust-based, constructive collaboration with employee representatives and unions.

Fair pay and benefits
We offer our employees competitive, performance-based pay oriented to the relevant national market. Our remuneration policies are structured to guarantee equal pay for men and women and do not discriminate. Executive compensation at Deutsche Telekom is based on our Group-wide Global Compensation Guideline. We also offer our employees additional benefits such as our company pension scheme. We regularly poll our employees' satisfaction with their remuneration with the employee survey and also conduct surveys on specific topics and in specific units. We have compiled a separate report in order to comply with the new legal requirements of the Act to Promote Transparency of Pay Structures. This is enclosed to the management report as an appendix.

Flexible working models
Having the chance to structure one's work according to one's own needs considerably improves work-life balance and helps prevent stress and the feeling of being overworked. That is why we actively promote flexible working time models. Our offer ranges from flexitime and part-time to lifetime work accounts. Since 2016 we have offered about 80,000 employees in Germany a so-called lifetime work account. This offer has been available to about 20,000 civil servants in Germany since mid-2017. This amounts to 90 percent of all employees in Germany. Lifetime work accounts give our employees the opportunity to finance future absences from work lasting longer than one month, which may be used for early retirement, a sabbatical or to support a period of part-time work. Executives have had this option since 2012. We set up 9,000 lifetime work accounts by the end of 2017. What's more, we created the prerequisite for establishing mobile working as a new way of working at our company when we concluded the sector-specific collective agreement on mobile working in 2016.

Socially responsible personnel restructuring
We must continually develop as a company in order to fulfill our customers' requirements. This also means quantitative and qualitative staff restructuring at some of our companies. The main objective is to structure these changes for our employees in a socially responsible manner. At the companies affected, for example, we decided to enter into collective agreements that rule out compulsory redundancies. Within the scope of this socially responsible staff restructuring, we employ alternative tools such as severance payments and phased retirement as well as training programs that help our employees prepare for new assignments.

Employee satisfaction and participationWe highly encourage a feedback culture throughout the Group and promote open dialog and constructive communication with our employees Our social network "You and Me" (YAM), the Group-wide network that has about 123,000 users, is an important tool for this. YAM provides not only comprehensive information but also a platform for our employees to engage in cross-hierarchical dialog and raise topics that are important to them for discussion within the Group. Our Board of Management also regularly uses YAM as a platform for direct dialog. Another key element of our feedback culture is our Group-wide employee survey. This is supplemented by pulse surveys, which give us a snapshot of the mood at the company twice a year. Our Group-wide ideas management activities are another key tool in encouraging employee contributions to the success of the company.

We have seen an increase in the number of employees participating in our Group-wide pulse surveys as well as our ideas management activities. In 2017, 71 percent of our employees took part in the pulse survey (previous year: 73 percent). Employee satisfaction remained high at 72 percent. Interest in ideas management is also very good; statistically, every eleventh employee submitted a new idea in 2017. We also offer our employees opportunities to help shape our corporate social commitment within the scope of corporate volunteering initiatives.

We have set Group-wide standards for managing employee relations. These were formalized in our Guiding Principles, Leadership Principles and Employee Relations Policy. You can find additional information about respect for human rights at our Group in the Strategy chapter.

Progress

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Employee relations at our national companies

What progress have our national companies been making in implementing our Employee Relations Policy? We determine such progress using special reviews. Two to three national companies are subject to such a review each year. They use the results of the review to further improve their relations with employees. The results also help us conduct a Group-wide assessment of employer/employee relations and any human rights risks involved in our business activities.

In 2017 we conducted reviews at T-Systems Netherlands and IT Services Hungary, a subsidiary of T-Systems International. We publish the results on our website.

Extensive discussions with management and numerous employees of T-Systems Netherlands showed that all elements of the ER policy introduced in 2011 had been successfully implemented. The employees proved to be very satisfied with their employer and praised both cooperation within their team and with management. The respondents suggested additional measures regarding communication of the complaints procedure, the ER policy, and the Guiding Principles as part of the ER policy. For example, they recommended that these topics be communicated even more intensively at events such as the Guiding Principles Day.

At IT Services Hungary (ITSH), the key elements of the policy have been successfully integrated into day to day business, and employees are familiar with these elements. Management has also focused in particular on reconciling work and family life, among other things, due to the large amount of young employees. A Working from Home policy was introduced in 2014. During the 2017 review process, the respondents indicated they would like additional options for flexible working schedules, such as tandem or part-time work. In 2017 ITSH was selected by the global service company Aon as the company with the best employee program and the most dedicated employees in Hungary. This award is given to companies that are particularly attractive employers.

Socially responsible staff restructuring continued

The transformation of our Group was a key issue in past years and will continue to be so in coming years. Against the backdrop of digitalization and the associated changes, we must secure our long-term viability and competitiveness. This process is connected to complex staff restructuring. We are creating new jobs in growth fields and are training qualified personnel to fill these positions. Other areas are the focus of restructuring activities involving workforce reduction. We make sure that all restructuring measures are implemented in a socially responsible way for our employees. In doing so, we try to support them in the best way possible on our way to the digitalized working world.

Integrated staff restructuring management introduced at Telekom Deutschland GmbH
Over the course of the upcoming changes, our goal is to provide even more professional assistance to employees during their professional reorientation phase. That is why integrated staff restructuring management was introduced in the Germany segment, which should be effective early on in the restructuring process. This means that in cases where tasks could be canceled or different skills could be required for certain positions, we want to take preemptive steps and consult with the affected colleagues and managers much earlier than we have in the past. During such consultation, various employment alternatives are devised together with the affected employees and their specific potential labor markets are ascertained. Added to this is comprehensive assistance with developing an individual job application approach and – if necessary – targeted planning and implementation of skills development measures.

Civil servanttransfer
Accompanying the above measures, Vivento, our internal service provider for Deutsche Telekom's staff restructuring measures in Germany, will continue to help civil servants transfer to positions in public service. About 450 civil servants employed at Deutsche Telekom opted for a permanent transfer to federal, state or local authorities in 2017. In 2017 the focus was primarily on transfers of civil servants to the Federal Employment Agency, branches and field offices of the Federal Office for Migration and Refugees and to the Federal Armed Forces. Employees were assisted in finding positions with federal, state and local administrative authorities.

New framework conditions for staff restructuring at T-Systems
Competition in the worldwide ICT img market and the changes resulting from digitalization are creating major challenges for us. This necessitated a collective agreement for 2016 and 2017 that does not place any additional strain on T-Systems' competitiveness and supports staff restructuring measures. The collectively agreed upon moratorium on compulsory redundancies will last until December 31, 2018. As an employer, we continued to make significant investments in the necessary socially acceptable staff restructuring measures in 2017.

T-Systems' goal is competent, employee-oriented change management that enables employees affected by staff restructuring to undergo professional reorientation and effective reintegration. Negotiations with employee representatives regarding framework regulations for the staff restructuring process took place at the end of 2016. The central works agreement on supporting and implementing staff restructuring at T-Systems International (CWA on Staff Restructuring 3.0) was revised in March 2017. It defines HR instruments as well as processes and procedures for carrying out compulsory staff-related measures. The Job Service & Placement (JSP) service launched in 2014 will continue to support affected employees in finding new jobs. The cooperation with JSP is set forth in T-Systems' Central Works Agreement on Change Management.

Transformation measures were necessary at the TC Division and IT Division in 2017. This change resulted in a moderate loss of jobs. The reconciliation of interests required for this were negotiated with the relevant department representatives. Here too, assistance with helping employees find new employment opportunities is important so as to ensure that the restructuring process remains socially responsible. Thanks to JSP, T-Systems was able to find new career perspectives for 50 percent of the 188 affected employees.

JSP's success stories in past years were also noticed by other Group units. As a result, JSP took over advisory activities for 25 Telekom Training employees and has already found solutions for 75 percent of them. Since September 2017, JSP has additionally been supporting the internal staff restructuring process of the Europe Board department and has achieved initial success in advising both employees and managers.

Reorientation of Telekom Deutschland GmbH
Telekom Deutschland successfully completed its transformation program in 2017. The goal of the reorientation was to make the unit more competitive by changing its structure. To this end, Telekom Deutschland concentrated on processes and interfaces that directly affect customers. The transformation project consists of three large organizational key elements. First, a new service organization was created that includes most of the operational back office – customer service and technical service. Hence services for consumer, business and carrier customers now come from one source. Second, a new sales organization was created for business customers from the sales units of the business customer segment, while the sales organization for consumers was rebranded and expanded. Technical service units were integrated into Deutsche Telekom Technik so that network expansion would be managed entirely by this company. On July 1, 2017, about 20,000 colleagues moved to the new units by way of transfer of operations, job offer process, transfer, assignment or temporary leave from civil-servant status. The last steps of reorganization and transfer of operations were completed at the turn of 2017/2018.

In order to promote Telekom Deutschland's targeted transformation, a needs-based staffing strategy was developed, consisting of three elements: staff cuts, restructuring and safeguarding the company’s future. The strategy entails monitoring of how requirements change over time in the individual companies and units. This is the basis for planning ideal headcount development. To this end, Telekom Deutschland uses a forward-looking competence management concept that analyzes which skills will be in demand in the future. The concept allows a reasonable assessment of the areas where staff cuts or recruitment should take place and of how existing skills need to be managed and missing skills need to be added. In addition, this helps to transfer employees to new positions, also beyond their own departments, and ensure systematic succession management. The year 2017 also saw new impetus for transfers to a different employment relationship – such as by making phased retirement more flexible, which can now last between two and eight years. Special severance packages are also still on offer, especially for managers.

Telekom Deutschland is also going down new paths with respect to working hours. "Breathing working time" is one example of this. This concept enables flexible response to fluctuation in workload, such as during network expansion activities. In order to introduce the new model, a collective agreement was concluded with ver.di as a basis for a temporary increase in weekly working hours. Next, specific regulations were agreed with the works councils of six technology units. These regulations have been applicable for about 2,600 employees since April 2017. This way, a "breathing capacity" of around 150 employees was created, enabling a flexible response to special requirements. This concept is scheduled to be expanded in the technology units.

 

Flexible working hour schemes expanded further

We offer a wide range of optional working models tailored to the needs of specific target groups. These are based on the laws and regulations applicable in the individual countries. Working hours at the Group companies in Germany are governed by collective agreements and works agreements. Daily working hours are electronically recorded for employees who are covered by collective agreements. This guarantees compliance with legal and company regulations; for example, it makes sure that the weekly working hours for a specific flexitime balancing period are complied with. At a large corporation such as ours, regulations are diverse and cannot be fully specified for all the Group companies.

Our flexible and innovative working time models were honored with an award in 2017: the Time-to-Change project received the Pillar World Award. The project consists of three individual measures: tandem, right of return from part-time work and additional days off. Deutsche Telekom Services GmbH received Gold in the "Employer of the Year" category and silver in the "Best Products & Services of the Year" category.

Promoting part-time work
Working based on various part-time models is a concept that is established throughout the Group. We have offered our employees a return to work guarantee since 2014, with employees being able to return to their original weekly working hours at any time. To promote part-time work for executives as well, we adopted a policy to this end in 2010. A total of 27 executives throughout Germany were working part-time as of December 31, 2017. Deutsche Telekom also made a similar voluntary commitment regarding employees covered by collective agreements and civil servants. What's more, 14 percent of employees covered by collective agreements and 20 percent of civil servants were working based on part-time models as of December 31, 2017. In 2017 we developed another part-time model for our employees in Germany, which we refer to as "additional days off" and which is scheduled to go into effect in 2018. This model enables part-time employees to accumulate additional days off. We also offer a number of additional part-time options for reducing working hours such as job sharing, in which two or more employees share a position. This option can be employed using a job splitting model where each employee is responsible for different tasks or via job pairing, where employees share responsibility for one area.

Mobile working
Mobile working is the normal state of affairs at Deutsche Telekom. We laid the foundations for this back in 2016. Deutsche Telekom and ver.di agreed on the first collective agreement on mobile working concluded by an employer association, which includes rules regarding telecommuting and mobile working, among others. Thanks to increased geographic flexibility, our employees have more freedom to plan their work, thereby gaining more job satisfaction and increasing productivity - and allowing them to achieve a better work-life balance.

Lifetime work accounts
Since 2016 we have offered about 80,000 employees in Germany so-called lifetime work accounts. About 20,000 civil servants in Germany have had this option available to them since 2017, which allows them to finance a future leave of absence lasting more than one month. The account may be used for early retirement, a sabbatical or to support a period of part-time work. Our employees can finance their lifetime work account either from their gross salary or with time credits converted into monetary amounts. Until 2018 we will also support employees who are below a certain income limit with an annual contribution. We had already set up 8,629 accounts for employees and 575 accounts for civil servants by the end of 2017.

Phased retirement
We offer all Group employees over the age of 54 the option of phased retirement. Separate regulations apply for employees and for civil servants. Phased retirement can be taken either based on the block or the part-time model. Unlike regular part-time regulations, we make a substantial top-up payment to the employees' part-time pay with our phased retirement offer. This means that reducing their weekly hours does not equate to a proportionately high reduction in net pay for employees. During the reporting year, a total of 1,747 phased retirement contracts were concluded with employees both covered and not covered by collective agreements. Among civil servants there were 580 such contracts.

Part-time training for single parents
We have been offering single parents up to the age of 25 the opportunity to complete a training program or cooperative course of study part-time at Deutsche Telekom in Germany since 2011 in collaboration with the German Federal Employment Agency 22 young people began their part-time training with this program in 2017.

Re-entry into the workforce after parental leave
We offer all Group employees the option of re-entering the workforce with part-time work after parental leave.

 

Implementation of the 2016 collective bargaining round and other harmonizations in 2017

In the course of the 2016 collective bargaining round, the second phase of salary increases was successfully implemented for the majority of Deutsche Telekom employees in Germany.

  • Starting in 2016, the salaries of roughly 60,000 employees covered by collective agreements at Deutsche Telekom AG and in the Germany operating segment were raised in two phases by a total of 4.7 percent for employees in the lower pay groups and 4.3 percent for employees in the higher pay groups. After the first increase in 2016, the second increase took place on April 1, 2017. The duration of the new collective wage agreements is 24 months and they are scheduled to end on January 31, 2018.
     
  • Salaries at T-Systems for some 20,000 employees under collective agreements will be raised in two phases by a total of 3 percent for employees in the lower pay groups and a total of 2.5 percent for employees in the higher pay groups. After the first increase in 2016, the second increase took place on April 1, 2017. The collective wage agreement has a term of 24 months and will expire on March 31, 2018.
     
  • The wages of apprentices and students in cooperative study programs will also be increased in two phases. After the first increase in 2016 by EUR 35.00, another increase of EUR 25.00 followed on April 1, 2017. Subsistence allowance for apprentices not living with their parents was increased by EUR 23 for all those eligible.
     
  • The standardization and harmonization of our German remuneration systems adopted in the 2016 collective bargaining round was further driven forward. The first successful collective bargaining took place in 2017; the results will be implemented on January 1, 2018 and January 1, 2019. Collective bargaining on additional harmonization topics will take place in 2018.

Great interest in employee survey

Our employee survey, which is conducted every two years, is an important tool for obtaining feedback from our employees, discovering weaknesses and implementing suitable measures to eliminate those weaknesses. The twice-yearly pulse survey additionally helps us obtain a current snapshot of the mood at the company and verify whether the introduced measures have been successful. This lets us make quick adjustments if necessary.

Some 75 percent of employees throughout the Group took part in the 2017 employee survey. The Group index value for commitment – our gage for employee satisfaction – was 4.1 on a scale of 1 to 5, with five being the highest. The pulse survey in November 2017 saw a 71 percent response rate among employees. 72 percent of participants expressed high satisfaction with their employer.

Trust-based cooperation with employee representatives

Co-determination rights play a key role with respect to digital transformation. We want to create the working world of the future alongside employee representatives and unions – with an eye towards the needs of our workforce and the success of our company. We negotiated and signed over 200 agreements in 2017 through constructive dialog with our works councils. One key project was the organizational measure "Einfach Anders” (Simply different), which focused on a re-alignment of the entities within the Germany operational segment of the Group. The new organizational structure allowed us to harmonize the management of service responsibilities combined within the Service board department, to establish a customer-centric sales process for consumers and business customers in separate sales entities, and to combine the activities for the network build-out in a single entity. We concluded another 65 collective agreements with the union ver.di in 2017. In order to make phased retirement an even more attractive option for leaving working life early with sufficient social security, a general collective agreement on phased retirement was concluded in 2017 between ArbeitgeberverbandfürTelekommunikation und IT e.V. (agvcomunitye.V., the employers' association for the telecommunications and IT industry) and the ver.di union.

The works councils, central works councils and Group Works Council represent the interests of our employees at our Group in Germany. Our partner at a European level is the European Works Council. We also have executive staff representation committees and disabled employee representatives at the unit, company and Group level. Collective bargaining plays an important role and has a long tradition at our company, a fact made clear by the percentage of employees covered by collective agreements. As of December 31, 2016, some 69 percent of employees in Germany were covered by collective agreements.

Constructive dialog with T-Mobile USA
As the underlying laws and contracts vary from country to country, codetermination matters with trade unions and employee representatives are managed locally. Group management is involved in all major issues as a matter of principle.

We carefully monitored trade union issues in the USA operational segment in 2017 and discussed individual cases in dialog with the management of T-Mobile USA. The responsibility for national Human Resources Management matters lies with the management of T-Mobile USA. This responsibility is administered with a high degree of dedication and accompanied by excellent customer satisfaction results. In a US-wide survey of 360,000 customers by market research institute HarrisX, T-Mobile USA received the highest customer satisfaction ratings among all network operators in the US for all four quarters of 2017.

Deutsche Telekom respects freedom of association and the right to collective bargaining in accordance with national regulations. This naturally applies to the USA as well. All employees at T-Mobile USA have the right to form and join a trade union. At the same time, employees are free to choose not to do so. T-Mobile USA will not exert any influence on this decision and will not favor or impede employees based on their choice.

The results of the employee survey in 2017 showed that 93 percent of employees are proud to work for T-Mobile USA. Some 88 percent would recommend T-Mobile USA as an attractive employer, and 84 percent feel inspired by the company such that they go beyond their normal job requirements to make the company more successful. These results are some of the highest in the entire Group.

TMUS has also been honored with a Glassdoor Employees’ Choice Award, recognizing the Best Places to Work in 2018. The Employees’ Choice Awards program, now in its 10th year, relies solely on the input of employees, who elect to provide feedback on their jobs, work environments and companies via Glassdoor. More than four out of five (81%) T-Mobile USA employees say they recommend the company to a friend. This is the highest percentage of any company in the US mobile communications industry. In addition to this award from Glassdoor, T-Mobile USA received further recognitions for Best Places to Work throughout 2017.

Good participation in Group-wide idea generation management

Many employees once again took part in idea generation management in 2017. In Germany, every 15th employee submitted a new idea, giving us a continually high participation rate. The economic benefit translated into a total of 99 million euros in cost savings and tapping of new business potential. With a total of 6,902 new ideas, employees again proved the great extent of their interest in helping shape the Group through creativity and commitment. They also make an important contribution to Deutsche Telekom's target objectives.

Two of our employees' ideas came up winners of the Idea Management Award 2017 bestowed by the German Institute for Idea and Innovation Management:

Bernd Zopf was awarded second place in the "Best Idea of 2017 from Production and Technology" category with his idea "Laying fiber-optic cables in the ventilation tubes of existing copper main cables".

Markus Cremer was awarded third place in the "Best Idea of 2017 from Management and Administration" category with his idea "Reducing the mast replacement rate by using an additional testing tool". Based on this idea, the mast replacement rate can be reduced from 14 percent to 10 percent, so the idea makes a significant contribution to conserving resources and reducing cost.

We honor the service of our longtime employees

In September 2017, we honored the commitment of our employees celebrating their 25th, 40th and 50th service anniversaries at Telekom Deutschland with a central  Anniversary Celebration Week . The idea for Anniversary Celebration Week  came about in 2008 in the customer service department and was expanded year after year due to positive employee response and importance to our corporate culture. The year 2017 also marked the first time that the employees of Telekom Technik Deutschland joined the central festivities, as previously these employees had been honored at regional celebrations. Eligible T-Systems employees were also welcomed to the joint celebrations for the first time this year. The former HR Director of Telekom Deutschland, Martin Seiler, the HR Director of T-Systems, Georg Pepping, as well as Member of the Board of Management of Deutsche Telekom AG and CEO of T-Systems, Reinhard Clemens, were all present at the celebrations.

More than 3,000 eligible employees were invited in 2017, with about 1,400 of them attending the event in Bonn personally. A total of 43,650 years of work and experience at Bundespost and Telekom were represented at our forum in Bonn during the four-day event. The excellent cooperation between our colleagues, both young and old, is a key pillar of our business success. That's because learning from each other, being interested in each other's ideas and growing and working out solutions together are basic conditions in professional life.