UPM Annual Report 2016

Stakeholders

In brief

Strategy

Businesses

Governance

Accounts

In 2016, the main focus areas in UPM’s People Strategy were aiming higher in business performance and value-based and inspiring leadership, as well as continuously challenging the status quo to develop the company. Our people Encouraging growth

of permanent employees had a personal performance review with their managers

favourable responses to Employee Engagement Survey’s diversity question

87%

79%

TARGETS 2030

TARGETS 2030

Developing a safe and inspiring working environment in which people can participate and grow is important for UPM. UPM aims to provide an environment in which employees are capable of achieving business success. UPM encourages its employees to pursue professional growth and supports them in learning and developing their skills further. The company uses the 70/20/10 model based on the assumption that 70% of learning takes place on the job, 20% comes from learning from others and 10% comes from development programmes. UPM systematically uses a performance management process (PPR) to set individual strategy-related targets and create development plans for all employees globally. The PPR provides an opportunity for both managers and employees to give and receive feedback on performance and behaviour based on UPM values. Over the past few years, UPMhas developed its performance appraisal process by emphasising managers’ roles in leading performance and giving feedback. Managers are expected to focus on performance management and guiding their teammembers to reach agreed targets. UPM’s target is that all employees have a target setting and development plan by 2030. In 2016, UPM started to train its key employees on human rights and continued its human rights assessment by initiating a global evaluation focusing on activities at UPM sites, community relations and local sourcing. Engaging employees to develop the workplace The UPMEmployee Engagement Survey (EES) invites all employees across the company to evaluate different aspects of the working environment every year. The survey measures development using three main indices: Employee Engagement, Manager Effectiveness and Occupational Health and Safety (OHS). In 2016, 83% (79%) of UPM employees responded to the survey, which illustrates a high level of willingness to participate in the development of UPM as a place to work. All UPM-level indices improved. The Engagement Index has increased three percentage points for three consecutive years. The Engagement Index increased to 69% (66%), but is still behind our 2030 target to be in the top quarter of companies. Favourable scores in the OHS Index increased to 81% (80%). Favourable scores in the Manager Effectiveness Index have steadily improved over the years (from 76% in 2015 to 78% in 2016), and remain at a high level. All EES items are showing a positive trend and the scores for questions regarding our future and vision in particular have increased significantly. The EES provides an opportunity for annual monitoring of long-term trends and the progress of agreed development activi­ ties. The progress is followed up and evaluated in order to define further improvements both at organisational and team level. UPM-level focus areas for development are diversity and inclusion as well as the growth and development of UPM employees. Apprenticeship combines learning and working UPM’s apprenticeship programmes in Finland and Germany are a way to ensure the required level of expertise for future employees The programmes are typically targeted at shop floor positions in production or maintenance. UPM conducts the programmes together with regional vocational schools. In Finland, some 100 people have been included in the apprenticeship programmes annually. Most of the graduated apprentices have continued to work at UPM. UPMhas also launched a UPMBioforce Graduate Programme for young professionals. The programme will begin in the autumn of 2017.

UPM’s personnel by business area 2016

Other operations 2%

UPM Biorefining 14%

UPM Plywood 13%

UPM Energy 0%

UPM Raflatac 16%

UPM Paper ENA 45%

UPM Specialty Papers 10%

Employee Engagement Survey (EES) results, Trend 2008–2016

80

60

40

20

0

08

11 10 09

12 13 14 15 16

■ Response rate (%) OHS Index

Manager Effectiveness Index (MEI) Employee Engagement Index (EEI)

PERSONNEL BY COUNTRY 31 Dec.

2016 2015 2014 7,347 7,464 7,855 4,262 4,591 4,586

Finland

Germany

Russia

793

798

787

United Kingdom 752

763 1,098

Poland France Austria Estonia

608 505 483 250 105

535 585 518 217 109

499 785 549 204 109

Spain

Italy

52 42 34 26 25 80

55 42 31 27 24 79

61 40 28 25 27 86

Turkey

Belgium Ukraine Sweden

Other Europe

1,790 1,546 1,424 970 1,070 1,087

China 1)

United States 2)

Uruguay Malaysia

580 140

573 122

565 175

South Africa

94 92 56 50 40

78 81 58 50 42

67 50 89 61 39

Mexico

Brazil

Australia

India

Rest of the world 134

120

118

Total

19,310 19,578 20,414

1) Incl. Hong Kong 2) Incl. Madison 50%

CONTENTS

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UPM Annual Report 2016

UPM Annual Report 2016