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Strong
together

The last year forced us to keep our distance yet also brought us together. The year 2020 made us into a closer team.

Our company’s success is heavily dependent on the skills, performance capabilities and commitment of our employees. Preserving these success factors in the long term is therefore incredibly important. Last year, however, both we and global economies were faced with rising to the challenge posed for society as a whole by a problem with a minute cause, but with enormous impacts. The Covid-19 pandemic meant that one of the greatest challenges in 2020 was that of connecting as many employees as possible electronically as quickly as possible. The norm until then of person-to-person interaction was replaced with mobile working and modern conference technology. Meetings in the meeting room became virtual get-togethers at every level, be it departmental meetings or the regular meetings of the Supervisory Board. Even the Annual Shareholders’ Meeting of H&R GmbH & Co. KGaA as a listed company was held as a virtual event in 2020.

Forgoing person-to-person dealings constituted a huge feat for everyone, but was an adjustment which we achieved with remarkable success. Right up to the end of the year, we never lost sight of the top priority of these efforts, namely to protect the health of the staff at our refinery sites, thereby enabling the heart of our Group to continue beating. We adapted our measures to the changing requirements, reassessed them at regular intervals and promoted them at all levels of the organization on the basis of meetings and dedicated contacts for specific issues. A spirited approach and clear definition of the procedures in advance meant we were able to address the handful of indirect and direct suspected cases of infection swiftly and fully.

In spite of the enormous challenges, this rewarded us with virtually coronavirus-free business operations and a healthy workforce at the vast majority of our sites.

What’s more, new employees with the specialist skills needed by H&R found their way to us once again in 2020, thereby making a key contribution to the company’s future viability.

In order to meet its corporate objectives, the H&R Group needs qualified employees for both its production sites and refining locations; as a result, human resources work focuses on employee recruitment and retention. We train our own junior staff and offer attractive pay and personal training opportunities in order to retain skilled employees within the H&R Group over the long term. The particular conditions in local and regional labor markets pose a special challenge to the human resources management of the H&R Group, as they sometimes differ greatly, such as in terms of demographics and level of education.

In addition, the H&R Group places the highest priority on safety and ensuring that employees remain able to work, something that we ensure by applying stringent occupational safety requirements and offering health promotion measures.

In our human resources work, we are guided not only by the local legislation, but also by our globally binding guidelines, such as the Code of Conduct, the corporate policy and our compliance manual.

The human resources management of the H&R Group is organized in such a way as to take into account site-specific and country-specific differences. Local human resources departments at the sites tailor their human resources management approaches to fit country-specific requirements. They are supported by the Human Resources department in Hamburg, which defines the general guidelines for our global human resources management.

EMPLOYEE
STRUCTURE

At year-end 2020, the number of people employed by the H&R Group had decreased by 40 to 1,585 (December 31, 2019: 1,625). The following table shows a breakdown by division:

Most of our employees work at the German refineries in Hamburg and Salzbergen (699 people (December 31, 2019: 709)) and at the GAUDLITZ GmbH site in Coburg (147 people (December 31, 2019: 232)). At the end of the reporting period, these locations had a workforce of exactly 846 (December 31, 2019: 941). The proportion of female employees increased from 21.6% to 18.8% (203 employees), which, according to our own estimates, was quite high for a production company with full-time shift operations.

The age structure of our domestic workforce has remained roughly the same in recent years. During the reporting period, the 51-to-60 age group was the largest. The age distribution of our employees is thus typical of industrial companies in Germany.

We count on the skills and commitment of each and every employee. We see the diversity of the people we employ as an asset. Employees with disabilities and health conditions enjoy particular protection, where we work closely with the relevant agencies to find solutions that enable them to keep their jobs or move to a suitable position. This means we can retain skilled workers and keep long-standing, valuable knowledge within H&R. In 2020, our German sites had 17 employees with disabilities, accounting for 2.0% of the workforce.

EMPLOYEE RECRUITMENT
AND RETENTION

To recruit new employees, we rely primarily on traditional channels such as recruitment consultants, job portals, advertisements, and our own website. One of the main areas we focus on is recruiting young employees as apprentices training to become chemical technicians or laboratory technicians. Our performance-related remuneration models and flat hierarchies also make us an attractive employer for experienced professionals. At the German sites, most employment contracts are subject to the terms of collective bargaining agreements. In addition, we offer our employees flexible working hours (part-time arrangements, honor-system working hours), which – to the extent possible, given the processes and operating needs, such as shift work – they also take advantage of. In 2020, for example, around 4.8% of our employees exercised their entitlement to parental leave. Furthermore, we offer numerous individual, in-house opportunities for continuing education in order to retain our employees over the long term. Our employees had to rise to special challenges as a result of the Covid-19 pandemic as the lockdown measures and school and kindergarten closures meant their private lives were also placed under pressure, in addition to the work-related restrictions already outlined. To mitigate these burdens, management, the employee representatives and the employees acted in unison and, above all, flexibly and supported one another.

Our employees are very committed to the H&R Group. This is demonstrated, in particular, by the high average length of service and the generally low staff turnover rate at the sites in Germany. We calculate the turnover rate exclusively on the basis of voluntary resignations by employees. Employees entering retirement are not counted, as new employees are generally hired to replace them. Our rate at the two German refinery sites dropped significantly again in 2020 to 1.73% (2019: approximately 5.0%), putting it far below the usual double-digit turnover rates for the working population in Germany. The turnover rate at the Coburg site was approximately 14%, not least due to the personnel restructuring measures there.

TRAINING AND
CONTINUING EDUCATION

As we can only compete internationally if we have superbly trained employees on board, we consider our spending on advanced training and professional development to be an investment in the future of our company.

When choosing advanced training courses, we follow an individual approach that promotes our employees’ strengths and helps them to achieve their career goals. To that end, we want to create dependable future prospects for our employees and to support them in their professional and personal development. Here, we focus primarily on in-house continuing education programs, such as mas- ter craftsmen’s training courses, but also on regular discussions and feedback sessions.

The increasing complexity of our plants and equipment also requires well-trained employees. For example, for the supervision of the processes in the refineries’ measurement and control stations and the daily operation of our facilities, we deploy only experienced employees who are ready and willing to regularly expand their knowledge base. In turn, they pass this knowledge and experience on to their young colleagues as part of their day-to-day work. In the course of their training and in the years that follow, our young colleagues learn about the special features and operation of each facility in detail. This allows us to ensure the smooth operation of our facilities – and keep important knowledge within the company.

As we have been using a predominantly electronic training system for years, the Covid-19 pandemic had next to no impact on our training measures in financial year 2020. We use our training management information system (SMIS database) to plan, coordinate and document all training activities within the company. If all of our employees worldwide completed the training courses and instruction planned for them, around 23,760 training courses would be provided in the course of a financial year (previous year: 23,304 training courses). In 2020, around 893 of our employees took part in continuing education courses (previous year: 1,020 employees), most of which are available online, reaching over 93.2% of this target (previous year: 94.4%). In total, training amounted to approximately 4,122 hours of training, or just under 4 hours and 40 minutes per employee. In addition to covering the traditional jobs at our sites, the training also covers more general topics such as environmental protection, health care and social and cross-cultural skills. New content can be added to the training system, depending on the specific needs of the individual subsidiaries or departments. The extent of training as presented here cannot, however, provide a full picture of our training activities. For example, our electronic training system does not include instruction in the area of hazardous substances, as is prescribed by law. In accordance with the Hazardous Substances Ordinance (GefStoffV), such instruction is to be given orally. Other special instruction, such as facility operation, is also given, and this is recorded away from the electronic training system.

OCCUPATIONAL HEALTH
AND SAFETY

As explained above, the year presented us with particular demands in terms of our duty of care toward our employees and the protection of their health. We embraced this responsibility early on and kept our employees informed about the latest developments and recommendations. Throughout the Group, the management levels in particular were responsible for implementing their nationally applicable rules and for ensuring the greatest possible safety of their employees.

To give the German sites as an example, regular newsletters were used to update the employees on implementation of the recommendations of the federal government and the Robert Koch Institute, and clear rules were defined for internal workflows. From fall, a “coronavirus guide” laid down unambiguous requirements regarding working together at the sites. In the event of queries, its actual implementation was specified by a task force consisting of management and HR heads with the backing of in-house medical staff.

This was accompanied by a comprehensive hygiene concept covering everything from the early procurement and in-house production of disinfectants to the later procurement of rapid tests and the implementation of a corresponding testing concept. We offered the employees at the production sites additional protection with a comprehensive mobile working concept, on the basis of which our IT department achieved maximum efficiency even away from the employees’ usual places of work in next to no time. Regular video conferences replaced not only in-person meetings, but also social interaction among coworkers. The “meetings by the coffee machine” continued, but were now held virtually.

As an operator of refineries and production plants, the H&R Group places a high priority on occupational health and safety, even when operations are limited by Covid-19. In their daily work, many of our employees control, operate, and maintain machinery and plants. In addition, our refinery processes utilize various substances that must be handled with the utmost caution. Group-wide, we strive to have uniform safety standards that exceed statutory requirements. In doing so, we take the entire value chain into consideration, from the delivery of raw materials to the use of our components in our customers’ products.

At both refinery sites, we comply with the German statutory requirements stipulated in Section 2 of German Social Accident Insurance Regulation 2 (DGUV V2) and Section 5 of the Occupational Safety Act (ASiG) by deploying specialists in occupational safety. In organizational terms, they report directly to the refinery management and are supported in their work by safety officers. At our international subsidiaries, the powers and responsibilities of occupational safety managers are based on the requirements promulgated by the Occupational Safety and Health Administration (OSHA) within the framework of each jurisdiction’s particular legal provisions.

Occupational healthcare and safety specialists provide support by taking suitable measures to prevent accidents and illnesses. Our occupational health and safety regulations also promote this objective. Many of the occupational health and safety measures that we take are aimed at raising employees’ awareness of potential dangers – to protect them as well as their coworkers. Therefore, a key safety issue at all of our sites is providing continuing education to our employees. We hold regular training sessions on topics related to safety and require all our employees to visit our web-based safety instruction system on a regular basis. Both before starting to work and at regular intervals thereafter, employees are required to attend briefings and training courses at which they are informed about possible safety risks, potential dangers, and how to properly handle hazardous materials. In addition, regular safety inspections, detailed analyses of any loss events or claims, a special report on safety-related indicators, and the active involvement of the Executive Board ensure that our safety performance is constantly improving. Every H&R Group employee is required to diligently follow all safety rules in their own work area.

Contractors, suppliers and transport companies working in our factories are also included in the safety strategy. For example, anyone who has to drive on the refinery sites or move around the premises for the first time, or as a one-off, without being accompanied by an H&R employee undergoes video-based induction training in the languages most commonly used by contractors as soon as they enter the site. Completion of the induc- tion training is recorded in a database.

In case of a relevant event, for example, involving bodily injury or physical loss or damage, or an event that is relevant to business operations, the direct managers and safety managers must immediately notify the company departments that are responsible for health, safety, and environmental protection. As such, occupational health and safety focuses not only on prevention, but also and in particular on the following up of events, addressing these with a catalog of measures. In this way, we are strengthening the role of the safety officer, who systematically works through events and their causes together with those affected and management. The employee representatives are likewise involved in these analyses. The findings are incorporated into training measures – also by including the individuals affected – and are thereby handled proactively.

Since the beginning of 2019, our accident statistics have no longer been based on the international CONCAWE standard (CONservation of Clean Air and Water in Europe), but have rather used the more stringent standards of the German Society for Petroleum and Coal Science and Technology (DGMK) as a point of reference. We report the indicators LWIF (lost workday injury frequency – number of work accidents with at least one day lost for every one million working hours) and LWIS (lost workday injury severity – number of days lost per work accident). Here, both our own employees and our contractors are taken into account. The standards we apply are therefore much stricter than those called for by the employers’ liability insurance associations in Germany, for instance. During the past year, our safety efforts proved to be much more effective than in the past. In 2020 the LWIF figure for our refineries was 5.7 (previous year: 2.0), putting it back on the level seen in previous years. By contrast, there was a significant drop in the severity of accidents based on the LWIF definition during the same period.

We are expanding our system of more extensive training measures, regular instruction and daily refinery rounds conducted by the individuals responsible for the site. Here, we will also be relying on our own well-trained employees to pass on to contractors their own practical knowledge of how to remain attentive and safe as they carry out their work at the respective sites – as soon as personal interaction is possible once again without major precautionary measures.

In addition to evaluating occupational safety, we also rate the production processes and workflows implemented at H&R, meaning that we systematically analyze all relevant production processes, up to and including an analysis of damages once any events have occurred. In other words, we investigate how error-prone our processes are and the extent to which they can be reliably performed error-free. Since the start of 2011, we have used the Process Safety Event (PSE) metric to measure our performance in the area of process safety; we calculate this by tracking incidents relating to the safety of our processes per one million working hours. We also ensure that our results are meaningful by comparing them with the DGMK benchmark, which again came to 0.17 in 2020.

We achieved an average annual PSE of 0.10 at both refinery sites. Therefore, since beginning to record the PSE, we have always performed better than the CONCAWE (until 2018) and DGMK (as of 2019) benchmark standards.


Answers from
Niels H. Hansen

Niels H. Hansen has directed the fortunes of H&R GmbH & Co. KGaA since mid 2019 as the sole managing director.

When you look back over 2020, what are your first thoughts?

NHH How something so small can have such a huge impact. I think it can safely be said that none of us have experienced anything comparable. Which makes me even happier that at H&R we have withstood this challenging time so well – and have grown even clos- er as a company and as a team.